Disclaimer: This transcript has not been edited for grammar, spelling, or punctuation.
Nicole Wipp: Welcome to the smart planning. 101 podcast, episode 15. I'm Nicole Wipp and I'm your host.
Hello, Smart Planners! Today, I'm very excited to introduce to you Audrey Ehrhardt, who is the elder council office management division, director. Now, for those of you that don't know what elder council is. I'll tell you that it is an organization that serves attorneys focusing on specialty areas of the law. And here we're talking specifically about elder law, special needs planning, and veterans pension planning attorneys.
I am a member of elder council and it's one of those things that helps me keep my finger on the pulse of what's happening nationwide. So I can better serve my clients here. Now, this interview with Audrey is going to be a five-part series. And our topic is five things every adult, child of aging parents needs to know, now.
And this is a really important topic because as elder law attorneys, we find that most often the people that are coming to us about these different issues are the adult children of aging parents. And, that's a lot of burden sometimes, and they don't know what to do. So the purpose of this series is to teach you what it is that you need to be thinking about on the lookout for and knowing about so that you can help your aging parents make good decisions or make good decisions on their behalf.
Welcome, Audrey Ehrhardt to the smart planning 101 podcast. Thank you for joining me today.
Audrey Ehrhardt: Thank you, Nicole, for having me, I'm excited to be here.
Nicole Wipp: So Audrey, I'd like to give the listeners a little bit of information about your background and where you're coming from. So can you just share with us a little bit about you? What led you to elder council? What are your experiences and why you're qualified to talk about this topic?
Audrey Ehrhardt: Sure I started gosh, I've been practicing in Florida for about 10 years now. As an attorney and I focused when I was practicing specifically on elder law issues, I started in a firm that did some elder law planning and some other areas as well, and really found a niche for myself with Medicaid crisis planning. And what I mean by that is crisis planning for families who were had a loved one who was injured or facing long-term care costs that well exceeded their income and finding options to meet their needs of the community and get them placed. And then in my later years of practice, I encountered clients who wanted to stay at home family members who wanted to stay at home, who weren't necessarily well situated for going to long-term care options, such as a skilled nursing facility.
We still had that high cost of long-term care and we needed to find ways to pay for that care. And one of the things I ran into was the VA pension benefit, which is a great benefit for wartime veterans and their surviving spouses. And that was how I found elder counsel. I received great training through elder council to learn how to do file VA pension claims for seniors.
And their loved ones. And so for my last three years of practice, I was out on my own specifically focusing on Medicaid and VA pension for my clients and giving them as many long-term care options as they needed, or as they wanted, whether they were going to stay at home or go into a long-term care facility.
Working really heavily with the family members of those seniors. But then you know, always takes a little bit of a turn and my husband was transferred about five hours away in our state of Florida from where I was practicing. And he commuted for the first year and I commuted for the second year and I ended up selling my practice and moving to be with him and our toddler.
And that was how I ended up coming on board at elder council because I had a series of systems and ways to run your practice for Medicaid, and then for VA pension and a couple of other things to really get you as efficient as possible and make it possible for you to have the time to do the things that you need to accomplish in your firm.
In addition to seeing clients, and in addition to doing that legal technical work. So I've brought that over to elder council. I joined elder council. Last year and I've had the great opportunity to put together membership and that's how we've met you know, working together in the office management side and practice development side for elder council.
Nicole Wipp: Yes. And it's been a great experience and that's part of the reason why I asked you to come on here because. It's really interesting to me to work with somebody like yourself that has specific practice or experience, I should say, running a law practice and servicing clients and helping clients get to where they need.
And then also now you've made this interesting transition to elder council where you help attorneys like myself to be able to successfully. Help our clients in the most efficient way possible. Because I'm such a fan [00:05:00] of the way you do this, I thought, well, what better person than Audrey? Because you really understand what this means from every angle.
In my opinion, you are very qualified to speak to what our topic is today, which is the five things that every adult child of aging parents needs to know now. And I'd like for you to start by just telling everybody really quickly to saying these are what the five things are, and then we're going to get individually in detail into what those five things are and why they're important.
