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    Dementia Symptoms & Caregiver Strategies: Cognitive Impairment and Financial Planning

    Putting financial plans in place is important for everyone, but understanding money matters is especially vital for someone helping a person who has cognitive difficulties. When an irreversible cognitive impairment is diagnosed, family and friends should begin helping the individual make financial plans. The sooner planning begins, the more the person experiencing cognitive challenges may be able to participate in decision making.

    This handout is meant to provide general financial information. It does not take the place of professional financial or legal advice. New developments — such as legislative and regulatory changes — may affect its accuracy. Consult a professional before making decisions.

    Getting Started

    Begin putting financial plans in place as soon as a diagnosis has been made. Careful planning can help secure your loved one’s financial future. In addition to planning for the cost of care, there are many ongoing financial duties, including:

    • Paying bills
    • Arranging for benefit claims
    • Making investment decisions
    • Preparing tax returns
    Get started by putting in place all of the information, resources and support you’ll need. Carefully review all financial and legal documents, even if you’re already familiar with them.
    Legal documents include:
    • Wills
    • Medical and durable powers of attorney
    • Living wills
    Financial documents include:
    • Bank and brokerage account information
    • Deeds, mortgage papers or ownership statements
    • Insurance policies
    • Monthly or outstanding bills
    • Pension and other retirement benefit summaries
    • Social Security payment information
    • Stock and bond certificates
    At this point, it may also be helpful to identify which necessary documents are not in place. Professional financial and legal advisers can assist you with this task.

    Discuss financial needs and goals

    Discussing financial needs and goals early on enables the cognitively impaired person to still understand the issues and to clarify his or her wishes. Involve all other concerned individuals as much as possible. Talk about putting financial and care plans in place. If others are available to help with care, encourage the sharing of caregiving duties and discuss how finances might be pooled to provide necessary care. Professional financial advisers, such as financial planners and estate planning attorneys, can help you:
    • Identify potential financial resources
    • Identify tax deductions
    • Avoid bad investment decisions that could deplete your finances
    When selecting a financial adviser, check qualifications such as:
    • Professional credentials
    • Work experience
    • Educational background

    • Membership in professional associations
    • Areas of specialty (ask if they specialize in elder care or long-term care planning)
    Seek an experienced elder law attorney to help:
    • Address estate planning issues
    • Prepare legal documents
    • Look at factors that affect income
    When making financial plans for the person with dementia, be sure to consider his or her:
    • Age
    • Types of assets/insurance
    • Tax issues
    • Long-term health outlook

    • Future care needs

    Paying for Care

    Costs you may face
    Begin planning a long-term budget. Consider all the costs you might face now and in the future. Keep in mind that your loved one’s needs will change over time.
    Costs may include:

    • Ongoing medical treatment for symptoms, diagnosis and follow-up visits
    • Treatment for other medical conditions aside from cognitive impairment
    • Prescription drugs
    • Personal care supplies
    • Adult day care services
    • In-home care services
    • Full-time residential care services
    Life insurance
    Life insurance can be a source of cash. You may be able to borrow from a life insurance policy’s cash value or the person may be able to receive a part of the policy’s face value as a loan. This is called a viatical loan and is paid off upon the person’s death.

    Some life insurance policies offer accelerated death benefits. This means that some of the insurance benefits can be paid if the insured person is not expected to live beyond the next six to 12 months because of a terminal illness. The payout may run as high as 90 to 95 percent of the policy’s face value and will not be taxed as income. See if any policies contain a waiver of premium rider. That means that the insured, if disabled, does not have to pay premiums to continue coverage.

    Retirement plans

    Pension plans typically pay benefits before retirement age to a worker defined as disabled under the plan’s guidelines. The person may also be able to withdraw money from his or her IRA or employee-funded retirement plan before age 59½ without paying the typical 10 percent early withdrawal penalty.

    This money usually will be considered regular income, and taxes will have to be paid on the amount withdrawn. In that case, if withdrawals can be delayed until after the person leaves work, income taxes due will likely be less because he or she will probably fall into a lower income-tax bracket. Social Security benefits are also available before retirement age if Social Security disability requirements are met.

    Personal savings, investments and property

    Investment assets such as the following can be sources of income:
    • Stocks
    • Bonds
    • Savings accounts
    • Real estate
    • Personal property, such as jewelry or artwork
    For example, the equity in a home could be converted into income, a process called a reverse mortgage. This is a type of home equity loan that allows a person age 62 or older to convert some of the equity in his or her home into cash while remaining the homeowner.

