This material was prepared for John Evans, LPL Financial Advisor, use.
Many baby boomers are finding that their aging parents are in need of health care assistance. Luckily, there are many options available today to help your parents grow old gracefully, either in their own home or in a facility, and several ways that you can finance the costs of the care.
Research your options
If your parents are healthy seniors who can look after themselves, they generally are eligible to enter a continuing-care retirement community that allows them to buy or rent an apartment and ensures them lifetime nursing care when it is necessary. Another option for healthy seniors is private long-term care insurance, which can help cover nursing home costs or the cost of an in-home aide.
There are a wide range of services and options available if your parent needs more substantial assistance and is not eligible for the above-mentioned services. Many families opt for moving an aging parent into their own home. However, if sending your parent to a nursing home is inevitable, make sure you research each home extensively. In addition, the government offers little in financial help for those families paying for nursing home care. As a result, financial planning has become even more crucial to the economic well-being of adult children responsible for the care of their elderly parents. Don’t wait until the last minute — start planning now to ensure the future care of your parents.
Maintaining their own home
When living together is not a workable plan, maintaining your parent in his or her own home is also an option. There are, however, several fairly expensive things that may be required to make a home environment safe and suitable for an aging person. Various safety features may be necessary, including first-floor bathrooms, grab bars in hallways and bathrooms, and a personal emergency response system in case your parent needs assistance while alone. If your parent is in need of daily assistance with meals or chores, he or she can apply for several services such as Meals on Wheels, which may be free for anyone over 60. If your parent needs more personal assistance, you may want to look into hiring an in-home aide at a skill level appropriate for the amount of help needed.
Medicare will only pay the full cost of professional help if a physician certifies that your parent requires nursing care and if these services are provided by a Medicare-certified home health care agency. Adult day care is also an option and a good way to get your parent to socialize with other adults. Prices for day care can cost up to $100 a day or more, depending on the amount of attention and activities provided, and reduced rates may be offered for those who can’t afford the full charge. Call your local senior services groups and agencies to find one of the thousands of nationwide day care centers that may match your needs.
Financing long-term care
One of the biggest worries of those caring for an aging parent is how to pay for the care needed. If you provide more than half of a parent’s support and his or her gross income is less than $3,800, you can claim your parent as your dependent, giving you a tax exemption for each parent so cared for and allowing you to write off much of the medical expenses. (Note: The dependent exemption phases out at higher income levels. Check with your tax advisor.) You may also be able to claim a federal tax credit that will enable you to take up to $3,000 off the cost of in-home care or day care. Another option is the flexible spending account (FSA), which lets you pay for a certain amount of care each year with pre-tax dollars.
If sending your parent to a nursing home is inevitable, make sure you research each home extensively. Reservations at the home selected should be made at least a year ahead of the time that you expect your parent will need it, as waiting lists are typically long at well-respected facilities. Keep in mind, too, that the government offers limited financial help for those families paying for nursing home care. Medicare will only pay for care on a short-term basis, and Medicaid only offers benefits to low income individuals with limited assets. And, with the average nursing home stay costing upwards of $90,000 per year, financial planning has become even more crucial to the economic well-being of adult children responsible for the care of their elderly parents. Don’t wait until the last minute — start planning now to ensure the future care of your parents.
There are many resources that can help you by providing valuable information and referrals. In addition to the resources listed below, your place of worship, local hospital, and senior services groups and agencies may also be helpful.
- LeadingAge (202-783-2242) offers information on how to choose a nursing home or assisted-living facility, a directory of continuing-care retirement communities, and information on long-term care insurance.
- Family Caregiver Alliance (415-434-3388) offers information for caregiver concerns, newsletters, fact sheets (English, Spanish, and Chinese), and an online support group.
- The National Alliance for Caregiving is a national resource center that provides information on elder-care conferences, books, and training for professionals.
- National Association of Area Agencies on Aging (202-872-0888) is an advocacy group for local aging agencies.
- The Eldercare Locator (800-677-1116) is a public service of the U.S. Administration on Aging service that puts you in touch with local services for older adults and their families.
Points to Remember
- As the population ages, many baby boomers may be called upon to care for an aging parent.
- There are a range of options available to senior citizens, depending on their circumstances and the degree of care they require, including continuing-care retirement communities, moving a parent into the child’s home, or modifying a parent’s home to make it safe.
- Certain tax breaks may be available if you can claim your parent as a dependent.
- Research all your options, and consult the various resources available for the elderly.
John Evans is a LPL Financial Advisor at MidWestOne Bank. He specializes in investments and retirement planning.
MidWestOne Bank and MidWestOne Investment Services are not registered broker/dealers and are not affiliated with LPL Financial.
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