Senior Finance Tips: 16 Experts Share Tips On The Biggest Financial Mistakes Families Make When Planning For Elder Care

When it comes to making financial plans for elder care, the unfortunate truth is that the vast majority of families are extremely unprepared. Whether it’s because many families are too preoccupied with the emotional changes that come with preparing for elder care to then make sufficient financial plans, or because many families’ need for senior care comes as a surprise. Regardless of the situation, financing senior care is not something to be taken lightly, and requires much thought and preparation.

As a senior care resource, finding helpful answers for this topic is important to us, so we set out to uncover the biggest financial mistakes families make when planning for elder care. To help understand these common pitfalls and learn from them, we asked 16 senior care experts the following question:

“What are the biggest financial mistakes seniors and/or their loved ones make in paying for elder care (and how to avoid them)?”

We’ve collected and compiled their expert advice into this comprehensive guide to financial planning for elder care. We hope it will inform you of the most common financial mistakes in order to avoid them,  and ultimately help you make better choices for your loved one.

 

Meet Our Panel of Senior Finance Experts:


Jody Gastfriend

Jody headshotJody Gastfriend is the VP of Senior Care Services at Care.com and is a licensed clinical social worker with more than 25 years of experience in the field of eldercare.  Jody’s broad range of leadership positions include Director of the Department of Social Services and Case Management at Lawrence Memorial Hospital, Clinical Supervisor within the Social Service Department of Massachusetts General Hospital, Chief Operating Officer of a Medicare-certified visiting nurse association, and Director of Adult Care Services at a national backup care company where she established an eldercare division serving more than 130,000 employees.

Jody shares the personal journey of her clients, having helped manage the care of her own parent with dementia for more than a decade. Additionally, Jody is a frequent lecturer on senior health topics, and is a featured senior care expert on NBC and Fox News, a regular contributor to The Huffington Post’s Huff/Post50 section, and has published numerous articles on caregiving and aging, including a 5-part series in USA Today.

In my company’s experiences with families trying to plan financially for elder care…

We find that many seniors and their families do not plan ahead for the cost of care. Money can be an incredibly taboo topic in many families. Unfortunately not being open about financial matters can lead to unwelcome surprises when it is time to pay for care. We recommend families consult with elder law attorneys who can assist with estate planning and give guidance around financial matters, particularly if Medicaid may be an option for the senior at some point.

The average person does not realize Medicare does not pay for long term care. This is typically paid for privately, but long term care insurance and Veterans Benefits can also be utilized in many circumstances. Understanding the payer sources and cost of care proactively are important in avoiding financial missteps once care is needed. Education is incredibly important.

Many seniors do not want to spend their private pay funds on care because they would like to be able to leave this money to their families. Unfortunately, if a senior is not receiving appropriate support this can lead to health crises that can possibly result in greater expenses down the road. Speaking with experts like the Care.com Senior Care Advisors for guidance on how to approach conversations with parents around unmet care needs has led to many positive outcomes among the families with whom we work.


Ryan McEniff

Ryan mcEniff

Ryan McEnnif is the Owner and operator of Minute Women Inc , a 44 year old home care/elder care company located in Lexington, MA. Minute Women Inc. has been in business since 1969 and has provided thousands of hours of care to seniors in the Boston area.

When it comes to financial mistakes leading up to elder care…

Some of the biggest mistakes I have seen come from a rushed and unexpected discharge from a hospital or nursing home care and because of this: unprepared families.

When a family has no plan in place for an emergency or adult care then that is when financial mistakes can be made. When these circumstances occur many families are under pressure and do not ask the right questions when making these decisions. Because of this, they can end up signing a contract, agreeing to outrageous charges, or both.

For example I have seen customers thankful that they have ended a two-year contract with a home care company they were contractually obligated to spending a certain amount of time with or a certain amount of money with, which ever came faster.

Having a plan of action is the most important part of getting older and understanding what needs to happen. Whether it is having a conversation with an only child or having legal documents written up this allows families to save a lot of money in the long run. Having a plan makes things easier and can save hundreds of thousands of dollars.

Finally, another important point is families not knowing about Veterans Aid and Attendance. The Veterans Aid and Attendance program is a federally run pension that provides reimbursement of home care, nursing home care, and assisted living cost to the Veteran and/or their spouse. 95% of people I talk to have no idea what Veterans Aid and Attendance is and how they can benefit from the program. It is a program that is not advertised by the government because so many seniors can benefit from it.


Christopher Rodde

RoddeChristopher Rodde is the President & CEO of SeniorHomes.com. Chris brings to SeniorHomes.com more than 15 years experience leading teams within technology start-ups and new business units and more than 8 years experience in online marketing. Together with Jay Goldstein, Chris founded SeniorHomes.com with the mission to simplify the search for families looking for senior care or housing. Chris holds a Bachelor of Arts in Business Economics from the University of California, Santa Barbara and earned an MBA at The Wharton School, University of Pennsylvania.

I think the biggest mistake most people make is that they assume…

That Medicare or their private health insurance will cover the costs of long-term care. Medicare does not pay for assisted living facilities, long-term in-home care and often does not cover longer-term nursing home care. Most individual health care plans do not cover long-term elder care either, unless you specifically buy a long-term care insurance policy. Our Care Advisors get calls every day from people across the country who did not anticipate how expensive elder care can be and are now searching for low-income or subsidized senior housing, which is in very limited supply and often reserved for those with little to no assets or personal savings.


Phillip Christenson

PhillipPhillip Christenson is the Financial Advisor and owner of an independent Financial Planning and Investment Management Company, Phillip James Financial, in Plymouth, MN. He is a CFA Charterholder and provides comprehensive financial advice to individuals and families.

The biggest mistake that seniors and their loved ones can make is…

Not planning ahead.

I had an older couple come to me after the wife had been diagnosed with Alzheimer’s. They had some long-term-care insurance but only about half of what was going to be needed for proper nursing home care. The prospect of going on Medicaid was a real possibility. The problem was that the husband would still need their assets to live on. We had to plan quickly because of the 5-year look back period for Medicaid. The proper way to handle this situation would have been to run an analysis to determine the cash-flow needs for this type of scenario before it actually occurred. Then we could purchase the proper amount of insurance and set up the appropriate trusts depending on their needs.

Long-term-care is a real risk that can be devastating to your goals and lifestyle. Also, if using a financial planner use a Fee-Only planner as this type of analysis should be included in the cost and the planner won’t have any conflict of interest in selling you an expensive insurance policy that you may or may not need.


