A new blood test being developed to identify the likely onset of Alzheimer's disease up to a decade before current tools
can offer financial advisers and clients great opportunities but also presents clients with a dilemma. To be tested or not to be tested?
While a positive result might offer clients the opportunity to start medical treatments to address cognitive and behavioral symptoms earlier, it also imposes a psychological burden — knowing they will eventually lose mental function and become a shell of their former selves.
Further, a positive test might lead to decisions by insurers — which likely would learn of the results — not to sell long-term-care insurance to the clients, or pricing it beyond their reach.
(More: Unraveling Minds)
On the other side, a positive test would give both clients and their advisers time to plan for the eventual loss of mental capacity and the financial burdens that attend the disease.
Alzheimer's is the most commonly diagnosed form of dementia, and more than 5 million Americans have the disease. That number is expected to grow to more than 16 million by 2050 as the population ages.
Symptoms worsen as the disease progresses. Eventually, bodily functions fail. There is no cure, and life expectancy after diagnosis averages seven years, with few living more than 14 years.
But those years can be expensive. The cost of living in an Alzheimer's care facility runs from $3,000 to $7,000 a month, according to Caring.com, and one-third of families spend $30,000 or more each year. As a result, many families find their financial resources strained by the costs.
The expenses can be substantial even when a patient is cared for at home in the first years after diagnosis, as changes often must be made to the home, and part-time caregivers frequently must be employed to relieve stresses on the family.
COVERED COSTS
Medicare covers some Alzheimer's costs — for example, inpatient hospital care and some doctors' fees for those on Social Security. It also will pay for up to 100 days of skilled nursing home care, but not long-term nursing home care.
It will pay for hospice care for people with dementia whom a doctor diagnoses as near the end of life. But Medicare leaves a large gap that the client's resources or the family must fill.
The longer a family can plan and save for the costs of supporting a family member in an Alzheimer's care facility or at home, the easier it will be to handle that expense.
As a first step, financial advisers can encourage clients to consider being tested if they have reason to think they may develop Alzheimer's. Reasons can include: one or more family members have been diagnosed with the disease, they are smokers, they have heart disease, or genetic tests have revealed they have the APOE4 gene, which heightens a person's risk for developing late-onset Alzheimer's.
A positive test could then lead to a discussion between the adviser and the client about which steps to take to prepare for the future. Getting long-term-care insurance, if it's available and affordable, would be one action to take.
The adviser and client should also determine which member of the family will be given a durable power of attorney to make decisions when the client is no longer capable.
The adviser and client then should review the client's financial plan and investment portfolio to determine if changes are appropriate given the near certainty of some significant Alzheimer's-related costs in the foreseeable future.
Given the approach of this new Alzheimer's test, financial advisers should begin preparing to discuss with clients whether or not to have it. They should also prepare for the next steps should the results of the test be positive.
