Related topics: •  Long-Term Care Insurance •  When a Parent Moves In

Caring for a loved one isn't just a job. It's a calling. And, all too often, it can also be a financial strain. An ailing mother, father, or spouse can throw your carefully laid plans out the window. There are many different ways to pay for caregiving expenses, though, and you can find a way to help without ending up in the poorhouse.

One of your top priorities should be to get a clear picture of your relative's finances. If you're the primary caregiver, it's important that you have a durable financial power of attorney -- that is, you need to be able to make financial decisions in case your relative is incapacitated. It's better to work with your relative to get that paperwork done before he or she is seriously ill. If your relative is already too ill to make any major decisions, consult an attorney about the next steps you should take.

Once you have power of attorney, start by gathering all of your relative's important financial documents such as wills, bank statements, mortgage papers, medical and life insurance policies, and monthly bills. If she has a life insurance policy, check to see if it's the type that can be cashed in while she's still alive. After the picture comes into focus, you'll have to ask the important question: Is your relative getting the most out of her finances? She may have money sitting in low-interest accounts or be missing out on pensions, veteran's benefits, or other sources of income. You probably shouldn't make too many major changes in investments, though, since you want the money to last reliably in the short term. Talking with a financial consultant is probably a good idea: At the least you can move some money into federally insured high-interest bearing accounts.

You'll also want to make sure she's getting her full allotment of Medicare and Medicaid benefits. Unfortunately, Medicare may not cover as much as you might think -- a social worker can sometimes be very helpful for working through all the options. It can help pay for hospital care and doctor appointments but generally doesn't cover costs of long-term care such as 24-hour in-home health workers or nursing home care. Medicaid can pick up some long-term health costs, such as nursing home care, but only seniors with very little income will qualify.

If your relative is over 65 and begins receiving hospice care at home, Medicare will pay for in-home visits from a nurse, pastor, home health aide, homemaker, and social worker, as well as the costs for painkilling medicines (you may need to make a small co-payment). Medicare will also cover medical supplies and equipment, such as walkers, wheelchairs, and air mattresses; in addition, a hospice nurse and doctor are on call 24 hours a day. Medicare will also pay for health problems not related to the terminal illness.

Your local Area Agency on Aging can help you identify other potential benefits and services. For example, if your relative has a limited income, she may be eligible for food stamps or Supplemental Security Income. If she still lives on her own, she may be able to participate in a local meal delivery program such as Meals on Wheels.

The Area Agency on Aging can also help you find a professional case manager who will work with you, physicians, and community agencies to put together a caregiving plan. Medicare or Medicaid may cover the costs of a case manager's services. Free or low-cost case management is available through hospitals, mental health programs, or social service agencies such as Catholic Charities or Jewish Family Services. Click here to find your local agency: http://www.eldercare.gov/Eldercare/Public/Home.asp.

If your relative has long-term care insurance, read the policy line by line. Some policies pay for home health care aides and skilled nursing assistance, as well as nursing homes. If the company refuses to pay for a covered expense, try to resolve the issue with a company representative. If that doesn't work, contact your attorney and public representatives for assistance.

If you're considering purchasing long-term care insurance for your relative, you'll face a Catch-22: It's usually extremely expensive or completely unavailable for a person of advanced age or in poor health. If you are in your 50s or even younger, reasonably solvent, and in reasonably good health, consider buying long-term-care insurance for yourself. Although it can be costly, you might be able to protect your assets and shield your own children from caregiving costs in the decades ahead.

When evaluating different care options, you may find a few ways to cut costs. For example, you may be able to find a competent and compassionate home health worker through word of mouth or through a church or senior center. (Always do a criminal background check, though, no matter who makes the referral -- you can pay to do the check yourself over the Internet if you have someone's birth date or social security number.) Home health workers hired through agencies can be more expensive, since the agency takes some of the money for overhead. And although you can be assured that an agency worker has gone through some sort of background check, you should still do one for yourself.

You can save even more money by providing some of the care yourself. Depending on where you live and your income level, you may be eligible for a state program to reimburse family caregivers -- check with your Area Agency on Aging for details. Pennsylvania, for example, will reimburse family caregivers $500 each month and will provide a one-time grant of $2,000 for wheelchair ramps or other home improvements to accommodate a person in need. To qualify, a family's income must be at or below 380 percent of the poverty rate. For a couple, that translates to a cut-off of about $45,000.

Massachusetts will pay family caregivers $1,500 a month, but only if the elder or disabled adult is financially eligible for Medicaid. (Parents, spouses, and legal guardians in Massachusetts are not eligible to be paid caregivers.)

You may also be able to enlist family members for help, but only if you ask. (And if your family is like many families, you may have to ask more than once.)

Older, independent people who own their own homes have several extra ways to augment their income. If they are homeowners, they can sell the house and move into a smaller, less expensive place. Those 62 or older who live in their own house are also eligible for a reverse mortgage, an increasingly popular option for covering expenses in later life, including long-term care expenses.

With this type of mortgage, a bank will lend you money based on the equity you have built up on your home. (Your equity is the value of your home minus the amount you still owe.) Unlike traditional home equity loans, reverse mortgages don't require any monthly payments. Instead, the loan is repaid when the beneficiary dies, sells the house, or moves out. The amount you can borrow depends on several factors. In general, older people who have large amounts of equity in their home and low interest rates on their remaining mortgage can expect the largest loans.

Reverse mortgages can be a great deal, especially if the beneficiary plans to stay in the house for years to come. A big plus: Borrowers can live in their homes as long as they like, even after they have completely used up their equity. Still, it pays to shop around. Different banks charge different fees, so don't sign anything until you've investigated your options. Also, don't be persuaded to pay an estate planning service or any other company to help you find a potential lender. The department of Housing and Urban Development provides this service for free. For a list of local lenders, simply call 1-800-569-4287.

At some point, of course, you'll have to take a close look at your own finances. Reviewing your current savings, home equity, and other assets will give you a good idea of the amount of help you're able to give. You should also take the time to make sure you have enough health, long-term care, and life insurance to protect yourself and your family. Consider hiring a financial advisor who can offer investment tips, show you how to minimize your taxes, and suggest potential sources of income, or check out an online retirement calculator from a reputable institution.

Your family is more important than your bank account, but you can't take care of one without looking after the other. With planning, you can care for your loved one without jeopardizing your own future.

-- Chris Woolston, MS, is a contributing editor to Consumer Health Interactive. A former staff writer for Hippocrates magazine, he has written for Health, WebMD, and other journals. He is also the co-author of Generation Extra Large: Rescuing Our Children from the Epidemic of Obesity (Perseus paperback, 2006).

Further Resources

Family Caregiver Alliance. An organization dedicated to helping people care for family members. http://www.caregiver.org/

Eldercare Locator. A one-stop source of information on local agencies that provide services for the elderly. http://www.eldercare.gov

References

First published August 23, 2007
Last updated October 7, 2008
Copyright © 2007 Consumer Health Interactive

or find more on:

Back to top of page