Audrey Ehrhardt: Sure. The five things that we're going to talk about today that adult children need to know for their aging parents, which I think it's still important. I'm glad we're talking about it today because I think our seniors and our older Americans who are making these decisions in our office, what we need to be aware of as attorneys and also as the children of decision-makers and the decision-makers is these decisions aren't made in a vacuum.
We're not apart from our children. We're not apart from our elder law attorney. And we need a full team on board to get the right solutions in place. The five things I think everyone needs to know today. The thing is first. I want to talk about the high cost of the rising cost of long-term care. Second, I want to take a second to look at the basic estate planning issue and the fact that basic estate planning isn't enough to meet older American's needs in the community.
Third. I want to turn to the long-term care options that are available to us, that our listeners may or may not be aware of that are out there number four. I want to turn to the legal responsibilities that a child, an adult child may be asked to take on for a parent. And these are responsibilities they may or not, may not be aware of right now.
And then number five, finally, I want to turn to the pre-planning options that your listeners needed to have in place yesterday.
Nicole Wipp: Alright, well that's a great overview the sort of 10,000-foot overview. So let's zero in on them. So long-term care costs are rising. What does that mean? Tell us about that.
Audrey Ehrhardt: I thought, you know, to best to describe it to you. Cause I don't really like math, but I like numbers. And so what I thought I would do is go ahead and put together some statistics for you today and for your listeners.
And so when I give you these statistics, Nicole, I'm actually talking about the term older Americans in America, older American, and I think it's a little bit tongue in cheek because older American is someone who's 65 years or older. And I'm not sure that today's 65 years old would appreciate us calling them an old American.
I know when I closed my practice, when I sold my practice, my average client was 93. So saying older American for an adult child was often an oxymoron because I had 90 three-year-olds who had 65-year-old children. So that was an interesting thing to see also that often I was talking to two audiences, but so today for these statistics on, talks about older Americans, so individuals in America who are 65 years or older from a national perspective, the number of older Americans has increased from 35 and a half million in 2002 by 21%, that is a huge jump.
And so we're looking at 43.1 million older Americans. 2012, that statistic actually comes from the administration on aging, which pooled figures from us census bureau, the national center for health statistics, the bureau for labor statistics. But the reason why we've had this very significant increase is because we're hitting the baby boom.
And as I'm sure you know, and your listeners are aware of, you know, during the great depression, we had a fewer number of babies born. And so that's why the 1990s weren't hit as much with this huge dramatic population increase. But that's what we're seeing. So right now in America, one out of every seven people is an older American, so that's 13.7% of the population.
And that number is just going to grow in a few short years. When we get to 2020, that number is going to be 56 million. And then by 2040, we're going to be looking at a population of almost 80 million older Americans.
Nicole Wipp: Wow that's a lot!
Audrey Ehrhardt: It is. And as an elder law attorney, I think you get excited because you see all the folks and at least demographically that you can get out and be helping in your community.
But I think it's also something that we need to be aware of because the costs are increasing as well as the population. And I wanted to give you a couple other statistics that I think are. So that we understand the context of this planning fits in because so often, you know, you give a statistic and people say, wow, that's a lot of people, but we don't really understand what that means.
So what I wanted to give you the context for of that, of the top percent of our population, that you know, that 43.1 million in America, 28% of those seniors, those elders they're living alone. And that's important for us to realize as planners, as children, as the seniors is we have to have safety precautions in place.
If we are aging in our homes, which I think all of us want to do as long as possible stay in our homes, but we have to have that protection set up to make sure that we're safe. As we age in our homes, moving from that number, though, I did want to give you some idea [00:10:00] for income and assets.
Cause I know we're going to be talking about that a little bit today, but right now the national average, the median income for men in America, the median income for older Americans in America is only $27,600. So, it's a little bit low and for women, it's even lower Nicole it's $16,000.
Nicole Wipp: Wow. That's a lot lower, actually.
Audrey Ehrhardt: It is a lot lower, almost $10,000 less. And so I think that's important to know going forward. Right now the national council of aging has told us that one-third of senior house households in America don't have enough money left each month to pay their bills. So the average credit card debt right now for individuals over 65.
