Aging at home can be a challenge when the need for high quality assistance arises. This challenge is exacerbated by the increasing difficulty in finding quality caregivers for aging and disabled individuals. This problem has profound and troubling implications for millions of older and disabled Americans who will need personal care assistance in coming years.
Most families, regardless of wealth, have older members, and many families count individuals with disabilities among their members. As any experienced practitioner will attest, wealth is by no means a guarantor of quality care giving and related health care services, particularly when an individual in need is maintained at home. The problems endured by Groucho Marx and Mickey Rooney are some of the more visible examples of aging care services that were or bordered on abusive.
Increased Demand
This is a time of crisis for individuals who need help at home. No one is immune, regardless of wealth. Keep in mind: 70% of those over 65 will need some form of long-term care (LTC).1 Indeed, the aging population is growing dramatically, now that Baby Boomers (that is, those born between 1946 and 1954) are turning 65. Approximately 10,000 Boomers turn 65 every day.2 Some need home and facility-based care by age 65. For the vast majority, the need inescapably increases with age.
The older population is expected to nearly double from approximately 52 million in 2018 to 95 million by 2060.3 Moreover, the share of the population that’s age 65 and older will increase from 16% to 23%.4 These are staggering facts. It means that dramatically fewer family caregivers (now the primary service of home care assistance) will be available. It means that the Social Security and Medicaid trust funds will be exhausted. But that’s a topic for another day.
Isolation exacerbates this problem. The share of women who are over the age of 65 who are divorced increased from 3% in 1980 to over 14% in 2018, and for men, the increase is from 4% to 11%.5 There’s also a dramatic increase in the number of men and women who are living alone. The database speculation is that Boomers will generate a 50% increase in the number of elders who require nursing home care—to almost 2 million in 2030 from 1.2 million in 2017.6
There’s also been a dramatic increase in the number of Americans who live with Alzheimer’s Disease. This number is expected to double to almost 13 million (from 5.8 million today) by 2050.7 In the early stages of the disease, personal care needs are minimal and typically provided by family members. As the disease progresses, the individual faces greater challenges as capability diminishes and as stress on caregivers increases. Hired assistance becomes necessary to avoid premature placement in assisted living, memory care or skilled nursing facilities. The number of disabled Americans over 65 is similarly increasing.8
Conservatively, I estimate that there will be a 100% to 200% increase in demand for caregivers who are available for home-based services to keep elders and disabled individuals safe and secure at home—and to avoid placement in unwanted facilities.
Fewer Caregivers
Competition for such caregivers is intense. Facilities that provide assisted living and skilled nursing care for elders look to this same pool of workers.
As if all of this wasn’t enough, a striking figure is that, in March of 2022, there were 11.5 million job openings and only 6 million individuals who were unemployed.9 The ratio of unemployed individuals to job openings was therefore 0.5. Competition for this work force also comes from other elements of the private sector in which entry level employment and relatively low skilled employment opportunities are abundant and growing. Wages for entry level individuals have risen correspondingly. Amazon, for example, now offers a starting salary of $18 per hour.10
Unfortunately, most native-born Americans are unwilling to provide individual care services. Immigration policies have, over the past few years, restricted the inflow of individuals from countries such as the Philippines, Puerto Rico and Tonga. These population subgroups provide a disproportionate share of personal caregiving services.
Need for Care Plan
Every individual has a unique set of needs and capabilities. Accordingly, a life plan or care plan for an aging individual is ideally developed by an appropriately skilled individual, such as a professional geriatric care manager. This can be the best investment a client ever makes. An appropriate care plan takes into consideration family resources, community resources, government programs and the physical and mental capabilities of the individual. An inappropriate placement can shatter one’s quality of life. An appropriate placement with appropriate resources can maximize quality of life even in challenging circumstances. Attorneys and financial advisors will be wise to expand their services beyond tax and economics to address these very human needs. A referral relationship with experienced geriatric care managers, for example, can complement and super-charge estate and financial planning services.
Who’s in Charge?
Ideally, the individual elder is in charge of their own planning and their own life. At the same time, any individual can suffer from diminished capacity or a lack of capacity. The choice of a surrogate decision maker, therefore, is of critical importance. In the context of elder care needs, the appropriate individual to have responsibility may be entirely different from the individual who has responsibility for surrogate financial management, being named in a durable power of attorney (POA) for financial affairs and as a successor trustee in a revocable living trust. This is particularly true when a bank or other financial institution is serving as trustee.
