“It can be wonderful to grow old with your parents. However, you’ll need strategic planning to ensure that caring for aging relatives doesn’t drain your emotional and financial resources.” –Jeff Kennedy.
For the last 25 years, Barbara and her mother Delores had lived miles apart, seeing one another mostly on holidays or during vacations. While they remained close, Barbara longed to spend more time with her mom, enjoying humorous family stories and sampling Delores’ amazing culinary creations. Barbara’s father had passed away several years earlier, and since she was an only child, her relationship with her mother had taken on even more significance.
So, Barbara was beyond excited when she turned 55 and moved to the same retirement community as her mom. With her children grown and on their own, the rambling house where she’d lived most of her adult life was too big for just Barbara and her husband, Ray. The couple sold their house, paid off some debts, and purchased a condo three blocks from Delores.
For a while, life in Palm Lake Estates was great. Barbara spent nearly every day with her mom, catching up, taking long walks, and sharing family photos and videos. They watched Delores’ favorite potboilers, sharing a big bowl of hot buttered popcorn when the weather turned cold and rainy. For Barbara, it felt as if she was only beginning to get reacquainted with her mother after years of being apart.
Unfortunately, three years after Barbara moved to Palm Lake, her mother fell, damaging her back, neck, and shoulders. Recovery proved elusive, and Delores underwent multiple surgeries, physical therapy and was prescribed numerous medications.
The decline came rapidly to this once active and energetic woman. Barbara’s life evolved into spending every day taking her mom to the doctor, helping her bathe and get dressed, and doing household chores. Although her husband was still working, Delores’ needs began to strain the family budget, causing tension and stress between Barbara and her husband.
Barbara wasn’t financially able to hire someone to help her for more than a few hours a week, leaving her exhausted and depressed. When Barbara and Ray looked into long-term care options, the $6,000 a month cost floored them, as did the realization that Delores’ Medicare coverage wouldn’t cover any of these expenses. Making matters even worse was that Delores had a few too many assets for her to qualify for government programs such as Medicaid.
This story, and others like it, happen every day in America. However, most of us don’t include taking care of our elderly parents as part of our financial plans.
Could a Medicaid annuity help?
Perhaps you are like Barbara and anticipate becoming a caretaker for an elderly parent or grandparent. In that case, you will want to consult your financial advisor about planning for this life-changing situation. Your advisor might suggest various options, including purchasing a “Medicaid compliant” annuity (MCA). Properly designed and implemented, MCAs can give applicants a way to spend down their assets without violating Medicare’s strict look-back rule.
A Medicaid-compliant annuity, also known as a “Single Premium Annuity, or Medicaid Qualified Annuity”, turns assets into an income stream that no longer counts toward Medicare’s asset limit. Instead, income from the annuity counts toward Medicaid’s income limit.
Bottom line:
Many Americans will find themselves caring for an elderly parent during retirement. While this situation can cause tension and stress in families, tools are available, including Medicaid-compliant annuities that may help reduce the financial and emotional burdens. There are strict rules and potential pitfalls when using these particular annuities, so consulting a highly- qualified retirement and income expert is advisable.
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