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Meet with Your Parents

As you prepare for your caregiving role, you may discover that no matter your age you never feel grown-up around your parents. They may tend to treat you like a child, and you may tend to respond like one. Thus, it may be challenging to talk to your parents about their finances, legal arrangements, and health matters. Whatever you do, don't be quick to step in and take charge. No matter how well-meaning you are, if you behave in a domineering or authoritarian way, it invariably deprives the other person of self-esteem. Let your parents tell you what they really want from you.

A family meeting is a good time to learn some important basics. An ideal starting point is a booklet published by AFSCME's Retiree Program called, Planning for Your Survivors: A useful record-keeper that will protect your loved ones after you're gone. You and your parents can fill in the pages with information on their insurance, bank accounts, deeds, debts and funeral arrangements.

You can tell your parents that these records will save you and other family members from having to search for documents in their absence and will ensure that their wishes are carried out. After your parents have completed the record-keeper, put it in a safe place and let family members know where to find it in the event of catastrophic illness or death.

If you have brothers or sisters, they also share the responsibility of caring for your parents. However, do not expect that all siblings will share the responsibilities equally. In many cases, it is more practical for one family member to provide the primary care, while other family members--particularly brothers and sisters--contribute financially and by phoning, visiting, or occasionally taking their parents home on weekend trips.

Health care coverage

One of the most important topics to discuss with older relatives is the type of health care coverage they have and what their future needs might be. Here's a brief description of the various types of coverage:

Medicare

Medicare is a federal government program which provides basic health care coverage for senior citizens over age 65. It's composed of two parts. Part A is hospital insurance and Part B is medical insurance that covers doctor bills and lab fees. In general, Medicare reimburses health care providers on a fee-for-service basis.

Part A: Most people over age 65 are eligible for Medicare Part A Hospital Insurance because they or a spouse paid the Social Security payroll tax while working. No additional premiums are required. Medicare will pay all hospital costs for the first 60 days of hospitalization after the patient pays a deductible that approximates the cost of the first day of care. Significant co-pays are required for lengthier hospital stays, which are rare.

Part A will also pay for post-hospital care in a skilled nursing facility and for home health care for limited periods. It also pays for hospice care for the terminally ill. Medicare does not cover long-term care at home or in a nursing home.

Part B: Part B Medical Insurance covers doctors and lab fees. Unlike Part A, it's a voluntary program that requires payment of a monthly premium. This premium is automatically deducted from the Social Security check unless you tell the Social Security Administration (SSA) you don't want the coverage. Despite the premium, more than 98 percent of seniors buy Part B coverage because it's an outstanding bargain. The U.S. Treasury Department subsidizes 70 to 75 percent of the cost.

Medigap Insurance

While Medicare provides good basic coverage for people over 65, it's not a "Cadillac" health plan. Even with Parts A and B, significant gaps in Medicare coverage remain. Part B has an annual deductible for medical care and charges co-pays for most services; Part A has its own deductible and co-pays. These can add up to substantial sums over the course of a year, especially if an older person has a chronic health condition or requires an extraordinarily long period of hospitalization. To cover these costs, most seniors purchase Medicare-supplement insurance, known as "Medigap" plans, or get this insurance through a former employer. Be advised that no senior citizen needs more than one plan to supplement Medicare.

The federal government has established guidelines for ten variations of Medigap plans. These plans are sold by Blue Cross/Blue Shield and for-profit insurance companies, such as Aetna and Prudential. Non-profit seniors groups, such as the American Association of Retired Persons, also sponsor Medigap plans for their members. Medicare-supplement plans generally cost between $70 and $150 a month, depending on coverage. If a person retires from a large employer, the employer may pay all or part of the retiree's Medigap premiums -- a big boost to retirement income. Some of the more expensive plans include coverage of prescription drugs. Most seniors, however, pay for prescription drugs out-of-pocket, since coverage is costly. Medicare provides no coverage for prescription drugs, except during hospitalization. Medicare also fails to cover hearing aids, dentistry, and dentures. These costs are rarely covered by Medigap plans and are usually borne out-of-pocket. As with Medicare, Medigap plans do not cover long-term care.