Douglas Goldstein, CFP(r)

Douglas GoldsteinDouglas Goldstein is the Founder, Owner, Director of Profile Investment Services, Ltd. He holds the designations of Certified Financial Planner™, Registered Investment Advisor, and Trust and Estate Practitioner. He is a member of both the Financial Planning Association and of the Society of Trust and Estate Practitioners.

Doug is frequently invited to give lectures as well as teach college courses on investing. He is often invited to comment on financial affairs on radio and TV and in local and international newspapers.

Probably one of the biggest mistakes the seniors make when trying to raise money for elder care…

Is to go for reverse mortgages. Though I see the theory of trying to equity out of a residence, the risks of reverse mortgages are so substantial and the stakes are so high, that for most people, choosing this path could lead to financial devastation. The risks run from large closing costs, the dangers of needing more money in the future, having family members kicked out of the house when they die, the loss of some governmental aid, and more.


Murray Gordon

MurrayGordonMurray Gordon is a nationally-recognized Long Term Care Insurance expert and is the CEO and founder of MAGA Ltd. Over the years, Murray has helped pioneer numerous LTCI enhancements, such as waiver of premium and group premium discounts. In addition to marketing LTCI, he is dedicated to educating the public on long term care issues. He has been quoted in the Wall Street Journal, The National Underwriter, and The Chicago Tribune. Nationally-known financial expert Terry Savage considers him “my advisor on long term care policies.”

Among his many civic activities, Murray is a past delegate to the White House Conference on Aging and has participated in the Governor’s Conference on Health and Aging in Chicago and presented to the Chicago Bar Association and International Foundation of Employee Benefits.

My advice for seniors and their loved ones planning for elder care is that…

To every time there is a season. As we pass from one of life’s seasons to the next, it’s important to do so mindfully.

We all want to look after our loved ones. People have worked hard over the years to accumulate assets, it’s a family’s right—and responsibility—to determine what will eventually become of them.

Long Term Care Insurance is Not Like Fine Wine – The opportunity of obtaining prime coverage does not improve with age. The younger you are, the lower your premiums. The healthier you are, the greater your eligibility. It can ensure your family will be taken care of.


Mr. Réne Evan Girard

Rene GirardMr. Réne Evan Girard has a Degree in Health Promotion & Mathematics and has been a Licensed Health Insurance Agent since 2004, with a licensed to practice in 6 states. He currently works with Hesed Insurance Solutions, an independent insurance agency that assists individuals for various insurance needs. He personally took care of father-in-law in home until his passing at age 95 is now taking care of his mother-in-law at age 83.

In my experiences, the biggest financial mistakes families make regarding elder care include: 

#1 – Not paying for elder care – taking the burden completely upon themselves when they could have / should have paid for professional in home assistance. The spirit may be willing, but the flesh is weak, time is money, and most people need a skilled and knowledgeable caregiver to help with the daily activities of living as well as healthcare decisions.
#2 – Paying for inadequate care – There can be a tremendous difference in both the quality and the cost of caregivers and assisted living facilities. And many times you get what you pay for. Medicare and Medicaid facilities are often the worst.

Seniors and their loved ones should make sure they have a long term care insurance policy that easily cover the cost for the best in home care, as well as assisted living facilities and nursing homes.


David Kassir

David Kassir

David Kassir began his wealth management career in 1995. At an early age he naturally gravitated towards finance. He is the owner and CEO of Manna Capital Management, which has been operating since 1962. Mr. Kassir is involved in other ventures such as investment property management and a 501c3 nonprofit organization aimed at easing the lives of homeless individuals in the Washington, D.C. metro area, The Kassir Foundation.

When it comes to making the right choices as a senior or family looking into elder care…

A lot of the biggest mistakes are planning failures. The biggest being not planning at all.

Sometimes people plan too optimistically by not taking honest assessments of retirement savings. Or too pessimistically by not expecting to live as long as they actually will. This directly affects paying for elder care. Elder care can be really expensive. According to
fidelity investments, the average 65 year old couple will spend $240,000 in health care expenses (not including long term care.) Many people don’t take honest assessments of their savings and what they can expect to spend. This can end up forcing some expenses on loved ones.


Patrick Brault, CPA

Patrick BraultPatrick Brault is the Principal and Regional Director of Hewins Financial Advisors, LLP. Pat has served high-net-worth individuals, 401(k) plans and foundations since the early 80s. In his view, every client needs help to “see” how to create and monitor clear, transparent long-term investment strategies. Pat offers Visual Interactive Planning™ (VIP™), a technology-based service that helps clients “see” different investment scenarios, by changing risk tolerance and return expectations.

I have seen many seniors and families struggle to make financial decisions regarding elder care. Some of the most common mistakes I’ve seen are…

1. Lack of communication between the parent(s) and family members

For a lot of families the conversations centered on level of care are never discussed between the parents and family until it’s too late and they’re in crisis mode. Generational differences, along with cognitive issues like dementia, often times create conflicts between parents, family members, and health care providers. Parents may have strong feelings on how they want things handled yet family members struggle with what they feel are good solutions for them. We’re also living in times where the availability of family members is more limited given two wage-earners dynamic. In addition, families are not living close to one another as was the case in the past..

2. Not understanding living options in retirement and how to pay for them

Seniors generally have three primary options for how they’ll receive care in retirement; at home, assisted living, or a nursing home. All three have various quality of life benefits, different outcomes and payments. Medicare is the primary funding source for healthcare in retirement. Services for hospitals, doctors and other health care offerings come under Medicare Part A or Part B. The issues arise when seniors and their families haven’t planned for the level of care, and budgeted for the potential costs.

For example; a senior facing multiple physical issues along with a cognitive health decline or dementia, is struggling with the decision to either stay in his or her own home, move to assisted living or to a nursing home. While staying in her own home is preferred, Medicare only covers medically necessary services, not the full 24/7 supervision needed. The senior is paying a family member at the present, which places a lot of burden on that individual, while depleting financial assets and also bringing about the possibility of raising friction among siblings.

According to AARP, assisted living remains primarily private pay, and as of 2000, 67% of assisted living seniors paid with their own funds, with 8% supported by family members and 2% from long-term care insurance. Due to higher cost and lack of public subsidies, assisted living is often not an option for those who would prefer it. Also, unlike nursing homes, there are no federal quality standards for assisted living.

