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How to Invest my Mom's Money for Her Home Health Care Aide Costs?
Old 07-13-2011, 01:20 PM   #1
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How to Invest my Mom's Money for Her Home Health Care Aide Costs?

I have a question and I was wondering if you could offer some advice. My mom is going to need a home health care aide. She has some savings, and paying for the health care aide will come from those savings, until they are depleted.

Right now, that money is in a managed money market account at a local bank currently yielding .85 percent interest. It stayed there throughout the recent financial crisis, because low risk and liquidity were important. The rate of interest on the account, as you may be aware, has been low.

I am trying help make my momís money last as long as possible, as it is used to pay for home health care. So I am looking for a low risk investment with the highest possible return rate.

My mom is 82 years old. About a month and a half ago, she fell and broke her shoulder. She was in a rehab and now is at a point where she needs home care assistance.

My thoughts were possibly something like Vanguardís Target Retirement Income Fund (VTINX) or Short Term Bond Index Fund Admiral Shares (VBIRX). Is one of these funds a good idea, knowing the risk profile and the investment timeline. Can you make any other recommendations? Thank you for your advice.
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Old 07-13-2011, 01:47 PM   #2
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Quote:
Originally Posted by midnighter777 View Post
I have a question and I was wondering if you could offer some advice. My mom is going to need a home health care aide. She has some savings, and paying for the health care aide will come from those savings, until they are depleted.
My first recommendation, if you're not already doing it, would be to hire a geriatric care manager for a few hours of consultation. It could be an agency or a one-person business with a big contact network, but you do not want to wander through this jungle on your own. You may pay a few hundred bucks now to avoid thousands of dollars of frustration (and even guilt) later. You'll get a better quality of health aide, you'll have access to more health aides and other support when you need it, and you'll be able to get more education & counseling along the way.

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Originally Posted by midnighter777 View Post
Right now, that money is in a managed money market account at a local bank currently yielding .85 percent interest. It stayed there throughout the recent financial crisis, because low risk and liquidity were important. The rate of interest on the account, as you may be aware, has been low.
I am trying help make my momís money last as long as possible, as it is used to pay for home health care. So I am looking for a low risk investment with the highest possible return rate.
You might already have appropriately balanced these mutually-opposing objectives.

When you have the cost estimate for a care provider, and a reasonable idea of its inflation, then you can figure out how long you need the money to last and how much you'll need each year.

Before you take on more risk in the hope of higher returns, decide how much principle you're willing to lose or how long you can wait for a recovery. Then you can decide what to do with the rest of the money.

You may want to just spread the funds out in a CD ladder, although it'd be difficult to forecast expenses.

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Originally Posted by midnighter777 View Post
My mom is 82 years old. About a month and a half ago, she fell and broke her shoulder. She was in a rehab and now is at a point where she needs home care assistance.
Can you make any other recommendations? Thank you for your advice.
If she has long-term care insurance then you may be able to make a claim under impairment of the activities of daily living, even if she's living at home instead of a care facility.

It's worth checking into whether Medicare or Medicaid or a state/local program can pay some of the costs of ongoing rehab or care. The easiest way to figure this out is to hire a geriatric care manager who has the experience at sorting through the programs.

If you or a member of your family is in a position to provide some (or all) of that care, then there may be state/local program allowing you to "hire" that person to care for your mother. The governments have learned that it's better (and cheaper) to put family on the payroll than to keep spinning a revolving door of caretakers who may not be suitable.

Depending on your mother's income & assets, you may also be entitled to a slew of medical tax deductions. Just having a trained eye look over her tax situation could save you far more than you'd hypothetically gain by stepping up the risk on her assets.
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Old 07-13-2011, 01:54 PM   #3
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DW and I are dealing with somewhat the same issue as you are but with her father. Unless you have "excess" money that won't be needed for more that 10 years, I recommend maximum safety. That being said you can get slightly better yields in a CD ladder. If you use a brokered CD through Vanguard (and others I'm sure), they are payable upon death so you won't run into estate problems when your mother passes.

If you have a home heath care aide in your mother's house, I recommend you two remove valuables and not keep significant amounts of cash, financial information, credit cards or check books there. You may hire an honest person but I can assure you there are many who are not.

I'll bring up what you didn't ask about. You are saying she will have a home heath aide. You will find this to be very expensive and an open ended liability if your mother's issues aren't very short term. If this is longterm or of indefinite duration, I suggest you and your mother consider assisted and/or independent living depending on her health issues. Eliminating the home and home health care will significantly reduce expenses. Bleeding through all of her savings now to keep her "out of an old folks home" will make that probably inevitable decision even more difficult.

