Managing Finances
Getting StartedBy Cheryl Slean, Staff Writer
Money management is a primary concern for many caregivers. The financial impact of an illness can be overwhelming. Even if your loved one’s insurance covers the medical bills, most health insurance policies don’t cover the significant costs of long-term care.
Other factors, such as loss of income or the need to hire outside help, can contribute to caregivers’ stress about money. For instance, a caregiver may decide to cut back on employment hours in order to care for a loved one. Or he may decide to hire outside help. Or both. The situation is complicated by not knowing exactly how long your loved one will need care, or how her care needs may change as the illness progresses.
Financial planning is essential to getting a handle on money concerns. Seeing the numbers on paper, finding out what options are out there to help cover shortfalls, preparing for future costs, and getting advice from experts are all part of making sure that your loved one is financially secure. When you know what you’re faced with, and take steps to deal with it now, you can ease some of your worry about the future.
Discuss Values and Goals
Before caregivers tackle the details of financial planning, financial experts advise them and their loved ones to clarify their values and goals for this phase of life. Specific questions need to be asked about where your loved one will live, what you both hope for in terms of his quality of life, and what he wants to happen if he becomes incapacitated. You will also want to discuss short- and long-term financial goals, such as his preferences for a certain standard of living, what changes he is willing to make (or not) to handle expenses, and plans for his estate.
As a caregiver, you’ll want to ask yourself some important questions as well, such as how much financial burden you’re prepared to take on, and what you would want to happen should you become ill in the process of caregiving.
Sorting through your personal values will simplify your financial decision-making.
The CareCommunity Toolkit offers questions and suggestions to help you and your loved one step back and discuss the big picture.
Expert Advice
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| “Financial planning strategy is client specific. I sit down with each person and look at what they’ve got and how they’d like to live, and work through the numbers with them. I ask questions about the future. Do you need to leave a legacy to care for people you leave behind? If not, maybe it’s OK to spend down your assets on long-term care. How long does your family live? What medical conditions tend to run in the family? I use all this information to help people plan for what is admittedly hard to predict: how much money you’ll need in the long run. But for peace of mind, it’s smart to consider the options—the sooner the better.”—W. Thomas Curtis, Certified Financial Planner, Frank, Samuel, Paul and Associates, Gaithersburg, Maryland |
Becoming the Money Manager
As a caregiver, you will likely play a role in your loved one’s financial decisions. This can range from giving advice to being called upon to manage everything yourself. Taking on this new role can be fraught with problems for both of you. Your loved one may not want to give up his self-sufficiency or let someone else, even a family member, into his private affairs. He may resist suggestions for how to fix money problems if it involves changing his lifestyle, such as selling the house and moving to assisted living.
See here for specific advice on managing a loved one’s finance.
Once you’ve clarified values and financial goals and gathered all the pertinent information and documents, it’s time to get down to business.
Use this
budget form to write down all of your loved one’s expenses and sources of income. The form has columns for monthly and yearly amounts in each category (as applicable), for up to three years. Doing the numbers for subsequent years is especially useful when planning for care expenses, which generally increase with time. The different time frames also help you see when various benefits kick in to help defray expenses, such as long-term care insurance and hospice.
Once you’ve got the financial picture on paper, you can work with your loved one—and a financial adviser—to plan for her long-term care. You’ll be able to see more clearly if her goals for care, standard of living, and plans for her estate can be realized. And if not, a written budget can help you assess where adjustments are needed.
A Note on Estimating Expenses
While itemizing your loved one’s income and assets is usually a straightforward task, accurately listing expenses can be daunting. For an overview, take a look at check registers, cancelled checks, and payment records over the past year or two. It helps to keep a notebook that lists every expenditure for a month, so you can really see where the cash goes daily. Unnecessary expenses may become suddenly obvious when you add up those daily expenses, such as the $3 espresso drink.
Now that you’ve talked over the big picture and run the actual numbers, it helps to talk about ways to make the money last. Click
here for suggestions on helping your money stretch further.
