Jeff had lived his whole life as a successful business man always vigilant about the smallest of details. He had two offices, in New York and New Jersey and kept traveling back and forth for his dealings. He also had a loving family – an adorable wife and two children who were in high school – when the family started noticing small missteps, says Jeff’s wife Rebecca. The family ignored the signs at first, blaming it on Jeff’s busy schedules and workload. Jeff would park his car outside the garage or forget to close the car’s door, he’d forget his mobile phone at home when going to work, sometimes he’d forget to eat dinner and insist that he already ate when he actually hadn’t. The family got a reality check when one time Jeff booked the wrong flight and flew all over across to San Francisco for a business meeting that was actually taking place in New Jersey – only to find himself lost! Jeff did not seem to remember why he was in San Francisco or how.
At the age of 59, almost one year after the initial signs it became apparent that Jeff was going through something awful. Rebecca took him to a psychiatric clinic in New York, where he had to perform certain activities and undergo some tests. They discovered Jeff had developed Alzheimer’s. Although it was evident the family would never overcome the emotional toll of the disease, but they soon realized they had to take the necessary steps to avoid a financial burnout due to Alzheimer’s treatment.
An Alzheimer’s diagnosis before the age of 65 is rare but not completely impossible. Since Jeff was only 59 and had a family to take care of he wanted to make sure he could save his assets for his family if he were no longer there to take care of them, either literally or hypothetically.
Only a few people realize the fact early on during their diagnosis that paying for Alzheimer’s care out of their own pockets can leave them bankrupt within 5-6 years or drain their resources. Many people seem to overlook the facts and live only in the moment, thinking they would be able to take care of their finances somehow. However, that is not always the case.
It is important to keep in mind that your own resources can be limited when it comes to paying for a long-term full-time care. It becomes financially draining for them to cover the treatment costs on top of usual household expenses. That is why people often look for Medicaid when it has ‘already’ taken a toll on their finances. But the best way to save your assets and receive help through Medicaid requires forethought and careful planning with the help of a professional.
Alzheimer’s has 7 basic stages and is a progressive mental disability that becomes worse with time. Although Alzheimer’s is not listed in Social Security’s listing of impairments as a disability, early on-stage Alzheimer’s is considered as a mental disability under the neurological disorders. That may include and are not limited to disturbances in memory, executive functioning (that is, higher-level cognitive processes; for example, regulating attention, planning, inhibiting responses, decision-making), visual-spatial functioning, language and speech, perception, insight, judgment, and insensitivity to social standards.
Although there may be more than one way to pay for Alzheimer’s care but the best option for one to pay for long term care is the federal government’s Medicaid program. Each program has its own eligibility criteria and limitations for financial help. Here’s how you might get financial aid to pay for your Alzheimer’s through each program:
- Workplace insurance (conditional coverage)
This may depend on the patient’s workplace insurance coverage provided that they signed up for it and paid enough installments for the insurance to be able to provide some coverage. It may also depend on the insurance type if it provides coverage to people with dementia.
- Life insurance (conditional coverage)
This is subject to the patient’s life insurance package and how much income they deposited each year in their life insurance package. Also the Alzheimer’s patient or their caregivers may have to contact the Insurance providers to learn more about their policy of Alzheimer’s disease coverage. I recommend life insurance with a long-term care rider to provide funds to provide for long term care.
- Medicare (short-term partial coverage)
Medicare may pay for a portion of up to 100 days regardless of the disease getting better or worse. A good Medicare supplement will provide coverage for all of the 100 days. Medicare may provide for patient’s hospital bills, drug prescriptions, doctor’s fees and up to 100 days of skilled nursing homes. Once the 100 days are over, the Medicare would be discontinued even if the disease plateaus as is common in Alzheimer’s.
- Retirement benefits (full coverage until funds last)
Retirement benefits should be utilized soon before the patient turns 65 to avoid getting penalties on getting benefits after the patient turns 65. Also, it might be a good option to receive the benefits earlier during retirement and deposit them in a trust to secure them (more on that later in the blog). Whether received earlier or later, however, these benefits would not be enough to provide for long-term Alzheimer’s patient care without draining resources.
- Medicaid (long-term conditional coverage)
Since Medicaid is a combined state run and federal program it is mostly designed for people with low household incomes and assets to help them pay their medical bills. It is imperative for a person’s income and combined assets to be less than a certain threshold limit set by each state’s laws. A person cannot be eligible to receive benefits under Medicaid if their income is above the stated threshold. A rough estimate of the income threshold for Medicaid depends on the number of people in the household. A general rule of thumb to qualify is if you earn less than 100% to 200% of income below federal poverty level set by each state.