My limited experiences tell me that once the elderly start falling and breaking things it only gets worse. Your mother will get better care and be less at risk in either independent living or assisted care. She will also have more opportunities for socialization.
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Old 07-13-2011, 02:01 PM   #4
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My mom is in the same boat. 93, broken hip/shoulder and rehabbing in a nursing home. She will be coming home on the 22nd of the month and I'm in the process of lining up a few home health care aides. Fortunately, she has enough money to take care of her needs so she is ultra conservative and has a ladder of cd's spread out over a 5 year period.

I wish you and your mom the very best.
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Old 07-13-2011, 04:25 PM   #5
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Bleeding through all of her savings now to keep her "out of an old folks home" will make that probably inevitable decision even more difficult.
She will also have more opportunities for socialization.
"Socialization options" never came up with my father because he's such a hermit an introvert that he makes me look like Sesame Street's Guy Smiley. However I think living alone independently cost him his health and very nearly his life.

Now that he's in a care facility, his Alzheimer's makes him think that he's on one of his many 1960s business trips to a busy office building or a hotel. He spends most of his day "managing by walking around" and has become one of the facility's "street mayors". It's a stark contrast to his old routine of nearly 25 years, but he seems much happier.

Or maybe he's happier because now he can walk out of the meetings whenever he wants to...
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Old 07-13-2011, 08:35 PM   #6
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I hired a home health aide for my Mom a few years ago . I went through an agency and actually I was surprised at the reasonable cost . It was $17 an hour and the aide was perfect .She would do anything my Mom needed . Depending on your Mom's insurance some visits may be covered .
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Old 07-14-2011, 08:58 AM   #7
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I hired a home health aide for my Mom a few years ago . I went through an agency and actually I was surprised at the reasonable cost . It was $17 an hour and the aide was perfect .She would do anything my Mom needed . Depending on your Mom's insurance some visits may be covered .
Prices vary considerably based on required qualifications and local. Your quote is about the same we go in the Houston area for an aide qualified to administer medication but not to provide any medical "treatments." The definitions can get pretty intricate but a reputable company providing home heath care people need to be very careful. Some were willing to do very limited domestic duties but none were willing to be housekeepers. Fixing lunch was about the most any would do and some wouldn't do that. I think the people that fixed lunch had figured out that they'd get a free meal out of it.

As for $17/hour, that works out to a full time aide getting $34,000/yr. We didn't see any that would work less than half time and they usually wanted a premium. If an aide is needed more than during the day, the cost will explode. My MIL would have needed round the clock care so the cost was overwhelmingly prohibitive -- almost $200,000K for aides plus transportation to doctors. I gueestimated it at over $300,000 per year. She lived for about 2 1/2 years after breaking her hip.

Low level assisted living can be had in the Houston area for around $36,000 per year at a nice facility. That includes all of their food and assistance care. Doctors come to them.

A home heath aide only makes sense financially for very short periods of time or where near unlimited financial resources are available.
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Old 07-14-2011, 03:23 PM   #8
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You didn't provide enough information... obviously one needs to get specific about the situation for specific feedback.

But I will provide my general opinion:

Generally speaking it depends on how much financial resources the person has and when/if they will need to consume them... just like most investment decisions, if the money is going to need to be consumed soon, it probably should not be exposed to risk of loss and kept liquid (which generally means a lower return).

If the person does not have excess money and cannot afford to lose it, then preservation of capital is very important. That typically means sticking with investments that have a low risk loss.


IMO - If she does not have a lot of assets, preservation of capital would be a key consideration.

If you can get more specific about her financial situation, perhaps someone could provide more specific feedback.
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Old 07-14-2011, 03:31 PM   #9
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Contact your community agency on aging. Depending on your mothers finances she may qualify for charitable care. Sometimes they only count income and not assets, so check it out, and have a social worker go out and do an assessment.
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Old 07-15-2011, 03:51 PM   #10
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I'm not a lawyer, so have this confirmed, but...

Assuming you have DPofA, I'd first get all her assets, including a house if there is one, out of her name and into yours. The transfer won't stop her from needing to pay medical bills for 5 years (last I knew) up to the amount transferred, but if the money lasts that long, Medicaid needs to take over & you can keep the rest. And at least the income from her money goes to you. Of course if you spend her money for your own needs/wants such that you can't pay her bills up to the amount transferred, you've really hosed you mom over.

Second, if you pay for over 1/2 her needs (Her SS counts as paying for her needs.), including from the money you transferred from her to you, then you can claim her as a dependent & take her medical expenses as a medical deduction. That could save you/her some nice taxes presuming her costs are over 7% of your AGI.

Good luck.
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