3. Not having a plan

At the end of the day the respect and dignity deserved by our aging parents must be the first priority. Getting the conversation started and working out a plan of action will take patience and the support of the children or other key advisors to the senior. It’s very common for a senior to not openly discuss their personal health care and financial situation. However, this is where time well spent will help all parties work together in harmony and in the best interests of the senior. For those seniors who have not been able to work out a plan they may not live out their later years in the best way and their quality of life will diminish.

The senior, along with their appointed agents (by way of powers of attorney, durable financial power of attorney or health care power of attorney[t1] ) should gather a team of family members, friends, and others (from work, organizations, church or associations) to collaborate on planning for health care. As there are a lot of challenges both emotionally and financially with health care delivery, no one person should be burdened with this responsibility alone. Once there is open communication, a plan developed, and emotions but aside, a proper balance of health care options and cost maybe balanced to best serve the senior.

4. Lack of protection from fraud and identity theft

Recent studies indicate that the most vulnerable groups for identity theft are ages 30 or younger, along with those ages 55 and older. While the majority of health care professionals and providers working in the Medicare related field are honest, there can be exceptions. The most common fraud occurs when services are billing and never provided. As with any financial transaction either the senior or someone with a financial power of duty for the senior should be reviewing statements for health care services. Typically this means contacting the health care service provider, or, if the senior is under original Medicare, reviewing Medicare claims at MyMedicare.gov, or, dial 1-800- MEDICARE (1-800-663-4227) to report any potential errors.

In addition to Medicare fraud, the other financial risk to seniors is the protection of their identity. Seniors, along with their appointed financial and health care givers, need to be aware of the threat to privacy for seniors, signs they are a victim of identity theft and having a personal security plan in place. If the senior is not mentally or physically able to act diligently, their appointed financial agent (power of attorney for financial matters) should take steps to secure and review their financial information and report any questionable activities.

In summary, as our nation’s population ages the need for open communication, along with planning for our seniors is essential so they’re provided the level of health care they want and afford.


Jeff Salter

Jeff SalterJeff Salter is the Founder and CEO of Caring Senior Service. Jeff Salter founded Caring Senior Service in 1991 after having worked at a home health company in Odessa, Texas. While working for the medical-only health company, he noticed the tremendous amount of seniors in the community who needed help with non-medical, basic things such as light housekeeping, meal preparation, errands and bathing. By 1994, he moved to McAllen Texas and expanded his business to Corpus Christi and San Antonio. Today, Caring Senior Service is nationally franchised, and has the belief that every senior should be able to remain happy, healthy and at home.

The biggest mistake seniors and their loved ones make is…

Not getting proper advice on what services are actually needed. Too often, senior care providers are ‘order takers’ and happily provide seniors with the services that are requested and don’t take a full assessment of what is needed. They should take into account their current need, length of time they may need services and create a plan that solves the issues today and plans for tomorrow. Often times, senior care companies provide unnecessary services at great expense, leaving the decision up to the senior and the families to determine how much they need. While it is a consumer choice, senior care companies should provide a complete consultation so the senior does not run out of funds and end up without the ability to pay for needed assistance.


Gina Kaurich, RN

GinaGina Kaurich, RN is Executive Director of Client Care Services at FirstLight HomeCare. Gina started her healthcare career as a Candy Striper in Junior High and now has over 35 years of experience as a Registered Nurse. She is credentialed as a Professional Geriatric Care Manager, Nationally Certified Dementia Care Practitioner and certified as a Master Coach and Trainer. Her nursing career has extended through Clinical Administrator for a Hospital System, Director of Nursing in a Continuing Care Community, VP of Clinical Operations in Home Care and she volunteered as a Certified Paramedic for her local life squad.

In my experiences with many families, the biggest financial mistake seniors and their loved ones make in paying for elder care…

Is not discovering all of the potential resource options available to them. For instance if the senior or their spouse was a military vet the individual can receive money for their non-medical care through the Veterans Aid and Attendance Benefit or via a Long Term Benefit Plan or an annuity where the seniors death benefit of an in-force life insurance policy into a financial vehicle for care. The best way to become informed is through a community resource such as FirstLight HomeCare, a care manager, elder law attorney or elder financial adviser.

Another financial mistake is to believe the only option is to become Medicaid qualified through a spend down and liquidation of property in order to receive care and services. There are many state and community programs which can assist the senior in staying at home and receiving meals, transportation, health and wellness checks, homemaking and personal care services. As was stated previously, finding a community resource such as those listed above will allow the person to remain in the comfort of their own home and independent.


Brian A. Raphan, Esq.

Brian RaphanBrian A. Raphan is founder and lead counsel of the Law Offices of Brian A. Raphan, P.C., an elder law firm in New York City. He has been serving the legal needs of elders for over 25 years. His cases have been written about in The New York Times, The New York Law Journal, The Villager, Elder Law Answers, and has appeared on CBS News television and NY Radio. He is also a regular editorial contributor to The Senior News on legal issues and frequently gives pro bono lectures throughout New York City at senior and assisted living facilities on legal matters facing the elderly.

Brian has vast experience with all Elder Care legal issues, handling estates of all sizes with expertise in the preparation of: Simple or Complex Wills, Trusts, Living Trusts, Medicaid Planning, Asset Protection Trusts and Guardianships.

When it comes to making financial decisions for elder care, the biggest single mistake is…

Not planning ahead. Under that umbrella are many other mistakes. Such as:

1. Thinking it’s too late to plan. It’s almost never too late to take planning steps, even after a senior has moved to a nursing home.

2. Giving away assets too early. First, it’s your money (or your house, or both). Make sure you take care of yourself first. Don’t put your security at risk by putting it in the hands of your children. Precipitous transfers can cause difficult tax and Medicaid problems as well.

3. Ignoring important safe harbors created by Congress. Certain transfers are allowable without jeopardizing Medicaid eligibility. These include: transfers to disabled children, caretaker children, certain siblings and into trust for anyone who is disabled and under age 65 ; a transfer to a “pay-back” trust if under age 65 ; and a transfer to a pooled disability trust at any age.

4. Failing to take advantage of protections for the spouse of a nursing home resident. These protections include the purchase of an immediate annuity, petitioning for an increased community spouse resource allowance, and in some instances petitioning for an increased income allowance or refusing to cooperate with the nursing home spouse’s Medicaid application.

