I have a friend, Beverly, who has an 80-year-old father, who lives 2 hours from Bev. Her dad went to a public health screening because all of his friends were doing it. The next day he got a call from the free clinic staff saying “Go see your doctor as soon as possible”. He was flagged with a serious health issue, and 24 hours later he was in major surgery. He may very likely not be able to be at home again. Now what?
As bad as this situation is… it is actually worse. Bev’s dad worked in education and has a small pension, no social security, and little savings, and has a home that is upside down financially. My friend Bev is in a bind she wants to help but does not know what to do. She is an intelligent person who wants and needs to do something to help fix the situation. She also has the financial ability to help out her dad but should she? The question is what to do and what not to do from an estate planning point of view.
Two perspectives need to be addressed: care and finances.
Care
The most important aspect is that dad gets the best care possible. When our loved ones start the decline there is a system in place to help evaluate and assess their ability to be home in a safe manner. There is a person from the county Jobs and Family Services Office who can be scheduled to come to Bev’s dad’s home for an evaluation. They will observe him and his living environment and they will evaluate his Activities of Daily Life (ADLs). These are the basic activities that every person should be able to do by themselves to live by themselves safely. They are the activities of bathing, dressing, feeding, medicating, toileting, and the ability to get out of bed or a chair by themselves.
In most counties, if the person in question can not do 2 of these ADLs they are deemed to need additional help. Step one is home health care. First, there is non-medical care then in-home medical care which often leads to assisted living and then full nursing home care. The most important aspect is that her dad gets the care he needs.
Finances
The second perspective is that of how to pay for it because the cost of care can escalate very quickly and be financially devastating. The first thing to understand is the rules. For a married couple, the patient can keep $2000 and the spouse staying at home can keep about $147,000 for full care. In my friend’s situation, her dad is single, so he can only keep $2000 and $50 per month from his income for full nursing care. In either case, he will have to “spend down” all of his assets then there are many state and federal programs to provide his care.
Based on working with many families over many years, first and foremost get the care needed. In Bev’s case, her dad was a bit of a hoarder, had not been to the doctor in years, and neglected self-care. Our suggestion would be to focus on care only. Do nothing to the home so the evaluation from Jobs and Family Services and get a complete and accurate picture of her dad’s situation. When Bev’s dad is released from the hospital he will most likely be eligible for rehabilitation which can be for 3 weeks to one month depending on the circumstances. Often this can be extended by doctors’ orders for an additional 3 weeks to a month being covered by Medicare. After that is when the decisions need to be made.
We encourage the families to focus on care and not finances. Because money does not matter. Let’s play this scenario out to full nursing home care. Best case, her dad goes home and needs care. He will spend his cash reserves on non-medical care to assist in bathing, feeding, and cleaning. Then he will be evaluated for his ability to do the Activities of Daily Life. Which he will fail. then the family will be required to find a place for their dad in either assisted living or full nursing care. We always suggest a facility with a broad continuum of care so he does not need to be moved.
Either way, this will cost between $3500 and $12,000 out of pocket. Bev’s dad does not have the money so he will apply for Medicaid which will only let him keep $2000. His savings will be depleted, his income will be directed to the nursing home and his house will be sold. As for the house, it does not matter if it is sold for $150,000 or $20,000! the mortgage must be satisfied then the proceeds will go to the state (Medicaid) so there is no advantage to get the house ready for sale at all because it does not affect anything.
The goal for my friend Bev is to get her dad the care he needs. Go to the house and collect personal items that are of importance to family and friends. He will need some personal things at the assisted living or nursing home such as a chair, dresser, pictures, and the like to make the room feel like “home.” Then list the house for sale “as is.” The new owner will get a deal and have to clean out the “stuff.”
As for selecting a facility, the first criterion is location. If Bev’s dad has a support system of friends in the town where he lives that location is an option. However, when people move into care facilities relationships change and friends don’t often come by after the first month. The next criterion is that it must be convenient for Bev and her family. Also, about 85% of all care facilities are Medicaid-accredited. there are no more “county homes” If you were to walk the halls of these care facilities you could not tell who was privately paying or who was on Medicaid.
The State of Ohio has installed many rating systems with fines and penalties to ensure quality care. Plus there is competition, these facilities need people in the rooms to pay the bills so they compete with each other like colleges in terms of food, activities, and the personal touch. If you do not like the care, you can move him to another location.
One last suggestion is for Bev to be cautious of what documents she and her family sign. When admitting a loved one into a care facility there are stacks of documents to sign. The ranges from personal care agreements to POAs and medical authorizations the list is exhausting. Our families that have gone through this say it is like buying a home in terms of paperwork. But the most important thing is her dad’s care.
However, some facilities have been slipping in financial responsibility forms that say anything not covered by Medicare the family is now obligated to pay. The facilities love this, additional revenue. The problem is that after signing 40 important documents, many people just sign things to get through the process and it could cost thousands of dollars a month to Bev.
This is a miserable situation. Unfortunately, there are times when we need help. This is why our team at Skolnik Retirement Solutions educates and advocates being prepared for this exact scenario. Imagine if Bev’s dad had $250,000 in retirement savings, $50,000 in the bank, and the house was paid for. He would have to spend down everything to $2000. Wasting the money does not honor the work of a lifetime.
If we need the care, we need that care. But, there is a solution and this is what we do every day. The problem is that Bev’s dad needed to understand there is a potential problem and then do something about it 5 years in advance to protect the assets.
If you, your friends, or loved ones need information on how to protect yourselves our goal is to educate people on how to be prepared.
