Finance

 Is It Time to Have a Conversation About Long-term Care with an Aging Parent?

Like many families, mine is scattered all over the United States.  Work and other commitments make it difficult to visit distant loved ones more than a few times a year.  When visiting, it is hard to gauge the health and safety of family members because they are often not going about their normal daily activities. 

A few years ago, while visiting my dad in Oregon, I noticed that there was something not quite right with him.  He was repeating himself and telling stories about his history that I was pretty sure were not true.
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In my practice, I spend a lot of time educating clients about the need to have an Advance Directive for Healthcare in place so that someone can make healthcare decisions for them if they are unable to make those decisions or to communicate them.  But what does the healthcare agent or surrogate do?

When nominated to become a surrogate healthcare decision maker for someone, you may be asked to make decisions about what healthcare procedures and care will be appropriate for someone other than yourself. You will only be asked to make healthcare decisions if the person is not able to make or communicate those decisions.  What that means is that you may have to decide what the person would want without ever having discussed the issue with them.

In general, as a healthcare surrogate you will have the right to:

• Make choices about all medical care for the person, to include surgery, medical tests, medical tests or pain management.
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To help your parents get their affairs in order, you should first make sure that you or someone trustworthy has the legal ability to manage your parent’s affairs.  This article is a guide to the four fundamental legal documents you and your parent may need in order to get financial affairs in order.

Jennifer’s 80-year-old mother seemed to be running low on funds every month.  By the end of the month, she had no money for groceries.  Jennifer had helped her mother with a budget, so she thought her mother had plenty of money to make it through each month.  When she asked her mother to allow her to look at her bank statements, though, Jennifer discovered a series of automatic debits to several companies she did not recognize.  It turns out, her mother had signed up for monthly book delivery clubs, as well as recurring magazine subscriptions for magazines Jennifer knew her mother did not read.
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Medicare Part B pays for doctor’s services, whether in their offices, the hospital, your home or other settings, and lab tests, screenings, medical equipment and other supplies. 

You will pay a monthly premium, which may be deducted from your Social Security, Railroad Retirement or Civil Service check.  If the premiums are not deducted from your retirement or disability check, you will be required to pay premiums quarterly.  In 2015, the monthly premium for most recipients was $104.90, though the premiums are higher if your annual income on your individual tax return is over $85,001 or on your joint return it was over $170,001.  The highest premiums in 2015 are $335.70 per month.

Once you pay the premium, there is a deductible and a coinsurance amount that you will pay.  The yearly deductible is $147, and the coinsurance amount is 20% of the Medicare-approved amount that is charged by the providers. 

For example, if you visit a doctor and the doctor accepts assignment from Medicare, the doctor agrees to accept the amount that Medicare has approved for the service.  Medicare pays 80% of the cost and you will pay 20%.  If the doctor accepts Medicare patients, but not an assignment, the doctor can charge you up to 15% more than the Medicare approved amount and you will have to pay the extra amount unless you have a Medigap policy.  If the doctor does not accept Medicare, Medicare will not pay for the service and you will be responsible for the entire amount of the service provided.  Medigap insurance won’t pay for the cost of a doctor who has opted out of Medicare.

Do I have to have Medicare Part B?  You are not required to sign up for Medicare Part B, but you will be responsible for paying privately for the services covered by Part B (unless you have a Medicare Advantage Plan) if you have chosen not to sign up.  If you don’t enroll in Part B when you turn 65 and enroll in Part A, when you do sign up for Part B you may be have to pay a higher premium for Part B.  The premium can go up 10% for each 12-month period that you could have been enrolled in Part B.  If you have insurance through an employer or have a union group health insurance plan that is your own, a spouse’s or a family member’s (if you are disabled), you do not need to sign up for Part B if that insurance will be the primary insurer.  If the plan is not the primary insurer, and Medicare is the primary, you will need to sign up for Part B.

Note that Cobra coverage does not count as employer coverage.

Medicare Part A is known as hospital insurance.  That term may be misleading, however, because services provided in the hospital by doctors, anesthetists, and surgeons are covered by Medicare Part B.  Part A covers nursing care, such as care provided by professional nurses, a semi-private room, meals, lab tests, prescription drugs, medical appliances and supplies, rehabilitation therapy.  Services provided for home health care, when you qualify, or hospice care are also covered under Part A.

Generally, the Part A premiums are paid for by the Medicare taxes withheld from your paycheck if you or your spouse has worked enough to qualify for 40 or more work credits.  If you have not worked long enough to earn the 40 credits, you may pay up to $407/month based on the number of credits earned during your employment.

You can qualify for Medicare Part A if you are age 65 or if you are disabled and qualified for Social Security Disability Insurance for 24 months. 