The individual named in an advance health care directive (AHCD) or durable POA for health care presumptively has authority for health care decision making, including decisions about level and type of supportive care services. This individual must be sensitive to the elder’s individual needs, ideally placing inheritance expectations aside. Experienced practitioners, however, know that many potential inheritors face and often struggle with this conflict of interest. Practitioners must directly address this point.
Consider a daughter, economically insecure, who has responsibility for her mother’s care. Her mother is ill and determined to remain at home. Hiring private care providers can cost $100,000, $200,000 and more over the elder’s lifetime. Every dollar devoted to such services is a dollar that the daughter won’t inherit. As difficult as it may be, the practitioner must discuss this conflict of interest with the elder client—very directly and with alternative approaches in mind.
Should a professional, perhaps a geriatric care manager, be given responsibility in the AHCD or durable POA for health care? While few individuals would prefer a professional to a family member, this approach addresses the conflict of interest. It increases the possibility that a care plan will be individualized and maximize independence and quality of life. At minimum, the services of such a professional should be integrated into the planning. Perhaps a professional is required to “sign off” on a care plan that family members develop. That professional might also be given some responsibility for monitoring quality of care.
Home Care Agencies
If family members can’t provide personal care services at home, home care agencies are perhaps the most appropriate source of help. The cost isn’t insignificant. Given the economic forces described earlier, wages for caregivers have increased dramatically. The cost of care for the individual can easily exceed $30 or $35 per hour, depending on needs and the qualifications of the provider.
If a client has LTC insurance, carefully evaluate its terms to understand the circumstances when policy benefits become available. Typically, benefits are only available when three or four of the activities of daily living are necessarily addressed. Such policies virtually never provide benefits if an individual needs help with laundry, house cleaning and other such services. Benefits may be available if the individual is unable to eat, bathe or take care of personal hygiene by themself. It’s important to understand what LTC insurance will and won’t cover.
A clear benefit of using a private agency is that the elder/family isn’t directly employing the caregiver. The caregiver is an employee of the agency, which has responsibility for benefits, withholding and other diverse financial responsibilities. The agency is also responsible for providing services if a particular caregiver becomes ill or ceases to provide services for any reason.
Private agencies also provide continuing education, monitoring and support to caregivers. This is of both direct and indirect benefit to families who retain the services of home care agencies.
Private Hire Caregivers
Despite the high cost of care, countless families seek out and privately hire individual caregivers. As the saying goes, “this works when it works.” Many learn the hard way that “when it doesn’t work, it doesn’t work.”
Privately employed individuals may prefer or even demand cash payments, eschewing arguable benefits of being placed on a formal payroll. The fact is that many are illegal aliens, raising other issues about quality of care and monitoring. There are countless stories of high quality services by privately hired individuals and of caregivers who are inappropriate and even financially or physically abusive. Here’s one example of such a situation that I experienced with one of my clients:
Mrs. J suffered a serious stroke and was homebound. Her only child lived 3,000 miles away. Her daughter hired a caregiver, referred by a friend living near her mother, to provide help four hours a day. The caregiver was paid in cash.
After three weeks, the caregiver complained of a serious back injury incurred while caring for Mrs. J. She told Mrs. J and her daughter that she would file a claim for disability, knowing that the family didn’t pay into the state disability system. She ultimately “settled” for a $3,000 payment from the family, who was worried about liability. The caregiver took the money and quickly disappeared.
If your client opts for a private hire, recommend that they sign a written agreement setting forth the terms even though it can’t eliminate all risk for the elder and their family. A CPA should be involved to be certain that taxes are withheld, state disabilities payments made and other formalities addressed.
Elements of such an agreement include:
- Specific days and hours of employment
- Rate of compensation
- Tasks to be performed by caregiver
- Whether the caregiver can bring guests to the house (typically prohibited)
- Mutual power to terminate agreement; notice periods if practical
- If “live in,” clarity about guests, meals, kitchen and whole house access
- Contact information for family member or legal agent for emergencies
- Whether the caregiver can use the automobile to drive the elder to appointments or for other purposes
- Privacy expectations of caregiver, when appropriate
Government Benefits
Government benefits are available for some levels of home care.
The Medicare program covers some in-home health care services when the individual meets eligibility criteria (being homebound and requiring the services of a skilled professional) and if the services are considered reasonable and necessary for treatment.11
Other services are typically a part of or related to a state Medicaid plan. Financial eligibility requirements for In-Home Supportive Services can be very strict, often mandating that eligibility is limited to individuals who have no more than $2,000 in countable assets.
