Money milestones: Planning to care for your parents

by Brian Acton
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Money milestones: Planning to care for your parents

Caring for an elderly parent can mean many things, from providing round-the-clock assistance to helping a few hours a week with household chores or attending doctor visits. It can be more difficult if your parent(s) have an illness or need extra help getting around.

The added responsibilities will come with extra costs. Caregivers often have to cover expenses out of their own pocket, which can lead to additional expenses each month, a lost income or a reduced ability to save for their financial goals.

Having a financial plan in place before your parents need your help is key. Here’s what you can do today to financially prep for becoming a future caregiver.

Plan for future care

The sooner you start planning for your parent to receive care, the easier it will be to arrange it when the time comes. There are several steps you need to take to determine what type of care is needed, and where you will fit in as a caregiver.

1. Talk with your parent and family

Your first priority should be a productive conversation with your parent about their future plans, said Cameron Huddleston, author of Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances. Ideally, that conversation should occur when your parents are still young and relatively healthy — not when it’s too late.

“Unfortunately these conversations often don’t happen until people are facing more urgency,” said Huddleston. You may need to loop in siblings and other family members for a family meeting. Initially, you should focus on first steps in assessing and arranging care, without bringing money into the picture if possible.

Make sure to frame the conversation in a rational and caring way, without letting emotions rule the meeting. Focus on the new challenges your parent is likely to face and the types of professional care that may be available. Before ending the conversation, be sure your parent understands you are there to support them to the best of your ability.

2. Assess your parent’s needs

During the planning stage, you should assess your parent’s mental and physical needs to determine what type of care they require. Some combination of professional care and personal caregiving may strike the right balance. Your assessment should take your parent’s wishes into account, as well as their finances and the amount of care you can commit to providing.

“You want to engage [the parent] from the very beginning,” said Liz Barlowe, president of Aging Life Care Association, a member-based organization of aging life care professionals. Making a mistake can be costly, she added. For example choosing a level of care that’s too much or too little and correcting that will take time, money and resources, she said.

3. Evaluate professional care options

There are many types of professional care available. If your parent already receives some form of professional care, you should try to determine if they need to adjust their level of services or see where your own caregiving fits in. Here are some of the most common types of professional care:

  • Home health aides provide at-home or onsite assistance with health services including administering medications, changing bandages and checking vital signs. This position does not require medical degrees, but they will have received training.
  • Respite care providers arrange volunteer or paid relief to primary caregivers by temporarily taking over duties. Their services can include health care duties to companionship or household chores.
  • Visiting nurses meet patients in their homes and provide care including medications, treatment or other nursing services. They may work for a hospital, a visiting nurse service or be self employed.
  • Continuing care retirement communities are live-in communities that provide care to residents, including health services, meals, housekeeping and transportation. It’s a costly comprehensive solution for seniors.
  • Assisted living facilities are communities for seniors who do not need medical services but require assistance with everyday activities like dressing, meals and housekeeping. Residents live in their own units but have access to on-call staff.
  • Nursing homes provide 24-hour nursing services for seniors with greater medical needs. You can find short-term or long-term care homes, which tend to have a higher associated cost.
  • Adult daycare centers provide care, companionship, meals and entertainment to seniors during the day.

If your parent doesn’t require professional care just yet, you may want to consider downsizing their home, moving them closer to family or other adjustments to make mobility easier within the home.

Want to learn more about long-term care insurance? Here’s our breakdown.

4. Determine where you fit in

Once you’ve established the level of professional care (if any) your parent will receive, you can determine where you fit into the picture. You should make a list of all the types of assistance you plan to provide. The ways you can support your parent are diverse and may include:

  • Moving them into your home to reduce living expenses and provide daily care.
  • Visiting them in their home on a consistent schedule to help with housekeeping, meal preparation, transportation and to provide companionship.
  • Assisting them with financial matters such as paying bills, working with insurance companies and other administrative tasks.
  • Sorting weekly medications and helping them get to their doctor appointments.

Keep in mind that your parent’s needs may change.The level of care they require could increase over time as they get older, especially if they have a chronic illness or degenerative condition. Make sure you’re considering the long haul.

