Be Educated About Your Options of Care and Financing The Care

November 26, 2009

Education and planning are the keys to making decisions especially when it involves care while aging. You need to be proactive and know what resources and options are available. With the education and a plan you have more options and can be proactive rather than reactive.

As Forest Gump said, “Life is like a box of chocolates, you never know what you’re gonna get.” This is especially true for aging. In mid November I was fortunate to participate in and be considered a trusted advisor at the Minnesota Private Duty Home Care Conference, “Keeping Mom and Dad at Home”. During the conference attendees were encouraged to plan the future as they would a trip, looking at what would they put in their suitcase for the journey of aging and be prepared for what isn’t known to happen along the way.

Conference attendees reviewed what is known about seniors and their families. We looked at what is known about seniors:

They underestimate their situations
They don’t want to worry or be a burden to their children
- So seniors don’t tell their children what’s going on
They want their families help
- Families often don’t have the time or the financial means to help
Role reversal is uncomfortable
They are fearful of nursing homes and moving
93% say they want to stay in their home

Then we looked at what we know about the families of seniors:

They want to help
They are busy; they are the sandwich generation dealing with their own family, careers, life
They see changes but don’t know what they mean or what the warning signs are
They may become frustrated with their parents denials
Role reversal is uncomfortable
It’s generally women who are doing the caregiving; Minnesota is #1 in the country for working women.

Consider what’s important to the seniors, what do they want for their journey? It’s important to involve the seniors in the process, the plan, and have them agree with the plan. Discuss their wishes along with what you think is needed. What will provide them their security, independence, dignity and control of their life? Including a mediator and/or trusted advisor is a good idea. If they are resistant to bringing someone else in, discussing their options, or accepting outside help, tell them that they may not need this but that you do.

By being educated and having your plan in place if a crisis occurs means more options will be available along with decreased costs. Being reactive at a time of crisis means less options are available along with greater costs. Emotional and reactive decisions make for poor choices and actions made from regret and guilt.

Part of the education and planning means getting the facts. Unfortunately we have been conditioned to think that seniors will end up in a nursing home; that an assisted living facility provides all the care needed and is often the only option; that home care is short term and the nursing home and/or assisted living is safer than being at home.

We need to recondition our thinking to:

Seniors can live at home indefinitely
Home care can provide a nursing level of care at home
Living at home can be safer; you receive a 1 to 1 ratio of care versus 1.5 or more of care per person
Living at home is affordable

Let’s compare the costs of home care options and assisted living rent and with home care options:

Home Care 1	$1,296/month	3-hour visits, 4 days a week, $27/hour
Home Care 2	$3,024/month	4-hour visits, 7 days a week, $27/hour
Home Care 3	$4,536/month	6-hour visits, 7 days a week, $27/hour
Home Care 4	$8,500/month	24-hour or live in care, one-on-one care, $275/day; includes a live in caregiver and frequent visits from a RN
Assisted Living Rent for 1 person	$2,800/month 1-bedroom$3,200/month 2-bedroom	Care packages range from $300 to $2,700 and would be above and beyond the rent; additional care would be charged per hour by a home care agency; there is an additional charge for a 2^nd person in the apartment
Assisted Living Rent & Home Care 1	$4,096/month	One bedroom apartment, 1 person plus additional care at 3-hour visits, 4 days a week, $27/hour from home care agency
Assisted Living Rent & Home Care 2	$5,824/month	One bedroom apartment, 1 person plus additional care at 4-hour visits, 4 days a week, $27/hour from home care agency
Assisted Living Rent & Home Care 3	$7,336/month	One bedroom apartment, 1 person plus additional care at 4-hour visits, 4 days a week, $27/hour from home care agency
Nursing Home	$6,000 – $12,000/month	Single or double room, level of care and facility amenities

Let’s look at selling and moving into an assisted living vs staying at home with a reverse mortgage:

