Caring for an aging parent or other loved one? You’re not alone. More than 65 million people, some 29% of the population, provide an average of 20 hours per week of care for a chronically ill, disabled or aged family member in any given year. Thinking you may eventually need a caregiver, yet you don’t know how you can afford to pay for it? You’re not alone there, either.
A recent survey conducted by AgingCare.com discovered that while adult children are often responsible for their aging parent’s care, the large majority of caregivers are also vastly unprepared to pay for it. In fact, the survey found that:
- 63% of caregivers have no plan as to how they will pay for their parent’s care over the next five years.
- 62% say the cost of caring for a parent has impacted their ability to plan for their own financial future.
Home health care or non-medical home care?
When you’re talking about paying for personal care in your home for a loved one, it’s important to first understand that there is a difference between home health care and non-medical home care. As a result, there’s also a big difference in the costs that would be incurred and who pays for it.
Home health care
While the names sound the same, home health care is prescribed by a physician, usually after injury, illness or a hospital stay. The individual being cared for must be homebound and the home healthcare agency must be Medicare-certified.
As a result, its average cost of $135 a day is generally paid for by Medicare or private insurance. What’s more, you can only receive benefits for a part-time skilled nurse (fewer than 7 days/week or less than 8 hours each day) over a period of 21 days or less.
Home health care through Medicare would pay for:
- Skilled nursing care provided by a registered nurse (RN) or licensed practical nurse (LPN). This would include services such as changing dressings, diabetes care teaching, giving IV drugs, managing prescription drug injections, tube feedings, etc.
- Occupational therapy, physical therapy, and speech-language services.
- Medical social services including counseling, as well as help finding community services.
- Medical supplies used in your care. This can also include durable medical equipment.
Non-medical home care
Unlike home healthcare, non-medical home care assists with activities of daily living (ADLs), such as dressing, bathing, housekeeping, and transportation. It is also referred to as personal care, companion care or unskilled care, among other terms.
While important and necessary for many people to remain in their homes, non-medical home care is not prescribed by a physician and is generally not reimbursable by Medicare or private insurance.
With an average cost of $131 to $135 a day (though hiring a private caregiver as opposed to an agency may 20-30% less) it is also not inexpensive. While much of these costs are paid for out-of-pocket, there are, however, a number of options to help pay for non-medical home care if funds are not available.
OPTIONS FOR YOUR PARENTS
If your parent has investments, this is the time to use them. However, instead of cashing everything in, it would be best for them to sell their investments off as gradually if possible. This would both extend the investment’s lifespan and its earning potential.
Be aware that a big sell-off could trigger a large and unwelcome tax event. Your parent’s investment advisor would be the best person to provide guidance on how to sell their investments in a way that will best meet their financial needs.
While your parent may have a long history with an investment advisor or a well-known investment firm, you may want to look at transferring their accounts to a fiduciary instead. There is a big difference between the two and making the wrong choice could cost your parents a lot of money.
A traditional investment advisor recommends products that are only suitable for a client and are legally entitled to put your parent’s interests last. In fact, their advice may be directly related to the financial product that brings them the highest commission.
A fiduciary, on the other hand, is legally required to put your parent’s best interests first. Working with your parent’s assets, they could structure a consistent income stream to pay for ongoing care. Also, as they only earn money based on a flat fee or if your parent earns money, their advice (and your parent’s assets) would be less likely to be impacted by any commission structure.
If you are interested in knowing more about fiduciaries or wish to speak with a fiduciary advisor, websites such as the National Association of Personal Financial Advisors or (NAPFA) Fee-Only Network would be a good starting point. Membership in either of these organizations is contingent upon the member being a true fiduciary.
Selling off personal items such as unused/unwanted household items through an estate sale, consignment shop or other means has multiple benefits. It can raise cash while also reducing clutter in the home that makes it unsafe. It also reduces the number of items to be eventually disposed of or otherwise distributed down the road.
