Rebecca Barnard of St. Louis spent her career as a software developer, but her passion was fine-art photography. She was detail-oriented in both her job and her hobby, says her husband, Richard Rubin. So he was surprised when he began noticing small missteps: She'd park her car at an odd angle and forget to close the car door, and she started to get lost. They had a major scare when she took the wrong train to visit family in New York and didn't know where she was.
"There was a point at which it became apparent that something awful was going on," says Rubin. Seven years ago, he took Barnard to a memory clinic for tests and discovered she had Alzheimer's disease. She was just 53 years old.
A diagnosis of Alzheimer's before age 65 is rare. But one in eight people age 65 and older start showing signs of the disease, and 45% of people age 85 and older have it, according to the Alzheimer's Association. All told, more than five million Americans have Alzheimer's. The cost of medical and long-term care for Alzheimer's patients was $200 billion in 2012—not counting the estimated 17 billion hours of unpaid care by family members and friends.
Part of the tragedy of the disease is that it often strikes healthy, vigorous individuals, who then go through a series of stages that rob them of their memory, their awareness of their surroundings and, eventually, their ability to do even the most basic tasks. They typically live nearly a decade after the diagnosis and usually need full-time care, initially at home but ultimately in a nursing home. "Costs associated with Alzheimer's disease cripple families at a time when they are also coping with the huge practical, social and emotional toll of this chronic brain disorder," says Carol Steinberg, executive vice-president of the Alzheimer's Foundation of America.
Scrambling for care
At first, Rubin, a software developer, worked at home and was able to take care of Barnard. "During the first year, most people couldn't tell that anything was wrong," says Rubin, now 65. But Barnard started getting lost in the house, and eventually even doing her morning routine became difficult. Rubin quit his job at age 60 to care for his wife full-time.
"Alzheimer's sneaks up on you," he says. "You think you can live with it and say you'll manage, but then it changes again." For some people, the middle stage can last five to seven years. But the middle stage for Barnard lasted just a few months.
After a long and complicated application process, Barnard qualified for Social Security Disability Insurance benefits of $1,700 per month and received retroactive payments back to her diagnosis in 2006. Qualifying for benefits has become simpler—early-onset Alzheimer's disease is now on the government's "compassionate allowance" list of conditions subject to fast-track benefits approval (opens in new tab).
Rubin hired a caregiver to give him some relief a couple of times a week. Then Barnard had a sharp decline and started to need about 12 hours of care per day. The caregivers charged about $20 per hour—totaling $240 per day. Barnard's Social Security payments barely put a dent in her monthly care bill of $7,000, and the couple continued to drain their savings to make up the difference.
Qualifying for Social Security disability also made Barnard eligible for Medicare two years after her diagnosis, even though she was younger than 65. Medicare covered most of her medical expenses but not what Alzheimer's patients need most: custodial care, or the nonmedical care associated with the tasks of daily living, such as help with bathing, dressing and eating. Medicare covers that care for only a short time when skilled care is also needed, such as when an Alzheimer's patient treated by a nurse for a broken hip needs help bathing.
Rubin eventually found an assisted-living group home with just nine residents. Barnard moved out of the couple's home in December 2008. "Being together all the time was over, and it was the hardest thing I did in my life," says Rubin.
The assisted-living facility cost $6,000 per month, which they paid from Barnard's Social Security and the couple's savings. "Basically, we had to start liquidating IRAs, and that was at the bottom of the market," says Rubin. They spent about $160,000 for Barnard's care during her two years there—more than their house had cost.
In fewer than four years from the time she started needing care, half of the couple's retirement savings was gone. "I had always been frugal," says Rubin. "I bought used cars and wasn't a big spender. But with $6,000 going out the door every month, that's serious money."
The Medicaid option
Rubin met with an elder-law attorney to start planning for Medicaid to pay for Barnard's care. But qualifying for Medicaid was tricky because Rubin was so young and had to spend down so much of his retirement kitty. The spouse who lives at home (called the community spouse) can keep all of his own income and, in Missouri, $115,920 in countable assets (such as savings). The spouse who needs care must have very little income and assets; those amounts also vary from state to state, but in Missouri, the spouse who lives in the nursing home can't have more than $999 in assets.
