This week’s blog post is from one of our clients who experienced first-hand what all adult children face: dealing with all the issues around aging parents.
Knowing your elderly parents’ financial situation is essential. If your parent(s) could run out of assets, you may need three to four years’ lead time to secure their senior housing.
A few years ago, just after I began handling my mom’s bills and medical care, I hired an elder attorney to review the Power of Attorney document. The attorney also reviewed my mom’s assisted living tenant contract and general finances.
Having a financial plan developed for my mom a few years prior, I knew that at her current expense rate, living in her independent apartment in an assisted living community, her assets could last about five years. But the elder attorney informed me that waiting until the assets run low to seek alternative housing and care through Medicaid is too late.
Medicaid is a joint program of both federal and state governments. The federal government sets guidelines, and each state establishes its own rules and benefits.
To qualify for Medicaid, a person must have very little in assets, income lower than a certain amount, and medically need help with Activities of Daily Living (such as feeding, bathing, grooming, dressing, etc.)
The elder attorney, who has knowledge about my state’s Medicaid system, taught me that:
- Most assisted living places within the city of Seattle do not accept Medicaid. There are assisted living places that accept Medicaid outside of the city, such as in Shoreline or Federal Way. (I phoned my mom’s current senior living place and confirmed they do not accept Medicaid.)
- Assisted living places or adult family homes that will take Medicaid require that a tenant “private-pay” for 2-4 years before assets are depleted.
In the greater Seattle area, monthly rates for assisted living for an adult family home start at $7,000. So my mom will need to pay a greater monthly rent for 2-4 years, so that when she later qualifies for Medicaid, she’ll be able to remain living at the same place. At that cash flow rate, my mom would need to move much sooner than I originally thought.
- Medicaid has a 5-year “look back” period, meaning finances going back five years will be examined during the Medicaid application process. If assets were spent or given in certain ways that are not allowable, Medicaid coverage can be delayed.
Depending on the state, some assets, such as a home, may be allowable to keep. Legal documents can be drawn to protect a couple’s assets when one needs care assistance.
- When my mom’s assets have reached a point where she has about 6 months’ of assets to pay her rent and expenses, then it will be time to start the Medicaid application process. The adult family home can help with the application, especially with documenting what assistance my mom needs. An elder attorney can also help with the application.
Bottom line, if you want to be prepared for the issues that will arise as your parents age, consulting with an elder care attorney is essential. They can provide you with a timeline for planning as well as review and organize the documents and assets prior to an aging care event.
