Remember the old fable of the ant and the grasshopper? I was reminded of this fable recently, and it struck me at how applicable it is when it comes to long-term care planning. Our office has helped many families plan for long-term care. Sometimes it is what we call “crisis” planning, meaning that the client already needs care or will need care very soon. For others, we do “preplanning,” meaning that the client is relatively healthy, but wants to plan ahead for the possibility of needing long-term care.
Many of us are natural procrastinators and this is particular true when it comes to long-term care issues. They’re not pleasant issues to think about, so most want to put them off for another day, but to what effect? If you’ll indulge me, I’d like to use a take on the ant and grasshopper fable to demonstrate the difference.
Meet the Harry and Henrietta Hopper
As Harry neared retirement, he and Henrietta decided they would take advantage of the prepaid legal plan through Harry’s employer to set up their wills. They couldn’t understand why their good friends, Andy and Alice Ant would opt to spend money to separately hire an elder care attorney when they could just have the prepaid legal attorney draw up a will for them. When they signed the wills, the attorney mentioned something about powers of attorney, but Harry and Henrietta thought that meant giving up control, which they weren’t ready to do. They figured they’d wait until needed to set them up.
Several years later, Harry suffers a stroke. He requires significant rehabilitation and needs a walker to get around. As such, he’s no longer able to reach their bedroom upstairs, so the Hoppers convert their dining room into a makeshift bedroom. With Harry’s limited mobility, Henrietta is left to assume responsibility for the household chores and home maintenance. Their children stop in occasionally to help, but they also have jobs and families of their own to care for and Henrietta doesn’t want to burden them by asking for assistance. Henrietta contacts an in-home health care agency to inquire about getting some assistance for Harry, but when she learns how much it will cost, she decides to hold off as long as possible.
Eventually, Harry’s health and cognitive abilities continue to decline and he can no longer remain alone in the home. Henrietta inquires once again about in-home care and at this point, due to Harry’s increased care needs, is shocked to discover that the in-home care would cost more than if Harry were to move into a nursing home! Although they have some retirement savings, the cost of the in-home care would rapidly eat through the funds, so Henrietta decides to stick it out a little bit longer.
A few months later, the Hoppers children intervene. They can see that caring for their father is taking a great toll on their mother and that the time has come for Harry to move to a nursing home. Reluctantly, Henrietta agrees.
As they are completing the admission paperwork, Henrietta asks the nursing home representative about Medicaid. She is told that they will need to “spend down” their assets significantly before Harry will qualify for assistance and that she may need to go to the courthouse to obtain “guardianship” of Harry so that she can handle the finances. At several thousand dollars per month, the nursing home bills will rapidly eat through their savings.
Henrietta pays for Harry’s care out of pocket for several months, until Harry finally qualifies for Medicaid. Henrietta visits Harry in the nursing home each day. At this point, Harry’s short-term memory is severely impaired. He does not remember why he is in the nursing home. Each day he repeatedly asks his wife why is he in there and tells her that he wants to go home.
One day the stress finally catches up with Henrietta and she dies suddenly from a heart attack. The family is devastated. All these years, they had put so much concern on Harry’s care, that they never contemplated the possibility that Henrietta might die first. It was only then that they discover that because Henrietta was so worried about taking care of Harry and making sure that he wasn’t left unattended, that she had neglected to see her own doctor for a couple of years.
When it comes time to plan Henrietta’s funeral, the children are fraught with grief and guilt. Wanting nothing but the best for their mother, they plan a lavish memorial service. Next, it is time to settle the estate. That is when the family learns that Harry and Henrietta owned most of their assets jointly. With Henrietta’s passing, this means that the assets are now in Harry’s name. As a result, Harry loses his Medicaid eligibility until the assets are spent down even further to requalify. At this point, all that is left is the Hoppers home and less than $2,000 in savings.
A few months later, Harry passes away. Shortly thereafter, the children are shocked to receive a letter from Medicaid informing them that they are required to sell their parents’ house and pay Medicaid back for the care that was provided to Harry!
Meet the Andy and Alice Ant
Andy and Alice Ant had seen first-hand the toll that long-term care can take when Alice’s mother had Alzheimer’s disease. They wanted to do everything they could to make sure that if either or both of them were to need long-term care, they would both be able to receive quality care in their home without becoming a burden to their children.
After meeting with a couple of estate planning attorneys that didn’t seem to understand long-term care issues, the Ants found a local elder care attorney to assist them. They discuss their goals with the elder care attorney, including things like wishing to remain in their home if care were needed, providing a legacy for their children and grandchildren, and avoiding the hassle of probate for their family to make things as easy as possible for them.
After discussing these issues with their attorney, the Ants decide to move into a single-story home in an independent senior living community. They develop some great friendships with the other residents and really enjoy all of the amenities available to them.
Those amenities really become a godsend when Andy is diagnosed with cancer and has to go through draining radiation and chemotherapy treatments. Alice is so relieved that they have housekeeping, laundry and dining services available to them so that she can focus on caring for her husband.
Unfortunately, Andy’s treatments do not work and he passes away. When the Ants set up their planning, they had also set up prepaid funeral arrangements and Harry had provided detailed guidance that he wished to be cremated and only have a modest service. Although the family was still grieving, the process itself was quite easy.
With the loss of her husband, Alice’s children visit regularly to check in on their mother, and it becomes apparent that she is suffering some memory loss. After a thorough diagnosis by a neurologist, it is determined that Alice is showing early signs of dementia.
As her dementia progresses, Alice begins needing assistance with some of the activities of daily living (e.g., getting out of bed, using the restroom, bathing, dressing, eating, and incontinence). The time comes for her to move to the assisted living section of the senior community she is already residing in. Although the cost of the assisting living care is quite a bit higher, the Ant family doesn’t have to worry because Alice has lifetime long-term care coverage in place that will enable her to afford the cost of the assisted living for as long as needed and Alice will be able to enjoy the social and recreational opportunities that the community offers.
Years later, when Alice passes away, the family again is thankful that through their careful planning, the Ants had already taken care of their funeral arrangements. In addition, the documents that the elder care attorney helps Andy and Alice set up, allowed the children to handle the estate privately without the intervention of the probate court. The children each receive an inheritance that gives them the financial freedom to pay off their mortgages and know that they have a nest egg to help them in retirement. The grandchildren also each receive funds to help with college education expenses.
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