5. Applying for Medicaid too early. This can result in a longer ineligibility period in some instances.

6. Applying for Medicaid too late. This can mean the loss of many months of eligibility.

7. Not getting expert help. This is a complicated field that most people deal with only once in their lives. Tens of thousands of dollars are at stake.. It’s penny wise and pound foolish not to consult with people who make their living guiding clients through the process.

8. Not knowing what to plan for. Many people don’t realize that even if they don’t end up in a nursing home, even home care at home or an assisted living facility can wipe them out. And put them out—if they run out of funds. When shopping a facility, it’s wise to select one that will accept Medicaid after assets are depleted. If this is the case you can plan wisely and leave funds protected for your family, spouse or loved ones.


Steve Barlam

Steve BarlamSteve Barlam is the CEO and co-founder of LivHome and has over 30 years of experience working directly with families as a MSW, LCSW and CMC. Steve Barlam co-founded LivHOME in 1999 with Mike Nicholson, Chief Executive Officer. Since 1984, Steve has worked exclusively in the field of geriatric care management. His experience draws from work in both the nonprofit family services arena as well as from his own private for-profit care management firm. Steve is a recognized leader in the field of geriatric care management and is professionally active as a speaker and writer at both the local and national levels.

The biggest financial mistake seniors and their loved ones can make in paying for elder care is…

Waiting too long before seeking advice from a financial or estate planning professional.

The longer you wait, the more costly the options become. When adopted too late in the game, they also tend to be less appropriate to the need at hand. For example, if a senior loses the capacity to engage in the decision-making process, his or her family may need to go through a more costly procedure such as conservatorship or guardianship, bringing in the court system. The senior may no longer have the wherewithal to apply for public benefits, or to express preferences that are in his or her best interest. In these cases, money will be spent on sub-optmial choices – which is a big financial mistake.

For this reason, I recommend anticipating potential eldercare needs and beginning conversations about them long before they are needed.

There are also important emotional costs to take into account: for example, the trauma of moving somebody into the wrong level of care, often against his or her will.


Joseph DeMattos

Joseph DeMattosJoseph DeMattos is president of the Health Facilities Association of Maryland, which represents most of Maryland’s 233 skilled nursing and rehabilitation centers. He is an adjunct instructor teaching leadership at the Erikson School of Aging at University of Maryland, Baltimore County.

One of the biggest financial mistakes seniors and their families make actually is…

Not having the conversation about financials in the first place. It would seem logical that today’s elders and their adult children would discuss financial plans for long-term care, however only a small percentage initiates this discussion. Many wait until there’s an acute care crisis or much later in the process when the senior has already lost independence to discuss finances. Adult children should approach their elder parents while they are healthy to discuss care plans and financial strategy.

Another mistake is seniors and their children not knowing where financial and legal documents reside or if they even exist. Seniors and their adult children should discuss power of attorney, wills, trusts and advance directives and review these documents often.


Lynda L. Hinkle, Esq.

LyndaLynda L. Hinkle is the head attorney of The Law Offices of Lynda L. Hinkle, a professional law firm serving clients in various cases. Lynda Hinkle is a bar certified attorney in the State of New Jersey, holds a J. D. from Rutgers School of Law Camden and she practices in the areas of Family, Domestic Violence, Child Custody, Estate Planning, Estate Administration, Small Business, Municipal Defense, Real Estate and Elder Law. Even before becoming an attorney, Hinkle was working hard to better the lives of families and individuals. Her experience in community service is incredibly extensive in both length and breadth.  She has worked as a teacher, an adjunct professor and an entrepreneur.

The biggest mistake that families make in financial decision making for their elderly members is…

Failing to consult an attorney as to the possible ramifications of financial decisions on Medicaid and Medicare, as well as their overall financial health. There are many pitfalls families can drop into easily without legal advice, and with a five year look back on Medicaid applications those financial pitfalls can be hit way earlier than the need for care.


Rob Stark

Stark Headshot

Robert Stark is the President of Melville Capital, LLC. The firm’s significant experience makes Melville uniquely qualified to handle all aspects of advisory and brokerage relating to Life Settlements.

Rob has been involved with finance, lending and life insurance for over 20 years. He is a licensed Life Agent and Life Settlement Broker in numerous states and holds Series 7 and 63 licenses in order to transact in Variable policies.

My best advice regarding financial planning for senior care is most relevant when life insurance coverage exists because…

It is essential to know ones options and have a strategy on how to turn this insurance into a benefit while still living.

Life insurance is an asset like stocks or bonds that can be sold.  As insureds age the risks they took life insurance coverage to insure (family needs, estate planning, etc.) have likely diminished or disappeared entirely.  The sale of a life insurance policy, as well as the money saved from avoiding future premium payments on that policy, can provide significant proceeds for all types of elder care needs.

A Life Settlement is the sale of a life insurance policy for a lump-sum cash amount exceeding the policy’s cash surrender value.  If an insured is 75 years of age or older, and has experienced a change in health since their life insurance policy was issued, a Life Settlement transaction must be examined.

Seniors and their Advisors, have been repeatedly told that seniors must “spend-down” their assets in order to eventually qualify for Medicaid.  For years, this advice has led seniors to surrender or lapse valuable life insurance policies.  55% of seniors surveyed by ICR Life Insurance lapsed policies because the policies were viewed as liabilities and not assets.  Worse yet, according to a recent study by the Insurance Studies Institute, 49% of financial advisors either know very little or nothing about Life Settlements and therefore do not recommended this solution to a client.

Life Settlements are suitable in any situation where a policy insuring a senior is either no longer needed or no longer affordable.  The financial benefits from a Life Settlement can provide for senior care needs and avoid reliance on family members for these expenses.


Bryan Stapp

Bryan Stapp is President of Medical Care Alert, a leading nationwide provider of medical alert emergency response systems for seniors.

The biggest mistake we see families make is….

Not being prepared or proactive with their elderly loved one, and having to be forced into a decision at a moments notice because of an unforeseen event (fall in the home, illness, etc).

Most of our clients for our medical alert systems get them because they recognize the preventative nature of the service (like an insurance policy), and the freedom and peace of mind it gives them and their families.

However, we often have folks get a system AFTER a fall has occurred and their parent has been left alone for hours on the floor. Typically we see those systems returned in 30-45 days as they are now unable to live independently at home and have been forced into a different living situation.


 

 

Medicaid: It’s Not Blanket Coverage!

