Caring for Your Parents: Key Financial Concerns

Many Americans are getting a firsthand look at the impact of an aging population right in their own families. A growing number of adults are finding themselves looking after aging parents, and for some, the transition isn’t always smooth. After all, it can be difficult to think of a time where you may need to care for the ones who raised you. For many families, discussions on who will manage the welfare of Mom and Dad often come too late or in the aftermath of a crisis.

So what steps can you take now to ensure your parents are protected?

Caring for Parents Key Financial Concerns

Open the Lines of Communication

For a lot of families, the conversations centered on level of care don’t take place between parents and family members until it’s too late and crisis sets in. Generational differences, along with cognitive issues like dementia, can often create conflicts between parents, family members and health care providers. For instance, parents may have strong feelings regarding how they prefer their care to be handled, while other family members may struggle with what they feel are better solutions for them. We’re also living in times where the availability of family members is more limited due to the two wage-earner dynamic, and most families do not live close to each other, as was the case in the past.

Taking all of these factors into consideration, starting the conversation and planning for your parents’ care well in advance become all the more imperative. Sit down with your loved ones to see how you can help with their housing, financial and medical needs. Broach the topic carefully and engage them in the process. Having these conversations is far from easy, but the payoff of developing and knowing there is a care plan in place can outweigh the difficulty.

Carefully Research Housing and Payment Options

Seniors generally have three, primary options for how they’ll receive care in retirement: at home, in assisted living or in a nursing home. All three options have various quality-of-life benefits, outcomes and payments.

Though Medicare is the primary funding source for health care in retirement, it doesn’t completely cover assisted living or nursing home expenses. This is often where the issues arise: when seniors and their families haven’t planned for the appropriate level of care or budgeted for the potential costs in advance. The key is for the senior, along with the family or caregivers, to discuss and weigh all of the options early on.

With regard to assisted living, the following are several locations seniors can explore to learn what options are available and most suitable for their situation:

— Family members, friends and neighbors

— State or local senior agencies, such as the Area Agency on Aging (AAA)

— State licensing agencies

— National agencies, such as the Assisted Living Federation of America (ALFA) or LeadingAge

It’s important to keep in mind that assisted living residences are not defined or regulated by the federal government; licensing is handled at the state level. Therefore, practice due diligence in researching state and local agencies or state health departments on the status of licensing and any history of complaints.

If your parent(s) decides to consider nursing home options, keep in mind that two-thirds of nursing home residents pay for their care by Medicaid, according to AARP.1
Medicaid will only cover nursing home costs for organizations that are certified by the government, so be sure to factor this into care planning.

Believe it or not, all seniors need to consider financial and lifestyle planning, even if they are well into their retirement.

It is important to weigh out the potential options of care and decide what is realistic based on your parents’ financial situation.

Protect Against Fraud and Identity Theft

While the majority of health care professionals and providers working in Medicare-related fields are honest, there can be exceptions. The most common fraud occurs when Medicare services are billed and never provided. As with any financial transaction, it’s important for your parents or a family member that holds a financial power of duty on their behalf to review all statements for health care services. You can also contact their health care service provider to review these statements. If he or she is under original Medicare, you can review Medicare claims at MyMedicare.gov or dial 1-800-MEDICARE (1-800-633-4227) to report any potential errors.

In addition to Medicare fraud, another financial risk to seniors is identity theft.
Recent studies indicate that people age 55 and older are most vulnerable to identity theft. Seniors, along with their appointed financial and health caregivers, need to be aware of common privacy threats and ensure they have a personal security plan in place. If the senior is not mentally or physically able to act diligently, his or her appointed financial agent (a power of attorney for financial matters) should take steps to secure and review their financial information and report any questionable activities.

Plan for the Unexpected

At the end of the day, the respect and dignity deserved by our aging parents must be the first priority in assessing appropriate care. Getting the conversation started and working out a plan of action requires the patience and support of the senior’s children or other key advisors. It’s very common for a senior to not openly discuss his or her personal health care and financial situations, including potential consequences of the unexpected. However, proper planning and communication will help all parties work together in harmony and in the senior’s best interest. Seniors who have not been able to work out a plan run the risk of their quality of life diminishing, and they may be unable to live out their later years the way they want to.

To ensure your parents are prepared to navigate these risks, it’s important to bring in their appointed agents (by way of powers of attorney, durable financial power of attorney or health care power of attorney) and gather a team of family members and friends (from work, organizations, church or associations) to collaborate on planning for health care. Since there are a lot of emotional and financial challenges associated with health care delivery, no one person should be burdened with the responsibility alone. Once you have opened the lines of communication, developed a plan and put emotions aside, health care options and costs can be properly balanced to best serve your parents.

As our nation’s population ages, the need for open communication and planning for our seniors is essential so they’re provided with the level of health care they want and can afford. With proper planning, due diligence and the help of an experienced advisor, you can feel confident knowing your parents are properly cared for and able to live out their retirement the way they have always envisioned.

 

Hewins Financial Advisors, LLC d/b/a Wipfli Hewins Investment Advisors, LLC (“Hewins”) is an investment advisor registered with the U.S. Securities and Exchange Commission (SEC) under the Investment Advisers Act of 1940. Hewins is a proud affiliate of Wipfli LLP. Information pertaining to Hewins’ advisory operations, services and fees is set forth in Hewins’ current Form ADV Part 2A brochure, copies of which are available upon request at no cost or at www.adviserinfo.sec.gov. The views expressed by the author are the author’s alone and do not necessarily represent the views of Hewins or its affiliates. The information contained in any third-party resource cited herein is not owned or controlled by Hewins, and Hewins does not guarantee the accuracy or reliability of any information that may be found in such resources. Links to any third-party resource are provided as a courtesy for reference only and are not intended to be, and do not act as, an endorsement by Hewins of the third party or any of its content or use of its content. The standard information provided in this blog is for general purposes only and should not be construed as, or used as a substitute for, financial, investment or other professional advice. If you have questions regarding your financial situation, you should consult your financial planner, investment advisor, attorney or other professional. Hewins does not provide tax, accounting or legal services.
Pat Brault
Pat Brault

CPA, CTFA | Principal, Regional Director

Patrick Brault, CPA, CTFA, is a Principal and Regional Director for Wipfli Hewins Investment Advisors in Minneapolis, MN. Patrick focuses on comprehensive financial planning and investment management for business owners, retirement plans and foundations, as well as advanced planning for seniors and family caregivers.

No Comments Yet

Comments are closed

Caring for Your Parents: Key Financial Concerns

time to read: 5 min