Many of us have read the titillating and tragic story of Sumner Redstone, the former executive chairman of Viacom, and the litigious financial power struggle that has embroiled his family. Redstone’s story was a key influence on the HBO hit series Succession, which involves a lot of money, a pugnacious media mogul, a conniving lover, and children trying to wrest control of the family fortune from a sordid mess. Most of us won’t need to worry about a multi-billion-dollar empire, and our family struggles may appear mundane by comparison. But disagreements over money can and often do prevent families from making the right choices about care.
As crude as it may seem, having financial resources — or not — may determine your available options and the type of long-term care you ultimately receive.
A big shocker for many is that Medicare, the primary insurer for 55 million older adults and people with disabilities, does not typically pay for long-term care services. That includes nursing homes, which can cost over $80,000 per year on average and significantly more in some states. Since the majority of people prefer to age in place, in-home care can be a great option.
The tough reality is that many people — unless you’re Succession’s fictional mogul, Logan Roy — aren’t rich enough to afford the staggering cost of long-term care, but don’t qualify for Medicaid, either. That was the case with my father, who spent six years in two different nursing homes. If you are among the “in-betweeners,” you’ll need to be resourceful because care is expensive. There’s a lot to learn — and what you don’t know can hurt you.
Now that boomers are turning 65 at a rate of 10,000 people a day, it may be time to worry about what comes next. Seventy percent of Americans over age 65 will need some form of long-term care support during their lifetime. Although most won’t end up in nursing homes like my dad, many may need in-home care at some point. The average cost of a paid in-home caregiver is $22 per hour, which can add up quickly. My devoted mother cared for my father at home for six years — until she couldn’t anymore. She was among the roughly 40 million family caregivers who provide the vast majority of unpaid care in this country, valued at $470 billion annually. And most family caregivers are digging into their own pockets to pay for care too.
According to Harry Margolis, a seasoned elder law attorney in Boston, people tend to think about wills and estate planning when their children are small, then not again until they’re considerably older. Should something happen to my husband and me, I don’t want our kids sorting it out on their own. So we told our three adult children it was time to have the “What if?” conversation. We discussed difficult topics like end-of-life care and nursing homes. We asked them not to fight over the beach house, and we talked openly about money — at least, what’s left after all their college tuitions. We designated our oldest son as our durable power of attorney, giving him authority to make financial and health-related decisions should we both become incapacitated.
The alternative is — as the Roy family learns — chaos. When families avoid the topic entirely, decisions tend to be made with urgency. And if you’re the child talking to a parent about money, don’t be surprised if an inquiry into your mother’s bank account is met with resistance. Doing your homework beforehand may help.
Here’s a few things you’ll want to learn about:
Medicare and Medicaid
Get them straight—they’re often confused, and the similarity of their names doesn’t help. Despite the large reach of both these programs, when it comes to paying for long-term care, there is a lot of confusion. Medicare is a federally-funded insurance program for people aged 65 and over and those under 65 with certain disabilities, regardless of income.
It has four parts:
Part A: hospital, limited home health and hospice coverage
Part B: medically necessary doctor visits, outpatient services and medical supplies
Part C: Medicare Advantage Plans offered by private insurers
Part D: optional prescription drug coverage
Medicaid is funded jointly by states and the federal government, which means that rules vary depending on where you live. Medicaid is also the largest funding source for long-term care in nursing homes. But unlike Medicare, which covers everyone regardless of income, Medicaid is for people with low incomes, who typically have no more than $2,000 in “countable” assets. This is where things get tricky: There are some assets that count and some that don’t. Planning years ahead with the help of an elder law attorney can make a big difference.
Long term care insurance
Long-term care insurance is essentially a pot of money that you can use when you need it, according to the policy’s guideline. It’s a type of private insurance that provides limited coverage (often after an initial waiting period) for long-term care. Prices vary depending on the type of plan as well as the age and health status of the policy holder. My father was fortunate to have a long-term care policy that helped defray the cost of a private nursing home at a rate of $90,000 per year.
Veteran’s benefits
The U.S. Department of Veteran’s Affairs offers long-term care benefits to eligible veterans who are either homebound or require assistance with their activities of daily living. You can learn more about the different benefits and eligibility requirements by going to the VA’s website https://www.va.gov/ . After my father spent three years in the private nursing home, my mother was worried that she would run out of money to pay for Dad’s care. It was a bit of a bureaucratic slog to apply for veteran’s benefits, but it paid off. We were able to move my father to the local Soldier’s Home at a fraction of the cost of the private home, where he was well cared for during the remaining three years of his life.
Talk about money
You don’t want to be figuring out a strategy to pay for care after there’s been a crisis — just ask Logan Roy’s children. While delicate discussions about money can be uncomfortable, it’s precisely these candid conversations that enable family caregivers to chart a pragmatic course based on realistic options. It’s best to bring up money as part of a series of conversations about planning ahead — for better and for worse. Even if your father is hale and hearty, he’s likely to need help one day. And that help costs money.
Recently my sister, brother and I decided it was time to understand more about my 89-year-old mother’s finances. We broached the topic with Mom and she was all in. Within the month, we plan to sit down with mom and her financial planner to understand more about her estate. We want to make sure she has enough funds available should she need long-term care and figure out how best to divvy things up when the time comes. No, it’s not fun to think about this. But it’s a much better option than sorting things out in the midst of grief.
The good news is that you and your family can come up with a game plan before a crisis erupts. Remember the Scout’s mantra: Be prepared! Understanding what is or is not covered by insurance, how much money—if any—your parents have stocked away, or whether they have long-term care insurance or Veteran’s benefits, can make the difference between chaos and clarity. Even if you have all the money in the world, both real-life and fictional billionaires still run into problems. Learning the landscape of senior care and coming up with a plan ahead of time will enable you to approach caregiving with forethought and compassion — no matter what the cost.
Jody Gastfriend is the Vice President of Senior Care at Care.com and author of “My Parent’s Keeper: The Guilt, Grief, Guesswork and Unexpected Gifts of Caregiving.” Follow me on twitter.