Selling off larger-ticket items such as a vehicle may be a difficult conversation, but this could also make it the perfect opportunity to talk with your parent about whether they should still be driving. Also, if you think it might be necessary to sell any high-value assets and there are siblings involved, you may wish to have a family discussion first to clear the air and get priorities in order to eliminate any potential hard feelings later.
Does your parent have a life insurance policy that’s no longer needed to provide for others? They may be able to tap into that money using accelerated or living benefits. This is done by selling the policy back to the insurer at 50 to 75% of its face value.
If the insurer isn’t open to doing this, there are companies which will also buy the policy for 50 to 75% of face value. They then pay the premiums until the policyholder dies and receive the benefits that would have gone to the original beneficiaries. Called a Viatical or Life Settlement, they are not for everyone but can provide a cash lump sum.
Long-term care insurance
If your parent has long-term care insurance, you’ll want to take a good look at the policy and/or contact the company’s representative. It’s quite possible that it will pay for a caregiver to come into the home to assist with their ADLs. It may even pay you or another family member to come in as a caregiver.
Keep in mind, however, that as every policy is customized to what the policy-holder wants and what they could afford when the policy was taken out, this is not guaranteed in every instance. The policy could pay for home care, assisted living, skilled nursing, and memory care or either by themselves or in combination.
Reverse mortgages (also called Home Equity Conversion Mortgage) were developed by the Department of Housing and Urban Development (HUD) specifically for the purpose of helping seniors stay in their homes until the end of their lives.
A Reverse Mortgage can allow your parent to convert a portion of the equity in their home into cash—either in one lump sum or spread out in regular monthly payments. Payment options include:
- Tenure: The receipt of equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence
- Term: The receipt of equal monthly payments for a fixed period of months selected
- A line of Credit: The ability to collect unscheduled payments or in installments, at times and in an amount of your choosing until the line of credit is exhausted
- Modified Tenure: A combination of line of credit and scheduled monthly payments for as long as you remain in the home
- Modified Term: A combination of line of credit plus monthly payments for a fixed period of months selected by the borrower
To qualify, your parent has to be 62 or older and own the home, either outright or with little debt left on the original loan. The bank decides on a value based on the home’s worth and also based on your parent’s age as that affects the length of time the payouts must cover. When your parent moves out of their home, the home must be sold to repay the balance.
As a Reverse Mortgage comes with strict rules regarding homeowners’ insurance, mortgage insurance, and home maintenance, it easy to default on the loan, in which case the home would be put up for sale. Experts also warn that your parent could run out of the equity in their home and still need care.
You can locate an FHA-approved lender by searching online or calling (800) 569-4287 toll-free, for the name and location of a HUD-approved housing counseling agency near you. HUD warns that if you are interested in a reverse mortgage to beware of scam artists that charge thousands of dollars for information that is free through them.
The home equity line of credit
A Home Equity Line of Credit (HELOC) is a loan that is similar to a credit card, except that it may offer lower interest rates as it is secured by the value in the home. Your parent would be told the maximum amount they can borrow and then given the flexibility to withdraw money up to that limit on an as needed basis.
While reverse mortgages have high closing costs, a HELOC has low upfront costs that instead accumulate over the life of the loan. This makes them a less-expensive, more flexible alternative that is worth considering if your parent needs financial assistance immediately and for just a few years.
As a reverse mortgage has a minimum age limit of 62, a HELOC also offers a solution if one parent is younger than 62 or if a couple can’t qualify for as much money as they would wish because of the younger age of one spouse. Should your parent need a large lump sum to move into a retirement community, a HELOC could also make this possible until their house is sold.
With a HELOC, there is a “draw” period, during which time your parent would be able to withdraw money, followed by a “repayment” period. A “draw period” of 5 – 10 years very common, while the “repayment” period may be 10–20 years.
At the end of the “draw” period, your parent would pay back the loan in a lump sum, including interest (usually by selling the house), or in monthly payments. Be aware that not all HELOCs offer a “repayment” period. Instead, the full amount borrowed, plus interest would be due at the end of the “draw” period.