Is $9,000. And that's high when we're looking at a possibility of a health decline or a health incident that suddenly adds more long-term care costs on top of a possible, already existing deficit in over one-third of our households.
Nicole Wipp: Yeah. I mean, that actually is. Very sobering. If you stop and think about it and particularly for anybody that would be your parent, that's very sobering.
But I also want to make sure that people understand that if your parent doesn't fit into those numbers, that this is still a really important conversation. So don't tune out because there are. Much bigger issues here than you may realize, even if your parents have way more money than what Audrey just talked about.
Audrey Ehrhardt: No, I think that's right on point, you know, and I think so often people say I have enough money. I don't need to think about the high cost of long-term care. There really isn't a high cost that will apply to me, but I think that's it, that's a dangerous trap to fall into. It's, you know, it's, self-assurance, that really is misplaced in the long-term care setting and what I would say to that and to people that we talked to about that.
As of this year, the cost of a semi-private room. So that means a room that you're gonna be sharing with someone else in a skilled nursing facility for this year is $90,520 a year. So even if mom or dad says, well, I don't have that median income of $27,000 a month. As a man, I have an income of $60,000.
You're still 30,000 below the. Of a price of a semi-private room and a facility. And that's concerning for us to be looking at going forward. The national average that costs a day is $239 a day. And what many of our children that we're talking to adult children? What many of our seniors don't realize is Medicare is not going to pay for a custodial, stay in a nursing home.
So this is. Out of pocket out of a long-term care insurance policy, something else making up that difference. And even if we have a sizable net worth, that's going to be very quickly diminished because that's just the cost to live in the facility. It's not your extras or your clothing or maintaining a household.
That's just the cost there. And of course, there are people who say, well, you know, Audrey, don't give us the statistics for a nursing home, cause we're never going to go there. Okay. Well, I understand that we're still looking at an assisted living facility costs nationally of about 42,000 a year. And then for those folks who say, I want to always stay in my home, the average national cost for a home caregiver is $21 an hour.
And if you put that together and multiply them, I had a 30 day month at 24 hours a day, you're looking at a cost of care bill, a $15,000 a month, about $15,000 a month. And that's going to quickly burn through anyone's assets. And so that's why I wouldn't say to your listeners that, you know, we may feel like we have enough income.
We may feel like we have enough assets to make these changes, but we really have to think this through, especially when we're thinking about providing for our families for the long term. Even more importantly, when we have a spouse that we're married to, who will still need to live and operate the home in the event that we ourselves need long-term care.
Nicole Wipp: Well, and actually you said something in the course of that, just now that I really do want to address and that, is this statement that we do very often hear from people, which is I'm never going to go into a nursing home. So don't even discuss it with me. And I. Must challenge that thought process for those people that have it because in my area, and I know in Florida and in every other market area, that there is the nursing homes are full of people that did not think that they were going to be.
And the reason is because when you need 24 7 medical care, the cost of doing that from home is far beyond what most people's pocketbook is going to be able to bear. After all, the at-home care costs that you just quoted does not cover 24 7 medical care in the home. And your family isn't going to just let you sit there and die in front of their eyes.
They're going to get you the medical care that you need. I always tell people, like, [00:15:00] don't tell me that if your husband or wife or your parent needs 24 7 medical care, that you're not going to get it for them.
Audrey Ehrhardt: Exactly. I completely agree with that statement. And it's something that, you know, it just, all of the all of these long-term care issues, they take a toll on the family and it's something that we can, you know, as seniors as elders, as older Americans, we can take the burden off.
Kids by making these choices early, by deciding how we want to have our affairs managed by working with an elder law attorney early to make these choices where even though we say, well, I'm never going to go to a skilled nursing home at most, I'll go to an assisted living facility. You know, we can make those decisions on how we want to handle things early to take the burden off our family.
That's going to be going through an incredibly difficult time when we do have that long-term care incident. Another chilling statistic that I always latched onto and found is that now, folks who go into an assisted living facility, they're only there for an average of 22 months, that's the national average.
So a little less than two years living in that assisted living facility before you're not there anymore. And over 60% of those people, when they leave that assisted living facility, it's because they're going to a skilled nursing facility. So even though we think that we're going to go to one location, It often is a misnomer.