Health Maintenance Organizations

For some Medicare beneficiaries, membership in a Health Maintenance Organization (HMO) may be a good alternative to buying a Medigap plan. Medicare pays the full cost of HMO coverage (the HMO must first have a Medicare contract) as long as the beneficiary relinquishes access to traditional fee-for-service Medicare.

HMOs can save seniors money because they charge no additional premiums for filling in the gaps in Medicare coverage. In fact, some HMOs even include prescription drug coverage and other services at no extra charge.

One reason HMOs can afford to do this is because they are structured to keep costs down. This objective can work to the disadvantage of some senior citizens. For example, most seniors would have to give up their current doctors when they join because HMO members are restricted to the doctors on the HMO's roster. Also, HMO members are permitted to visit HMO specialists only when their primary-care physician recommends them. Some HMOs have been known to withhold such recommendations, as well as expensive tests and treatment, in order to contain costs. Obviously, such practices can be dangerous for an older person with a potentially life-threatening illness.

Yet another problem is that HMOs have strict rules about paying for care beyond their geographic location. In most cases, HMOs will pay only for emergency treatment.

Carefully consider the specific circumstances of an older relative when deciding if an HMO is the right alternative. For names of HMOs with Medicare contracts in specific localities, call SSA's toll-free line: 1-800-772-1213.

Medicaid

Medicaid is the federal/state health care program for low-income and disabled people. Here are 3 ways in which the program helps seniors:

  • If an older person doesn't qualify for Medicare and meets stringent income and assets limits, Medicaid may pay for basic health care coverage.

  • If an older person who's covered by Medicare meets the stringent income and assets limits of the Supplemental Security Income Program, Medicaid may pay that person's premiums, deductibles and co-pays under Medicare.

  • Medicaid pays for long-term nursing home care for those who qualify under stringent income and assets limits. In most cases, this includes middle-class people who've impoverished themselves by expending their life's savings on costly long-term care services (a common occurrence with nursing home costs averaging $40,000 a year). If a nursing home resident has a spouse living in the community, federal law permits the person to qualify for Medicaid while allowing the spouse to maintain a certain portion of the couple's income and assets for living expenses. The protected amounts vary from state-to-state.

In addition to nursing home care, states are covering an increasing number of Medicaid-eligible seniors for home and community-based long-term care services (including chore assistance and adult day care). Check with your local social services office or health department to find out more about Medicaid coverage in your parents' state.

Long-Term Care Insurance (LTC)

In the absence of a social insurance program -- similar to Medicare -- to cover the cost of long-term care, private insurers have attempted to fill the void. Most seniors don't need long-term care insurance because they have minimal assets and will quickly qualify for Medicaid if they end up in a nursing home. For those who want to preserve larger assets for their heirs, however, private insurance may be worth considering.

Here are some things to keep in mind about long-term care insurance plans:

  • The prime time for purchasing long-term insurance is when people are in their 50s and 60s. The cost of premiums is generally determined by a person's age, health at the time of purchase, and the extent of coverage. It can average between $75 and $400 a month. Once a person becomes ill, insurance is virtually impossible to buy at any price.

  • What are the plan's benefits? A plan that pays $40 a day for nursing home care when the average cost in the area is $90 offers meager coverage; so does a plan that fails to raise payments with the cost-of-living. Read the contract's fine print. Does the plan exclude such specific conditions as Alzheimer's disease, one of the most common reasons for needing long-tem care? Does it cove home care as well as nursing home care? If so, does the plan cover chore services as well as home health services?

  • Every state runs a free health insurance counseling program for seniors that can help families make informed decisions about long-term care insuance and Medicare-supplement plans. For more information, contact your area agency on aging. (see Eldercare Locator) 

Advance directives on health care

Another important issue that needs to be discussed is what to do in the case of a parent's incapacitating illness. To clarify how your parents would like medical decisions made on their behalf, you might want to look into preparing a written statement of instruction, called an "advance directive." The most common types of advance directives are the Living Will and the Medical Durable Power of Attorney.

