Military Financial Independence

[Note:  My father passed away on 18 November 2017 from end-stage Alzheimer’s.]

It’s been a busy few months for us Nordman family men, but the fallout is settling.

Dad’s still healthy and mobile, he just turned 82 years old, and he’s still deep into mid-stage Alzheimer’s. He’s doing “as well as can be expected” (I’ve learned to despise that phrase), but everything else has changed. This year (so far) Dad has developed new Alzheimer’s behaviors, moved to a new care facility, and is testing out new medications.

This is a 3500-word post but I only write about this topic every year or two. I hope you never have to live with Alzheimer’s, but you can learn from my experiences. Take a bathroom break, get a fresh cup of coffee, and then settle in for a caregiver story.

This post describes some of the logistical and financial challenges of caregiving for an aging elder. (See the related links at the end.) I’m also trying to open up the discussion and share a few Alzheimer’s links. Many Boomers are going through a caregiving challenge, but it’s not exactly a popular topic. Nobody talks about it unless there’s a crisis, and then you learn that three-quarters of your friends have gone through the same crisis (yet don’t talk about it).

Caregiver stress

Let me be clear: my Dad’s in good financial shape and he has plenty of eldercare resources. He’s spent his life working hard and being frugal, and now it’s paying off for him. His financial challenges come from abundance and he’s years away from Medicaid. Yet for caregivers, being a good steward of those resources (and learning to ask the right questions at the right times) can regularly ruin our day.

My brother and I have very few problems in our guardian and conservator roles, but the stress is perpetually simmering below the surface and the crisis can pop up any day. Our experience is relatively mild among the families of Alzheimer’s patients, and maybe even remarkably drama-free. But if this is “good” then I’d hate to deal with “bad”.

Behavioral changes with Alzheimer’s

Dad’s slowly withdrawing from the world, and he’s more easily aggravated by people or activity around him. He used to socialize with other residents but now he feels confused and upset around them. He thinks he’s on a 1960s business trip, so his frustration manifests as the urge to “check out of this hotel” or “find my business meeting”, and he starts looking for exit doors. A few months ago one of those doors at his old care facility was left unlocked, and Dad went through it. He walked back in after he couldn’t find his meeting, but the staff had to treat it as an incident. The doctor decided that Dad could be calmer with an anti-anxiety medication instead of an antidepressant.

Dad’s old favorite hike at Colorado’s National Monument Park.

In January Dad felt that a resident got into his personal space. There was a shoving match, and nobody was hurt, but the staff said that they were unable to give Dad the environment he needs. They’re not a memory care facility, and that’s always been a background issue, but now it’s a problem. Just to make the situation more complicated, the facility’s previous director had moved on (after more than five years) and the new doctor wanted no part of Dad’s sundowning problems— or potential liability.

That day Dad was driven from his old care facility to a local hospital for a two-week medication review. Hospitals can be upsetting and even dangerous to Alzheimer’s patients so they were happy to change his medications as an outpatient. My brother called our geriatric care manager, and with the help of the old care facility they arranged a couple of weeks at a memory care facility a few miles outside of town. The medication changes dropped the Namenda and Aricept, moved from Haloperidol to Risperidone (antipsychotics, mostly for mood swings of bipolar disorder) and added Paroxetine, a different antidepressant. (Dad’s also been on Lisinopril for nearly a decade of high blood pressure.) These changes can take weeks to settle out, and balance/stability problems are a side effect.

Dad’s reading glasses were broken during the move (and his backup pair was lost) so my brother took him to the optometrist for a prescription checkup and new glasses. Much of the exam is covered by Medicare and the glasses are relatively inexpensive. But you can imagine how much fun my brother and the optometrist had with an Alzheimer’s patient who doesn’t like having things pushed up close to his face.

My brother and our geriatric care manager continued the scramble to find a new care facility with a vacancy. After the two weeks at the “temporary” facility, their staff agreed to admit him as a new resident. It seems to be very good for Dad. It’s much quieter. It has locked exits and only eight residents per floor, so Dad encounters fewer people. My brother says that Dad’s happy and spends most of his time in his room doing jigsaw puzzles. He’s enjoyed them his entire life, and puzzles are a very good cognitive activity for Alzheimer’s patients. His sundowning behavior is greatly reduced (environment? medications?) and he’s much mellower.

