The Financial Toll of Alzheimer's Disease: How Families Can Prepare

Alzheimer's disease is not only an emotional and physical challenge but also a significant financial one. The associated costs can be overwhelming, and families need to be prepared to handle these expenses. Understanding the financial implications and taking proactive steps can help alleviate some of the stress of managing your loved one’s care. 

The financial toll of Alzheimer's disease

Direct costs

• Medical expenses. These include doctor visits, hospital stays, medications, and treatments specific to Alzheimer's. 
• Professional care services. Many families require the help of home health aides, adult day care services, or residential care facilities, such as assisted living or nursing homes. These services can be quite expensive, with costs varying based on the level of care required and the region.
• Medications. Alzheimer's medications can be costly, especially when considering long-term usage. While some insurance plans may cover a portion, out-of-pocket expenses can add up.

Indirect costs

• Lost income. Caregivers, often family members, may need to reduce their work hours or even quit their jobs to provide care, leading to a loss of income. This can significantly impact the family's financial stability.
• Home modifications. Making the home safer and more accessible for a person with Alzheimer's can involve costs for modifications such as installing handrails, ramps, or medical alert systems.
• Miscellaneous expenses. Additional costs include transportation to medical appointments, special dietary needs, and legal fees for setting up power of attorney and other legal documents.

How families can prepare financially

1. Early planning

The earlier you start planning for the financial impact of Alzheimer's, the better. While it can be difficult to have these conversations, especially when a diagnosis is still fresh, they can allow you to explore more options and make more informed decisions before the disease progresses further. 

2. Understand the insurance options

Review your loved one's health insurance policy to understand what is covered and what isn't. Some plans may cover certain medications and treatments but not long-term care. If it doesn’t, consider securing a long-term care insurance plan to help cover the costs of things like home health aides and nursing home care.

Lastly, you should learn what Medicare and Medicaid offer. Medicare generally doesn't cover long-term care, but it may cover some costs associated with medical care. Medicaid, on the other hand, can assist with long-term care expenses for those who qualify.

3. Create a financial plan

Develop a detailed budget that includes all of the potential expenses related to Alzheimer's care, such as your loved one’s medical costs, caregiving, home modifications, and any other anticipated expenses.

Establish an emergency fund to cover unexpected costs. This fund provides a financial cushion and can prevent stress during unforeseen circumstances. You may need to evaluate existing budgets and spending habits to create more room to save. 

4. Legal preparations

Set up a durable power of attorney for finances. This legal document allows a designated person to manage financial matters on behalf of your loved one if they become incapacitated, which may occur at some point in your loved one’s Alzheimer’s diagnosis. 

Additionally, consider creating advance directives to outline your loved one's wishes for medical and end-of-life care. This ensures their preferences are honored and can help avoid family disputes.

5. Managing finances and bills

Developing a plan for managing your loved one’s finances ensures bills are paid on time—preventing service disruptions—and safeguards them against financial exploitation. As a result, you can provide stability and reduce stress for both your loved one and yourself. Consider:

• Automating payments. Set up automatic payments for recurring bills, such as utilities, mortgage, and insurance. This ensures bills are paid on time.
• Consolidating accounts. Simplify finances by consolidating your loved one’s bank accounts. For example, it may be difficult for you to remember to pay the balance on multiple credit cards. Instead, apply for a balance transfer so you can consolidate balances and potentially pay less interest over time.  
• Monitoring accounts. Regularly review bank statements, credit card bills, and other financial documents for any unusual activity. This can help detect fraud or errors early.
• Hiring a financial advisor. Consider working with a financial advisor who specializes in elder care. They can provide guidance on managing assets, investments, and overall financial planning. General Electric Credit Union (GECU) members can schedule a consultation with a financial advisor through Investment Services, offered through CUSO Financial Services, L.P. (CFS).¹

6. Seek support

There are helping hands available to those caring for loved ones with dementia and Alzheimer’s disease. Local support groups, non-profits, and government programs offer financial assistance or respite care services. These resources can provide valuable support and help ease the financial burden. Some options in the Tri-State area include: The Alzheimer’s Association, Meals on Wheels, and the Giving Voice Foundation.

Alzheimer's disease presents significant financial challenges, but with careful planning and proactive steps, families can manage the costs more effectively. Early preparation, understanding insurance options, creating a comprehensive financial plan, and seeking professional advice are crucial to ensuring financial stability. By taking these measures, families can focus more on providing the best care and support for their loved one with Alzheimer's or dementia.