Professional advice can be a highly worthwhile investment, especially for handling the complexities of caregiving and money management. Financial experts can help protect you and your loved one’s long-term security by assessing your current situation, strategizing money-stretching options, and explaining the legal intricacies of your situation.
| Caregiver's Story |
| “As my mother’s long-term illness dragged on and I watched her savings steadily deplete, I became more and more concerned. I met with an attorney who specialized in Medicaid and long-term care financial planning, and she suggested several options for how to proceed that made sense and eased my mind that our problem had more than one solution. The education I got from an hour of her time was well worth the investment.”—Kate, a family caregiver in Seattle |
You probably won’t need help from all the experts we’ve listed, and some areas of expertise may overlap. (For example, your tax attorney may double as your financial adviser.) But you’ll benefit from knowing where to find an informed opinion when you need help with money management.
- A good financial planner can help you and your loved one get a fresh perspective on your situation, help you identify your financial goals, and offer strategies for realizing those goals. Financial planners are often licensed stockbrokers, who can manage investment and retirement accounts.
- Besides preparing your tax returns, an accountant or tax attorney can guide you through the ins and outs of tax law and suggest tax-saving strategies for investments and your loved one’s estate.
- Consulting with an elder law or estate attorney can help you navigate the legal maze of estate planning and advance directives for health care.
- A Geriatric Care Manager works privately with older adults and their families to create a plan of care. They also find the resources and options to make the plan happen. Geriatric Care Managers usually have a background in gerontology, nursing, social work, or counseling.
- If you’re working with hospice, a hospice social worker can do what a Geriatric Care Manager does, for free (hospice is generally covered by insurance). But a hospice social worker has many clients and may not be able to give you the personal attention of a dedicated Geriatric Care Manager.
- A Daily Money Manager is someone who comes in the home to help with day-to-day financial tasks, such as setting up a budget, paying bills, and handling insurance claims.
When you’re looking for a reputable consultant, ask family and friends for suggestions. You might also ask for recommendations from a professional you’re already working with, such as your attorney or tax accountant. Your local Area Agency on Aging can provide referrals in your community, as can the national websites for various professional organizations. See the list of resources at the end of this article for links and contact information.
The American Association of Daily Money Managers has information about what Daily Money Managers do and how to find one in your area:
www.aadmm.com
The National Association of Professional Geriatric Care Managers has information about what Geriatric Care Managers do and how to find one in your area:
http://www.caremanager.org/National Academy of Elder Law Attorneys answers legal questions and provides referrals to member lawyers.
(520) 881-4005
http://www.naela.org/The Eldercare Locator of the Area Agency on Aging can help you find resources for financial and legal assistance in your community.
800.677.1116
http://www.eldercare.gov/
The Financial Planning Association is a national organization that offers money management tips and can help you find a financial planner:
http://www.fpanet.org/Tax Assistance
The IRS and its sponsored assistance programs offer tax assistance.
http://www.irs.gov/(800) 829-1040.
Tax Counseling for the Elderly offers free tax help for people aged 60 and older.
www.irs.gov/individuals/article/0,,id=109754,00.html
The IRS Volunteer Income Tax Assistance (VITA) program and the Tax Counseling for the Elderly (TCE) program offer free tax help if you qualify. http://www.irs.gov/individuals/article/0,,id=107626,00.html
Other Financial Assistance for Healthcare – A Place to Start
The National Institutes of Health offers information and resources for finding financial assistance for medical treatment:
http://www.genome.gov/11008842
The National Cancer Institute offers financial resources for people with cancer:
www.cancer.gov/cancertopics/factsheet/support/financial-assistance
Christian Financial Ministries offers help repaying large medical bills for counselees in good standing:
http://good-steward.org/Ministry/Help_Medical.htm
The Karis Group provides mediation between healthcare providers and patients with large outstanding medical bills:
http://www.thekarisgroup.com/Resources/Frequently_Asked_Questions/medicalbills.html