Long Term Care Planning – Should I Wait and See?

I consistently emphasize that we can achieve the most favorable results for our clients with the benefit of time, meaning we want to work with clients as far as possible before they reach crisis mode.  I know, however, that there is a general resistance to taking action.  Long term care is an unpleasant subject and the options presented seem less appealing than delaying action as long as possible in the hope that it can be avoided altogether.  Two calls we received in the past few weeks illustrate the dangers of waiting.  They present a before and after picture of sorts.

Lisa called regarding her mom, who was recently diagnosed with dementia.  That condition, however, was not the acute one that landed her in the hospital and then in a subacute rehab facility.  She had a bad fall and fractured her shoulder.  Lisa was referred to us by the social worker at the facility.  Mom’s Medicare coverage was about to be exhausted and Lisa and her sister needed to make a decision about whether they should bring Mom home or look to an assisted living facility.  “The family preference”, she told me, “is to keep Mom at home as long as possible.”

Mom owned a home worth $400,000 and had investments of approximately $250,000.  Her income consisted of Social Security of $1000 and the interest from her investments.  She did not have long term care insurance but Lisa told me that her dad was a World War II veteran.

I told Lisa that to give her the most flexibility in addressing her mother’s needs now and in the future, the time to act is now.  Lisa said Mom’s prognosis was pretty good.  They expect that she’ll need home aides initially but that the goal is for her mom to be able to continue to live on her own.  With a diagnosis of dementia, I told Lisa to prepare for the need for increased care over the next several years, even if, in the short term she makes a great recovery from the shoulder injury.

I laid out a plan to qualify her mom for VA benefits, by virtue of her dad’s military service, under the VA Aid and Attendance program.  This would net her an additional $1113 per month of tax free income to help pay for care.  While the program is a needs based one with income and asset limitations similar to Medicaid, it currently does not have a look back and penalty periods as does Medicaid (although that is likely to change within the next year).  I told Lisa that we would need to move most of Mom’s assets to a trust so they would be available to pay for her care but would not disqualify her for the VA pension.  In all likelihood, as her dementia progressed, Lisa’s mother would need increase care.  We had to plan for the possibility she would need 24/7 nursing home level care.

I could tell Lisa was hesitant.  “But, we don’t want to place Mom in a nursing home,” she told me.  I understood completely.  Although I talk about nursing home care because it is the worst case scenario from a financial perspective, I know many families want to do their very best to keep their loved one at home as long as possible.  I told Lisa that taking the proactive steps I proposed now, would increase the chance that she and her sister would be able to honor Mom’s request to stay at home.  Of course, we can’t guarantee that outcome, but we can do our best to enhance the odds.

Next week I’ll share with you the story of Kelly, who called us shortly before we took Lisa’s call, someone I spoke with 7 years ago and proposed a plan of action which she decided not to move forward with.  Her situation now is exactly where Lisa could be headed if she decides to do nothing.  Stay tuned.