Finances and dementia

Crushed

We quite properly talk about the legal documents required in a dementia case and yes they are important.  But just as important is realistic financial planning.  Dementia patients require supervision and eventually 24/7/365 care The cost of that care , one way or another, falls overwhelmingly on families unless and until they are placed with medicaid 

The minimum estimate of the annual cost of dementia care is $50,000.  When  I was a Professor in Consumer Economics we used to calculate family labor , the imputed value of housing cash income etc.  What we found was disturbing.  Families routinely tried to keep their standard of living up despite the dementia and the  huge future uninsured costs down the line.   They depleted savings and ran up debts. They did not do dementia financial planning

  I have had to tell many people that a dementia diagnosis means that you have become instantly poorer than you ever imagined.  For myself I never imagined we would be paying $150,000 dollars a year for DW's care.  I had wonderful golden retirement plans for that money.  fortunately I was already mostly retired when she was diagnosed so for 7 years I could provide the care DW needed.  We did spend a lot on travel.  

 The day after a diagnosis you start Medicaid planning unless  you have a LOT  
 of money to set aside for your LO care.   How much?  3-500,000
   above what you need for yourself if you got just as sick   That is apart from your house which is considered separately (social security and pensions can be analyzed as part of it. 

The state you live in is critical NO ONE CAN ADVISE YOU ON MEDICAID WITHOUT KNOWING WHAT STATE YOU LIVE IN  

Please please PLEASE PUT IT IN YOU PROFILE  
 
If your LO is not a spouse put it in your profile   it makes a big difference.

Status as a veteran is also critical as is Social security disability if you are under 65

We are here for you but you have to meet us half way  

 

Joydean

Crushed 

Thank you for sharing this eye opening information. It is a very scary thing. We live in Texas and I know I put that in my profile and my DH is a Vietnam vet. I have been learning this lesson for the past 21 years.  In 2001 my DH was in a very bad accident on his job. He was in rehab for over 3 years, besides all the physical injuries he had a head injury. Affected the left side of brain. There was no way he could go back to work, finally he got on Medicare disability. I had to leave my career to take care of him. So I have been his caregiver all this time. 9 years ago we started going to va doctors. Not how I expected to be using our retirement money. We worked all of our lives and had other plans for retirement, but things happen and now we deal with Alzheimer’s. I will continue taking care of him as long as I can. Our story is no different than others. Thank you again for sharing this information. 

Jeff86

Good financial planning goes beyond preparation for retirement—it has to incorporate solutions to possible risks to a retirement plan.  Notably, chronic diseases:

https://www.nytimes.com/2022/01/14/business/chronic-illness-financial-planning.html

Risk management is a particularly critical consideration well before retirement, as early onset is even more devastating financially.  Shortened careers for PWDs, and often their spouses/partners, means less time to accumulate financial assets.  

Options diminish dramatically upon dx.

Crushed

Just to note, the article while good focuses on POST diagnosis planning

Your comment which I agree with,  relates to pre-diagnosis planning, which is arguably much harder.  I know, I had to do it. My mother had vascular dementia which forced us to confront the issue.   I tried to buy what I needed which was long term care with a big deductible.
no one sold it !! 
  It is axiomatic that you do not insure against events which you can afford to pay for because the overhead cost of insurance is 25-40% So I have a $2000  deductible on my car. So instead we treated our pensions and social security as long term care  and created special savings to cover the gap.  DW's pensions and SS cover about 75% of her costs  and retirement savings.  I have my own pension and social security that would do the same   If we both needed care we would do it at home with live in care.  So we had a plan.   

After DW was diagnosed I did make the mistake of equating DW's  Alzheimer's and  my mother's vascular dementia .  My mother lived her last two years with my sister and it was never a problem.  DW was psychotic and a wanderer, so the house was simply not safe.  
DW has also lived longer than anyone thought.  That is not a financial issue but we did have the added strain of Covid , which required a  30 hour a week caretaker in the Assisted living facility.   However since I was not  traveling or buying blondes or convertibles  we were ok.

Vitruvius

Crushed,

When you suggested how much to set aside for your LO’s care, I think you meant to use a comma not a hyphen. I think you meant one needs 3,500,000 not 3-500,000.  At least that is the way it seems. 

Jeff86

The risks that can and should be insured are ones that occur infrequently but are costly when they do occur.  Think of your house burning down—a very rare or unlikely event but financially disastrous when it occurs.  

The short history of long term care insurance (versus centuries for fire insurance or life insurance) is one of tremendous miscalculations by insurers, including under-estimating claims and health-care costs and over-estimating policy lapses, all resulting in huge underwriting losses and large premium increases.  The insurance industry has been unable to determine how to price LTC policies in part because too a high percentage of insureds make claims—the need for long term care is not rare or unlikely.  

Concur that insureds should have the highest deductibles they can afford.  For LTC insurance, this would mean, for many people, policies that insure against catastrophic outcomes—the need for many many years of care, but not relatively short term and not unexpected possible need.  Many potential insureds could afford one, two or three years of care but AD brings the potential of needing care for five, seven, ten and more years.  Such catastrophic coverage has never been offered, because insurers can’t figure out how to price the risk, and newer policies are more restrictive and less attractive than older policies.  

Crushed

Vitruvius wrote:

Crushed,

When you suggested how much to set aside for your LO’s care, I think you meant to use a comma not a hyphen. I think you meant one needs 3,500,000 not 3-500,000.  At least that is the way it seems. 

When you are down to 3- 500,000 you start medicaid planning

Crushed

Jeff86

The reason the risk is hard to calculate are the usual adverse selection and moral hazard.  But i do think it could be done.  The other problem is the market is so small due to medicaid

Quilting brings calm

== Many potential insureds could afford one, two or three years of care but AD brings the potential of needing care for five, seven, ten and more years. ==

Yes, in our case, our long term care insurance will cover approximately 2-3 years of care.  But considering that we can afford 2-3 years of care ourselves, our hope is that the two methods combined will be enough to cover 6 years if one of us needs it. While leaving the other one totally able to live a comfortable life afterwards.   If needing longer, it at  least gets us that far down the road. 

Iris L.

Single people have to spend down to $2,000.  This is hard to plan for.

Iris

Crushed

Quilting brings calm wrote:

== Many potential insureds could afford one, two or three years of care but AD brings the potential of needing care for five, seven, ten and more years. ==

Yes, in our case, our long term care insurance will cover approximately 2-3 years of care.  But considering that we can afford 2-3 years of care ourselves, our hope is that the two methods combined will be enough to cover 6 years if one of us needs it. While leaving the other one totally able to live a comfortable life afterwards.   If needing longer, it at  least gets us that far down the road. 

If one of us needs it.  Honest question , what is the plan if both of you need it?

Quilting brings calm

Crushed.

We each have that long term care insurance and I think we could each do that 2-3 years of self pay too from investments That’s without even using our SS and pensions toward any of it or selling the house.  So whomever is last into a facility  would be able to still have SS and pension to throw that towards the annual cost too, and not have many  outside expenses since no one would be left outside  to need the money.

Back to the first person to go in:     Costs for a MC in our area of the country is about half of what you are paying- that’s what would allow our money to stretch farther.  Our current levels of long term care would pay the total cost for those first 2-3 years or half the cost for 4-5 years ( using  the patients SS and pension as half of it). Then we’d eat into our investment for the later years. .that allows those investments to grow for as long as possible  

I’m sorry if this doesn’t explain it very well.