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My mother is 99 and lives in a NH. She fell in October, 2016, broke her hip, had surgery, went to rehab and never returned home. She suffers from slight vascular dementia, needs help walking and is slightly incontinent. She has recently told me, she's "done" and I better start watching for "rents" because she's moving at the end of the month. She really believes she can do everything as before and there is no reason to live in a NH. When she talks like this, I start to doubt myself and the decision I have made for her to live in a NH. I've tried to tell her she lives there now and sometimes she accepts it, but not others. This is very difficult. Should she be allowed to live independently again? She no longer has any money and is on Medicaid so most AL facilities in our area wouldn't even take her.

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If Medicaid has accepted her for long term care, it means that they have determined that she's not capable of living independently. I would trust that because they don't make that determination lightly. To live independently she would need in-home care 24/7. I don't believe Medicaid pays for that anywhere, even where they do provide in-home care to people who are able to live independently with help.

Built into her equation is probably the assumption that you will be available to run over at a moment's notice for every burnt-out lightbulb, every window that can't be opened or shut by her own power, every spilled soda or broken glass on the floor. The number of "emergencies" that crop up when someone is living independently beyond their abilities is staggering. You don't want that. Stick to your guns, please.
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"When she talks like this, I start to doubt myself and the decision I have made for her to live in a NH."

Really??? Do you?!

Did you base your initial decision on your mother's assessment of her care needs? Or on an informed, objective appraisal drawing on your own observations and the advice of her medical and rehab teams, while taking your mother's wishes into account as far as possible?

Your mother is 99, physically frail, becoming mentally frail, and has been dependent on full-time care for 16 months. Do *you* think she is being realistic about her ability to live alone?

As the subject of living alone again has come up again just recently:

ask around and see if anything has upset her that can easily be put right;
see if this change ties in with anything else you've noticed about her physical or mental health.

Meanwhile, let her talk about it. You can cover all kinds of topics - rental prices, properties available, what sort of place would be ideal, what sort of place she used to daydream about when she was first married - this could take you to all sorts of conversations that will tell you things you never knew about her story (and possibly shouldn't rely on! - but that's another issue).

And you can reassure her that you will certainly keep your eyes open for the right place. Or, she'll need to get a bit stronger, and it might not be by the end of *this* month, but who knows. She's allowed to have a dream, isn't she? No need to crush it.

You also don't need her to acknowledge that the NH is her permanent home now. It would be good if she did! - and liked it. Maybe she will still come to, in time. But her being comfortable and safe there is all that matters, not that she demonstrates her understanding of why it's necessary and that it's for good.
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CM has some great approaches. My reaction would be to tell her that I would talk to her banker and see what she can afford, and then I'll see what's available. Put her off. Be agreeable, distract, and forget. If she continues to ask, then continue the strategy. Talk to the NH management so they understand you have no plans to move her, but ask if there is something that might have upset her recently that they could help with. Keep her where she is. It's amazing that she recovered from her broken hip at all!
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Thank you to all for your insightful answers. Hearing this from strangers who don't have an emotional stake in the situation puts it into perspective. Sometimes you just need to hear it from unbiased people. Thanks again.
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No emotional stake? Oh, we do. Been there. That's why we know how hard it is to hear. Hugs to you.
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I know our parents can cause us to doubt our decisions and even our sanity sometimes but I don’t even have to read your mom’s medical chart to know she is where she needs to be right now. I’m sure that having only slight dementia causes her to be bored since most patients in NH are quite ill. But your mom definitely needs more care than an AL or you could provide.

CarlaCB is absolutely right. That Medicaid placed your mom in a NH, proves she’s where she belongs! 
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I am utterly astounded that you mother lived independently for so long as my parents needed 24/7 care starting in their 70’s! She must still be a formidable woman for her to be able to talk you into second-guessing yourself. It seems dissatisfaction with where they live or life in general is all part of the aging process. I read on this site from caregivers whose LO lives with them who complain incessantly as well as those living in IL, AL, or nursing homes who do the same.
There is a lady, Evelyn, at my mother’s Nursing Home who seems to have a very stoic and accepting attitude toward her life. She is a former legal secretary, about 89 years old. At times she can have very lucid conversations. She told me that she was one of the first patients to live at this facility when it opened four years ago. Once, my mother was complaining to me about my brother, “He told me that this is my new home!”. Evelyn, matter-of-factly, piped in “Yes”. Another time, we were talking about the big cold front that was coming and how low it was going to get that night. She replied, “I won’t worry about that. I’ll be in my warm bed”.
I am very well-acquainted with second-guessing. It helps to play out the scenario in order to see the futility of it. She moves out. She manages for a week or more (which means you manage it) until the next fall, and the cycle starts again. I can’t even imagine the paperwork involved to get off Medicaid and then back on again. Lots of good advice on here as to how to respond.
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You indicate that your mom has mild dementia, but, I wonder if you have considered her lack of judgment into the mix. Sometimes, it's not just memory that goes, but, using reason. Would a reasonable person believe that she can live alone?

I recall a family friend that I used to visit in a Rehab. That's what they called it. She went after a fall, but, then continued to live there for years. It looked like a cross between NH, AL and MC. The place still doesn't advertise what they are....anyway, she put up a pretty good front and it was years before I learned that she had substantial dementia. She had me convinced that she loved crossword puzzles, long after she was able to do them. She ALWAYS asked me if I knew where she could get a job. lol She could not walk, double incontinent and had substantial dementia. But, she actually believed that she was employable and was able to keep me going for years about it. She has passed away now, but, I always recall her lively and purpose driven spirit.
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