OPTIONS FOR YOU AND YOUR SIBLINGS
Collective sibling agreement
Similar to a Reverse Mortgage, a Collective Sibling Agreement is a legal agreement by which family members who can’t help out because of geography or work demands combine their resources to pay for a caregiver (or to pay a brother or sister who has that availability to be with their parent on a daily basis).
This is done with the understanding that they’ll be paid back for their contribution from their collective inheritance or the proceeds of the house after the parent’s death.
Best put in place with the assistance of an experienced elder law attorney, these agreements need to be spelled out very carefully to avoid conflicts down the line.
Child and dependent care credit
If you’re looking to hire someone to care for your parent while you work or are looking for work, you may also be able to take advantage of the Child and Dependent Care Credit (Also called the Elderly Dependent Care Credit or Aging Parent Tax Credit). Interestingly enough, they do not have to be a dependent on your taxes to qualify. Instead, your parent:
- Must be physically or mentally unable to care for themselves and have lived with you for more than six months
- Could have been considered a dependent except they earned more than the allowed maximum. ($4,050 in 2017).
Unlike a deduction, which lowers your taxable income, this program allows for a tax credit which is deducted from the taxes you owe. If you’re looking to care for a parent yourself, there are also a number of tax tips you can follow to deduct costs for their care.
LOCAL, STATE AND FEDERAL OPTIONS
Local and state-sponsored services
In 1965, Congress enacted the Older Americans Act, which allocated funding for state-run social service programs to assist those 60 and older with the greatest social and financial needs. Through the National Association of Area Agencies on Aging, this program covers assistance with such services as:
Personal care: Non-skilled service or care that assists with bathing, dressing, eating, getting in and out of bed or chair, moving around and using the bathroom. Can also be referred to as Custodial Care.
Home health services: Paid supportive services in the home ranging from skilled nursing care and occupational, physical, respiratory and speech therapy to assistance with activities of daily living (ADLs) and housekeeping.
Nutrition services: Hot or cold home-delivered meals (sometimes known as Meals on Wheels) are delivered to homebound seniors at risk for poor nutrition and/or hunger. Congregate meals are provided in a senior center or another community site where older adults can enjoy a healthy meal, socialize with others and have access to other supportive services.
Transportation options: Services for older adults or people with disabilities who lack private transportation or who are unable to access public transportation. Personal Emergency Response Systems: 24-hour electronic alarm systems to enable people to summon emergency help.
These home and community-based services (HCBS) can be requested through your local Area Agency on Aging, which may provide them directly or refer you to a local provider. To find HCBS options in your community: Visit www.eldercare.gov or call (800) 677-1116.
Medicaid—Home and community-based services
If your parent is eligible for Medicaid, Home and Community-Based Services (HCBS) provide opportunities for your parent to receive services in their own home or community rather than institutions or other isolated settings. Through “Cash and Counseling” or Self-Directed Services, states have several options available including:
- Home and Community-Based Services State Plan Option- 1915(i)
- Community First Choice-1915(k)
- Self-Directed Personal Assistance Services State Plan Option-1915(j)
- Home and Community-Based Services Waiver Programs- 1915(c)
As the availability of these programs and what they offer varies considerably from state-to-state, you’ll want to contact your local Medicaid office to determine what is available in your area. You can also use the free service provided by the American Council on Aging with help in locating a Medicaid Planner.
PACE is a Medicare and Medicaid program that helps people meet their health care needs in the community instead of going to a nursing home or other care facility. PACE stands for Programs of All-Inclusive Care for the Elderly.
PACE is only available in some states that offer PACE under Medicaid. To qualify for PACE, your parent must:
- Be 55 or older
- Live in the service area of a PACE organization
- Need a nursing home-level of care (as certified by your state)
- Be able to live safely in the community with help from PACE
Services covered by PACE may include:
- Adult day primary care (including a doctor and recreational therapy nursing services)
- Emergency services
- Home care
- Hospital care
- Laboratory/x-ray services
- Medical specialty services
- Nursing home care
- Nutritional counseling
- Occupational therapy
- Physical therapy
- Prescription drugs
- Preventive care
- Social services, including caregiver training, support groups, and respite care
- Social work counseling
- Transportation to the PACE center for activities or medical appointments, if medically necessary. You may also be able to get transportation to some medical appointments in the community.
