Helping an elderly parent find appropriate care and figuring out how to pay for it can be an overwhelming job. Fortunately, help is available.
Area agencies on aging can help you select an elder-care facility, refer you to home care and other community-based resources, or help you figure out if your parent is eligible for medicaid. You can find the appropriate agency via the Eldercare Locator or by calling 800-677-1116.
The National Reverse Mortgage Lenders Association provides a reverse-mortgage calculator that will tell you how much cash flow your home could generate, based on how much equity you've accrued, and the house's age and location.
It's a dilemma for the ages. As Depression-era elders reach their declining years, their baby-boomer children worry that their parents will run out of money before they run out of years. Even supplemented by social security and pension payments, the nest egg that your parents took a lifetime to build isn't likely to be enough to cover an extended stay in a nursing home or assisted-living facility. Few seniors carry long-term-care insurance to cover the bills. At nursing homes around the country, most people go through their assets within a year, warns Charles Johnson, director of the Illinois Department on Aging.
Your impulse to ride to the rescue is likely to be held in check by the need to pay the mortgage, save for your own retirement and maybe put your kids through college. So, what are your options when Mom or Dad runs out of money?
The safety net
Just a year after her husband died, in 1999, Mary Cruice suffered a cerebral hemorrhage that left her needing round-the-clock nursing-home care. Now 89, she's in a chronic vegetative state. Her daughter, Maggie D'Alesio of Drexel Hill, Pa., drew down her mother's $100,000 in savings (mostly from the sale of the family home) to pay the bills. It was gone in less than three years.
D'Alesio is an only child -- there are no siblings to share the burden. And she and her husband, Rudy, have five children of their own -- three still at home. She's a nurse, Rudy is a police officer. There was little choice but to start filling out paperwork for medicaid, the government program that provides health care for the poor. Now Cruice's social security and her late husband's pension pay about half of the $5,000-per-month cost; medicaid covers the rest, with a tiny allowance ($10 per month) for personal expenses.
To get that help, D'Alesio spent three months navigating a bureaucratic maze to prove to the government that her mother was essentially impoverished. To qualify for medicaid, nursing-home residents must usually show no more than $2,000 in assets. Aside from gathering checking- and savings-account statements, and showing that investment accounts had been depleted, D'Alesio had to track down a 70-year-old life-insurance policy to prove that it had been cashed in. "It was a nightmare of paperwork," she recalls. "Whatever my mother had in 2000, I had to show where it went in 2001 and where it was in 2003 when she went on to welfare."
Under the rules, a small slice of Cruice's assets were protected: modest bank accounts for two grandchildren and one great-grandchild. Generally, the state can't touch money you've given away more than three years before you enter a nursing home. But a misstep cost Cruice's oldest granddaughter half of her $10,000 account. When the granddaughter turned 21, Cruice changed the account to joint ownership. That allowed the state to claim $5,000 of the money for nursing-home costs. "In hindsight, I should have gotten a lawyer who specializes in geriatrics," says D'Alesio.
If you do hire a lawyer to help with medicaid eligibility, insist on an elder-care specialist. "Many times I have seen people who have not gone to an attorney experienced in elder care and medicaid, and they have been given bad advice," says Renee Slifkin, a medicaid-eligibility manager for Genesis HealthCare Corp, which operates about 200 elder-care facilities in the eastern U.S.
What if Mom is in a nursing home and Dad still lives at home? In addition to the family home, he can keep up to about $93,000 in assets (rules and exact amounts vary by state). He's also entitled to monthly income that ranges from about $1,500 to $2,300. Any income above that goes toward the cost of Mom's care.
If Mom is the sole occupant of the house and moves to a nursing home, she might eventually be expected to sell and use the funds to foot nursing-home costs, if it's clear she won't be returning home. More often, the state will wait until she dies or the house is sold to exercise its right to tap proceeds of the sale for reimbursement of nursing-home costs.
In addition to one's home, many states exclude IRA assets from the medicaid-eligibility test if you are taking required minimum distributions each year. You will, however, be expected to use those withdrawals toward nursing-home expenses. In California, "it's possible to have a million-dollar home and $800,000 in an IRA and still qualify for medicaid," says Ruth Phelps, an elder-law attorney in Pasadena.
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