Care Givers

It may be difficult to know when you, as an advisor, should step in and recommend when an elderly client, or client's elderly family, member should look for a nursing home, plan a funeral, or explore Medicare and Medicaid options. According to Tilly, usually a family member makes that determination. However, some signs that an elderly client is in the early stages of dementia will leak into the financial area of their life and will be obvious to an advisor. An example would be if they start making financial judgments that are abnormal for them. "You can tell when they call three or four times a week saying that money is being taken out of the account, or they keep writing checks but they don't realize it and they want to know where the money has gone," notes Grande. "In that situation, we will call one of their children. If they are alone, I'll try and find a close friend or distant relatives." (See sidebar at right for another sign of impending dementia among clients.)

"With end-of-life issues, something that is sometimes avoided and is not written into legal documents is at what point is the client no longer in a position to make his own decision and who makes that determination," says Keeling. "If it's obviously clear, it's a different story. But if someone is simply having medical problems and the children get the idea that they're not quite there anymore, doctors are very hesitant to say that people no longer have that competency." In response to this, Keeling works with attorneys that, within a trust, set up a competency panel. While the client is still well, they select certain people that will determine whether or not the client can make decisions later on in life. "That way, when an advisor gets to that point when she is wondering whether a client can make his own decision, it's a nice check to have so that you, as the advisor, do not have to make that decision. You have someone in place to do that. We see it more and more, because it's hard to determine when that point is."

It's important to have a team of experts you can call on, advisors counsel. "There no longer is that one person that can be the expert on all of these areas," notes Pat Murphy, a partner at Lenox Financial in Chicago. Grande agrees. "You, as a planner, can't give any professional legal advice, but you can refer them to someone," she says. "Elder care lawyers that help the client figure out the best way to handle their assets, wills, and power of attorney are important. It's a very specialized field–the rules change overnight." Grande keeps other professionals in her network as well, such as a person who takes care of Medicaid planning. Other specialists advisors should think about adding are support groups for caregivers, a home healthcare service, an adult daycare service, and various reputable nursing homes in the neighborhoods of their clients. "We always bring in an outside estate-planning attorney," states Keeling. "We find attorneys that really know what they are doing. These attorneys are not general practitioners that throw wills and trusts together on the side. It is very specialized."

Medicaid, Medicare, and LTC Insurance

"If anyone needs Medicaid planning, they better do it now," warns Grande. "It's been changed from a three-year look-back (the period of time in which Medicaid will examine asset transfers to determine eligibility for benefits) to a five-year look-back for everyone." This is just one of the several facts about health insurance an advisor should be aware of if they plan on servicing older clients. "You'd be surprised at the number of otherwise well-trained and knowledgeable advisors who don't realize that Medicare and Medicaid are different," notes Cutler. Medicare is for older people; Medicaid is for less wealthy people. There is some overlap, but Medicare does not pay for long-term care and Medicaid does, but only if you're relatively poor. "Planners that spend most of their careers talking about growing a client's portfolio and haven't thought about the health side wind up surprised," Cutler adds. "They believe that when their client turns 65 and is eligible for Social Security and Medicare, there will be no problem." This is especially wrong when it comes to clients with dementia. "The first thing to realize is that about 70% of the roughly five million people in the country who have dementia live at home and do so with the help of friends and family that are unpaid caregivers," says Tilly. "But dementia is a progressive brain disease that causes increasing levels of dependency over time, so eventually, if a person lives long enough with dementia, they'll end up completely dependent on others, which can overwhelm the caregivers." In other words, a frail older woman can tell her husband how to get dressed in the moderate stages of the disease, but cannot lift him and dress him when he's bed bound. These people may need homecare, adult daycare, assisted living, or, toward the end, 24-hour care in a nursing home. According to the Genworth Cost of Care Survey for 2007, the annual cost of living in a nursing home is $75,000, assisted living costs about $33,000 and the cost of 40 hours of homecare per week is $53,000 in 2007.

"The cost of long-term care is so expensive that even people who would be considered extremely financially well-off would find that they run out of assets very quickly," Keeling points put. "Medicaid planning becomes essential, and you have to figure out a way to get them into the Medicaid system or you will impoverish the spouse at home." The Medicaid program varies quite a bit from state to state, so it's important to find out how your clients are affected by their state laws.

Tilly recalls other special situations as well. "If the patient breaks a hip, they can stay in the hospital a few days and then go to a nursing facility after. Medicare will pay for most of the care for the first 20 days in the nursing home." Medicare will also pay for home health care if the person has a skilled need, like physical therapy, Tilly adds. "But that's very limited."

Another possible consideration: hybrid long-term care products. "With long-term care insurance, you're really restricted in what you can use that money for, but there are so many people that want to stay living in their own home and have trouble doing so," notes Chappell. For example, one hybrid product, The Hartford's LifeAccess Accelerated Death Benefit Rider, allows policyholders to use, or "accelerate," their policy's death benefit for daily living needs, such as paying someone to walk their dog or do their yard work. To qualify, the insured must be diagnosed annually by a physician as unable to perform at least two activities of daily living (ADLs) without substantial assistance from another person for at least 90 days. The rider's benefits can also be used if the insured requires the supervision or protection of another person due to a severe cognitive impairment. The insured has flexibility in determining what type of care she is comfortable with, including nursing home, assisted living, home healthcare, adult day care, or family care. While chronically ill, the insured can access the death benefit on a monthly basis and use the proceeds for virtually any need, whether health-related or not. The policyholder can also use the benefits to pay family members who provide care or assistance, maintenance on their home, basic living expenses, or other needs.

Keep Up the Good Work, Get the Referral

David Littell, professor at the American College, points out that for any advisor looking to serve the boomer market, "there's going to be a lot of opportunity, considering the demographics." But as many advisors and organization leaders have said, it's not just enough for planners to take a few days, attend a class, and think they can settle all of their senior clients' issues. Financial advisors who deal with this demographic must continually educate themselves to function in the ever-changing senior landscape. "Understanding what motivates seniors and what's important to them should be important to the people who want to work with them," explains Dan Danbom of the Society of Certified Senior Advisors. "There are constantly new articles and books coming out," notes Grande. She also depends on seminars provided by elder care attorneys, which update her on the new rules in Medicaid planning or asset protection.

Finally, the good financial gerontology work you do will almost guarantee referrals, according advisors active in the field. "If advisors can help their clients through these emotional times, they will tell their friends about what a great advisor they have," Chappell says. It's good to go ahead and get a head start while this trend is still fresh. Many colleges are starting to include financial gerontology courses, and many advisors are adding CSA, RFG, and CASL to their business cards. "This is going to be a whole other field in financial planning," Grande concludes.

E-mail Staff Editor Kara P. Stapleton at [email protected].