To find out if your parent is eligible and if there’s a PACE program near them, search for PACE plans in your area, or call your local Medicaid office. You can also use the free service provided by the American Council on Aging with help in locating a Medicaid Planner.
If your parent or other loved one is a veteran, the U.S. Department of Veterans Affairs can help pay for the cost of home care and other services through their Program of Comprehensive Assistance for Family Caregivers. These include:
Aid and attendance
Veterans and survivors who are eligible for a VA pension and require the aid and attendance of another person, or are housebound, may be eligible for additional monetary payment.
The Aid & Attendance (A&A) increased monthly pension amount may be added to a veteran’s monthly pension amount if they meet one of the following conditions:
- They require the aid of another person in order to perform personal functions required in everyday living, such as bathing, feeding, dressing, attending to the wants of nature, adjusting prosthetic devices, or protecting themselves from the hazards of their daily environment
- They are bedridden, in that their disability or disabilities requires that they remain in bed apart from any prescribed course of convalescence or treatment
- They are a patient in a nursing home due to mental or physical incapacity
- Their eyesight is limited to a corrected 5/200 visual acuity or less in both eyes; or concentric contraction of the visual field to 5 degrees or less
A veteran may be eligible for the Housebound benefits if:
- They have a single permanent disability evaluated as 100-percent disabling AND due to such disability, are permanently and substantially confined to their immediate premises, OR,
- They have a single permanent disability evaluated as 100-percent disabling AND, another disability, or disabilities evaluated as 60 percent or more disabling.
- In addition, their income must be less than $14,978 without dependents or $18,773 with dependents.
Since Aid and Attendance and Housebound allowances increase the pension amount, people who are not eligible for a basic pension due to excessive income may be eligible for a pension at these increased rates. A Veteran or surviving spouse may not receive Aid and Attendance benefits and Housebound benefits at the same time.
Home and community-based services
The Veteran-Directed Home and Community-Based Services (VD-HCBS) program offers Veterans and their caregivers greater access, choice and control over the long-term services and supports(LTSS) that help Veterans live at home and remain a part of their community.
Developed by the U.S. Department of Veterans Affairs Veterans Health Administration (VHA) and the U.S. Department of Health and Human Services Administration for Community Living in 2008, these programs are currently offered at 62 VA Medical Centers across the country.
To find out if a VA Medical Center near you is offering the program, just click here.
VA respite care
If you are already providing caregiving to a veteran and need assistance, Respite Care is a service that pays for a caregiver to come to a Veteran’s home or for a Veteran to go to a program while their family caregiver takes a break. While a Veteran gets Respite Care, the family caregiver can run errands or go out of town for a few days without worrying about leaving the Veteran alone at home.
Respite Care can be helpful to Veterans of all ages, and their caregiver. Veterans can receive Respite Care in an inpatient, outpatient or home setting.
The program is for Veterans who need skilled services, case management and help with activities of daily living.
Examples include help with bathing, dressing, fixing meals or taking medicines. This program is also for Veterans who are isolated or their caregiver is experiencing burden. Respite Care can be used in combination with other Home and Community-Based Services.
Respite Care can help lower the stress the Veterans and their family caregiver may feel when managing a Veteran’s long term care needs at home.
As Respite Care is part of the VHA Standard Medical Benefits Package, all enrolled Veterans are eligible IF they meet the clinical need for the service and it is available.