If you're the community spouse, you're allowed to keep your home, car and assets in certain kinds of trusts. Giving away money to anyone other than your spouse within five years of applying for Medicaid can delay your eligibility. (See www.medicaid.gov (opens in new tab) for state eligibility rules and www.naela.org (opens in new tab) to find an elder-law attorney in your area.)
Because Rubin was in his early sixties, the $115,920 asset allowance would be way too little to cover the 20 or 30 years he might live in retirement. So he did some "financial acrobatics" to shift money around and keep more for his own future. He sold some stocks to buy a special Medicaid annuity, which converted that money from countable assets to noncountable income (see www.elderlawanswers.com (opens in new tab)). He also used some money to pay down his mortgage because the value of his primary residence wasn't included in the calculation.
But even after Barnard qualified for Medicaid, the couple faced another problem: Medicaid generally doesn't cover home care or assisted-living facilities (some states have voucher programs that let people in assisted living or home care use Medicaid). Rubin worked with the Missouri Department of Health and Senior Services' long-term-care ombudsman and finally found a nearby nursing home that had a Medicaid bed open. "The new place is just ten minutes away and has a beautiful view of the Mississippi River," he says. "Beck and I watch the boats on our sad, low river," which has been affected by drought.
Even if you find a Medicaid-eligible nursing home, the facility may not be equipped for the special needs of active Alzheimer's patients. Julie Dobson's mother, Elizabeth Dobson, 80, started showing signs of Alzheimer's about ten years ago. Elizabeth's husband, Charles, took care of her in their rural New Hampshire home for several years, but eventually he needed more help. When Charles had knee surgery near Julie's home in the Washington, D.C., area last year, he and Julie moved Elizabeth into a nursing home nearby. The facility cost $9,300 per month, which they planned to pay themselves until Elizabeth qualified for Medicaid.
The nursing home accepted Medicaid, but it wasn't equipped to deal with physically active Alzheimer's patients. "My mother is 80 years old, but she looks 60 and is as healthy as an ox," says Julie. "People don't understand that Alzheimer's patients can be very active—they walk and walk." But the nursing home told Julie that she'd need to hire someone to watch her mother in the nursing home—at an extra $17 per hour.
Instead, she found a memory-care facility near her home in Potomac, Md. "The people are much more like my mother," says Julie. "The facility keeps them active—they sing and dance." The new facility costs $7,500 per month, but it doesn't take Medicaid. Charles is paying the bills from his savings, and Julie, 56, plans to cover the cost as long as she can after her father spends all his money. But she is also saving for retirement and for college for her two teenagers.
"You think you've saved enough, and it's overwhelming," says Julie. "My father felt financially comfortable. You can have a couple hundred thousand dollars in the bank, and it can all go in just a year or two."
The insurance option
Neither Elizabeth Dobson nor Rebecca Barnard has long-term-care insurance. That's the only way to get broad coverage for custodial care in a variety of locations: your home, an assisted-living facility or a nursing home.
For the policy to pay benefits, you generally must need help with at least two out of six activities of daily living (such as bathing and dressing) or provide evidence of cognitive impairment. Most policies have a waiting period—generally 60 or 90 days—before benefits kick in.
Contact the insurance company immediately after discovering your family member has Alzheimer's. Many policies have a care-coordinator service that can help you find caregivers or facilities before the benefits kick in, says Marilee Driscoll, author of The Complete Idiot's Guide to Long-Term Care Planning. Some newer policies from Genworth, the largest long-term-care insurer, offer its CareScout service to policyholders who are searching for care for their parents—even if their parents don't have long-term-care insurance themselves. The program recommends caregivers and facilities and negotiates discounts.
Some policies pay for any caregiver who is not a family member, and others pay only for licensed caregivers who work for an agency. Hiring an eligible caregiver upfront helps you avoid having to find a new caregiver after the waiting period is over.
Find out how the benefits are calculated. You can't use more than your daily benefit per day, but you can usually stretch your benefit over longer periods if you use less than the allotted amount. For example, if you choose a three-year benefit period at $200 a day but spend only $100 a day for caregivers, you may be able to stretch your coverage to six years. Or if your care costs more than your daily benefit, you might hire a licensed caregiver to provide care up to the benefit limit, then get less-expensive care from adult day care or help with basic tasks from unlicensed providers.
Thanks to American Public Media's Public Insight Network for help locating families affected by Alzheimer's disease.
As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.
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