Receiving a diagnosis of Alzheimer’s Disease can bring a lot of questions, including how to pay for the care you do or will need. Because Alzheimer’s is a progressive disease, the level of care changes over time and often leads to long-term care. Long-term care for someone diagnosed with Alzheimer’s could range from round-the-clock care in a memory care facility to part or full-time in-home care. Long-term care providers often assist with Activities of Daily Living, which are your basic personal tasks of everyday life like getting dressed or going to the bathroom.
With the likely need for long-term care comes the expense of long-term care. While you may not need long-term care right now, you can begin planning for that scenario to hopefully lower the burden if and when you need long-term care. The total lifetime cost of care for someone with dementia was estimated at $377,621 in 2021.
Conduct a Self-Audit of Financial Documents
Planning right after receiving a diagnosis of Alzheimer’s allows you to have control over your care later and prepare for the financial burden it may bring. It is important to assess the current state of your financial documents. We recommend conducting a full audit of your financial documents. Reviewing these documents can help you figure out what additional steps you may need to take to prepare for the costs that may come later.
Considering the Cost of Care
After you have assessed your current financial situation, you will want to estimate the cost of care as the disease progresses. At first, you may only need someone checking in on you once or twice a day, but as Alzheimer’s progresses, you may need care for longer amounts of time or even full-time care.
First, you will want to consider what type of care you prefer. If you would prefer to have full-time in-home care before being moved to a memory care facility, you will want to ensure that you have funds set aside for in-home care.
If you want to have a family member care for you, you need to make sure you have had a conversation with that family member and put a plan in place for how the care will be provided. For example, will that family member continue to work or will they stay home full-time? In 2021, family members and friends provided more than $271 billion in unpaid care to people living with Alzheimer’s and other dementias.
Exploring Resources to Pay for Care
When planning for long-term care, you will want to consider both private and government resources as options for paying for care. Private resources can include:
- Personal savings and assets. This is what we would refer to as private paying. We usually do not recommend making private paying your only plan to pay for long-term care. Even for someone that has a substantial amount of wealth, why would you want to spend a large portion of it when you can preserve those assets and use another option to pay for your long-term care?
- Life insurance. There is a special type of life insurance that has a long-term care rider added on to the policy that can be used for long-term care expenses. The basic concept is that the insurance company will allow the insured to accelerate the death benefit of the policy if the insured is unable to perform two of six daily living activities (eating, dressing, bathing, transferring, toileting, or continence) or if the insured is cognitively impaired.
- Traditional long-term care insurance. When we say “traditional long-term care insurance,” we are referring to policies that insure against future long-term care expenses, require an annual premium, do not have a cash value or death benefit, and allow the premium to increase over time. Traditional long-term care insurance policies are “use it or lose it.” If you pay the premiums for years and never need long-term care, then you have lost the money you paid into the policy.
- Retirement benefits. Using retirement benefits to pay for long-term care would be another form of private paying for care, and again, we would not recommend making that your only plan for payment.
- Disability insurance from an employer-paid plan or personal policy. When planning to utilize any disability plan for long-term care, you will want to read the policy closely to ensure it covers Alzheimer’s.
If you are planning to use long-term care insurance to pay for care, you will need to check the details of your policy. Most of the time a long-term care insurance policy cannot be purchased after receiving a diagnosis of Alzheimer’s, but if a policy is already in place at the time of diagnosis, you can check the policy to ensure it covers long-term care for Alzheimer’s.
Government resources can include:
- Medicare. Medicare usually does not pay for long-term care, but it usually does cover things like trips to the doctor’s office or the hospital.
- Medicaid. Medicaid is a needs-based program for people 65 years of age or older, or who are permanently blind or disabled. Because of Medicaid’s specific income requirements, it is important to make sure that you actually qualify before applying. Sometimes people wishing to use Medicaid benefits to pay for long-term care must first spend down their assets to meet Medicaid’s qualification requirements.
- Supplemental Security Income (SSI). Receiving SSI automatically qualifies you for Medicaid benefits, so you could use your SSI in tandem with Medicaid benefits to pay for long-term care.
- Veterans benefits. The Veterans’ Health Administration (VHA) provides healthcare services to eligible veterans. Due to a lack of funding, the VA prioritizes available services to veterans based on the extent of their service-related injuries. There are a total of eight priority groups. The further down the list you go, the less likely you are to receive those services, so it is important that if you were planning on using VA benefits to pay for long-term care you know where you fall in the list of priority groups.
- Tax deductions and credits, such as the Household and Dependent Care Credit. If you are living at home, the person you live with may be able to utilize this tax credit. You would want to check with a qualified tax professional to see if it would apply to your circumstances.
When considering utilizing government resources to pay for care, it is crucial to pay close attention to the qualification requirements for the program(s) you may want to utilize. For example, Medicare does not usually pay for long-term care, but Medicaid does. However, you must qualify to receive Medicaid benefits as Medicaid is a needs-based program. Intending to use Medicaid benefits later on often requires its own planning.
We Can Help You Develop a Long-Term Care Plan
Having assisted many clients with long-term care planning, our team at Carolina Family Estate Planning understands that developing a long-term care plan is not just about protecting your own independence and dignity, but also about protecting those you love from the physical, emotional, and financial toll that caring for a loved one can take.
We’ve helped many clients take an interdisciplinary approach to their long-term care planning by exploring both legal and financial options. Usually, a well-rounded long-term care plan will involve a combination of legal, health care, and financial tools to meet your goals and maximize your protection.
For more information, check out our free guide to Alzheimer’s Care, and give our office a call at 919-443-3035 and one of our friendly Client Welcome Specialists will be happy to tell you more about The Alzheimer’s Planning Center and our unique Memory Safeguard Planning, to help you determine the best path forward, and to help you take the next steps toward a more secure future and a better life.