However, not all income is countable as assets. Properties not belonging directly to you and owned by a spouse or children may not be counted as patient’s property. Hence, it is a good idea for Alzheimer’s patients to establish an Asset Protection Trust containing most of their assets more than five years before needing Medicaid. This will protect those assets from being considered available by Medicaid. These assets would be very helpful to pay their medical bills once they need money to pay for Alzheimer’s care or treatment out of their pocket.
According to the Alzheimer’s Association long term caregiving through agencies could cost $13,000 per month to the Alzheimer’s patient or his or her family. If they don’t have a financial plan set out early on after diagnosis, they might end up having to pay it out of their pocket and drain all their income resources and savings. It is imperative to protect the Alzheimer’s patient’s assets to prevent them from draining quickly.
Although Medicaid would cover almost all of the long-term care or nursing facility costs, the patient may have to pay for additional care and services. Also, if the patient decides to keep living in his own house and get an in house long term care through either a family caregiver or hiring a nurse as a full day caregiver, they may have to pay for these expenses themselves. It is important that the Alzheimer’s patients secure their assets to be able to pay for such expenses while keeping Medicaid for basic care and facilities.
How to protect the assets while keeping Medicaid?
Consider the example of an accountant, Jonas, who worked all of his life in a 9 to 5 paying job until he retired at 65. Jonas lived a good life, with balanced passion of interests, hobbies and work life. As he aged towards retirement he looked forward to living carefree days with his spouse and children. He wanted to watch his children growing up, establishing careers, and getting married. He often imagined playing with his grandchildren, reading his favorite books, taking long strolls with his lovely wife in the neighborhood. Sadly Jonas developed Alzheimer’s quickly and it took a huge toll on his after retirement dreams and quality of life. His insurance coverage and savings were not enough to pay for his Alzheimer’s care. He needed Medicaid for his long-term care or nursing facility but did not qualify because his total assets worth exceeded the state’s laws asset limits for Medicaid eligibility.
Wanting to keep living in his own home with family and loved ones, Jonas was only able to pay for a few hours of care each day. However, as the disease progressed he was unable to perform daily tasks or make financial decisions wisely. He now needed full-time care in the nursing facility but his income was not enough to pay for it. Had he or his family taken care of the legalities in advance they would have saved the pressures and difficulty of providing care for the Alzheimer’s.
Let’s learn how can an Alzheimer’s patient preserve his assets while utilizing Medicaid:
A wise plan as suggested by an elder law attorney is to take care of the legal matters ahead of time. To be qualified for Medicaid, it would be a good idea to transfer your assets to a Medicaid Asset Protection with your children, immediate relatives, friends or whomever you trust five years in advance. There are likewise approaches to “spend down” your assets in order to qualify for Medicaid. These may incorporate doctor’s visit expenses not generally secured by protection, prescription’s drug costs, and even prepaid burial service plans. Some portion of preparing is seeing if your parent has reserves or stock saved away to pay for their care. As harsh as it might sound, having monetary assets—or not—may decide the kind of long haul care your parent will at last get.
Working around closely with a trusted attorney can greatly turn the tables in the patient’s favor. Such as in Jonas’s case their attorney advised them to spend some of their savings on a wheelchair, doctor’s visits, short-term caregivers from agencies, etc. Once they had used up their savings and as Jonas had already wisely transferred the remainder of his assets to his family in a Medicaid Asset Protection Trust they no longer needed to worry about Jonas qualifying for Medicaid. They saved the 5 figure income and assets that would have been burned out for Alzheimer’s treatment and care. It also gave Jonas the proper place and amount of care his disability required without taking a toll on his family’s well being.
Lastly, Jonas wisely saved his family from needing to go through probate once he passed away. No one would like to put their families in a situation where they have to wait for months to receive their own parent’s/spouse’s money. Also, most people like Jonas would naturally want to pass on their hard earned assets and money to their families instead of spending it on probate fees.
Hence, Jonas made a great decision by creating a living trust on his family member while he was alive and sane. It not only saved him money required to go through probate but also distributed his assets according to his wishes. It also allowed his family the financial freedom and security of not having to depend on federal programs to run the household. The trust could now be managed by his beneficiaries without him having to worry about what happens to his wealth after he dies.