Financial Planning for the Elder Care Years


by: Keith Barnaby

Most financial planning calculators give you high marks if you have saved enough to live on 60-70% of your current income. But how many ask you to estimate elder care costs in the equation?

By becoming aware of:

  • Possible elder care costs
  • Medicare's Rx donut hole
  • Income limitations for Medicaid, VA benefits, state entitlements
  • The health of pension funds you have
  • Your health and family's health history
  • The role of long term care insurance

you can anticipate possible problem areas, avoid a crisis and sleep better at night.

Elder Care is Inevitable

Prudent financial planning must involve elder care. How many times have you heard an elder say something like, "I never thought I would come to this?"

Planning is not about negativity or doomsday prophesy. Rather, it is an eyes-wide-open look into how things are, may be or are very likely to be. And preparing for each so that no matter what happens, you will be as prepared as possible.

A sober assessment of your health, medical history and your family's medical history is a great place to begin.

Consider first what you can do now to maximize the chances that you will remain healthy for as long as possible. Implement these measures and stick with them.

Did you know that current medical research has found a different (and more dangerous) makeup of the fat that accumulates around our middle body than in the fat elsewhere on our bodies? It is easier to keep it off than take it off, so please do not delay.

Even perfect human specimens wear out over time. We see this in our skin, but of course it's inevitable elsewhere.

The fact is that you will need more and more elder care as you age. Both medical and non-medical.

Financial Planning Means Insurance

Non-medical home-based elder care costs anywhere between $10/hour if you hire yourself to $21/hour or more through an agency. Add R.N. to the credentials and costs rise 20% or more.

Medicare was never designed to cover 100% of medical costs, and home-based care is covered only in limited circumstances. What does one do?

Look now at what Medicare does cover for part A (hospitalization), Part B (outpatient services) and Part D (prescription drug coverage). Compare that coverage to your health conditions, your family health history and the inevitability that at some point, however distant, your body will not serve you as it does now.

Why now?

Early financial planning allows you time to create assets. Long term care insurance (an asset) is much cheaper when you are younger, for example.

Also consider how to fill the gaps in Medicare coverage. Medicare supplemental plans, called Medigap by some, are government-regulated private plans offered to fill in for co-payments and deductibles. Medicare Part C is Medicare Advantage Plans, private insurance that covers the Medigap areas plus more.

Some Advantage plans will cover prescription costs to help you avoid the "donut hole" in Medicare Part D coverage, where you are responsible for 100% of costs exceeding $2,830/year until your costs exceed $4,550/year. That's $1,720/year from your pocket. Stand alone Medicare Prescription Drug plans are another option.

What if Assets Run Low?

Medicaid is a state administered federal program supplying health monies for low income persons. The Veterans Administration has many programs available to vets and their families, but nearly all have income limitations. Most states have several state-wide and local programs to help lower income citizens.

Maybe you have a short list of possible retirement destinations. Use that list to check not only cost of living but also the elder care costs in each.

With Medicaid and possible VA health benefits in mind, see what sort of drain on your projected assets would be required to place you into their programs, and what the benefits may be. Finally, check on the facilities and services in each locality.

For example, some religious or organizationally affiliated assisted living or nursing care sites are state of the art yet cater to lower income members. Elsewhere you may find yourself not so fortunate.

Review the Plan

You or your financial advisor checks your nest egg periodically to see if your pension fund has been downgraded or the government bond you hold is in financial trouble.

Critically assess the components of your elder care financial planning as well.

Perhaps some family care on which you had counted has become less likely. Or you have suffered a disabling injury impacting your earning capacity or making it more likely that health services will be needed later.

Consider consulting an objective elder care professional to ensure you have covered all issues and to help you successfully manage the transitions of our elder years.

Keith Barnaby, Esq. is a web educator on topics related to elder issues, health, fitness, energy conservation, green living and gardening. He lives in Pennsylvania with his four teenage children.

His website is

Keith also owns and directs Elder Care Management, dedicated to helping seniors plan, execute and sustain a healthy transition into their golden years. Using his skills from a 20 year legal career and his work in scientific research and emergency care, he works wherever there is a need from his PA and FL locations. Keith speaks English, Spanish, and rusty French. A brief summary of his services can be found at under the Elder Care tab. You may contact him for a free consultation at