 

Tighten Your Belt - Austerity

People tend to think of Medicare and Medicaid in a single breath, like peanut butter and jelly. But the two programs, while complementary, address distinct aspects of senior health care and finances. And neither of them offers blanket coverage for assisted living, despite this common misconception.

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Medicare, examined in detail in a previous post, covers:

  • Qualified medical care in a hospital
  • Short-terms stays in a skilled nursing facility (SNF)
  • Nursing home care (as long as the resident requires actual nursing care and not simply “custodial assistance” with daily needs such as bathing, dressing and eating)
  • Hospice care
  • Home health care, including physical and occupational therapy as medically prescribed.

There will also usually be out-of-pocket copayments, unless the Medicare recipient has additional insurance or another form of financial aid that covers these charges.

Medicaid, in contrast, is the “fallback resource” for financial assistance once Medicare coverage ends. Medicaid provides health coverage to more than 4.6 million low-income seniors, most of whom are also enrolled in Medicare. Services that are covered by both programs are paid first by Medicare, with Medicaid funding the difference up to each state’s payment ceiling.

However, while many nursing home residents rely on Medicaid as their principle form of financial aid, Medicaid will not generally pay for assisted living, although there are some states in which this is an option. In these situations, the individual must qualify for Medicaid and reside in an assisted living facility that participates in the state’s Medicaid program.

Though each state has different qualifying parameters for Medicaid, up until now all eligibility standards entailed exhausting one’s personal assets — an issue for seniors who wish to provide for their families or a spouse.

But the new Affordable Care Act, which President Obama signed into law in March, 2010 and which takes effect on January 1, 2014, contains a clause that protects couples from “spousal impoverishment” if one partner enters a hospital or nursing facility and is expected to be there for at least 30 days. This is a boon for seniors who exceed the Medicaid personal asset threshold yet do not have sufficient resources to pay for care once Medicare runs out, and don’t want to “spend down” the rest of their savings in order to qualify for benefits.

The best move for seniors who may wish to utilize the Medicaid program for housing support? Check with your state’s Medicaid office to see whether Medicaid coverage for assisted living or other senior living options is available in your state. If you plan to use Medicaid as financial aid for assisted living, be sure to ask whether the facility you’re considering moving to participates in your state’s Medicaid program.

You’ll find information about both Medicare and Medicaid, as well as many more suggestions concerning how to finance senior care, in this senior living financing guide.

About the Author:

Amara Rose is a personal and business coach with a broad background in health and positive aging. She writes widely about senior housing, elder health and nutrition, lifelong learning and the spiritual dimension of aging. Contact her via email amara@liveyourlight.com

 

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Medicare: The Low-Down on a “Catchall” Solution

 

Medicare private insurance graph

People who have not yet attained “senior status” may mistakenly believe that once they turn 62, concerns about future long-term care expenses will vanish: “Medicare will cover it”! While Medicare is certainly a blessing for older adults, it’s not a cure-all or a catchall, and seniors must become aware of how eligibility will impact their health, finances and living arrangements.

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At the top of the list of potential health and lifestyle changes is the new Affordable Care Act (ACA), signed into law by President Obama in March 2010 and due to take effect January 1, 2014. The ACA purports to:

  • Help Medicare recipients with the cost of prescription medications
  • Increase access to preventive care
  • Boost support for primary care practitioners
  • Offer seniors more Medicare advantages.

Yet even with its implementation imminent, the ACA legislation is still under fierce debate. Recent news reports reveal some insurers are limiting their networks of doctors and hospitals to those who are willing to accept less reimbursement. Doctors have been facing cuts in Medicare reimbursements as well, and some are now choosing to limit their practice to private pay and non-Medicare insured patients. Hospitals are streamlining staff in order to remain profitable, which translates to fewer doctors, nurses, and support personnel available to provide patient care.

However, regardless of what effect the ACA will have, it’s important for seniors and those who care about and for them to understand how Medicare works. Medicare will only cover long-term care under certain circumstances.

Medicare Part A (hospital insurance) will pay for:

  • Hospital care
  • Skilled nursing facility (SNF) care
  • Nursing home care (as long as the care involves skilled nursing — if someone only needs assistance with activities of daily living such as bathing, dressing, etc., in most cases Medicare will not cover it)
  • Hospice (end-of-life care, usually in the patient’s own home)
  • Home health services

Although Medicare will not cover the cost of assisted living, for example, it will cover qualified health care costs incurred while a senior resides in an assisted living facility. Medicare is therefore a temporary and/or partial resource, not a long-term subsidized housing solution.

Medicare Part B (medical insurance) covers medically necessary services and preventive care: physician services, lab and x-ray services, durable medical equipment, outpatient and other services.

Medicare Part C, the Medicare Advantage Plan, is supplemental insurance offered by private, Medicare-approved companies.

Medicare Part D covers prescription medication.

Because federal and state laws affect Medicare’s various plans, it’s essential to know what coverage you have. Medicare.gov explains the different types of coverage simply, and provides an easy way for you to check whether your service or test is covered.

What about Medicaid? This program is more of a “last resort” because it generally requires individuals to have exhausted their personal assets — although this is projected to change somewhat under the ACA. Watch for a detailed Medicaid overview in an upcoming post.

Bottom line: both housing and health care are critical factors for an aging population. The more knowledgeable seniors and their loved ones become about how to finance their future, the better equipped they will be to manage these arrangements and costs when the time arrives. This senior living financing guide can assist you on your journey.

About the Author:

Amara Rose is a personal and business coach with a broad background in health and positive aging. She writes widely about senior housing, elder health and nutrition, lifelong learning and the spiritual dimension of aging. Contact her via amara@liveyourlight.com

 

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Silver Linings: Low Income Senior Housing

 

Caution Seniors (Low Income Housing)

While “low income senior housing” may sound unappealing to some people, the reality is that affordable housing can be a boon for seniors who find themselves spending the lion’s share of their retirement income on rent. And unless you are disabled or require long-term medical care in a nursing facility, neither Medicare nor Medicaid will pay for senior housing on an ongoing basis.

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Following are several ways to reduce your senior housing expense so you’ll have more money to enjoy your later years.

Option 1: Low Income Housing Tax Credit (LIHTC). This federally funded program has been available to the public since 1997. While not specifically targeted towards seniors, the goal is to ensure there is enough low-income housing to meet the needs of the population. According to HUD the (U.S. Department of Housing and Urban Development), which created the LIHTC, an average of 105,000 units were made available each year from 1995 to 2011.