    The amount the person is eligible to borrow is generally based on the:
    • Person’s age
    • Home’s equity
    • Lender’s interest rate
    Reverse mortgages do not have an impact on Social Security or Medicare benefits, but they may affect qualifying for other government programs.

    Government assistance

    In addition to Medicare, the person with cognitive impairment may qualify for a number of public programs. These programs provide income support or long-term care services to people who are eligible.

    Social Security Disability Income (SSDI)
    A worker who is younger than age 65 may qualify for Social Security Disability Income (SSDI) payments. To qualify, the person must meet the Social Security Administration’s definition of disability. Meeting the definition of disability generally means proving that:
    • The person is unable to work in any occupation
    • The condition will last at least a year or is expected to result in death
    Through the Compassionate Allowance Initiative, those who suffer from younger-onset Alzheimer's disease are considered eligible for SSDI as long as they meet all other criteria. They are also fast-tracked to a favorable decision, which significantly shortens the time it takes to start receiving benefits. After receiving SSDI benefits for at least 24 months, the person with dementia will qualify for Medicare benefits.

    Supplemental Security Income (SSI)
    Supplemental Security Income (SSI) guarantees a minimum monthly income for people who:
    • Are age 65 or older,
    • Are disabled or blind, and
    • Have very limited income and assets — these asset and income levels vary from state to state
    To qualify for SSI benefits, the cognitively impaired person must meet the Social Security Administration’s definition of disability. If you think he or she qualifies for SSI benefits, begin the application process as quickly as possible after the diagnosis. SSI payments begin upon approval of the application. To learn more about SSDI and SSI you can call the Social Security Administration at 800.772.1213 or visit online at

    Medicaid (Medi-Cal in California) is a state-administered program jointly funded by federal and state governments which pays for medical care for people with very low income and asset levels. Under most circumstances, it also covers long-term care for people who have used up most of their own money. While not all nursing homes accept Medicaid, most Medicaid dollars go toward nursing home care. In addition, many states, including California, have home- and community-care options for those people who qualify for nursing home care but want to stay in their own homes. (Not all nursing homes accept Medicaid.)

    Medicaid will also pay for hospice care. If the person with cognitive challenges is eligible for SSI, he or she usually is automatically eligible for Medicaid. Those not receiving SSI must have minimal income and assets. The amount is determined by each state.

    There are also specific guidelines about protecting spouses from impoverishment (the depleting of finances) in determining income and asset levels. The person with cognitive impairment should be very careful about giving away assets to family members to qualify for Medicaid. Strict laws govern this area. Check with your legal adviser to be sure you are fully aware of the legal and financial results of transferring property and wealth. For more information you can visit

    Veterans benefits
    Those who served in the military for any period of time may qualify for government benefits, including health and long-term care. These benefits often change. Call a Veterans Affairs benefits counselor (877.222.8387) or visit for the latest information.

    Tax Implications
    Certain tax benefits are available for caregivers through the Internal Revenue Service (IRS):
    • Income tax deductions
    • Income tax credits
    In many cases, the person with cognitive impairment can be considered a dependent for tax purposes. If so, you may be allowed to itemize his or her medical costs. Keep careful records of all medical expenses. You may also be entitled to the Household and Dependent Care Credit if you need to pay someone to care for the person in order for you to go to work. This credit can be subtracted directly from the tax shown on your return. You can learn more about the tax implications from the Internal Revenue Service (IRS): Call 800.829.1040 or visit

    Family and Medical Leave Act
    If you work for an employer with 50 or more employees, you may be able to use the federal Family and Medical Leave Act (FMLA) to help balance your caregiving responsibilities. FMLA allows you to take off up to 12 weeks of unpaid leave each year to provide caregiving. Most workers are guaranteed to keep their jobs.

    Community Support
    You can learn more about community support services through:
    • Eldercare Locator: Call 800.677.1116 or visit
    • Your local religious organization
    • Hospital social worker or discharge planner
    You can learn more about general financial issues and planning at:
    Benefits Check-Up:

    Find out which government benefits you may be eligible to receive:

    Financial Planning Association: Call 800.322.4237 or visit:

    This material was adapted from source material by the National Endowment for Financial Education® (NEFE®).

    Cognitive Impairment can have many causes. The patient’s doctor should be consulted to determine a specific diagnosis and treatment options. But whatever the cause, the symptoms are often alike, and the Caregiver Strategies are often similar.

    The information in the resources listed above was compiled by the Ray Dolby Brain Health Center through clinical experience and commonly available published materials. For information on additional Caregiver Strategies, go to: