The cost of caring for someone with Alzheimer’s can be astronomical. Doctor visits, specialized testing, in-home aides, and medications can add tens of thousands of dollars to your medical costs. And if there comes a time when you need to go to a nursing home, those expenses will skyrocket. Trying to get a grasp on these costs may be overwhelming, if not frightening, to the average person.
The key to preventing economic disaster is good planning. By planning for the future and tapping into all your available resources, you can spare your loved ones financial hardship. Here are some guidelines from the Alzheimer’s Association:
Talk About Money
It isn’t always easy to discuss money matters, even with the people closest to you. But discussing your financial needs and goals with trusted family members now can avoid problems, conflicts, and mistrust in the future.
Choose a Money Manager
Whether it’s your spouse, a child or a trusted friend who’s a certified public accountant, designate someone to manage your finances when the day comes that you can no longer handle them.
This person will need to know every detail of your financial and legal affairs. Gather your documents and spend a day reviewing them with this person. Important papers include bank and brokerage account statements, wills, living wills, healthcare proxies, durable power of attorney, insurance policies, Social Security payment information, pension and retirement benefit summaries, monthly bills, stock and bond certificates, and any other forms pertaining to money. Inventory your assets, and know the extent of your estate.
Consult a Professional
A financial planner, an elder law lawyer, or estate planning attorney can work with you and your designated money manager to help manage your finances. These professionals can help ensure that your money is properly managed and also identify resources to assist in your Alzheimer’s care.
Look for a professional who has solid credentials, work experience, and educational background. If possible, go with someone who is familiar with elder care and terminal illness issues.
Identify Potential Costs
Having Alzheimer’s is costly. But determining those expenses ahead of time can help you prepare for the future. Write down a list of all potential expenses, such as health expenses not covered by insurance, legal expenses, and future housing. How much will it cost to go to an adult day care? How much coverage do you have for prescription medications? Begin exploring residential facilities now, too, and start researching ways that you can afford these costs in the future.
Sources of Income
Now that you know the expenses involved, take a look at your financial resources. These might include:
Healthcare Coverage
Most people over the age of 65 are covered by Medicare, the federal health insurance plan operated by the federal government. You may also be eligible for Medicare if you’re under the age of 65 and have been on Social Security disability for at least 24 months. Medicare covers inpatient hospital care and a portion of doctors’ fees and other medical expenses. It also covers limited skilled nursing care following hospitalization and limited skilled care at home. But it does not cover long-term nursing home care. For more information about Medicare, check out www.medicare.gov.
Other Health Insurance
If you’re younger, you may have private insurance, a group employee plan or retiree health coverage. If you switch plans, make sure to find out whether the new policy provides coverage for pre-existing conditions. If you stop working or cut back on your hours, you may be eligible for COBRA, which allows you to pay for continued group health care coverage for up to 18, 29, or 36 months. The coverage may be enough to cover you until you find a new plan or become eligible for Medicare.
Disability Insurance
A worker who is no longer able to work may have disability coverage through an employer. If you bought a personal disability policy, you can obtain benefits paid in the amount you purchased.
Long-Term Care Insurance
If you bought long-term care insurance, you may be covered for expenses in a nursing home or other extended-care facility. It also may cover home health care, assisted living facility, and adult day care costs. It is essential to buy sufficient coverage, but long-term care insurance is very expensive and is generally not available to people who have been diagnosed with Alzheimer’s.
Life Insurance
You may be able to borrow from a policy’s cash value or use a portion of the death benefits to pay for long-term care expenses. Some policies may offer “accelerated death benefits,” in which a portion of the death benefits are paid before death if you’re expected to live for only six to twelve months.
Viatical Settlements
In die later stages of Alzheimer’s, you may also consider a viatical setdement. A viatical settlement allows a terminally ill person to reap the benefits of his or her life insurance policy while he is still alive by selling an existing life insurance policy to a third party in return for a percentage of the face value of the policy, which is paid immediately. The buyer purchases the policy, or a portion of it, at a price that is less than the death benefit of the policy. When the seller dies, the buyer collects the death benefits.
For the buyer, viatical settlements are high-risk investments that allow them to invest in another person’s life insurance policy. If the seller dies before the estimated life expectancy, the buyer may receive a higher return. But if the seller lives longer than expected, the buyer will receive a lower return. If the person lives long enough diat you have to pay additional premiums to maintain the policy, a viatical settlement could become a financial liability.
For the seller, a viatical settlement is a source of tax-free income. For more information about viatical setdements, contact the Viatical and Life Settlement Association of America at 407-894-3797 or online at www.viatical.org.