Financing 101 for Dementia Diagnosis

According to the Alzheimer's Association, there is an estimated 5.7 million Americans that are diagnosed with Alzheimer's; 1 in 3 seniors dies with Alzheimer's or another form of dementia. The percentage of Alzheimer's diagnosis has increased 123% between 2000 and 2015. As a prevalent disease in our society, it is important to set up a financing plan after a loved one is diagnosed with dementia.

A diagnosis brings many decisions. One of the hardest is how to pay for care. This article lays out basic financial steps and options. It is meant to help older adults and their family members start planning with confidence.

Gather paperwork and make legal choices

Start by collecting important documents. Having things in one place makes decisions easier. Key items to gather include:

• Medical records and the diagnosis letter from the doctor.
• Insurance cards and policy information for Medicare, Medigap, Medicare Advantage, and long-term care insurance if any.
• Bank statements and a list of regular income sources such as pensions, Social Security, and retirement plans.
• Life insurance policies and retirement account beneficiary forms.
• Deeds, titles, and mortgage information for property you own.
• Existing powers of attorney, wills, and advance directives.

Next, consider legal steps. Appointing a durable power of attorney for finances and a health care proxy lets a trusted person act when the person with dementia cannot. If documents do not exist, talk with an attorney who works with older adults or an elder law attorney. Even a basic legal plan can prevent crisis problems later.

Understand common payment sources

Different payers cover different needs. It helps to know who typically pays for what:

• Medicare generally covers medical care and short-term skilled nursing care after hospitalization. It does not usually pay for long-term custodial care.
• Medicaid can cover long-term care services for people who meet income and asset rules. Each state has its own rules and programs.
• Long-term care insurance may help if a policy is in place. Review the policy terms and waiting periods.
• Veterans benefits may help eligible veterans and spouses with some long-term care costs.
• Personal savings, pensions, and retirement accounts are often used to pay for care not covered by insurance.

Talking with the person who handles the household finances, the insurer, and a benefits counselor can clarify what is available. Do not make big moves with accounts or assets until you understand the impact on eligibility for public benefits if those are needed.

Organize money and protect it

Good money management reduces stress and risk. Take practical steps early:

• Create a simple budget that lists regular income and all monthly expenses.
• Set up automatic payments for bills when possible to avoid missed payments.
• Keep a short list of trusted contacts such as bankers, the primary family contact, and the doctor.
• Monitor accounts regularly for unusual activity. Older adults with dementia can be targeted by scams.
• Simplify accounts when you can. Fewer accounts make tracking easier.

If the person with dementia is still able to participate, include them in decisions about their money to the extent possible. This helps preserve dignity and can make transitions smoother.

Plan for care and ongoing costs

Care needs change over time. Think in terms of stages and have a flexible plan.

• Start with supports that keep the person at home if that is the goal. In-home help and adult day programs can delay or reduce more intensive care.
• Research local memory care options and assisted living facilities so you know what services and price ranges exist.
• Factor in extra costs such as home modifications, transportation, and respite care for family caregivers.

If care will require help from family, be clear about roles and a schedule. If paid care is needed, get multiple estimates. Ask providers for written descriptions of services and costs.

Get help when you need it

You do not have to handle this alone. Professionals can help with specific parts of the plan:

• A financial planner who works with older adults can help with budgeting and long-term planning.
• An elder law attorney can advise about legal documents, Medicaid rules, and protecting assets.
• A social worker or care manager can do a needs assessment and guide you to local services.

Keep conversations calm and focused. Start early while more options are available. Small steps taken now can protect savings, reduce stress, and improve the quality of care for a loved one with dementia.