Details: Home Value $200,000; 80 year old (reverse mortgage funds available will depend on age, older one is more funds available)

	Selling	Staying in home with a Reverse Mortgage
Third Party Closing Costs	$2,211	$2,211
Less Real Estate Agent/RM Origination Fee & FHA Mortgage Insurance Premium	$12,000 (6%)	$8,000 (2% origination + 2% FHA MIP)
Net Proceeds	$185,789	$110,108 in Line of Credit; $862/month tenure-for life; or term payments structured as needed (based on rates of 11/24/09)

Now let’s take the net proceeds and compare living in an Assisted Living to living at home with a reverse mortgage and receiving home care.

Selling and Living in an Assisted Living¹	Living at Home using a Reverse Mortgage²
$185,789 ) $2,800 (rent only) = 5.5 yearsNo remaining equity from home.	No rent or mortgage payment as long as you live in the home as your primary residence³Borrower is still responsible for household maintenance, i.e. taxes, insurance, utilities and stay in your home as long as primary residence (i.e. approximately $755/month for a $200,000 home) May have retained equity depending on how long you stay in the home and the home appreciation. The loan is non-recourse.
$185,789 ) $4,096 (rent and Home Care 1) = 3.7 years No remaining equity from home.	Roof over head; funds to cover home care 1 with term payments from RM = 9.8 years³Additionally it is likely that there would still be retained equity in the home after the 9.8 years.
$185,789 ) $5,824 (rent and Home Care 2) = 2.6 years No remaining equity from home.	Roof over head; funds to cover Home Care 2 with term payments from RM = 3.33 years³ Additionally it is likely that there would still be retained equity in the home after the 3.33 years.
$185,789 ) $7,336 (rent and Home Care 3) = 2.1 years No remaining equity from home.	Roof over head; funds to cover Home Care 3 with term payments from RM = 2.1 years³Additionally it is likely that there would still be retained equity in the home after the 2.1 years.
Then where will you go?Some assisted living will accept Medical Assistance or other public programs such as Elderly Waiver however your choices may be less.	You can stay in your home and have a roof over your head without rent or mortgage payment even after funds from a reverse mortgage are used.Medical Assistance or other public programs such as Elderly Waiver or Alternative Care can be received even with a reverse mortgage. Reverse mortgage does not impact receiving Medicare or Social Security.

¹These rates do not take into consideration care packages or increases in rent charges so it’s likely that the number of years the net proceeds would cover will be less.

²With the reverse mortgage there is a growth rate factor that is passed along to the borrower.

³This time can be extended if you are receiving Medical Assistance or other public programs such as Elder Waiver, Alternative Care or qualify for Medicare covered Home Care.

You have choices and can have control over where want to live and the care you receive. You have the right to say, I want to stay in my home (or keep my parents in their home). When educated and with a plan for the journey, you will have more choices and life will be easier.

Note: This information and these home care and senior housing figures are reflective of costs in Minnesota and are a compilation provided by the home care agencies at the 2009 Minnesota Private Duty Home Care Conference. They are approximations and can vary by company, agency, facility and geographic area.

32 Comments leave one →

Jo T. Letwaitis permalink

November 29, 2009 5:16 am

while we all appreciate education for the seniors we serve, reverse mortgage is not always the options. This slants the perspective so that one doesn’t consider the socialization aspects of living in a senior living community; or the fact that often a senior (or their adult child) feels imprisoned because of the need vs the desire to be together. Socialization, as well as proper nutrition and exercise, is a primary factor in staving off dementia. If socialization, proper nutrition and exercise can be guaranteed for a senior staying in their own home with the benefit of a reverse mortgage, then that’s a different story. I just felt that more needed to be consideredin your blog. Thank you for your contribution. Jo T. Letwaitis

Reply
- Michelle Lano permalink
  
  December 1, 2009 7:39 am
  
  Jo T. Letwaitis – Thank you for your comments to Beth’s Blog and for your obvious concern for the best well-being of people as they age. I do want to add to your comment that home does not necessarily equal isolation for the people it serves. With home care services, a person’s nutrition, exercise needs, and socialization and many other elements of living a high quality of life are all individually addressed.
  