Most people assume that Medicare will cover the cost of all health care once you reach 65.  That is not truly accurate.  Although the premiums for Part A may be “free” because you or your spouse paid through the payroll deductions from your paycheck while you were working, in most circumstances you will be required to pay a co-pay or co-insurance.  In addition, you will be required to meet a deductible of $1,260 for each hospital benefit period in 2015.  What is a hospital benefit period?  That is the period from when you are admitted to a hospital and ends when you have been out of the hospital for 60 days in a row.  After the deductible is met, Medicare will pay for the full cost of the hospital care for 60 days.  If you go home from the hospital before the 60 days are up, but are readmitted during that 60 days, the costs of the stay will be covered.  After 60 days and before day 90, you will pay $315 for each day of the benefit period.  After 91 days, you will pay $630 per day.  (These are the 2015 costs.  The 2016 rates will most likely be higher.)

What about admission to a Skilled Nursing Facility (SNF)?  Medicare will pay the full cost of Days 1 through 20 in a SNF.  From Day 21 through 100, you must pay a daily co-pay of  $157.00 (These are 2015 costs.)  and from Days 101 on you must pay all of the costs. Before Medicare will pay for your stay in the SNF, however, you must be admitted to the hospital for a 3-day inpatient stay.

You can buy a Medigap policy to cover some of the Part A deductibles and co-pays.  If you are admitted to a SNF, long-term care insurance may cover some of the costs of your care.

Open enrollment for Medicare plans is October 15 through December 7^th, 2015.  At that time, you can compare Medicare Advantage (Part C)  plans to regular Medicare plans to determine which option is the best one for you.

Concerned about how your parents will pay for their long-term care?  Here are the four basic ways to pay for care.

July is Sandwich Generation Awareness Month.  The Sandwich Generation refers to those people, mostly in their mid-40’s to late 50’s, who are caring for aging parents as well as caring for young children or dependent young adult children.  If you are the meat or peanut butter in that sandwich, you might be looking for help from your siblings or other family members.  One of the best ways to plan the care for an aging or disabled family member is by holding a family meeting.  The meeting is designed to do many things:  get information from the aging or disabled person about their needs, figure out what kind of care is needed and brainstorm about ways to find that care, gauge the financial resources available for care, and assign duties to various family members so that one caregiver does not get burned out.

Who should attend the meeting?  I recommend that all of the parents and siblings attend a meeting, preferably where they can meet face to face to talk about the issues facing the aging parent now, and those issues that may come up in the future.  If grandchildren, aunts and uncles or friends will be responsible for some of the care, invite them along.    The parent or person with a disability should be in attendance so long as they are physically able to be there. 

It is usually best to hold the meeting in a neutral place, such as a meeting room in a hotel or community center.  I also recommend there be a fairly impartial facilitator to keep the meeting on track, if possible.  And, there should be plenty of snacks and drinks so people won’t want to leave before you’ve discussed all the important points.

With so many families spread out over the world, it can be difficult to get everyone together.  If the family has a regular family reunion, perhaps the reunion time can be extended to allow the family to get together for this meeting.  If there is no regularly scheduled reunion, you can use scheduling programs such as www.doodle.com to find out when the most attendees will be available. If some family members absolutely cannot meet in person, you can use tools such as Skype www.skype.com or Google Hangouts www.google.com/hangouts‎ to bring those other family members in by video.

Once you have set the time and place, have everyone agree to an agenda.  Appoint someone to come up with a proposed agenda in advance of the meeting, and then circulate that proposed agenda for comments, additions and changes.

Here are the five basic items that should be covered in the meeting:

1. The Health and Safety of the aging parent or person with a disability

    

   How do they feel about their own healthcare and safety and what are they concerned about?

   Are there any disease or illness diagnoses?

   Are they paying attention to personal hygiene?

   Have there been any instances where the safety of the parent has been compromised, such as falling, leaving the stove on, wandering, etc.?

   Who are their physicians, dentists, therapists, professional and volunteer caregivers?

   What medications are they taking and are they remembering to take them regularly? 

    

   What health insurance do they have?  If they are on Medicare, is there supplemental insurance or prescription medication coverage?

   How are the premiums paid and is there someone who will be informed if the premiums are not paid?

    

   How are their finances? 

   What financial resources do they have? 

   What are their regular bills and how do those bills get paid?  How will you know if they forget to pay the bills?

    

2. The current living and care arrangements, whether those arrangements are working, and a plan for future living arrangements

 If the parent’s condition is changing, what living and care arrangements will be necessary in the future?

How will you find appropriate housing and care?

1. The legal documents do they have and the legal documents they need

    

   Who is their lawyer and when was the last time they saw a lawyer?  Where are the legal documents stored?