It’s up to the building owner to choose how many units to set aside for low-income residents. For instance, an owner may opt to set aside 20 percent of a building’s units for those whose income is less than half of the median household income in the area. The other option is to set aside 40 percent of the total units for those whose income is less than 60 percent of the local median household income. Dwellings that meet the reasonable, safe accommodations requirement and other qualifying rules may then apply for the tax credit.

Owners accept the rent amount specified by HUD to participate in the program and be eligible for tax credits. If a senior meets the HUD income criteria, they can research their local area for dwellings that are HUD-approved and offer the housing tax credit.

 

Option 2: Housing Choice Voucher Program. More commonly known as Section 8, this low-income option, also offered through HUD, enables low-income residents to rent “safe and reasonable” apartments or other accommodations. Under Section 8, landlords accept 30 percent of the family’s or individual’s income as a full rent payment.

In terms of income guidelines, individuals generally must have an income that doesn’t exceed 50 percent of the median income in their local area (county or metropolitan area). This allows the program to function effectively in any location. Section 8 is not contingent on age (i.e., it is not a senior-specific low-income program).

 

Option 3: Section 202. Also funded through HUD, the Section 202 Supportive Housing Program is specifically geared towards seniors: adults aged 62 plus who meet the “very low income” requirement. It’s the only U.S. affordable housing program offered exclusively for seniors. In effect for more than half a century, Section 202 currently funds over a quarter million units for the elderly.

Section 202 is similar in structure to Section 8. Participants pay 30 percent of their income for rent, with the HUD subsidy making up the balance.

A perk of Section 202: This housing option may offer combined features of both independent living and assisted living. For example, some Section 202 housing developments provide assistance with activities of daily living (ADL), along with meals and transportation; others might offer free blood pressure screenings and social events, such as “movie night.” For seniors who are noise sensitive, Section 202 housing will also be quieter than general subsidized housing, because the only children around will be visiting grandkids!

An applicant selected for the Section 202 program signs a lease and a tenant rental assistance contract, verifying their income. Since this may change over time, the contract states that a senior agrees to be re-certified annually to ensure they are still eligible to receive assistance. If their income should exceed the very low-income limit, they will no longer receive a rental subsidy — however, they can remain in Section 202 housing as long as they wish.

Obviously, both later life housing and health care are crucial issues for seniors and their loved ones. To help you make the best decisions, please review this comprehensive guide to paying for health care and senior living as you and your family plan for current and future health and housing needs.

About the Author:

Amara Rose is a personal and business coach with a broad background in health and positive aging. She writes widely about senior housing, elder health and nutrition, lifelong learning and the spiritual dimension of aging. Contact her via amara@liveyourlight.com.

 

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Seniors and Supplemental Security Income

 

Social Security (SSI)

Supplemental Security Income (SSI) is a federal income program administered through the U.S. Social Security Administration. SSI is a needs-based program created to assist people aged 65 and over, as well as those who are blind or disabled, who are living on an extremely limited income.

SSI is distinct from Social Security, which is based on the number of years worked and amount of tax paid. SSI is also different from the similar-sounding SSDI (Social Security Disability Income), which is a payroll tax-funded, federal insurance program designed to assist people who are unable to work due to a disability. SSI functions independent of your employment history. Even if you have never paid into Social Security, if your income is below a certain threshold and you’re 65 or older, you can receive SSI benefits.

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To be eligible for SSI, an individual’s total assets cannot exceed $2000 (or $3000 for a couple). Resources you are permitted to own and remain eligible include real estate, bank accounts, stocks and bonds. In addition, when making its resource determination SSI does not count the home you live in, life insurance policies with a face value of $1500 or less, your car (in most cases) or burial plots for you and members of your immediate family.

SSI benefits are paid monthly and can be used as the recipient chooses: for food, clothing, shelter and other necessities. This online benefit eligibility screening tool can help you determine whether you qualify for SSI. The tool will also let you know whether you’re eligible for Medicare, SSDI, Veterans benefits and several other federal income programs.

Seniors may choose to use their SSI benefit to help cover the costs of senior housing, either as partial rent payment for independent living or in a facility. Some personal care homes and assisted living facilities will work out payment arrangements with individuals in need of care. These arrangements typically involve accepting the person’s SSI income as full payment, while the facility provides necessary care and services.

However, not all senior living facilities offer this as an option. And while these cash benefits can be used to cover a variety of living expenses, Medicaid is often a better option for seniors with limited incomes to pay for nursing home care.

Whether or not you qualify for SSI, you may also want to explore other potential sources of senior living funding, including Long-term Care Insurance (LTCI), Veteran’s Aid and Attendance Benefits, PACE (Program of All-Inclusive Care for the Elderly) and Life Settlements. Depending on your health status and where you currently live, one or more of these programs may be a financial option for you in your later years.

Because finances and health care are critical issues for seniors and their loved ones, it’s essential to become familiar with all the potential resources available for your needs, which may change over time. To support you in making the best decisions possible, please review this comprehensive guide to paying for health care and senior living.

About the Author:

Amara Rose is a personal and business coach with a broad background in health and positive aging. She writes widely about senior housing, elder health and nutrition, lifelong learning and the spiritual dimension of aging. Contact her via amara@liveyourlight.com

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Residence-Based Scholarships for Seniors

 

 

Residence based scholarships

Many high school seniors apply for various college scholarships that cover part or all of their tuition and living expenses. However, when the same type of need occurs at the other end of the life spectrum, seniors may not know where to turn. Finding oneself aged 62 plus, living on a reduced income and having difficulty making ends meet can be very disconcerting after a lifetime of financial solvency.

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To address this essential need, some senior living facilities offer financial assistance in the form of residence-based scholarships. Like the scholarships offered to teens for college, residence-based senior scholarships may fully cover the expense of assisted living or long-term care, or they may partially offset the cost of residential housing.

Much depends on both a resident’s income level and the facility’s resources. Some residence-based scholarships are made available through a facility’s own fundraising and/or endowment efforts. Since each residence, or their management or parent company, oversees these financial scholarships directly, seniors who are interested in applying for a residence-based scholarship first need to find out whether the facility they are planning to move to, or already reside in, offers such programs. If so, they can ask about the types of scholarships available, learn whether they quality, and begin the application process.

