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|How To Plan The Legal And Financial Needs Of A Loved One With Dementia|
If you have a loved one who has been diagnosed with Alzheimer's or dementia, there are certain things that your family needs to plan for both legally as well as financially. Alzheimer's disease is the sixth leading cause of death in the United States as of 2018, and currently, there is no cure.
If you care for a loved one who has Alzheimer's or dementia, you know that it can be trying, difficult and expensive. For example, currently, the average cost of a private room in a nursing home is estimated at over $7,500 per month. The question becomes: how do we pay for long-term care if we have a loved one diagnosed with Alzheimer's or dementia?
If you have a loved one who has recently been diagnosed with Alzheimer's or dementia, there are three main disability documents that should be in place. First, a financial power of attorney is necessary. This is a document that appoints someone to make financial decisions if the individual is unable to make their own decisions. Next would be the medical power of attorney document that appoints someone to make medical decisions for the incapacitated individual. Last is a document that instructs the financial and medical power of attorney on how best to care for the person who needs care. This document is a personal care plan. With these three documents in place, there is now a foundation to make decisions for the person diagnosed with Alzheimer's or dementia.
With that foundation in place, the next step is to identify how to pay for the devastating cost of long-term care. There are six main ways to pay for long-term care, so it is up the family to best determine how to use the following options.
1. A family can privately pay for long-term care. In other words, they can use their retirement accounts or savings, sell real estate, etc., to fund care. This is where most families start, but they certainly don't want to depend on it.
2. Families rely on their children to pay for long-term care. Often, the kids do not financially pay for long-term care, but they often pay for long-term care by using their time. Everything in life is time or money, and the children typically either take time to visit the certified elder law attorney to help create a plan of care or put their life on hold to become a full-time caregiver.
3. Make use of long-term care insurance. There are now new forms of long-term care insurance that do not have the escalating premiums of pure long-term care policies and also provide a death benefit should the individual never need long-term care. The key to long-term care insurance is that it needs to be set up ahead of the Alzheimer's or dementia diagnoses.
4. Another way to pay for long-term care is through Medicare -- but to be honest, Medicare does not actually pay for long-term care. What Medicare pays for is short-term rehab when there is some type of event, such as a broken hip. Medicare also pays for hospice, also known as end-of-life care, which is important for families that have loved ones diagnosed with Alzheimer's or dementia. For more information on what Medicare will and won't pay for visit Medicare.gov.
5. Families of veterans can make use of the veterans benefit, more specifically the non-service-connected pension, which is sometimes called the aid and attendance benefit. This VA benefit can provide an additional $1,000-$2,000 per month to help pay for long-term care for veterans and surviving spouses of veterans.
6. Finally, Medicaid may help pay for the cost of a nursing home. However, there are certain requirements to qualify for Medicaid, including an asset test that varies by state, as well as a look-back period to see if a family has moved any money around. One of the strategies to help pay for long-term care and use Medicaid would be utilizing an asset protection trust, such as a Castle Trust, as a way to shelter assets and protect against the Medicaid or nursing home spend-down.
If you have a loved one who has been diagnosed with Alzheimer's or dementia, it is important to set up disability documents to be able to make medical and financial decisions. Once the foundation of decision making is handled, the next step is to consider the type of care that will be necessary, including how best to pay for that care.
This article was first published on Forbes on February 25, 2019: https://www.forbes.com/sites/forbesfinancecouncil/2019/02/25/how-to-plan-the-legal-and-financial-needs-of-a-loved-one-with-dementia/#254697815090
Founder of The CJ Berry Group & The Elder Care Firm. Wealth, Estate and Tax Planner helping good families protect what's important to them.