You may be able to get Respite Care in a number of ways:
- A paid Home Health Aide could come to your home
- You could attend an Adult Day Health Care Center
- You could go to a Community Living Center (VA Nursing Home) or a VA medical center for a short inpatient stay
As benefits for all these programs vary depending on the individual circumstances, you can learn more by contacting contact your VA social worker/case manager or by calling 1-877-222-VETS (8387)
Other options to reduce your costs
While you may not be able to reduce the actual cost of home care, you can do things to reduce the need—which can help your money go farther. Things you might consider include:
Taking advantage of community-based meal preparation & delivery services
Meals on Wheels operates in virtually every community in America through our network of more than 5,000 independently-run local programs. While the diversity of each program’s services and operations may vary based on the needs and resources of their communities, they are all committed to supporting their senior neighbors to live healthier and more nourished lives in their own homes.
Does your parent have a pet? Nearly 300 local chapters of Meals On Wheels, such as AniMeals in Tampa, FL, deliver free cat and dog food, in addition to senior meals, through their Meals on Wheels Loves Pets initiative.
Alternatively, if you’re already paying for a home care worker, they often have downtime. Consider asking them to prepare, label and refrigerate meals in advance for your parent to eat when they’re alone.
Making home modifications. Making changes to stairs, bedrooms and/or bathrooms can delay or eliminate the need for home care aides, while also reducing monthly expenses. Financial assistance may be available through:
- Area Agencies on Aging (AAA) distribute modification and repair funds through the Older Americans Act. To contact your local AAA, contact the Eldercare Locator at 1-800-677-1116 or https://eldercare.acl.gov.
- Rebuilding Together, Inc., a national volunteer organization, is able to assist some low-income seniors through its local affiliates. Visit http://rebuildingtogether.orgto learn more.
- The U.S. Department of Energy’s Low-Income Home Energy Assistance Program (LIHEAP)and Weatherization Assistance Program (WAP) offers assistance to seniors through local energy and social service departments You can also search for state-specific tax credits, rebates, and savings at http://energy.gov/savings.
Purchasing medications from Canada
“While the practice of reimporting drugs from Canada, Mexico, or other countries is still technically illegal,” according to WebMD, “it is increasingly becoming a custom more honored in the breach than in the observance.”
The popular website goes on to note that, “Because Canada and most other industrialized nations impose price restrictions and limit what pharmacies can charge for drugs, the cost of a brand-name medication sold in Toronto can be as much as 55% less than what the identical drug is sold for just across Lake Ontario in Rochester, N.Y.”
Think that might be a good option for your parent? WebMD notes, “Current law says that if Granny decides she can get her heart medications more cheaply in Alberta than in Alabama, she could be busted for either bringing it over the border or having it delivered to her.
“Does that mean that dear Granny is likely to do a stretch in solitary? Hardly, experts say, because nobody wants to be seen putting the cuffs on elderly pensioners. Also, they’d have to arrest the governments of the states of Wisconsin, Minnesota, Illinois, Vermont, as well as many city governments and private employers who have turned north for lower-cost prescription drugs.”
You can compare prices online at PharmacyChecker.com and determine if you wish to look further into this option.
Looking into other options for care
Depending upon the rates and the number of hours you’re looking at needing care, you may find it’s actually less expensive to look into:
- Emergency medical alert systems. These easy-to-use systems vary from $26 to $70 a month and can be compared at the Consumer Reports
- Companies such as GrandCare and MyTruSense also offer easy-to-use, interactive touchscreens that can provide activity and health monitoring, medication prompts, as well as easy communication to family and physicians.
- Adult day care or respite care. Where available, adult day care averages $70 a day. The cost of respite care varies with the type of agency and the services needed, but federal and/or state programs through the Area Agencies on Aging (AAA) may help you to pay for it. While transportation to and from an adult day care or respite care center may be a challenge, many centers provide shuttle services and most urban areas also have free or very affordable paratransit services for the elderly or disabled.
- An assisted living community. Although this would take your parent out of their home permanently and may sound like a more expensive option, placement in an assisted living facility includes three meals a day, activities and transportation to outings and actually averages $123 a day—24 hours a day, 7 days a week.
Paying for home care out-of-pocket can be pricey. However, as you travel down the gray mile, there are a number of options available to help pay for those costs. You just have to knock at the right doors and help is available.