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The Devastating Impact of Elder Care Costs

Millions of American families are faced each day with the issues of an aging parent or relative. Planning for elder care will typically involve more services and assistance to cope with one’s daily lives and/or a sudden serious health crisis. How do you know when loved ones need additional help? When should you consider alternative living accommodations and what type? The costs of care through each stage can be shockingly high.

Long-term care represents one of the largest unknown liabilities. Long-term care refers to the open-ended need for daily assistance with the most basic tasks. Planning in advance before additional long- term care is needed can make a big difference.

Among the fallacies that keep families unprepared for future medical bills and ongoing elder care is the belief that they are too well-off to worry about them. If anything goes wrong they figure they can foot the bill, in other words, self-insure. If you have never been faced with steep medical and ongoing care expenses, you may be innocent of how drastically and quickly these expenses can drain assets.

Talking to your parent or relative before additional care or alternative living accommodations are needed may reduce the financial and emotional strain. The goal is to have an integrative plan where family members agree to consider strategies that build and conserve resources for all. The unknown factor in the senior’s financial plan is the length and severity of the aging process. Listed below are some issues to help your family get started:

  • Evaluate the senior’s finances. You have a valuable opportunity to discuss and settle important details with your senior relative when they are still relatively healthy and clear-headed. Scheduling a family meeting with key decision makers can allow each member to contribute their ideas and understand the senior family member’s assets and how he or she want these assets applied to their care. A question to ask if he or she is self-insuring: if costs exceed income, which assets would you sell first to pay for continuing care? What are your relative’s legacy goals and how do they feel about tying up their money?
  • Check with a tax advisor. If the adult children are contributing to the care of a senior relative, check with your tax advisor as to the tax rules for claiming parents as a dependent and for deducting their medical costs.
  • Are key documents and records in place and accessible? Critical records such a current will and trust, relevant legal and health powers of attorney, any written instructions relevant to their care, funeral wishes, and property issues. We have developed a “Family Record Locator” to assist families in this process (contact us if you would like to receive a copy). What is important is that information and records be stored in an agreed upon place and that all key decision makers can get access the information easily.
  • Begin to research care options. In almost every community there are resources and guides to the various programs, assisted-living centers and nursing homes. Possible services and locations costs can be compared early on. Note that the worst time to collect this information is when a relative suffers a debilitating illness that requires an immediate decision.
  • Make sure the care option fits the state of health as well as the budget. Each family must decide the right arrangement that will work best for everyone based on costs and quality of life for all. The housing options for older parents who are basically healthy but need help with certain activities due to frailty or forgetfulness include:
    • Staying in their home. There are several options if home care is desired. Consider a home health aide or adult day care. Part-time caretakers can handle key tasks such as grocery shopping, cleaning and meal preparation.
    • Living with their adult children. If the adult children’s family wants to take in the elder relative to live with them, remember that most caregivers underestimate the time required for care giving and the impact on their family dynamics as well as the obligations of their work. Additional costs could include modifications to the home to enable the elder to get around safely as well as possible need to bring in part-time outside caregivers.
    • Moving to an assisted-living facility. More and more retirement communities are popping up to serve senior citizens who are looking for a permanent place to live where they can tap into varying levels of care. Residents usually start out living independently, and then move through increasing levels of care as health needs arise. We have addressed the issue in further detail in our article titled “The Challenge for Selecting an Elder Care Facility for a Loved One”.

Let’s address the painful question - how do you know when loved ones are ready for long term care? There is no firm litmus test. Each individual is different and each setting is unique. The need often arises only gradually - sometimes imperceptibly.

It is difficult to balance an individual's desire for independence and their right to make their own choices against their ultimate safety and well-being. Any choice will likely take time. It may be helpful to start here and then move on to serious discussions about the pros and cons of various living alternatives and the many competing values.

Long Term Partners, LLC which administers the Federal Long Term Care Insurance Program sponsored by the U.S. Office of Personnel Management has developed an “Independent Living Test”. The following questions can be used to determine whether a loved one is having difficulty in performing everyday activities (check the activities that apply). The results may reveal whether the family member can live independently or whether intervention is necessary. For your reference we have attached this checklist to help you spot any red flags. Since so many people will need long term care services and the costs can be high, it's helpful to plan for long term care before the need actually occurs. Let us know if we can help you in elder care financial planning issues.

Independent Living Test1


  • Are prescriptions not being refilled, resulting in failure to take medication when scheduled?   ❑Yes ❑ No
  • Has taking medication become difficult due to poor memory or confusion? (Evidence may include pills taken together that shouldn't be, different pills mixed together in a pill box or an oversupply or undersupply of pills.)   ❑Yes ❑ No
  • Have conditions previously under control become acute because medication is not being taken correctly?   ❑Yes ❑ No

Food and Groceries

  • Based on past food habits, are the cupboards frequently empty or being filled with unusual foods?   ❑Yes ❑ No
  • Is the food in the refrigerator often spoiled or kept long beyond the "use by" date?   ❑Yes ❑ No

Daily Business

  • Is the mail being picked up and opened regularly or is it remaining uncollected and/or unopened?   ❑Yes ❑ No
  • Are credit cards or checkbook being misused or not balanced as well as in the past?   ❑Yes ❑ No

Social Contact

  • Has the amount of social contact changed dramatically, so that there are few public outings or limited social visits with close friends?   ❑Yes ❑ No
  • Has the ability to drive deteriorated? Is there a fear of driving or a recent history of multiple minor accidents that is leading to isolation?   ❑Yes ❑ No

Living Habits

  • Has there been a change in living habits such as a change in dress or appearance, or a decline in personal hygiene not related to physical disability? Is dress appropriate for the weather?   ❑Yes ❑ No
  • Have housekeeping habits changed so that a normally neat and orderly home is now cluttered and not cleaned regularly?   ❑Yes ❑ No
  • Are pets that were normally well cared for suddenly not being fed or cared for as they had been in the past?   ❑Yes ❑ No


  • Is there a sudden increase in ordering unnecessary items through mail or televised advertisements?   ❑Yes ❑ No

Calls to Family Members or Health Care Providers

  • Has there been a marked increase in panic calls to family or medical providers without apparent need?   ❑Yes ❑ No
  • Have unnecessary calls been made to 911?   ❑Yes ❑ No

1 Source: Long Term Partners, LLC which administers the Federal Long Term Care Insurance Program sponsored by the U.S. Office of Personnel Management has developed an Independent Living Test.