On my drives to visit my mom at her assisted living home in Petaluma, California, I reflect on how lucky my siblings and I are that she is comfortable and well cared for and that my parents were vigilant savers. Mom will be 91 in July. She voluntarily moved into an assisted living home in the fall of 2005 after a bad bout of pneumonia. She had a friend who lived there and we all thought this would be an opportunity to see if this type of living situation would work for mom.
At that time, she was living alone in our family home in the Sunset District of San Francisco. My parents bought the house in 1958 for a song and had paid off the mortgage years earlier. She probably caught pneumonia because she would fail to turn on the heat and also forget to eat. It was a combination of losing her short-term memory and frugality that did her in. She lost a lot of weight and we realized she probably couldn’t live on her own anymore.
My mom bought a long-term-care policy in late 2000 when she was 78 years old. This decision surprised us all because the annual premium was $5,150. But she did it, she says, because she didn’t want “you kids” to have to pay for her care in old age. She purchased a basic policy with a daily maximum payout of $100 and a lifetime maximum payment of $146,000 with no inflation protection and a 90 day deductible. With the cost of healthcare as it is, this isn’t very much money, but she wanted some protection for her assets and she couldn’t afford a higher premium.
As it turns out, it wasn’t a bad decision. Mom qualified to use her policy in January 2006 right after moving into the long-term-care facility. She couldn’t independently perform several activities of daily living (ADL’s) and senility was starting to set in. She had paid premiums of $25,170, but over the course of the next 4½ years, the insurance company paid $146,000 costs not a bad deal. When the policy dollar limit was reached, she started to pay 100% out of her own assets again.
During that time, my mom experienced her share of senior mishaps: falling, breaking bones, more bouts with pneumonia, and one scary incident involving septic shock and months in a rehab facility. In addition, she had a pace-maker installed. She also moved to a new assisted living home in Petaluma to be closer to three of my sisters and to enjoy a warmer climate.
My mom has thrived in the assisted living environment not because she loves the place – she often asks about “414 Rivera” (our old family home), but because she is getting really good care, is eating three balanced meals a day, can participate in activities, and has someone to make sure she takes her pills. She went from 100% mobility, to grudgingly using a cane, to a walker, and she now occasionally has to use a wheelchair as her body slows down. Since 2006, her costs of care have gone from $2,495 to $7,700 a month due to increases in levels of care and additional services.
A couple of months ago, her doctor recommended she start hospice care and visits with her now are bitter-sweet. My siblings and I are grateful for the hospice care with its goals of improving the quality of a patient’s last days by offering comfort and dignity. And indeed they do.
What Can You Do?
My mom’s story is not unusual. Many of us are dealing with aging parents and their needs. We can all learn from each other to make this part of our lives go as smoothly as possible for our parents and for ourselves.Here are some key things to think about and research as your parents age:
- Do you know your parent’s financial situation and whether they’ll be able to pay for assisted living or nursing care themselves? If not, what are the options?
- Do your parents have a long-term-care policy? If so, become familiar with the terms and conditions, since you may have to be an advocate for your parents when the time comes.
- Find out about long-term-care insurance – there are more options now (such as hybrid policies) that combine the benefits of an annuity or life insurance agreement with long-term-care contract. The decision to buy long term care insurance depends on individual circumstances as it is expensive and the industry is less than stable. But it is worth looking into as your circumstances may warrant the expense. Here are some tips to think about as you do your research:
- Like my mom, consider a short-term plan that limits coverage to three to five years. This will ease costs rather than cover them completely. Short-term policies are cheaper and can cover most long-term care situations.
- It’s best to buy long-term care insurance way before you need it. Premiums are cheaper and you are less likely to be turned down due to health reasons.
- Review your own financial situation. If necessary could you help support your parents if necessary? Could other family members?
- Do your parents have a durable power of attorney for finances and for healthcare, and a living will? If not, you will want to make sure they they do. These documents dictate who handles the financial affairs after your parents can no longer do so themselves. They also clarify who will make healthcare decisions on behalf of your parents and the parameters for care at the end of life.
Give yourself some peace of mind with advance preparation and planning. You will be glad you did.
More tips and resources are in these articles:
Should You Purchase Long-Term Care Insurance? Wall Street Journal
A New Way To Pay For Long-Term Care Insurance With Favorable Tax Treatment. Michael Kitces, A Nerd’s Eye View.