Families making care decisions for their aging loved one can easily become overwhelmed as they juggle emotions and financial decisions.
Many families struggle with calculating how much they can afford for in-home care, mainly because they don’t have a handle on their loved one’s finances AND their own finances.
Here are six steps to determine if you can afford in-home care for your aging loved one.
1- Estimate the total annual cost for in-home care.
Contact several providers and find out what they charge.
Some providers require a minimum number of hours per visit.
Also, they may only offer non-medical in-home care.
2- Determine how much insurance will cover.
If your loved one has a long-term care policy, contact the provider and find out what will be covered.
Contact Medicare to see if any portion may be covered. While it has been generally assumed Medicare will not cover long-term care, the Jimmo v. Sebelius court decree issued on January 24, 2013, challenged the misconception that Medicare will not pay if a patient is not improving.
There is no “improvement” standard. It’s better to call and ask than to make a costly assumption.
More than likely, you’ll call into a call center. For this reason, call several times to make sure you receive the same information.
3- Calculate how much money you will need to come out of pocket.
Take the estimated annual cost for care and subtract the amount covered by insurance.
The resulting amount is how much you will need to pay out of pocket for in-home care.
4- Identify how much your aging loved one has available to pay for out-of-pocket costs.
Look at income sources such as pension and Social Security.
Also, check bank and investment accounts.
5- Estimate how much you can afford to contribute.
In order to estimate how much you can really contribute, examine your annual spending.
Keep it simple by using 10 broad categories: home, transportation, food, health-related, entertainment, charity/gifts, personal care, dependent care (including pet expenses), miscellaneous, and savings contributions.
Identify if any of those categories can be reduced to shift money for in-home care.
6- Reach out to family members if there is still a shortfall.
Yes, it can be a tough call to make, but you’ll be prepared.
You can provide amounts for total cost, total insurance will cover, how much your aging loved one will pay, and how much you will pay.
Even if you have a family member contribute $50 per month, that amounts to $600 annually.
If you still have a shortfall after following the above steps, you can’t afford in-home care — or at least with the service provider you contacted.
Reach out to your network and ask for other options to explore (e.g., adult day care, care provided by a nearby church, etc.).
Keep making phone calls and reaching out to your network for help.
Caring for an aging loved one has its challenges, don’t go it alone.
(Update to original post from July 28, 2015)
ABOUT THE AUTHOR:
Niv Persaud, CFP®, CDFA®, RICP®, is a Managing Director at Transition Planning & Guidance, LLC. Life is more than money. It’s about living the lifestyle you want and can afford. For that reason, Niv consults with clients on money, life, and work. Her approach capitalizes on techniques she learned throughout her career, including as a management consultant, executive recruiter, and financial advisor. Her services include developing comprehensive financial plans, divorce financial reviews, and retirement plans. Niv actively gives back to her community through her volunteer efforts. She believes in living life to the fullest by cherishing friendships, enjoying the beauty of nature and laughing often — even at herself. Her favorite quote is by Erma Bombeck, “When I stand before God at the end of my life, I would hope that I would not have a single bit of talent left and could say ‘I used everything you gave me.’”