Living Wills

A Living Will is a document stating the medical care an individual would want (or would not want) if the individual became incapacitated and unable to make his/her own decisions. It alleviates pressure from family members who would otherwise have to make these difficult choices for older relatives.

Many states have their own Living Will forms. Some states will accept standardized forms or even written statements explaining an individual's preference for treatment. To be sure the Living Will has been completed in a way that makes wishes understood, contact an attorney or physician for advice.

Medical Durable Power of Attorney--

In many states, individuals have the right to a Medical Durable Power of Attorney -- a signed, dated, and witnessed paper naming another person, usually a family member or close friend, as an "agent" or "proxy" who can make medical decisions if the individual becomes incapacitated. The paper can include instructions about any treatment the individual might want or may wish to avoid (such as, surgery or artificial feeding).

Some states recognize Living Wills and others recognize Medical Durable Powers of Attorney. Some states permit an individual to have both or to combine them in one document. Check the state laws where your parents live to understand all the options in order to make the most informed choice. A good source of information on advance directives is the national organization Choice in Dying, which is listed in the Resources section of this booklet.

Under federal law, Medicare- and Medicaid-certified hospitals, nursing facilities, hospices, home health agencies, and prepaid health plans must provide adult patients with written information about their right to make health care decisions, including the right to accept or refuse treatment. Also, the health care facility must document in every patient's medical record if he/she has signed an advance directive.

Income Security

If you are helping to care for an elderly parent or other relative, you may need information about his/her financial picture, i.e., income and assets. If so, you'll want to know if your relative has a pension from previous employers (or spouse's employers), income from Social Security, or any additional income from savings and investments.

Social Security

Everyone who has worked and paid the Social Security payroll tax for at least 40 quarters -- or is the spouse of such a worker -- is eligible for a monthly benefit under Social Security's Old Age and Survivors Insurance. Full benefits are payable at 65; reduced benefits are available at 62 or, for widows, at 60. The program is operated by the Social Security Administration, an agency of the Federal Government.

Supplemental Security Income (SSI)--

SSI provides basic income or income to supplement Social Security payments for very low-income elderly, blind or disabled individuals. All who qualify under SSI's stringent income and assets limits are currently "entitled" to (guaranteed) benefits. The program is administered by the Social Security Administration, but benefits are paid out of general tax funds, not out of the Social Security payroll tax. The resource section of this booklet lists several informative publications about Social Security programs and SSI.

Acting as legal surrogate

While most elderly persons remain fully capable of managing their own financial affairs, there is always the possibility that they may eventually need family members' assistance in bill paying, checkbook reconciliation, savings and investment management or medical care paperwork. In some instances, the family member must be granted legal authority to assume these responsibilities on behalf of an older relative. Here are some of the options for obtaining this legal standing:

Power of Attorney

A Power of Attorney is essentially a contract in which one person gives another the legal authority to gain access to his/her financial affairs. The contract can stipulate that Power of Attorney be granted only for a specific task, such as bill paying, or it can cover the full range of financial assistance. Power of Attorney can be granted only when the older person is fully aware of what the contract means and is acting on his/her own free will.

Durable Power of Attorney

This is similar to a regular Power of Attorney except that the Durable Power of Attorney remains valid even when the older person can no longer direct or supervise the surrogate's actions (usually due to incompetency or incapacity).

Guardianship

If a court of law finds that an older person can no longer adequately manage his/her own affairs, it will appoint a guardian (called a conservator in some states). The process usually begins when a family member (or a friend, health care facility or county social service agency) petitions the court to appoint a legal surrogate to handle an older person's finances. If the older person objects, he/she has the right to legal representation and presentation of witnesses during a formal hearing.

The judge has the authority to choose the appropriate guardian and to determine the extent of the guardian's control over the older person's finances. For more information about Guardianship or Power of Attorney, contact an attorney or local legal aid office.

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