Help your parent evaluate their finances

If your parent is willing and able to share their financial situation with you, it will help you understand how they can manage to afford care (including your own services if they plan to pay you). There are many factors to consider when it comes to your parent’s finances, including:

Income: How much income your parent receives on a monthly basis, including Social Security, retirement plans or pensions, government benefits and other regular sources of income.
Health coverage: If your parent is under 65 and has health insurance, those policies can help them afford their medical costs. Most seniors over 65 will be eligible for Medicare:

  • Medicare Part A will help cover inpatient care in hospitals, hospices and some home health care. Most Medicare Part A beneficiaries do not pay premiums.
  • Medicare Part B will help cover certain doctor services, outpatient care, medical equipment and preventive services. Most patients pay premiums for Medicare Part B.
  • Medicare Advantage Plans are offered by private companies and provide all Part A and Part B benefits, plus additional coverage including vision, hearing, dental and health or wellness programs. Patients will pay premiums.
    Medicare Part D is prescription drug coverage provided through private insurers (many Medicare Advantage Plans include Medicare Part D). Costs vary by insurer and income.
  • Medigap is supplemental Medicare insurance provided through private insurers to help cover out of pocket health expenses.
  • Medicaid helps people with limited income afford medical expenses like doctor visits, hospitalization and preventive care. Eligibility requirements vary by state.
  • Long-term care insurance is private insurance that covers the costs associated with chronic illnesses and health conditions in old age, such as home health care or nursing home costs (most other types of insurance don’t cover these costs, though Medicare covers them for low income individuals who fall below a certain income threshold). Most people don’t have long-term care insurance plans, but it’s worth asking about.
  • Annuities are insurance products that require an upfront lump sum payment, then pay out income for a predetermined period of time, said Huddleston. “If your parent has annuities, find out when they can be annuitized to start getting regular payments.”

Read more on our Medicare guide.

Evaluate your own finances

When you become a caregiver, chances are you’ll be spending some of your own money. According to the AARP, caregivers spend more than $7,000 per year out of pocket for caregiving expenses, on average. Expenses may include the cost of gas, supplies, food and other purchases you make as you care for your parent. Because of this, you need to evaluate your own finances and look for resources that can help you.

1. Work caregiving into your budget

Create a line item in your budget specifically for care expenses, and make allocations that are reasonable but realistic (if you need help creating a budget, check out our budget spreadsheet template). If siblings and family members are able to provide money or make purchases, work their contributions into the budget as well.

2. Use available financial resources

There are many ways to reduce costs or receive financial assistance for your caregiving expenses. Here are a few:

  • Flexible spending accounts are offered by many employers. FSAs can be funded pre-tax from your paycheck and used to pay for eligible expenses tax-free. If your parent qualifies as your dependent, you can use your FSA to pay for their doctor visits, hospital visits, eligible medical supplies and other costs.
  • Employer benefit packages sometimes offer resources for caregivers. Depending on your job, you also may be able to arrange working from home a few days a week (or permanently) to provide flexibility for caregiving.
  • Medicaid programs in some states will pay qualified individuals, including family members, to provide care. Requirements differ from state to state.
  • Veteran programs, in some cases, allow veterans to receive benefits they can use to pay family caregivers for their care, or provide benefits directly to caregivers. Programs include Veteran Directed Care, Aid and Attendance and Housebound programs and Program of Comprehensive Assistance for Family Caregivers.

Hire a professional

Hiring a professional can alleviate many factors including the health of your parent, your family and career obligations, financial resources and more. Navigating these issues alone is a big deal and a huge undertaking.

There are three types of professionals that can help your parent receive the right care and help you become a caregiver.

1. Elder law attorneys

Elder law attorneys are lawyers who specialize in legal issues surrounding seniors and are a huge help in figuring out care, said Huddleston. They can help draw up personal care agreements, create wills and advanced directives. This will include appointing someone with power of attorney to handle your parent’s financial matters if they become unable to, among other matters.

The National Academy of Elder Law Attorneys has a directory to find lawyers in your area.

2. Aging life care professionals

Aging life care professionals provide holistic, client-centered services to elder individuals, said Barlowe. They can recommend the right level of care for your parent. In addition, they can meet with your parent and listen to their concerns, assess their physical health & mental wellbeing and evaluate their ability to manage their own affairs. They can meet with your parent’s doctors with permission.

Another benefit to aging life care professionals is their ability to discuss finances like insurance and determine the best choice of care based on your parent's resources. They can even talk with your parent’s financial planner to directly assess the ability to afford care.

Barlowe recommends engaging an aging life care professional as early in the process as possible. “If your parent appears to be struggling or having health issues...it might be right to hire someone.”

3. Financial planner/adviser

Finally, if you need help figuring out your finances, you may want to speak with a certified financial planner. These professionals can go over your budget, determine how to allocate your income and help you anticipate future costs.

Protect your job & personal financial goals

At the end of the day, taking on the added responsibility of caregiving for a parent can be difficult to adjust to in our daily routines. It’s important to protect your family as well as your own job and financial goals. Huddleston recommends exhausting all other caregiving options before leaving a job or reducing your work hours to provide care. Stepping away from income will reduce your financial stream and ability to save for your own financial goals like saving for retirement or paying down debt. Leaving a job can also put your health insurance at risk if you are enrolled with your employer.

“Look for alternatives first,” said Huddleston. “Talk with your employer to see if you can work from home or talk your parent into moving in with you. Create a system of volunteers … to check in and see if they need anything.”

Image: MoMo Productions (Getty)