Dear Carrie: My friend’s 90-year-old mother was just diagnosed with early stage dementia. Unfortunately, she never provided any written or verbal guidance about her wishes for care, so my friend finds herself in a very tough spot. I want to make sure this never happens to me or to my loved ones. What do we need to do to prepare? — A Reader
Dear Reader: Contemplating the possibility of dementia is tough, whether you’re talking about yourself or a loved one. We want to think that it only happens to the very elderly, someone in their 90s such as your friend’s mother. And so we put it off. But according to the “2014 Alzheimer’s Disease Facts and Figures, Alzheimer’s & Dementia” report by the Alzheimer’s Association, one in nine Americans age 65 or older have some form of dementia. And the annual number of new cases of Alzheimer’s and other dementias is projected to double by 2050. It’s scary. It’s sobering. And to me, it means there’s a real need to confront this possibility — and prepare for it — when we’re young and clear-headed enough to look at financial and healthcare decisions from a practical as well as an emotional perspective.
Your friend’s situation is a heartbreaking example, and you’re very wise to take steps now to prevent this from happening to you and your family. But no matter how forward-thinking you are, it won’t be easy. You may be willing to face the possibility of incapacity, but others may not be so comfortable with the idea, either for you or for themselves. So you may have to tread gently. Here are some thoughts on how to go about it.
Think Realistically About Care Options
Exploring care options for someone with dementia is more of a challenge than with other diseases. That’s because, while there is certainly the need for doctor’s visits and medications covered by insurance, a lot of the care required by people with Alzheimer’s or other forms of dementia involve more personal care, called the activities of daily living (ADLs). Where do you turn for help with eating, bathing, dressing or just making sure you don’t injure yourself? These things aren’t generally covered by health insurance.
Again, according to the report from the Alzheimer’s Association, unpaid caregivers such as family members provide billions of hours of care. Professional care is available, such as assisted living, in-home care or adult daycare centers, but the costs can be a challenge. For instance, basic assisted living services average about $42,000 per year according to alz.org as of 2015. And that’s just the estimated average. I recently spoke with someone who was paying $12,000 a month to have both parents in assisted living with full care.
Your own family and financial circumstances may well determine what care might be available to you or to a loved one. But whether you’ll have to rely on professional assistance or you have a supportive family network that can provide help, be aware that you’ll be dealing with potentially significant emotional as well as financial costs.
Plan for the Financial Side
There’s a whole list of costs you may have to deal with from ongoing medical care, to home safety related expenses to full residential care.
Most insurance policies don’t cover nursing home care or help with ADLs. And while Medicare covers some skilled home health care such as skilled nursing care, long-term care isn’t covered. Medicaid is a possible solution, but it’s only available when an individual has depleted most of their personal assets.
Unless your family has significant assets to self-insure, you may want to look into long-term care insurance. Here, too, you have to be cautious. Not every LTC policy covers Alzheimer’s. And you want to make certain that a policy covers things like assisted living, skilled nursing home care and licensed home care.
There are, of course, other financial options. People with a lot of equity in their homes may see that as a potential source of funds. Others may max out a health savings account (HSA) every year and keep it in reserve for this type of care. Your retirement funds can also be a significant resource.
Put Your Paperwork in Place
Basic paperwork includes an advance healthcare directive, power of attorney for healthcare, a will and/or trust, and a durable power of attorney for finances. You’ll find more specific information on legal documents for someone who’s incapacitated at alz.org.
There’s no one solution for every family. But thinking about it and planning ahead is something everyone should do. It also would be a good idea to consult with your financial advisor about the best way to prepare financially given your personal circumstances. I applaud you for being willing to tackle this very difficult subject.
Carrie Schwab-Pomerantz, CERTIFIED FINANCIAL PLANNER ™ is president of the Charles Schwab Foundation and author of “It Pays to Talk.” You can e-mail Carrie at email@example.com.