  It is a common misconception that home care addresses only a person’s physical care needs. In reality, with home care, a client gets to know their caregiver and/or nurse. The caregiver and/or nurse oftentimes arranges for the client’s social life based on their personal likes and dislikes – attending religious services, dining with friends, going to movies, getting to the nail salon, having friends over to play bridge, etc. The caregiver and/or nurse oftentimes is going on walks with the client, helping them to do exercises recommended by a physical therapist, bringing them to yoga classes at the senior center, etc. The caregiver and/or nurse can monitor blood sugar and blood pressure and prepares healthy meals that contain foods recommended by the client’s physician.
  
  The goal of home care is to do whatever is necessary to make it possible for people to continue living life (in the best possible health, with excercise, and with a social life) at home.
  
  It is simply up to the individual whether they would rather live in an assisted living environment or whether they would rather live in their home, but essentially the same services can be offered – and by services I mean personal care, social, nutrition, exercise, companionship, etc. I encourage you to read the story of one of our home care clients, a very social man living in Edina, MN, at our website: http://www.homewatchmn.com/Clients.asp
  
  Reply
Shirlyn Nickelson permalink

December 2, 2009 5:17 am

Beth–Good job in describing the benefits of staying at home for seniors! There are certainly benefits to getting home care in place. Being the co-owner of a home care agency we have seen some pretty wonderful outcomes! Besides providing the homemaking and personal care assistance that we often are requested to provide, the caregivers often form good, lasting friendships as the seek to serve they senior. I certainly agree with the comment ahead of this one that mentioned the isolation factor. I think this argument is one that doesn’t carry a lot of weight, at least from what we have seen in our agency. For example, activities such as hobby painting, playing games, going to social events (yes, the CG provide transportation) all keep the senior quite active. So with a little help seniors can remain independent and active as they truly desire!
Keep up the good work, Beth!

Shirlyn http://www.atimeforhelp.com

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Vitaly Salo permalink

December 8, 2009 4:39 am

Jo T. Letwaitis – I too wanted to address your comments about Home Care not adressing many needs of the Senior. The socialization is often the biggest one that is brought up to support this argument.

I think that there are two issues here.

1. Some people are more social than others. Some enjoy group acivities, while others prefer to read, study , meditate, and otherwise do their own thing. While we may not agree as to which one is better I think that we all would agree that the most important thing here is to be respectful of the individuals personal wishes.

2. The seconf issue is that while a Senior Living Facility is a great choice for many people, and provides many Social Activities, it is a New Lifestyle that has to be adjusted to. The main difference as I see it with Home Care is that Home Care is there to support a Lifestyle. To help a person stay engaged in social activities such as Church, Civic groups, as well as Family Functions. These are not a new set of Social activities that a person now needs to adjust to , but rather a continuation of their lifestyle. Yes they may need to have a little physical help to do that, but this is what is very often overlooked.

I think that Home Care is painted with a very broad brush and most people including the Professionals forget that “Home Bound” is a Medicare requirement and therefore does not apply to Private Duty Home Care. So in essence we can come alongside of a individual and help them live their life on their own terms.

The Goal with Home Care Services is to allow an individual to continue to function while remaining at home where they want to be. This does not only mean bathing, or dressing assistance. It means helping them to stay healthy by: excercising, eating well, having their medications monitored, and yes visiting friends, going to their Grandkid’s Sports games, and attending Church. All while working with a personally Matched CAREGiver that can provide the One-To-One support for anything that is a challenge.

If you would like to read more about what Home Care has meant to clients and families that we have served please visit: http://www.homeinstead.com/505/aboutus/Testimonials.aspx

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