You’ve probably heard of seniors having trouble with living alone and the related financial burdens. But what happens when it is you, your spouse or your parent? What options exist for an aging person, and what do they mean financially? Now more than ever, estate planning that takes elder care arrangements into consideration is essential.

Elder care is a booming business. New living arrangements for the elderly are still developing. Children of aging parents are looking for alternatives to traditional nursing homes. The most popular new option is assisted-living facilities.

Surveying the Options

Assisted-living facilities provide each resident with a room or suite, meals (sometimes in a common dining room) and a 24-hour staff who assist with daily routines, such as bathing, dressing and taking medication. Assisted living is best suited to seniors who are cognitively impaired yet physically capable or who are mentally capable but have motor or balance difficulties. Residents can retain some degree of independence and privacy while receiving needed care. The price for an assisted living unit averages $2,000 per month (higher in some geographic areas) varying based on amount and type of services provided and unit size.

Nursing home facilities are best suited for seniors with significant medical problems or memory impairment. They are also appropriate for those who have problems that their caregivers can no longer manage such as wandering, agitation or erratic behavior. A nursing home generally provides 24-hour professional nursing care, physical therapy and recreational therapy. A nursing home can cost anywhere from $1,500 to $5,000 per month or more, plus extras.

How To Choose a Facility

When investigating a facility, ask if you can walk through the common areas and talk with some of the residents. Find out the ratio of caregivers to residents. Try to gauge whether the staff is caring and friendly. Ask residents and their visitors how responsive the staff is and how well they interact with residents. Although generally not indicative of the quality of care, a pleasing and warm decor may make seniors feel more at home. A registered dietician may be advantageous for seniors with special dietary needs.

Also consider these questions: Is the facility conveniently located? Does it offer religious services or transportation to services? If the facility is in an urban area, does it offer special outings for residents? What reputation does the facility have in the surrounding community?

Nursing homes are regulated at both state and federal levels, while assisted-living communities are overseen just at the state level. This may result in differing standards. Carefully examine the guidelines for each type of facility. Understanding the regulations governing these types of facilities and knowing whether they are in compliance helps you determine the quality of care. Contact the health department’s senior or elder unit in the county or state where the home is located to determine if the home has a reputation for complying with regulations.

Beware of Pitfalls

The rapid growth of the assisted-living industry has resulted in some problems. A recent survey conducted in four states found “unclear or potentially misleading language” in sales brochures for approximately one-third of the 60 assisted-living facilities surveyed. One common concern was the lack of clear guidance regarding under what circumstances a resident may be expelled. These types of facilities, as with nursing homes, are driven by supply and demand and should be looked into carefully.

How To Pay for It

One way to manage the cost of nursing home care without forfeiting all your assets is to purchase long term care insurance, which can defray or pay the cost of nursing home care. The cost of long term care insurance depends on the age of the insured at the time coverage is purchased. For example, a long term care policy purchased at age 55 may cost $800 per year, while a policy offering the same benefits bought at age 65 may cost twice as much. As long as the cost is not prohibitive, a policy can be a worthwhile investment and an important part of the estate planning process. Be certain that the policy purchased covers all levels of custodial and skilled nursing care and builds in adjustments for inflation.

Medicaid may pay for a portion of nursing home costs if the senior meets the eligibility criteria. Be sure to verify that a nursing home takes Medicaid patients. In general, most of the individual’s assets must be depleted before Medicaid will cover the cost of nursing home care. But a nursing home patient’s spouse may retain a residence along with other minimal assets.

Because assisted-living communities are not medical facilities, Medicare and Medicaid will usually not cover their costs. But some states do permit the limited use of Medicaid funds for assisted living.

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