With everything else going on in Dad’s life, last month he had a fall at the new facility. His head laceration needed three staples and he had a cut across his nose. The scans came out fine and he’s recovered, but it could have been caused by medication side effects or the progress of Alzheimer’s. It’s yet another one of those “things to keep an eye on.”

Dad has always shrugged off physical injuries. After he and my brother finished at the doctor’s office, they went out for a milkshake. Keeping up Dad’s weight is important, and ice cream is a popular treat with Alzheimer’s patients. I hope he can stay mobile and enjoy plenty more of it.

Caregiver finances

On the financial side, the new care facility is a little less expensive than the old one. (Both seem to offer outstanding care.) By now I know the drill so I called the manager, introduced myself as Dad’s conservator, and asked what I could do for her. She explained their fees. She had e-mailed an invoice for the two weeks of the respite care so I sent another monthly payment to that address. I also followed up in a long e-mail with my contact info, Dad’s mailing address (my home in Hawaii), the insurance info for his Medicare supplemental insurance policy, the info for his employer’s prescription insurance policy, and a few questions about how they wanted to handle the billing. I also asked for a complete invoice from the day Dad had shown up in case I have to document his care expenses for the probate court.

That e-mail was met with silence. A month went by without any contact from the manager or their billing office.

This is not unusual among care facilities, especially when their patients are doing well and the billing office is busy with other families. But when I didn’t get an invoice for the next month, I knew they’d dropped the ball on Dad’s account. I let my brother know about the problem and told him I’d call them again in a few days.

Two days later our mail carrier brought me a mangled letter. It had been sent to my brother at Dad’s old address, where he had left over five years ago. Somehow his old post office still had my change of address on file and they forwarded it. It had been in transit for three weeks.

It was the care facility’s invoice for the month that we were already halfway through.

Clearly, the care facility’s financial office had not received my followup e-mail. I got back online for another round of voicemails and e-mails. It’s been over two months since Dad’s arrival and I still haven’t managed to extract a complete invoice from the staff.

It turned out that the facility was recently acquired by another corporation and is still consolidating their accounting, billing, and e-mail systems. One of the managers at another facility abruptly quit, so the manager at Dad’s place has covered both jobs for over a month. The former financial manager at Dad’s facility has turned over the files but the new corporate financial manager has been on several weeks of family leave, and they’ll eventually catch up with Dad’s account. During the acquisition, the new IT server managed to “lose” a month of e-mail (including mine).

My brother visits the care facility several times a week at unpredictable intervals, he and Dad get along fine, and he says that Dad is well cared for and happy. Apparently, the care staff is doing a great job despite financial and management chaos behind the scenes. This hairball is all my challenge to deal with.

That new invoice showed $275/month(!) in “personal care products”. When I finally got a billing clerk on the phone, she said that they included items like toothbrushes, shave cream, wipes, and incontinence products. But she didn’t have the account data for Dad’s Medicare supplemental insurance, so she’d have to reprocess those charges.

By now you other caregivers are thinking “Incontinence? Ruh-roh.” That signals a urinary tract infection or a medication problem or an abrupt transition to late-stage Alzheimer’s. It’s a big deal. I called my brother to share the question and he scrambled over to the facility to chat with the care staff. It turned out that Dad’s not incontinent and that the invoice had a simple billing error.

The other issue, of course, is that my brother has already provided Dad with personal care products. The care facility’s inventory must be piling up somewhere or else we’re being billed incorrectly. My brother will work that out with the care staff and then their agreement will be reported to the billing office. I hope.

Now I’m trying to settle into a routine with the care facility’s financial office. They’ll bill me for Dad’s monthly fee and they’ll bill Medicare for occupational & physical therapy. After Medicare pays the negotiated rate, the financial office will bill Dad’s Medicare supplemental insurance policy for the deductible. Eventually, they’ll catch up with me for the remaining copay, which means that some charges will stay on Dad’s invoices for weeks before clearing.

That seems pretty common with care facilities, so I won’t have to worry about interest or late fees. Besides, I have plenty of other eldercare companies to chat with. After the scramble of finding Dad’s new facility, once again we profusely thanked the geriatric care manager and paid their invoice. (Whatever they want, they’re worth it!) Dad’s move to a new facility meant that his medications switched to a new pharmacy. I set up his new account there and so far that’s going well.

Billing errors are common with elder care, and overstressed caregivers might not ever notice a mistake of hundreds of dollars. I’m a fairly competent and persistent guy who has plenty of time to ask questions and pursue the facts, and I’m still astounded at how quickly the mistakes can compound.

