How to invest my dad's money
@conanrob it's not just dementia care it's any elder care that requires full time skilled care more than what a family can do at home. My mom had Medicare and supplemental insurance through my dad's va benefits. When she became essentially bedridden our only choice was a nursing home. None of us was capable of giving her care 24/7 and none of the insurance would pay for any long term in home care. Once she went in to the nursing home, we had to apply for Medicaid. Medicaid requires one to spend down all their assets before they will begin to pay. Thank goodness my mom had put the house in our names years before or she would have been forced to sell it too in order to pay for her care. She didn't have a ton of money, but it was extremely important to her that she leave an inheritance for us. Thoughts of leaving something for my brothers and I consumed much of her thinking and emotional energy in the last months. I had to continue to reassure her that we would be fine - the house was our inheritance and the savings was for her care which is how we wanted it.
@bklyngrl I agree with the advice to encourage your dad to spend what he has. If there is something he wants to do or wants to buy, he should do it. If he insists it is for you, maybe he would prefer to see you enjoy the money now while he is alive? I would prepay his funeral if he hasn't done that, and otherwise, have fun.
As the daughter of a subsistence farmer during the depression, my mom scrimped and saved her whole life. She wasn't a big traveler and didn't buy much for herself. She agonized over the granite countertops she put in her kitchen 2 years before she died. She loved them, but felt so guilty for spending the money. They helped us so much when it came time to sell the house. I'm glad she at least got a little enjoyment out of them before she got sick and started the cycle of hospital/rehab/nursing home.
I hope your dad has many healthy years left!
As I understand it, I thought they can't take your house in the situation you describe. Isnt the house a protected asset? I do understand the concept of "spend down". I guess some advance planning is needed if there are significant assets at play.
I guess I am still not understanding what huge expenses there can be? Medicaid will kick in and pay long-term care, right? It's just a matter of having all savings seized before it does then?
The transfer of the house to kids (or anyone) has a 5 year wait period after the transfer. This is sometimes done with a $1.00 price and a "life estate" to the seller.
After 5 years, the government can't put a claim on the house. This does not apply to a "legitimate" sale of the house.
conandrob240 said:
As I understand it, I thought they can't take your house in the situation you describe. Isnt the house a protected asset? I do understand the concept of "spend down". I guess some advance planning is needed if there are significant assets at play.
I guess I am still not understanding what huge expenses there can be? Medicaid will kick in and pay long-term care, right? It's just a matter of having all savings seized before it does then?
Advance planning can be from an elder law attorney AND a social worker in the community the parent lives in.
The government does not seize the assets. Rather, the assets must be spent before Medicaid kicks in.
yes but if you have a spouse who is living with you in the house, it is an asset that doesn't have to be spent down. It is untouchable.
That may be true, (mom was a widow, so I didn't pay as much attention to those rules) BUT the patient must pay all of their income except something like $50/month toward the nursing home. I feel like it might have even been $30 It was barely enough to pay for my mom's weekly hair apt. So, if the couple uses both people's income to pay bills etc, the other spouse might not be able to stay anyway. Lots of things to know and work around. This is why as we age, it is important to get in touch with someone who specializes in elder law. My lawyers assistant was my lifeline in many ways as was the wonderful aid at the home who treated my mother as if she were her mom.
conandrob240 said:
What doesn't Medicaid cover? Are all these horrific expenses people are talking about in regard to dementia only? or are there other Medicaid gaps?
And why hasn't anyone tackled the problem of dementia care not being covered by insurance? I'd like to see that be a priority within healthcare reform.
My grandmother earns about $25,000 a year (pension, social security). She earns too much to qualify for medicaid.
Her assisted living cost about $45,000 a year (assisted living only, a nursing home costs much more).
She didn't qualify for medicaid, but was $20,000 short, per year, for assisted living. This has been the case from 2008 until a few months ago when she was accepted into a VA wing.
$20,000 a year gap, for 8 years. Horrific expense doesn't even begin to describe the situation. If it wasn't for the VA and the fact that my grandfather was a combat veteran which qualified my grandmother for VA care, I don't know what the outcome would have been long term. Her money ran out awhile ago, my dad was going into debt to cover the difference.
This situation may have now been addressed by New Jersey finally allowing Miller trusts, but from 2008 (when my grandmother went into assisted living) until she was accepted into the VA home, Miller trusts were not recognized in New Jersey.
Correct.
In NY under full Medicaid the pension and soc sec money gets deposited directly with the health care provider. The patient does not see the money. $50 a month is then given to the patients PNA (Personal Needs Account). Assets cannot exceed around 14,850. IRA's, KEOGHS and certain burial funds are not counted in determining the asset level. Excess assets have to be spent before Medicaid is allowed. You can gift your assets to get them down to 14,850 but the 5 year look back applies. They look back 5 years and anything gifted in that period is still considered to be part of their assets.
Then there is community Medicaid, which I know about. Under that Medicaid the pension and soc sec money still comes to the patient. They live in their residence or an assisted living facility. They are under a managed care program like the Visiting Nurse Service. If you live in a residence they have an aide paid by Medicaid. The look back period for community Medicaid is three months. Their personal expense account is about $825 a month. But most people living at home have expenses exceeding that. What is done is to set up a Community Medicaid Trust II account which allows drawdown income to be deposited into the trust. The trust funds are then used to pay for expenses (rent, cable, food, credit card). So, if the total income is 3,000 a month, they put 2,175 a month into the trust and keeping the other 825 in their checking account. Make sure that the total of all accounts do not exceed 14,850. Its a paperwork pain but worth it.
The patient has to be disabled to use the trust. Dementia qualifies.
http://trustservices.nysarc.org/index.php/our-trusts/community-trusts
I believe NJ has similar options such as a Miller trust. The amounts are different.
The point is an elder law attorney is needed to do this quickly, correctly, to protect assets and explain all the in's and out's. It should be an attorney that specializes, a CELA.
conandrob240 said:
yes but if you have a spouse who is living with you in the house, it is an asset that doesn't have to be spent down. It is untouchable.
True. I am not familiar with the situation when there is a living spouse. The house is secure but the monthly income is not.
film: I appreciate your input. I have the right, because my dad has been asking me for years to do something with his money so that it doesn't sit there earning nothing while at the same time not investing it in anything risky keeping in mind his age. Add to that that he doesn't speak English and knows nothing about these matters. Like several people mentioned already, he too grew up during the depression and his mindset has always been to save as much as possible and hide any savings under your mattress (literally! lol).
My dad's finances are very straight forward, thankfully, which is why I reached out simply to make sure that what we've been doing for years is still good practice. He doesn't own anything; receives a decent SS pension only (no retirement pension); and has little to no expenses, because he lives with family members who pay for everything and the same goes when he visits me. He also has no interest in spending his money or even traveling too much. I think he's just tired and enjoys the little things in life. If he were ever to need assisted living or anything like that, luckily my husband and I can manage the payments assuming they're not catastrophic. I'm an only child and have been planning this phase of my parents life for some time now.
Can't thank you all enough for all the information and help you've provided. Good to know I've been on the right track.
Purchasing long-term-care insurance is something to consider, depending on one's circumstances. Once you really need it, it's too late to get it. Expensive, though so is the alternative.
one of the problems with medicaid is you have to go the facility that has a room available and often is not convenient. It should be the last option. Long-Term Care insurance policies will cost you about $2,500- $4,000 /year if you are smart enough to buy before you are age 60. They are far more expensive to buy when older. To put that in perspective, I have round the clock care for a family member right now - and costs close to $100,000 a year. Nursing home is more. This has been going on for years and the doctor says she is healthy enough to live another 10 years. She has dementia.
mikescott said:
one of the problems with medicaid is you have to go the facility that has a room available and often is not convenient. It should be the last option. Long-Term Care insurance policies will cost you about $2,500- $4,000 /year if you are smart enough to buy before you are age 60. They are far more expensive to buy when older. To put that in perspective, I have round the clock care for a family member right now - and costs close to $100,000 a year. Nursing home is more. This has been going on for years and the doctor says she is healthy enough to live another 10 years. She has dementia.
Getting a bit off topic, isn't this absolutely disgusting that elderly people or their families have to incur this kind of cost? So, you will spend more than a million dollars for the care of your family member. Healthcare in this country is so off-kilter.
I can't believe this issue hasn't been raised loudly during the whole health care reform movement. It should be being screamed about constantly. It is truly disgusting that organizations are allowed to profit off of something like this in the way that they are and that elder care isn't protected.
And bklyngrl, it seems the "under the mattress method" may not be too far off what's best for dealing with eldercare. if they don't know its there, they can't make you deplete it before receiving care.
conandrob240 said:
It is truly disgusting that organizations are allowed to profit off of something like this in the way that they are and that elder care isn't protected.
Profit is the American way. That's what it's come to.
There are certain areas where there should be a cap on profit. healthcare is one of them
Totally agree about the health care issue. @Conan - hadn't thought of it that way - so true! My husband and I often joke about putting our money under our mattress, but maybe it's not such a bad idea.....
@conanrob it is horrifying. After how hard my parents worked and all they gave to our country (dad was a fighter pilot in Vietnam) it was appalling that she had to essentially become a pauper in order to be cared for adequately. Honestly is we had known she was only going to live two years from her first illness, I would have moved her in with me and used her savings to pay for her care. But we had no idea how long she would live, so figuring out what to do was extremely difficult.
In NY you can gift the money and then only a portion of it is considered for the Medicare look back. There is an entire complicated formula and way of doing it so the 2 or 3k we spent for the elder care attorney was invaluable
Assisted living with dementia care averages 7K per month in our region. It is cheaper in the mid-west.
I took my parents to an excellent elder law attorney to have several documents drafted and it was worth the peace of mind. Not cheap, but necessary. I am grateful I have an employer that offered Long term care and I will continue that as long as I legally can.
Looking at long-term care insurance to the tune of $10000 a year! I am not sure it's worth it. It seems like it may be yet another price gauge unless its offered lower cost through work. I think we had some offer to buy in years ago that was relatively cheap. 40 years old x $10,000k a year for 40 years = $400,000 spent just on insurance. Yikes!
Yes we had an offer through work about 5 years ago so I took it. Its like $40 a month I think. A few years ago we were offered an upgrade for a few dollars more so I took that. Very lucky to have it.
when my mom moved to her senior housing apartment she bought in for 100k plus 3500 per month rent. She had her own nice apartment and kitchen, but housekeeping was included and meals, activities, and trips as well. The 100k was so that when she needed more care, like assisted living, or a nursing home and rehab, it was all included and the rent never went up. She had her apartment for 10 years before needing more help. Her insurance still covered her doctor and hospitals, but the rest was part of that buy in. Outside of those expenses she never bought long term care insurance.
boomie said:
Yes we had an offer through work about 5 years ago so I took it. Its like $40 a month I think. A few years ago we were offered an upgrade for a few dollars more so I took that. Very lucky to have it.
Yes! I didn't pay much attention to it when it was offered. Guess I should have!
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In my mother's case she was in a senior living facility. She had been slipping for a while but last October she had a stroke. She was gone by December. She had bought the life care policy so all the care cost nothing outside of the original buy in, but we were accidently billed for her rehab and hospice care, and the bill was over 28k for less than a month. Again, we were fortunate that she planned well in advance but that's where I see savings disappear.