Some states, such as New York, have been historically liberal in allowing Medicaid coverage for home care services. Importantly, eligibility for home care services in New York have been forgiving with regard to asset transfers to achieve eligibility. That’s currently changing as New York is imposing a 30-month look-back period that will deny eligibility to individuals who made significant asset transfers within that 30-month period.12
It’s unlawful to supplement the compensation paid to workers through programs such as Medicaid. This is important because such hourly wages are typically lower than wages paid by private agencies.
Every jurisdiction has its own Medicaid plan. Practitioners must be familiar with eligibility rules and guidelines in the jurisdiction of residence. Medicaid is also considering enacting new minimum staffing requirements for nursing care facilities. See “New Minimum Requirements?” p. 41.
While government programs are important, and while they’re simply necessary for lower income individuals, ideal planning integrates government eligibility and government programs with private pay resources. The unfortunate fact is that, because of lower reimbursement rates and more paperwork, countless physicians and other medical care providers don’t accept Medicaid patients. Indeed, expanded Medicaid eligibility faces a disheartening dilemma: As eligibility is more accessible and demand increases geometrically, fewer physicians, care providers and facilities will be willing to accept Medicaid unless reimbursement rates increase dramatically. We aren’t optimistic that this will happen. The system will therefore face strains and challenges with regard to quality care at home or in care providing facilities.
Estate Plan, Protective Measures
A trusted individual must be given authority to manage assets and health care decisions in the event that an individual becomes incapacitated. While immediate health care decisions are typically delegated to the individual named in an AHCD or durable POA for health care, health care decisions, such as the employment of home care service providers, present financial challenges because few elders have inexhaustible resources. The individual in control of the purse strings—the trustee of the trust and individual named in the durable POA—must be involved, in agreement and satisfy financial obligations for home care services.
If an individual suffers from dementia or has other significant and increasing care needs, an appropriately drafted durable POA must have provisions that are sensitive to financial and supportive care needs. A simple “vanilla” durable POA will have an individual simply check boxes to authorize surrogate planning and management steps. Such documents typically don’t authorize asset transfers or gifting, which may be necessary if assets are to be presented and Medicaid eligibility obtained.
Notwithstanding concerns about quality of care in Medicaid-certified skilled nursing facilities, most individuals don’t have sufficient funds to pay $10,000 or $15,000 per month for skilled nursing care without facing the exhaustion of private assets. Balanced, protective planning involves the use of programs such as Medicaid while complimenting such services with privately paid resources. For example, an individual may be in a Medicaid-certified nursing home and have private resources pay for supplemental care.
Endnotes
1. See Michael Gilfix, “Aging in Place,” Trusts & Estates (July/August 2021).
2. U.S. Census Bureau, “2020 Census Will Help Policymaker Prepare for the Incoming Wave of Aging Boomers,” (Dec. 10, 2019), https://www.census.gov/library/stories/2019/12/by-2030-all-baby-boomers-will-be-age-65-or-older.html.
3. Administration on Aging, “2020 Profile of Older Americans,” (May 2021), https://acl.gov/sites/default/files/Aging%20and%20Disability%20in%20America/2020ProfileOlderAmericans.Final_.pdf.
4. Mark Mather, Paola Scommegna and Lillian Kilduff, “Fact Sheet: Aging in the United States,” PRB (2021), www.prb.org/resources/fact-sheet-aging-in-the-united-states/.
5. U.S. Census Bureau, “Population Projections.”
6. U.S. Census Bureau, “Current Population Survey, Annual Social and Economic Supplement.”
7. U.S. Census Bureau, “American Community Survey and Population Projections.”
8. “Taking Care of Tomorrow, A Consumer’s Guide to Long-Term Care,” www.aging.ca.gov/download.ashx?lE0rcNUV0zb5HC7UVQpEPQ%3D%3D.
9. U.S. Bureau of Labor Statistics (May 9, 2022).
10. Michelle Cheng, “What Amazon’s $18 hourly wage means for other employees,” Quartz (2021), https://qz.com/2060508/what-amazons-18-average-hourly-wage-means-for-other-employers/.
11. “Medicare and Home Health Care Guide,” Centers for Medicare and Medicaid Services.
12. N.Y. 2020 Omnibus Budget Act, amendment to the Social Services Law; see also Medically Needy Aged (SSA Section 1902(a)(10)(C), 42 CFR 435.320 and 435.330).