Preparing for Paying for End-of-Life Care

As you start to get your affairs in order, it’s a good idea to stop and think a bit about what sort of end-of-life care you’d want — and how you’re going to pay for it. No one wants to think about these things, but bills are going to come at you when you don’t want to deal with them. Just because you’re talking about really sacred human moments, doesn’t mean capitalism isn’t going to stick its sociopathic nose in the middle.

Your Family Wants to Be With You, Not Manage Money

My neighbor Shay is currently experiencing this as her father is dying. My heart breaks for her because of the insult on top of injury she received when the hospital discharged her dad to a hospice facility, which asked his grieving children to hand over big gobs of cash up front to let him in the door. Their dad isn’t communicative , at this point. If he had big gobs of cash set aside for his care, it wasn’t readily apparent to his kids. They were there to hold his hand and tell him that they loved him, not be his personal comptroller and manage his cash flow.

Fountain from Angels in America

So let’s get ourselves prepared for end-of-life care, as a gift to our loved ones, if not ourselves.

Dying is a bit like being born. Even when it is close, you don’t know how long it will take. And like a birth, death is accompanied by changes in our usual activities. Birth and death are BIG, life changing events, and each is followed by a period unlike any other time of your life (caring for a newborn after a birth, or grieving after a death) that often requires the participants take time off of work, often at an unplanned time, usually unpaid. In Shay’s case, it also required she travel to where he is and move from AirBnB to AirBnB as her dad’s dying takes as long as it takes. So in addition to the emotional toll and the expense for end-of-life care, being there for a family member’s end of life brings a host of new expenses and less money with which to pay for them. Again, you can help ease things for your loved ones with some planning. 

How Much Is This Going to Cost?

Shutting down a body can be a long and slow process. The time from when you know there’s nothing else to do until death occurs can be six weeks or more. When a dying person takes to their bed and starts sleeping all the time, there might still be three weeks or so to go. If they stop eating (much), it may be another two weeks. If they give up fluids entirely, it’s closer to four days. It’s super variable and individual, though. I remember my grandmother telling me, about three weeks before she passed, that she kept hearing her mother calling her. My husband’s cousin told his parents right before he died that he saw angels waiting for him just beyond them. It’s not unusual for dying people to talk about traveling and needing to pack their suitcase or catch the boat. It’s also not unusual, as the brain shuts down, to have some psychotic episodes; scrambling to escape death or being upset and thinking people are “killing” you. It’s heartbreaking for the witnesses, but death often comes within a few days of these upsetting episodes. 

A big question comes up: where will you die? 

Few people get to just wake up dead with no infirmity first. (And if that’s you, sheesh, overplanning isn’t going to kill you, so may as well do it.) Most people enter a period sort of like the spring of 2020: just when you start to get used to the new normal, the whole world tilts again. Get used to being resilient. Just be aware that this is a season FOR resiliency, and don’t expect to know what’s going to happen next.

To get prepared, you can determine whether you’d like to try to stay at home. In that case, get hooked in with a visiting nurse or hospice or palliative care association. At least research what’s available in your area. Check with your local Council on Aging for some places to call, or just do a Google search. Getting a relationship set up before you need it can make the difference between dying at home or in some institution.

When we say “institution,” we’re probably not talking about a hospital. Dying in a hospital isn’t actually as easy as you might think: hospitals need the beds for people who need medical intervention. Dying, like being a newborn, isn’t all that necessary to medicalize. Chances are you’ll be discharged to either a nursing home or, if you’re lucky, a hospice facility.

If you end up going to a nursing home or hospice facility, expect that to cost about $4K a week. This is NOT covered by Medicare! (It’s complex, of course, but the basic rule is that Medicare pays to get you well from an unwell state, i.e., rehab, and it provides some medical services to the dying, i.e., pain meds, but the room and board and personal care attendant parts are basically private pay.) Note that, as this suggests, stays in long-term care in nursing homes are not covered, either, once your Medicare-allowed rehab days are used up. More details here:

If you are at home, expect to need round-the-clock caregivers, typically at $30/hour × 24 hours for up to maybe six weeks. That’s maybe $30,000. When my brother-in-law was dying, my sister was concerned about the huge cost of his care, about $16,000/month. I advised her to just pay it: the cold comfort was that it wouldn’t be for long. (Comfort is thin on the ground when your husband is dying.) And it wasn’t – he was gone within three weeks of that conversation.

And How Do We Pay for It?

So, where would you get $30,000 for end-of-life care? This is just another version of saving for your old age. I tell my financial planning people that the average spending on health-care in the last two years of life is $42,000 a year. (I’ve also heard $59,000 for just the last year.) Basically, a pot of money needs to be held back because either end-of-life OR longevity needs to be funded (although not both). 

When I’m setting up a retiree’s buckets of money, I like to separate the money into three portions. I use a farming analogy: the stuff growing out in the field for the long-term are the investments, the stuff growing in the kitchen gardens are the short-term savings/CDs, and the pantry is the money sitting in the checking account ready to use. Many people are surprised by how much cash I have people keep on hand in the checking account, but having nearly a year’s living expenses already on hand in case anything happens gives that resilience I mentioned earlier. 

So here’s the idea: take at least $30K out of your investment portfolio or let a CD not renew and leave it in your checking and/or savings account as the base. 

  • If you have standard checking and savings accounts, EITHER name an agent under a Durable Power of Attorney and give that person access to them OR simply open up a joint checking account with whomever might want to pay the bills and keep $30,000 or so in there. (Note that this second option can interfere with your estate planning, as that money passes directly to the joint owner before the rest of the estate is totaled up. It can also affect the finances of the joint owner.
  • If you have a revocable trust, consider adding a co-trustee or resigning as trustee and appointing the successor right now. 

No investments or CDs? There’s something called a HECM Line of Credit that could be helpful, where you take out a line of credit against the house. It’s not for everyone, but in some cases it is. I wrote an entire article about HECMs here.

Another possibility is to sell some things that you really aren’t going to use going forward: a timeshare or the RV, the boat or the camp … things that are meaningful to you and you will miss, but their sale is both part of getting the money you need AND part of cleaning things up for those left behind.  If you choose this option, be sure to tell your loved ones WHY these things are important, too: sometimes the closing out of an era gives you an opening for really meaningful conversations. 

Conventional burials can easily cost $20-$30K if you use a funeral home. Is that what you want? Prefer a direct-to-cremation or a green burial? Or a big party? Will your loved ones KNOW what you want without you ever mentioning it? Don’t leave them wondering, be clear about your preferences. Even better if you can keep back some money for this, or prepay your funeral arrangements if you’re going with a funeral home route.

I suggest that you and your family talk explicitly about the bills that will need to be paid surrounding your death, and who will pay them. In our family we have a tradition that the parents pay for the airplane tickets. This is something we’d continue to offer to caregiving children someday. If funds allow, we might also want to add that the dying person pays for the AirBnBs and perhaps 50% of lost wages that family members suffer from this inverse form of maternity/paternity leave. Financial stress on top of everything else can feel like one thing too much for the surviving family. If you think you’ll want to follow the example of my family, it’s another thing to keep in mind when you’re setting up your buckets of money. 

End-of-life care isn’t always easy to think or talk about. You may be resistant, your family may be resistant, but you’ll make it easier for everyone if you don’t shy away from it. Because talk about it or not, ready or not, it will come.