I think this will all work out. But this financial limbo is frustrating when you’re trying to maintain the conservator’s accounting and project the expenses.

Prescription medication “insurance”

The change to a new pharmacy (just a few miles away) seemed to inspire Dad’s prescription insurance company (CVS Caremark) to hit the reset button and start in on his prescriptions all over again.

Dad’s corporate retirement prescription insurance policy is a fantastic 1980s deal that’s perhaps now too costly for the insurer, so they’re even more brutal about refills than Tricare. When the new care facility’s pharmacy started new prescriptions and didn’t use mail-order delivery, the insurer tacked on $600 of fees in one month. The pharmacy and the care facility contacted the insurer, but new fees kept popping up each month. It turned out that CVS was waiving the mail-order refill requirement only for each individual medication, and only for one month at a time. As the hospital and the care facility switched among different medications to find the right mix, the insurer gleefully piled on the fees. I finally got the right help at the insurance company and it’s been sorted out for a full annual override, but it’ll take a couple of months for the refunds and for the new invoices to settle back down to their usual $10-$40/month. I’ve already been promised that in 2017 we get to start the annual review & waiver process all over again.

The good news is that Dad’s new pharmacy does online billing. (The old pharmacy somehow never got around to using the Internet, despite five years of my polite nagging and several lost invoices.) The new pharmacy does everything through their website (including e-mail notifications) so I won’t have to worry about lost letters any more.

Conservator stress

Conservators in Colorado are appointed by the probate court, and the appointment letter expires every year. (My first appointment application included a phone interview, a criminal background check, a waiver of my Hawaii extradition rights, and a judge’s hearing.) To renew my annual appointment letter, each year I file a financial report and (when expenses change) a new financial plan. Each document has a detailed format requiring several hours of tedious data entry (and error-checking). Over the last five years, I’ve learned to update the reports every month and to file them well before the due date.

“Luckily” Dad’s move occurred near the end of the reporting period for the conservator’s annual report, so I didn’t have to report the financial details of his move. I have eight months left in this reporting period to get my financial act together. Hopefully, by then the care facility gives me a complete set of invoices and corrects the “personal care” billing, and the pharmacy refunds all the extra charges.

The probate court is a significant source (admittedly unintentional) of caregiver stress. My brother and I have our appointments at the pleasure of the court, and it’s a huge bureaucracy. They only deal through the U.S. mail (not e-mail or phone calls), so it’s easy to miss a letter (and maybe a court hearing). I could be “fired” at any time, and professional contract conservators are over $100/hour. If my records of Dad’s finances are audited, the court’s accountants won’t do it over the phone and I’d have to bring the files to Colorado. If I disagree with any court decisions then the only effective dispute resolution would be lawyering up ($275/hour for my lawyer and another $275/hour for Dad’s lawyer).

I’m not an accountant or a lawyer, but it seems that the only effective way to avoid this financial situation would have been for Dad to establish a revocable living trust with his sons as contingency trustees. (“Durable” powers of attorney don’t cut it.) Even then the court would still have appointed a guardian.

Other financial details

The really good news is that the old care facility cheerfully returned the unused portion of Dad’s fees for his final month there, so I didn’t have to chase down any refunds. (I didn’t even realize that Dad was entitled to a refund, and I appreciate that they volunteered it.) That’s just a little blip on next year’s report.

The other “good news” of the care facility change is that Dad is no longer receiving a payout from his long-term care insurance company. I can only imagine dealing with John Hancock’s insurance bureaucracy if I’d had to switch the reimbursements from one care facility to another.

But wait, there’s more! While the conservator’s annual financial reports are awaiting approved by the probate court, it’s time for taxes and investments.

This is Dad’s first full year of tax returns without a long-term care insurance payout. His $64,995 of adjusted gross income and his $95,434 deduction for medical expenses means that he’ll never pay taxes again. That “saves” a few thousand bucks a year, but best of all I no longer have to do federal or state estimated tax payments. Prepping the tax returns goes a little faster, too.

Fun fact about states fighting fraudulent tax returns: Colorado is about to impose a requirement to provide identification (driver’s license or state ID numbers) with tax returns. My brother and I haven’t seen Dad’s driver’s license in over five years, and I’m sure it’s expired. I can only imagine using our court appointments with a different state bureau to get Dad a state ID– and would he have to go to a state office for a photo?

Yeah, since Dad doesn’t owe state taxes anymore then I’m not going to worry about ID. If the state won’t let me e-file the returns then I’ll send them by mail.

