Caring for Aging Parents
Are you ready for the responsibility

hree out of four Americans live past the age of 65. That's good news when it comes to thinking about your parents and the years you'll have together. It also means there's a good chance you'll help take care of them at some point in your life.

That said, there are important matters for you and your parents to consider about their future. So why not plan ahead? By putting it off you'll risk the possibility of having to rush through critical decisions, with unfavorable results.

You can start by asking your parents some basic questions: Where will they live and who will make decisions about their health care and finances if they can no longer take care of themselves? Then, consider the following issues as you agree on a plan of action.

Covering expenses
One of the biggest issues for aging parents and their families is the cost of housing and services. Medicare pays for rehabilitative nursing home care immediately after a hospital stay but only for a limited period of time. Medicaid pays for nursing home care only after a person has spent almost all of his or her personal assets. Savings built up through the years can also provide some support, but what happens if you don't have quite enough to cover all the costs?

Long-term care insurance can help. For a fixed number of years, these policies pay about $100 per day for nursing home care and about $50 a day for services provided at home. Policies sometimes cover certain costs for assisted living facilities and adult day care services.

The key to long-term care insurance is to start saving early. You're locked into your premium rate for good when you first buy a policy. Every year you delay purchasing one, premium rates jump by about 8%. Look at the numbers: for a healthy 50-year old, the fixed premium is about $800 a year. Buying one at age 65 will cost you about $1,800 per year. At age 75, it's up to an annual $5,900. People with serious pre-existing medical conditions usually don't qualify.

Another thing to remember when looking into long-term care insurance: inflation protection. Even though this part of the plan costs a little extra, if you start saving at a young age, you'll need compounded inflation protection to help keep pace with the constantly escalating costs of care.

Planning for the unexpected
Who should make decisions about your parents' health care and finances if they no longer can? What are your parents' preferences about financial matters if they become unable to decide for themselves?
These are emotional issues to consider, so be a good listener. Your parents need to be reassured you'll respect their wishes. The following legal documents can help you define those wishes and take proper action if your parents require assistance:

• Living Will. This states the type of life-sustaining treatment your parent wants or does not want in case he or she becomes too sick to express preferences.

• Health Care Proxy (Durable Medical Power of Attorney). A health care proxy authorizes a person and a backup to make medical decisions for someone who has become too ill to do so. The proxy can use the living will as a guide.
  
  A copy of the living will and health care proxy should be left with your parents' doctor, lawyer and other family members. It can be registered online at www.uslivingwillregistry.com.

• Durable Power of Attorney (DPOA). Durable power of attorney names the person and a backup who have the power to make decisions about finances and other matters on behalf of a parent who becomes mentally incapacitated. Some DPOAs take effect as soon as they are signed; others “spring” into effect only after a person becomes ill.

• Power of Attorney. Unlike a DPOA, this document is valid when the parent is mentally competent but is unavailable, such as being away on a trip. With power of attorney, you can act on your parents' behalf in identified financial situations. Copies of this document should be distributed to businesses and financial institutions with which your parents conduct transactions.
  
  Separately, you can be named as a joint owner of your parents' bank and brokerage accounts and as a joint renter of their safe deposit box. This gives you access to those accounts and important documents in case of an emergency.

Where should your parents live?
There is a broad spectrum of housing options for aging parents outside the family home, as the chart to the left shows. At one end is the assisted living facility, where seniors live together in group housing arrangements and have access to 24-hour personal and supportive services.

At the other end is the nursing home, which provides 24-hour nursing care and assistance. This is generally for elders who can no longer perform daily tasks without help, such as eating or bathing, and those who need medical attention.

Making these kinds of decisions can be emotionally difficult. But you can ease the pressure on both sides by creating a plan together. For now, it means maintaining an open level of communication with your parents, keeping in contact with them and letting them know you are there for them if and when they need you.

Your time together in the future will be more enjoyable because you'll know what to expect. By minimizing the uncertainty, you'll have greater peace of mind for the years ahead.