Because finances and health care are critical issues for seniors and their loved ones, it’s never too soon to start planning for senior living. You may wish to consult an elder care attorney before you might ever need assisted living or other long-term care, in order to protect your assets and plan for needs which are likely to change over time. Elder care financial advisors and geriatric care managers are two other types of consultants who can help you plan for future senior living needs.

To support you in making optimal senior living decisions, please review this comprehensive guide to paying for health care and senior living.

About the Author:

Amara Rose is a personal and business coach with a broad background in health and positive aging. She writes widely about senior housing, elder health and nutrition, lifelong learning and the spiritual dimension of aging. Contact her via amara@liveyourlight.com

What Seniors Need to Know About Life Settlements

 

Life Insurance Cycle (Life Settlement)

Life settlements offer seniors a way to turn their life insurance policy into income for their remaining years. In a life settlement, a senior who has exhausted his assets, is 65+ and not chronically or terminally ill, sells his life insurance policy to a third party for more than its cash surrender value (the amount he would receive if he voluntarily terminated the policy prior to its maturity) but less than its net death benefit. The purchaser takes over premium payments on the policy, and collects the benefits upon the original policyholder’s death.

In theory, life settlements sound quite attractive: in 2009, the United States Senate Special Committee on Aging determined that life settlements yield an average of eight times more money than the cash surrender value offered by life insurance companies.

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However, there is a downside: like reverse mortgages, life settlements can have high transaction fees. A number of organizations will gain access to your health information. And releasing one’s assets in this way can substantially reduce your estate, meaning there will be less to leave for loved ones. Therefore, a life settlement is recommended only when the policyholder is out of income options, has a relatively limited life expectancy and is perhaps unable to continue to pay the policy premiums.

To safeguard seniors, FINRA (Financial Industry Regulatory Authority), a non-profit, non-governmental organization dedicated to investor protection, recommends people ask the following questions to determine whether a life settlement makes sense for them:

  • Is the life settlement broker or provider licensed in my state? Check with your state insurance commissioner. If you are working with a securities broker, use FINRA BrokerCheck.
  • What will happen to my policy? The individual or company that purchases your policy will become responsible for paying the premiums and will collect the death benefit when you die. They will also gain access to extensive personal information about you, including your health status.
  • What information will I have to provide? When you sell your life insurance policy, you authorize the release of medical and other personal information, which the buyer may share with other parties, including lenders or third party investors.
  • How can I protect my privacy? Before accepting any offer from a life settlement company, find out how the company protects your confidentiality.
  • How do I get the best price for my policy? If you are using a life settlement broker, ask what bids were received and what steps the broker used to make sure you are being offered the most competitive price available.
  • What are the transaction costs? The commissions paid by life settlement companies to life settlement brokers and other financial professionals involved in the transaction can be as high as 30%. Ask your broker or other financial adviser what they are being compensated for their role in the transaction and how their compensation is being calculated.
  • What are the tax consequences? The lump sum payment you receive in exchange for your life insurance policy may be taxable, depending on your circumstances. Before entering into a life settlement, check with a tax professional.
  • What if I change my mind? You do not have to accept an offer to purchase your life insurance policy, even if you shopped around for the best price. If you do accept an offer and later reconsider, some states allow you to change your mind within a set time period.
  • Is the life settlement in my interest or my investment professional’s? The person purchasing your policy gains a financial interest in your death. And almost half of all life settlement transactions result in the purchase of new life insurance.
  • Am I being pressured to make a fast decision? A legitimate investment professional will provide clear answers to your questions and will give you the time you need to make an informed decision.

Finances and health care are vital issues for seniors and their loved ones. To support you in making the best decisions for your evolving needs, please review this comprehensive guide to paying for health care and senior living.

About the Author:

Amara Rose is a personal and business coach with a broad background in health and positive aging. She writes widely about senior housing, elder health and nutrition, lifelong learning and the spiritual dimension of aging. Contact her via amara@liveyourlight.com

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“How Will I Manage?”

Most people anticipate retirement as a time of leisure, when they can take a trip, play golf, embrace a lifelong passion such as music or art, or spend more time in the garden and with the grandkids.

But if they’re hurting for money, none of these dreams will be easily realized. A recent study by Banker’s Life & Casualty found that 14 percent of Baby Boomers have no retirement savings, while 55 percent of middle-income Boomers’ retirement accounts have balances under $100,000. That’s not a lot of savings once someone has a significantly reduced retirement income.

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But there’s good news: many soon-to-be-retirees do have significant equity in their homes. And both Boomers and older seniors can tap this financial reserve with a reverse mortgage, or Home Equity Conversion Mortgage (HECM), a federally insured program that allows homeowners 62+ to convert some of their home equity into cash to fund their retirement years.

How does a reverse mortgage work? As the name implies, it’s like a traditional mortgage in reverse: instead of making a mortgage payment each month, the accrued equity in your home pays you. There are a variety of types of reverse mortgage loans to suit different needs (in fact, the entire reverse mortgage program is being overhauled in October 2013, so specific options will shift).

Here are three key elements in the reverse mortgage timeline:

  • 1961: The first reverse mortgage is created by a savings and loan executive as an act of kindness, to help a struggling widow make ends meet;
  • 1989: Reverse mortgages become a federally insured program through the Housing and Community Development Act, signed into law by President Reagan;
  • 2000: HUD (Department of Housing and Urban Development) begins requiring third-party reverse mortgage counseling as a consumer safeguard. Shortly thereafter, telephone counseling, in addition to in-person counseling, becomes available.

As longevity continues to rise, people also worry about “outliving” their money. There’s good news here, too:

  • A homeowner can’t “outlive” a reverse mortgage loan. As long as at least one borrower (that is, a person 62 years of age or older, whose name is on the title to the house) remains living on the property, and pays the property taxes and insurance on time, they can stay in the house for the rest of their life — even if the loan balance exceeds the value of the home!
  • The reverse mortgage never has to be repaid by the borrower, unless and until the last property owner decides to move or sell, or vacates the home for more than one year. In practical terms, this means that if your spouse needs to move into an assisted living facility, for example, the reverse mortgage remains in effect as long as the other spouse a) is named on the title and is 62+ b) lives in the house c) maintains it adequately and d) pays the property taxes on time.

So the real question then becomes: how can a reverse mortgage help seniors remain independent?

