Having enough money to take care of mom is one of those things that’s always in the back of my mind. Right now, we’re in a good place but as her needs increase it’s going to start getting a little tight financially. I have investments in place along with savings but there may come a day when what she needs exceeds her retirement income and I’ll have to start tapping into those accounts. Yes, that’s what they’re there for but they aren’t bottomless; of course, I’ll make it work but it still makes me nervous.
All things considered, we’re lucky that we live in a state where assisted living costs are not as expensive as some. Here’s a breakdown of the $3,948.80 we’re currently paying a month:
Room and Board - $2,930
Tier 2 level of care - $960
Art council - $20
Cable TV - $25
Oklahoma sales tax (8.625%) - $13.80
The National Center for Assisted Living reports that more than 800,000 Americans are now residing in assisted living facilities, and that number is growing. The average median cost for an assisted living apartment in the United States is about $3,700 per month and the majority of residents are age 85 and older. If a resident needs to live in a memory care facility, you can expect to pay $600 - $1000 more per month.
Prices can vary widely nationwide and within the same state. Alaska is one of the highest with an average monthly cost for assisted living of $6300 per month. Just for fun, I looked at the average cost for Illinois, where my mom lived before we moved her here, and it’s $4030. From where she lived, Missouri is about 15 miles away and the average monthly cost there is $2844 which is one of the lowest in the United States. That $1,186 difference is huge, especially as the costs go up as the level of care increases. I found this state to state guide on the average cost of assisted living interesting; I had no idea the cost could vary as much as it does but from all I’ve learned so far, it’s not surprising.
When it comes to having to pay for assisted living, there are a few things to consider. Retirement, personal savings, and other assets are where the funds will most likely come from but there are some other options, a few of which I’ve listed below. Remember, your financial advisor is one of your best allies and adding in an elder law professional can’t hurt.
Long-term care insurance is an option but do your homework before purchasing one of these policies. You’ll need to make sure you can afford the premiums and understand the stipulations of the policy, such as exclusions for addiction and mental illness. Other illnesses such as heart disease or Alzheimer’s may be excluded from the policy along with certain types of cancer. Also, there is a chance you may never need the benefits of the policy and should your ability to pay the premiums stop, you’ll most likely lose coverage along with what you’ve paid in. For more information, go to AARP's page on long term care insurance.
Veterans Aid and Attendance benefits can be used by veterans who are 65 or older and their surviving spouse; if the veteran is under 65 he or she must be totally disabled to qualify. In addition, the veteran must have served at least 90 days on active duty with at least one of those days being during wartime. There is a net worth limit and an investigation into finances over the three years prior to application along with several conditions that must be met. Go to the U.S. Department of Veterans Affairs site and the Senior Veterans Service Alliance for more information.
Life insurance. You can use your existing life insurance policy to receive benefits before death through an accelerated death benefit (ADB) in which the insurance company “buys back” the policy. This benefit may be included in the policy or may need to be purchased as a rider and the buy back percentage can vary from 25% to 100%. The ADB is usually tax exempt if life expectancy is less than two years; however, receiving this benefit may affect Medicaid and SSI eligibility. For more in depth information, go to Investopedia's page on ADB.
Annuities purchased as an up front lump sum payment can provide regular payments to the annuitant for a predetermined amount of time which could be the rest of your life even if the amount paid in is exhausted. If it is allowed in your state, an irrevocable annuity can be helpful if you or your spouse needs assisted living and you want to qualify for Medicaid but your assets are over the maximum resource allowance. There is a lot of information to consider before taking this route and I would strongly urge you to consult your financial advisor and an elder law attorney before making any commitments. ElderLawAnswers has a page that describes using annuities as a Medicaid planning tool.
I have a piece of advice to share that I learned the hard way. If you are in charge of paying for your family member’s expenses make sure you look at the invoice every single month. I used to have an automatic draft set up so I didn’t have to worry about writing a check for mom’s care and rent every month; I usually looked at the bill when it showed up in my email just to make sure everything was as it ought to be and it always was. However, somehow I got distracted or busy and for a few months I didn’t look, I just assumed things were going along as they always had. That is, until I got an overdraft protection notice from the bank. I couldn’t imagine what had happened since, at that time, mom’s expenses were well below what she had coming in every month. I went back and looked at mom’s last few months of invoices and I couldn’t believe what I was looking at - her expenses had climbed exponentially to almost $6000 a month.
I called the business office at mom’s and we finally figured out there was some kind of glitch in whatever billing system they were using. Easy enough to fix but here’s where the horrifying part comes in; I was told that if I hadn’t caught the mistake it would have kept on happening, to the point of potentially wiping out everything mom has. No one was checking to make sure the monthly statements were accurate, they were just generated and hopefully paid. What happens to the people who have no one to advocate for them?
Mistakes don’t just happen with living expenses, they happen with medical costs, too. So far mom’s physical health is better than mine so medical billing hasn’t been a problem. I’ve had issues with my own medical bills - I can’t imagine how much money is made from people who don’t know what to look for, don’t know the laws concerning preventative care, and don’t know that it’s ok to ask a question and ask again if they believe what they’ve been told is wrong.
As we age things like taking care of ourselves and our parents, along with handling Medicare and Medicaid can start to seem like a full time job and it can be exhausting. Make sure you have trusted professionals on your side and people you can turn to who have your best interest at heart. No one should tackle this kind of stuff alone.