   Who is named as Agent, Personal Representative, etc. in those documents?

   Who are their beneficiaries on their IRA’s, 401(k)’s, life insurance policies and annuities?

    

2. A plan to pay for long-term care

   Is there long-term insurance available?  If so, what are the terms?  Where is the policy and how are the premiums paid for? 

   If there is no long-term care insurance, can the parent or person with disability afford to pay for care by him or herself?  Are there any government programs, such as Veterans benefits or Medicaid, that can help pay for long-term care?

    

3. The family caregivers – who will do what and when

Sometimes family members volunteer to perform the tasks for which they have talent.  The brother who is a nurse may be the natural fit for the person to oversee the parent’s healthcare and the sister who is the CPA will take over the finances.  What if it isn’t so clear or if no one wants to take on the tasks?  Can people be hired to perform some of the tasks such as paying the bills? 

Can the family agree that it may not be fair to one of the children to take on all of the responsibility for care?

If one family member is taking on the bulk of the care, can the others agree to take a turn to provide relief to the primary caregiver? 

The topics may vary from family to family, and for those families who may find it especially hard to discuss these items you might consider having a professional or a mediator to assist in these discussions.

What is a Fiduciary and why does the VA want to appoint one for my dad?

George, a veteran of WWII who now lives in an assisted living facility, applied for Improved Pension with Aid & Attendance.  After a few months, the VA sent him a letter explaining that George had been awarded the Pension, but would not receive his retroactive check until the VA determined whether he was competent to handle his affairs and whether the VA should appoint a fiduciary to manage his checks. What is a Fiduciary and why does the VA want to appoint one for my dad?

George, a veteran of WWII who now lives in an assisted living facility, applied for Improved Pension with Aid & Attendance.  After a few months, the VA sent him a letter explaining that George had been awarded the Pension, but would not receive his retroactive check until the VA determined whether he was competent to handle his affairs and whether the VA should appoint a fiduciary to manage his checks. 

Often veterans or their surviving spouses applying for VA Pension or Compensation benefits have some mental disease or injury that affects their ability to manage their financial affairs.  Before the VA will issue payment, the VA wants to know that if the veteran or spouse cannot manage the money they receive from the VA, someone trustworthy will be able to manage their money for them. 

The VA may appoint an individual or a corporation to serve as a fiduciary, or may authorize someone who has been appointed by a court to serve as a fiduciary.  A fiduciary is a person or legal entity that has been appointed by the VA to receive VA funds on behalf of a beneficiary for the use and benefit of the beneficiary and his/her dependents.  See A Guide for VA Fiduciaries. A beneficiary is an individual entitled to receive VA benefits.    The definition of incompetent for VA purposes is a minor or an adult who is rated incompetent by the VA or is under a legal disability by reason of court action.

The VA first makes a determination based on the evidence submitted that the veteran or surviving spouse is not able to manage their money.   If the veteran or spouse wishes, they can tell the VA that they are incompetent and request someone they know and trust be appointed to serve as the fiduciary. 

Before the VA appoints the person, though, they will do what is called a “field examination” to check that the person is trustworthy.

A VA employee, called a Field Examiner, will interview the potential fiduciary to ask whether they are willing to serve, will check the person’s credit rating, do a criminal background check, and ask for personal references.  If the veteran or surviving spouse does not have anyone they trust, or if the VA finds that the person nominated by the veteran or surviving spouse is not trustworthy, the VA can appoint a corporate fiduciary.  In some cases, the VA appoints an employee of an institution, such as an assisted living or nursing home,  to serve as a fiduciary.

The fiduciary is responsible to oversee the veteran or spouse’s VA award, and is required to use the VA funds to pay the basic living expenses for the beneficiary and his or her dependents first, and to provide goods and services to improve the lifestyle of the beneficiary and dependents only once the basic needs are met.

George requested that the VA appoint his oldest son, John, as his fiduciary.  Once the VA investigated John, they made him the payee of George’s VA check.  John received George’s retroactive Pension payment, and now receives George’s monthly check.  John must keep the deposits separate from his own accounts and keep records of payments he makes for George from the VA funds. He also agreed to keep the VA informed of any changes in George’s residence or medical condition, and to file a Federal Fiduciary’s Account, VA Form 21P-4706b, every year.

Nursing Home Care for Veterans

The VA provides “Community Living Centers”, or what used to be called Nursing Homes.  These are operated by the VA, and are usually in a Veterans Administration Hospital.  These Community Living Centers (CLC’s) provide rehabilitation for veterans recovering from injury and illness in the short-term, but also provide long-term skilled nursing care for veterans who need care for long periods of time for a service-connected injury.

