Thursday, August 1, 2013

Long Term Care Planning: Lessons from my Dad

Medicare is health insurance for individuals age 65 and over who are entitled to Social Security retirement benefits (or have received Social Security disability benefits for two years.) When Medicare was enacted in 1965, the thinking was that working people would “pay in” during their earning years, so that illness in their later years wouldn’t eat up their life savings. 

And yet now, almost 50 years after its enactment, Medicare is not the panacea many had hoped. Why not?

Because Medicare doesn’t cover long term care which is what you need with Alzheimer's or Dementia. Medicare only provides coverage for acute care and skilled care.  According to “America’s Long Term Care Crisis,” in July’s Trusts & Estates Magazine,  13% of the population is now over age 65, and 1.8% of these  folks (5.7 million) are over 85. More than half of those over 85 need assistance with daily living and assistance is expensive

With home care cost now running $55,000-$75,000/year, and care in a nursing home costing up to $180,000/year, how does the unaffordability of long term care play out in human terms?

My Dad: A Case Study

My Dad worked for one company for 45 years. Between his pension, social security and lifetime medical coverage (lucky guy!) he could afford a simple life on about $40,000/year. But by his 85th birthday, after a series of fender benders and stairway falls,  Parkinson’s and Dementia  got the better of him.  My siblings and I forced him to surrender his car and figured we’d move him to an apartment with an aide in his neighborhood.

But my Dad vetoed the new ground floor apartments, mostly because he couldn’t handle the change and new floor plans.  This is a very big deal with Dementia. Without a car, and with increasing phone calls to bring him food, we took him to my home until we could formulate Plan B.

For two weeks, as I explored renting a house with him, getting an aide and senior living, my 20 year old daughter babysat him.  He had difficulty navigating our home and at night he plopped into whatever bed he happened upon. The full reality of his illness hit us and we now knew first hand how tough basic living had become for him.

 Within a few weeks, we felt “lucky” to have him safely ensconced in a senior living facility, for about $6,000/month. Since the layout was the same as his former apartment,  he got the hang of it quickly. In his lucid moments, he was enraged that his new digs were about a third the size and 4x the cost. He cursed me and thought me a lunatic to have agreed to such a thing. Mercifully, logical discussions about these subjects became less frequent as his disease progressed.

But even at this juncture,  the economic reality of my Dad’s situation proved quite sobering for his children. None of the four of us had had one employer for more than 10 years, let alone 40. Already in our 50s, our lives reflected the times we live in: several jobs, job losses, periods of unemployment; retirement benefits and IRAs cobbled together between mortgages and kids’ college education.  What would await us when we need long term care?

After about a year in “senior living,” my Dad took a fall and was given the “do not return” card from the facility.  Fortunately, because he was in the hospital for at least three days, and admitted to a rehab-nursing home with skilled care within 30 days after that, he was covered by Medicare in full, for the first 20 days, and then was required to pay a daily co-pay of $148/day for days 21 through 100. After Day 100, there is no coverage unless another illness crops up.  After 100 days in skilled care, then what?

Long Term Care Isn’t Covered by Medicare

Folks like my Dad who lived long enough to be debilitated by Dementia and Parkinson’s require care, but not the “skilled” care needed to secure Medicare coverage.   The rules regarding how much is covered for home care benefits etc., is limited, because the definition of medical necessity is limited.  So what happens next? 

In my Dad’s case, he couldn’t tend to his daily needs because he couldn’t walk, bathe himself or go to the bathroom on his own. He didn’t so much require “medical” or “skilled” care, but rather “custodial” care. And that’s not covered by Medicare.
Out of options, we felt fortunate to have found a clean safe nursing home where the monthly bill climbed to $12,000/month instead of the $6,000/month in senior living. 
By that point we had begun the 18 month process of securing Veterans’ Benefits for him (he was a WWII veteran), which were later paid retroactively from the date of application. With these new funds, we managed to negotiate a more affordable rate with the nursing home. His monthly income was too low to afford the place, but rendered him ineligible for Medicaid. A real tough "Catch 22."

It really made us wonder who has $12,000/month to pay for care! And we’re not talking about Ritz-Carlton care here. We’re talking about a nursing home where residents are in various states of dementia, disability and ability to care for themselves.   In this difficult environment, the care, health and well-being of the residents essentially depends on the caring kindness of very low paid workers.

Neither Medicare nor the new Patient Protection and Affordable Care Act of 2010 covers care for long term chronic care. With Alzheimer’s, dementia and similar ailments on the rise for seniors, the promise of Medicare is a false one.  When a person runs out of money and needs care, not covered by Medicare, your next “failsafe” is Medicaid. Medicaid is another federal system, run at the state level, with rules, regulations, and hurdles. It is another subject for another day.

My Personal Long Term Care Plan

 After experiencing the process of watching my father move out of his home and move into the “system,” it became quite clear that unless I had a big lottery winning, there’s likely no way I’ll be able to afford long term care.

An apt analogy is college costs: When I was younger, college cost $5000 a year at a top school. Forty years later it costs $60,000/year.  If nursing homes cost $180,000/year now – there is no hope for me – even if I don’t need that “greener pasture” for another 20 years.

My Long Term Care Plan
 Instead I came up with my own plan. 

I'm holding onto a small ranch house in Florida with three bedrooms and two baths, all on one level, close to the beach and where handicapped accessibility is commonplace.  There will be enough room for me, an aide and a visiting child. And the sunshine will feel good, no matter my mental capacity. 

And with a little luck, my mortgage will be paid off and it will cost far less than $180,000/year.