Long-term-care planning is an essential part of any retirement plan. But often, an important element is missing.
While advisers ask their clients about their own plans for long-term care, they often fail to ask them about their parents' (or other elderly family members') plan for long-term care in the event of a sudden health care crisis.
This is a vital question to ask during the planning process, as most middle-aged clients are members of the "sandwich" generation, with children still at home and aging parents facing, or likely to face, care needs. Laying the groundwork before these needs arise can help them be emotionally and financially prepared for a sudden health care crisis.
For instance, consider this common scenario: Your client's parent suffers a stroke or fall, resulting in admission to an acute care hospital followed by a rehabilitation hospital. Two days before discharge, your client learns that he or she must either hire a 24/7 caretaker or move the parent to an assisted living facility or a skilled nursing facility. Your client has just two days to do research, choose the best facility, and get ready for the financial hit.
Though these events will always be difficult for your clients, they will have an easier time getting through them if they are prepared. Encourage all your clients who have elderly parents to accept that at least one parent will have a sudden and devastating health incident that will demand their immediate attention. Tell them this will be emotionally difficult and possibly very expensive, but that they can make the transition go more smoothly if they have done some preparation in advance.
As part of these discussions, recommend that clients have the correct legal forms in place (such as a power of attorney for health care) that will ensure their parents receive the type of health care they desire should they be incapable of expressing their preference at the time it's needed.
Below is a list of the most important challenges your clients could face when suddenly needing to move a parent to long-term care, along with ways you can help them prepare:
Challenge: The client has only a few days to select a facility for the elderly parent.
Planning tip: Have your clients do their homework well ahead of the need. They should visit both skilled nursing facilities and assisted living facilities in their area or their parent's area. Your clients might consider recommending to their parents a preemptive move to a continuing care retirement facility. You should also be familiar with the long-term facilities in your area.
Challenge: The parent may be discharged over the weekend, but moving from a rehab hospital to an assisted living facility is often more difficult on a weekend. Many facilities are not prepared to do the health evaluation necessary to properly admit a new resident on a weekend. If the parent is discharged without a place to go, family members may end up providing short-term care until they can place the parent in a facility.
Planning tip: When touring a facility, your clients should ask about their policies regarding check-in. How and when will the facility perform a health assessment of a patient before the move? Who will perform this assessment? When will your client learn of the results? Will the facility allow a transfer during the weekend and be able to provide the proper care?
Medicare beneficiaries may also challenge a discharge decision. Such challenges are expedited. If the appeal is unsuccessful, however, the cost of a portion of the stay beyond the original discharge date may be the patient's responsibility.
Challenge: The transition to a skilled nursing facility or an assisted living facility is difficult even under the best of circumstances. The sudden illness may have taken a toll on the parent's cognitive capacity, resulting in confusion and disorientation. Your client's parent needs to become accustomed to a new care plan and a different daily routine that includes accepting help from kind but unfamiliar staff.
Planning tip: Clients should ask the facility about their transition program for new residents. Will a staff member come to a new patient's room and take her to her meals until she is comfortable with her surroundings? What special accommodations are made for fall risks? How does the resident call for help? Find out how much can be done to personalize residents' apartments or rooms. Hanging familiar artwork and photos can help new residents to have an easier time getting comfortable.
Challenge: If your client's parent takes several prescription drugs, in addition to any new required ones, your clients will need to check to make sure the new drugs are on the parent's Part D prescription drug plan and the co-pay or co-insurance required. If the new drug is not on the formulary, the patient or family member will have to check with the doctor to determine if another drug can be prescribed. Alternatively, the Medicare drug plan can be contacted to ask that the drug be covered until an alternative can be prescribed.
Planning tip: Advise your clients to
- maintain an updated list of their parent's medications;
- become familiar with the parent's Medicare Part D standalone prescription drug plan or Medicare Advantage Prescription drug plan;
- have the contact information for the Department of Veterans Affairs if the parent receives prescription drugs through the VA;
- ask the new facility if they are in the parent's Part D plan's "network." If not, there is an opportunity to make a change with a Special Enrollment Period even if it is outside the Annual Enrollment Period (Oct. 15 through Dec. 7); and
- coordinate the prescription changes with the new facility.
Challenge: The parent's current primary care physician's signature may be needed on a medical document prior to the transfer.
Planning tip: Advise your clients to maintain a contact list of all their parents' physicians (primary care and otherwise). If possible, they should directly take documents needing a doctor's signature to that doctor's office. Sending a fax or email does not always receive enough attention for immediate action!
Challenge: Unless your client's parent can leave the facility, he or she most likely will not have future access to his or her regular doctor.
Planning tip: Ask the facility whether a physician is available for "house calls" at the facility, and, if so, find out whether the physician is in-network for the parent's health insurance or Medicare Advantage plan.
Dramatic changes to a family member's health care needs can happen suddenly. The family members whose emotional, physical, and financial well-being are directly impacted can suffer "spillover" effects. However, CPAs can offer clients a unique level of care and concern by directly addressing such issues well before the need arises.
Tracy Stewart, CPA/PFS/CFF,CFP, CDFA, is a Texas-based CPA financial planner who specializes in helping people make financial decisions in a variety of areas including retirement and aging. James Sullivan, CPA/PFS, is a financial planner in Wheaton, Ill. He specializes in working with clients, and the families of clients, suffering from chronic illness. To comment on this article or to suggest an idea for another article, contact senior editor Courtney Vien at Courtney.Vien@aicpa-cima.com.