For veterans rated at 70% service-connected or higher, or for those who need nursing home care for their service-connected injuries, the VA pays for their nursing home placement as part of their package of healthcare benefits.

The CLC’s are available for non-service connected veterans who are enrolled in VHA healthcare, and need short term services such as rehabilitation, hospice, respite, and for those waiting for placement in the community.

VA provides care to veterans based on a priority system.  There are currently 8 categories of veterans based on service- connection and financial need.  For example, a veteran who is 50% service-connected or higher is in category 1.  A non-service connected veteran with significant assets and income is most likely going to be enrolled in category 8.

Veterans in category 1 will be eligible for placement in a CLC, and will not have a co-pay, but those in category 8 will be placed in a CLC only if there is availability and no one in a higher category needs the bed.  The veteran in category 8 will pay a daily co-pay for services in the CLC.

In Atlanta, the CLC is located in the VA hospital on Clairmont Road, and is almost always full to capacity with a waiting list.  For those veterans for whom nursing home care is not part of the package of medical benefits, they may be able to find placement in one of the two Georgia War Veterans Homes.

The two Georgia War Veterans Homes in Georgia are not run by the national VA, but are available to veterans.  The Georgia Department of Veterans Services and the Georgia Health Sciences University operate the Georgia War Veterans Nursing Home in Augusta.   The Georgia War Veterans Home in Milledgeville is operated by United Veteran Services of Georgia, Inc., which operates the home for the Georgia Department of Veterans Services. 

In order to be eligible for admission to a Georgia War Veterans Home, the person must be domiciled in Georgia, and must have resided in Georgia for the five years immediately preceding admission.  He or she must have been a “war veteran”, defined as any veteran who served on active duty in the Armed Forces of the U.S. during wartime or during the period between January 31, 1955 and May 7, 1975.  In addition, the U.S. Department of Veterans Affairs must approve them as “eligible for care and treatment”.  Veterans accepted into the Georgia War Veterans Homes will be required to pay some expenses such as Medicare or health-care insurance deductibles and co-pays.  The forms to apply for admission to the Georgia War Veterans Homes are found at veterans.georgia.gov/gwvh-forms.

Eligible for both VA and Medicare? 

Who pays what?  Do I need insurance if I’m eligible for VA healthcare?

You’ve been approved for VA Pension or Compensation, and you will be receiving healthcare and prescription drugs at the VA facility.  You also have Medicare part B and Medicare part D.  Do you need both? 

Medicare Part A pays for inpatient hospital care for up to 90 days per benefit period, skilled nursing care partial pay for up to 100 days each benefit period, home healthcare for up to 100 days, and hospice care.

Medicare Part B pays for doctor’s visits, ambulance services, preventive care services, and durable medical equipment, as well as many other services.

Medicare Part D pays for outpatient prescription drugs.

For veterans that qualify, the VA provides care in VA healthcare facilities, as well as contract care in other facilities when the VA cannot provide the required care.  The VA authorizes care at non-VA facilities when necessary medical services are not routinely available at a VA facility, or the VA determines that the services can be obtained more economically outside the VA.  The non-VA care must be authorized by the VA in advance.

Unless the veteran has other healthcare, or his or her healthcare is being provided by the spouse’s employer, once he or she turns 65 she must enroll in Medicare Part B and D.  If she does not enroll at age 65, when and if she finally enrolls, she will have to pay a Part B and/or a Part D premium penalty which increases for every year she does not enroll in the programs.

The veteran may want to enroll in Part B in order to receive healthcare services from Medicare approved providers that provide services he may not be able to receive in a VA facility.  In that case, it is important to enroll at age 65. 

If the veteran is eligible for prescription medications from the VA, he may choose not to enroll in Medicare Part D.  VA prescription coverage is considered “creditable”, meaning it is as good, or better, than Medicare Part D coverage.  What that means for the veteran is that he can delay enrolling in Part D and not suffer a penalty.  However, if the veteran loses his prescription coverage, he has 63 days to enroll in a Part D plan or he will be penalized. 

When deciding whether or not to enroll in Part D, the veteran should consider if he will get all of his prescriptions from the VA.  The VA will only provide coverage of the drugs the veteran receives from the VA.  A veteran is eligible for the prescription benefit if he or she is enrolled in and receiving health care from the VA.  The prescriptions must be written by a VA health care provider, or a VA-authorized provider.   A VA health care provider will review prescriptions written by a private health care provider to determine whether the VA can rewrite the prescription and dispense it from a VA pharmacy.  Most prescriptions can be mailed to the home, or can be picked up at the VA pharmacy.  Depending on what priority category the veteran is in, he or she may have a co-pay for each prescription received.  Co-pays for prescriptions are between $8.00 and $9.00 per prescription.