And we end up going to that skilled nursing facility, or we need that 24-hour care, which, you know, we have to be, well, I think we have to embrace as humans that we may get to that point. We have to have 24-hour care be under observation. And I don't think it's a future that all of us necessarily want, but it is something that we have to be prepared for.
Nicole Wipp: And then the statistics are, I believe that one in three seniors over 65 will spend a year or more in a nursing home. And almost one in 10 will spend five or more years in a nursing home. So it's actually many more of us than we'd like to think about. I mean, we don't want to think about this isn't a pleasant topic and yet, you know, we need to be real.
Audrey Ehrhardt: You know, one of the things I always encountered and you may encounter this too while you're practicing. I know I'm not practicing right now, but it's a constant comment I often heard was, you know, and even if I end up in the nursing home, it's not going to matter. I have a long-term care insurance policy, and I think it's excellent to have a long-term care insurance policy.
I think they're great. I know Nicole, you and I often go back and forth about that. But what I will say to your listeners is if you have a long-term care insurance policy, you need to know exactly what it says. And I found when I was practicing, many of my clients didn't know what it said. They don't know the fine print.
Does it offer coverage in the home? Does it offer coverage in assisted living? Does it offer only coverage in a skilled nursing home? And to what amount, if we're talking about right now, the cost of care in a semi-private room is $239 a day. What does your policy cover? And I think Nicole, you, and I especially talked about this.
Does it have an inflation rider or is it going to go up as the cost of care increases?
Nicole Wipp: And what we see very often is that there is an elimination period usually of 90 days where the benefit doesn't kick in until after 90 days. And some people that never. Comes to fruition for them. Also if it only covers a hundred dollars a day and the cost is 200 or more a day, which is most places in the United States, then you still are digging into assets.
And then number three, like you said, inflation, because. An example of why that issue is incredibly important is in my area in Southeast Michigan, for example, we are looking at a projected increase by the federal government of an 88% increase in the cost of the nursing home from today to 2027. Which is not that far away and is when many people are expecting to look at this issue, 88% increase.
And there is no long-term care policy that I'm aware of. That's going to keep pace with that type of inflation.
Audrey Ehrhardt: I haven't seen one yet. That has that type of increase. But I don't know. It could be out there.
Nicole Wipp: Yeah. I mean, it's not, I'm not saying it's impossible, but I haven't seen it.
Audrey Ehrhardt: Sure. And I mean, those are, when we're talking about the, you know, the cost of long-term care, rising in America, those are the things I really think your listeners should be aware of because it's not dinnertime conversation.
It's the conversation you have when you're talking to an elder law attorney, someone who's specifically trained to have this conversation with you. And so I just want your listeners. Aware that when they're having this conversation with their elder law attorney, but they need to be aware of these things because the more information you're armed with the better client you can be for your attorney in that appointment.
Nicole Wipp: Absolutely. Absolutely.
Audrey Ehrhardt: Good. Okay. Moving forward. If you're ready, Nicole, I thought we would go on to number two. We've just recapped our number one issue, which is the cost of long-term care is rising. And now we're going to shift over and start talking about why basic estate planning really isn't enough for our older Americans.
Nicole Wipp: This concludes my interview about the five things that adult children of aging parents need to know now in part two [00:20:00] Audrey and I explore why basic estate planning isn't enough. And this section is really important because one of the things that I frequently hear from people is, well, I already have that taken care of.
I already have a trust. I already have a power of attorney and the fact is that even though you think you have it taken care of what we find more times than not is that you really don't because the laws have changed and things are changing at a rapid pace. As many of you, if not, all of you are completely aware, healthcare and issues surrounding healthcare are.
Becoming even bigger and bigger on a daily basis with a rapidly aging population. This is even becoming a more important issue when we're talking about this. So that's why basic estate planning isn't enough. And even if you do think you have it taken care of some of the things that you need to realize is to understand that you might not.
So please join us in part two to read the show notes for this episode. Or to learn more, please visit smartplanning101.com/15. That's smartplanning101.com/15. Thanks for listening.
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The information contained within this podcast does not constitute legal or financial advice it's for general informational purposes only for advice specific to your situation. With your legal financial professional.