  • It allows them to remain in the home and community they may have lived in for decades, rather than have to move;
  • It provides a nest egg for future health care expenses, because every penny is no longer tied to mortgage payments. A reverse mortgage may mean a smaller inheritance for your offspring, but most adult children would agree that mom’s or dad’s needs come first. After all, it’s their house, and very likely the one in which they raised those same children;
  • It enables seniors to “age in place” with the use of community resources (such as in-home assistance ranging from companions to home health aides to skilled nursing visits) and home modification, which can include something as simple as installing grab bars in the shower or a wheelchair ramp, to a more accessible kitchen remodel and stair lifts for hauling groceries, laundry — or people.

Below are seven guidelines to help you decide whether aging in place makes sense for you, and if so, whether to explore a reverse mortgage. Aging in place can serve a senior well if:

  1. You have sufficient equity in your home to qualify for a reverse mortgage;
  2. Your health is generally good, and you are mobile (physically able to get around);
  3. You have a network of local family, friends, and neighbors;
  4. You drive, and alternate transportation is readily accessible;
  5. You live in a safe neighborhood;
  6. Your home can be modified to address changing needs;
  7. You’re well connected and able to reach out for social support.

Home holds deep meaning for most of us. Being able to remain “at home” in familiar surroundings thanks to a reverse mortgage can be a financial boon for seniors as they plan for the rest of their lives.

About the Author:

Amara Rose is a personal and business coach with a broad background in health and positive aging. She writes widely about senior housing, elder health and nutrition, lifelong learning and the spiritual dimension of aging. Contact Amara via email amara@liveyourlight.com

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What’s the Best Age to Start Thinking about Retirement?

Retirement is an important topic, especially as people get older. It may seem like worrying about retirement is only for older people; however, this is a common misconception. While most people can’t retire until they are in their sixties or seventies, thinking about retiring should start as soon as you start working. The government benefits for retirees is simply not enough, so people need to think of new ways to save money toward retirement, and they need to start early.

Planning for Retirement Early

Many companies offer retirement plans such as 401Ks and IRAs. Many times, companies will match a certain percentage of the worker’s investment into these plans. That is free money for your retirement. If you start a plan early, that’s more money that you and your company are putting toward your retirement. Even people who are not able to use a work retirement plan can start their own IRA or 401K. The sooner you start adding money, the faster you can retire and the better life you will have. For example, if you start saving at 25 and save 15.4% each year, you can be financially independent at age 65. However, if you wait until you are 35, then you have to save 30.1% a year to reach financial independence by age 65. That’s about twice as much for only missing 10 years. That is why starting planning now is so important.

Social Security

As you’re working, the government is taking some of your money and putting it toward social security for when you retire. The longer you work and pay into social security, the more credits you earn. Once you have enough credits, you can retire and receive social security benefits. For some people, the benefits from social security might be enough for them to live comfortably in their retirement; however, social security was never supposed to be the only source for retired income. While, social security makes up about 40% of the individuals average wages, they still need to find a way to replace the other 70% in order to continue their lifestyle. Most people do not need to worry about social security as long as they work on a regular basis. The government automatically takes money and gives them credits. However, for the remaining 70%, workers need to take matters into their own hands.

Savings and Retirement Plans

While, you don’t need to worry about social security at a young age, as long as you are working continually, there are other retirement benefits to consider. These benefits need to be started early in order to get the most money in the smallest amount of time. Starting saving early lets you put more money in sooner and compiling interest faster. Many people try to put money in their savings to put toward the future. Savings accounts usually accrue interest, and are a great way to save and grow money. However, they do require self-control because it is so easy to pull out the money and never replace it. Retirement plans like IRAs and 401Ks are a great way to set money aside without the risk of taking it out. There are many rules set around IRAs and 401Ks, so that people are only able to withdraw money for retirement. There are a few special circumstances that will let people withdraw early, but they often have to pay heavy taxes and penalties on the money, making it very unappealing

Conclusion

Waiting to think about retirement is a big mistake. Even waiting a few years could cost you thousands in interest. Starting early means that you have to put away less money each year, but you reach your goals faster. Social security is not the only benefit you should consider. Retirement plans and savings are also important, but they need to be started early in order to reach the best pay-out possible.

Author Bio: Nisha represents a site called MHA.org.uk. She enjoys writing about elderly health and dementia care.

Getting Organized: Important Documents for Caregivers and Families

If you’ve ever had your wallet stolen, you know how convenient it is to have a photocopy of the important contents: your credit cards, driver’s license, insurance cards. You might know how inconvenient it is to NOT have those items copied. You’re suddenly sifting through old bills, files and paperwork to make the calls and stop the accounts, hoping beyond hope you haven’t forgotten one, or taken too long. Basically, wishing you had been more prepared.

In a similar way, preparedness is a gift to your family members as you age. Experts advise that you have your plans and wishes documented. There are many elder care lawyers available to help with this process. Prepare a will; designate an executor; talk about end-of-life decisions with your family before you’re in the frenzy of the moment.

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Photo credit: stock.xchng, Plex

Do-It-Yourself Task

Often times it’s just organizing your materials. Documents organized in a filing cabinet, stored in a fire-proof safe, or within an electronic spreadsheet of accounts, numbers and important passwords make it much easier on your caregiver or family members, and with help, you can get your papers in order.

The job  is not an afternoon in the park, by any means. But setting aside a little time every day or week until you can check off items from the checklist below will put your worries at ease, make you feel more in control of your life and make the path much clearer for your loved ones when they are focused on you.

Follow this basic checklist of important documents and information for your loved ones:

  • Birth certificate
  • Social Security records
  • Health and life insurance records, including your account numbers
  • The names and phone numbers of your primary care doctor, as well as significant specialists you’ve seen. You may also include documentation of your recent medical history
  • Advance directives. If you don’t have an advance directive, start with your family doctor, attorney or long-term care facility
  • Name of clergy or layperson
  • Funeral pre-arrangements, if you’ve made them
  • Medicare documentation
  • Trust documents
  • Will documents
  • Military records
  • Divorce records

Deserving of its own checklist are the following financial documents:

  • assets and sources of income
  • bank accounts/safe-deposit box
  • mortgage papers
  • investment records
  • negotiable securities
  • credit cards
  • your most recent income tax return
  • loans, payments and balances

Gathering this information in advance and talking to your caregivers or loved ones before there’s a health scare or you’re unable to do so lessens the burden of confusion and grief. It’s a gift of preparedness that will make a difference.