In addition to the probate court reports and tax returns, I’ve built a spreadsheet projection of Dad’s portfolio survival. Every month I update his net worth and then run out his expenses with reasonable assumptions. For example, the old care facility raised their rates about 5% each year while his personal care & entertainment expenses have remained fairly flat. Dad’s pension is fixed but Social Security usually has a small COLA. His investment returns are slightly ahead of inflation but his care expenses mean that he has to keep at least a couple of years of expenses in cash.

The major investment challenge of Alzheimer’s asset allocation is the expensive care facility. Most Alzheimer’s care situations only last for a few years, but a few Alzheimer’s patients survive for 20 years. Some longevity insurance comes from Social Security and Dad’s small corporate pension, but the rest is coming from his investment portfolio.

This long-term planning always makes me feel gloomy about Dad’s inevitable prognosis. The progress of Alzheimer’s is completely unpredictable, and statistically, his survival time is now anywhere between six months to 12 years. That’s a completely different type of longevity risk in personal finance (with Medicaid eventually rearing its ugly head) but Dad seems to have the genes and the physical health to hang on for another decade.

His asset allocation is still 50% cash, 35% equities, and 15% bonds. I have his CD ladder rolling on a three-year cycle (thanks to some help from NFCU and USAA), and several of his Fidelity mutual funds pay out a healthy stream of dividends. However, the cash is dwindling and I’ll need to sell more equities in 2017. I have to figure out how much of his equities I can cash in each year without the capital gains triggering IRMAA penalties on his Medicare premiums. Dad’s held most of his mutual-fund shares for over 20 years so the cost basis is very low. I think I can rebalance a little each year without having to pay an extra $150/month to Medicare but I don’t want his cash allocation to get below 30%.

The right priorities

Ironically Alzheimer’s has made Dad the happiest he’s ever been in his entire life. He enjoys working on puzzles, walking around the facility, and sitting in the back yard watching the wildlife. (It’s very similar to the routine he’s enjoyed since the 1980s, but with a lot less travel.) Unfortunately, he still wakes up with daily confusion and upsetting stress, but it quickly cycles through the peaks and troughs. He frequently tells my brother that he’s forgotten to pay the rent, and my brother reassures him that I’m taking care of his finances. Dad always smiles and visibly relaxes at that news, and he’s back to being happy again.

A few years ago during one of my visits, Dad recognized me but quickly forgot who I was. As we chatted about anything that occurred to him, one of the caregiver staff walked by and asked Dad if he was enjoying his visit with his son. Dad missed her reference to me but he picked up on the “son” theme. He proudly told her that he “has a son in Hawaii who’s a really smart son of a bitch” and that he’d given me all of his money to invest for him. In our family, in his way, that’s high praise between two engineers… and between generations.

Dad took care of us sons for a couple of decades, and now we’re rewarding his efforts. Even more ironically, we go through a similar happiness cycle. We can live our lives yet we’re still on call. (Travel is complicated and easily disrupted, but my spouse and I still traveled for nearly half of 2015.) My stress level still spikes when I hear certain ring tones on my phone or when I get a letter in the mail. Caregiving has taught my spouse and me a tremendous amount about practical elder finances (not just theory), and that’s now reflected in our personal financial planning.

Once again, the real stress of Alzheimer’s lands on the caregivers instead of the patient. If these are the biggest problems we have then life is pretty good. I’m just glad that Dad’s able to afford a facility and that my brother and I can share the duty. I can’t imagine a spouse or an adult child handling the full load on their own.

After five decades of life experience, being an Alzheimer’s caregiver has finally convinced me to clean up my personal diet & exercise habits, to stay healthy, and to carpe every diem I can find.

Related articles:
The Pitfalls of Your Parents’ Finances
Why I Won’t Buy Long-Term Care Insurance
Interview: what’s wrong with long-term care insurance?
How I cost my Dad over $2000 in Medicare benefits (the IRMAA “tax”)
Forensic geriatric finances
Book report: “The 36-Hour Day”
Book review: “When The Time Comes”
Book review: “A Bittersweet Season”
23andMe genetic testing
Geriatric financial management update (September 2012)
Geriatric financial lessons learned (January 2012, becoming a conservator)
Geriatric financial management update (November 2011, claiming long-term care insurance)
More on caring for an elder’s finances (September 2011)
Financial lessons learned from caring for an elderly parent (August 2011)