Financial and Legal Matters Facing the Elderly

Be Ready For the Unexpected

When a senior becomes too ill to make his or her own health, financial and business decisions, stress will be greatly reduced if arrangements have been made regarding who will take over these decisions.

First, the person needs an Advance Directive: A verbal or written statement of the elders' wishes regarding continuing medical care and other matters.

Then a legal document will be needed, a Durable Power of Attorney for Health Care: A document naming someone to make medical decisions for a person should he or she become incapacitated.

The form can be filled out independently, as there are many resources online that explain how to do it. Once completed, a lawyer must check it. Only a lawyer can be relied upon to assure that the form is legal, because laws change, advice online may be correct for one state and not for another, and there may be small details that render a document invalid.

Once a reputable lawyer deems the durable power of attorney for health care legal, copies should be distributed as follows:

* A copy to the senior's representative
* Copies to key family members and close friends
* An original for seniors' own records

Also, send a copy to the outpatient medical records department for the medical facility, hospital, HMO or other health care plan that the person uses.

NOTE: A durable power of attorney is different than a durable power of attorney for health care. The former pertains to financial power of attorney- naming the designated representative who will take over financial and business decisions on behalf of the deceased or incapacitated. This power of attorney legal document should be prepared and distributed to advised recipients.

Other information and terms that seniors and those who care for them should be familiar with:

A. Artificial nutrition and hydration - feeding mechanically when a patient cannot eat or drink. Feeding may be through a tube inserted into the nose, the stomach or a vein.

B. CPR - cardiopulmonary resuscitation - restoring a heart beat after a cardiac arrest.

C. Ventilator - a medical device that moves air into the lungs of a patient how is not able to breath.

D. DNR - do not resuscitates - a medical order to refrain from CPR if the heart stops beating

E. Life sustaining treatment - a medical intervention that delays death or prolongs life

F. Palliative care -medical care for easing suffering, without the aim of curing a disease. For example, a pain medication could be given even if it made a particular disease harder to cure, based upon its effectiveness at alleviating immediate suffering to the patient

G. Persistent vegetative state - The American Academy of Neurology's definition of a person who is no longer aware of his or her environment, who is unconscious although experiencing sleep and awake cycles.

H. Proxy, surrogate or agent- a person who makes decisions for another person, such as in the case of a durable power of attorney

I. Decision making capacity - ability to make informed decisions that show comprehension of the consequences of said decisions

J. Living Will - a specific type of advance directive that contains information about the medical treatment a senior does or does not want to receive in the event of incapacitation. A living will can be governed by the state-i.e. the state can determine if the will is in effect based upon the date it was drafted. The state can also make determinations about the types of treatment that is or is not covered

K. Legal guardian - a person who is responsible for the care and management of the property of an individual who is unable to provide self-care and self-management

L. Surrogate decision-making - a process that allows family members to make decisions regarding medical care

I. that reflect the wishes of the ill family member if those wishes are known, or

II. that are in the ill person's "best interests" if their wishes are not known

Some states in the US have laws that govern this process of surrogate decision-making.

Words commonly misunderstood about the remaining life and death of the terminally ill:

Interested in learning more? Why not take an online Aging and Long Term Care course?

There may be confusion about terms related to death, namely right to die, euthanasia and suicide. The legalities around these matters are not generally cut and dry. Here we attempt to shed light on these issues. Anyone involved with the elderly will benefit from knowing these definitions.

Terminal condition - The exact definition may vary state to state but typically means a health condition that cannot be cured, in which the patient will probably die within a short time period, i.e. usually no more than a year

Comfort Care - care of terminally ill that allows for relief of pain as first priority, and not always prolonging life or curing illness. The aim is to provide a physically, socially, psychologically and spiritually acceptable balance of life, and a dignified and meaningful death.

Right to die - the concept that a person has a choice about their death, that death does not have to be a human condition about which they have no choice.

Euthanasia - a process in which a physician gives lethal medication to a terminally ill individual who is competent and requests that the physician administer the lethal dose, as a last resort.

Suicide - when a person takes their own life, commonly understood as an act of one who is suffering from clinical depression and/or other mental deficiencies, and possibly not acting in one's own best interest.

Considerations: Preparations for the Demise of An Elder

Seniors, their loved ones, and those in professional service to them, should be able to address the legal issues surrounding death.

Following is a partial list of logistical matters to address at the earliest date possible, regardless of the health of a senior. (Not only those in failing health are subject to death or incapacity, as accidents or other unforeseen may occur).

  • Gather financial paper work-Insurance, bank accounts, mortgages, automobile loans/titles and keys, grant deeds, other documents of property ownership, applicable user names and passwords, and safety deposit box documentation and keys.
  • Compile currently verified name-address-phone number of each relative and close friend of the elder, so they can be informed of your loved one's change in condition and/or demise
  • Have copies of the following - front and back of social security card, last wishes, burial preneed plan and certificate of ownership, birth certificate, drivers license
Whether you are preparing your own legal requirements, those of an aging parent, or work in the ALTC industry, take the time to learn legal terms, and to set things in place in a timely manner.

Insurance, out of pocket, and government funding (Medicaid, Medicare):

What will it cost? That depends on the level of care needed, which is determined by what activities of daily living (ADLs) and instrumental activities of daily living (IADLs) are required.

Doing the numbers (these can vary widely based upon region of the United States and amenities of a facility, among other things)

Average Cost per day for in home health care - $65.00

Assisted living facility - $2500 to 4500 a month

Skilled Nursing Care - 3 to 8K per month

Retirement community (with varying levels of care) 2600 to 2800/mo.

(for a nonprofit retirement community)

Entrance fees for moving into a continuing care retirement community (CCRC) can be as much as buying a home in the same neighborhood, plus 3,000 to 5,000 a month.

Medicaid - Must be low-income to qualify - Covers primarily nursing homes

Medicaid pays about 40 percent of nursing home care costs, based upon figures of Kaiser Family Foundation 2010-11.

Since one must be low income to qualify for Medicaid, middle-income seniors sometimes spend their assets down so they can qualify.

Unfortunately, people do move into nursing homes simply to be eligible for Medicaid coverage, even when they don't need that level of care, because at present only nursing homes are eligible for Medicaid.

Efforts are being made by Congress to have better access to assisted living and other options for funding (see CLASS Act below).

Medicare - This federal funding applies to disabled people as well as seniors. Funds defray doctor's fees, hospital and skilled nursing time limited care, but do not cover long-term care.

Private Long-term care insurance may not be an option for middle-class seniors due to high expense. In any event, you will need to plan for your care and living expenses for longer than any other time in recorded history.

One former doctor turned financial care-giver (with a business called Wealth Care) suggests people plan to live to 95 or 100 years of age, based upon medical advances. These are expanding continually: We can cure many diseases, fix broken hearts , inoperable knees and joints, kidneys... and maybe every other body part will be repaired or replaced.

So, how will baby boomers pay for these extra years bestowed upon them? The main option, until you have spent all your assets and qualify for Medicaid, is long-term care insurance, or a savings plan to fund your care.

Otherwise, the new long-term care system is becoming friends and relatives donating their time, because of cost prohibitive long-term care insurance and no viable options through Medicaid and Medicare.

To Manage Long Term Care Insurance Costs and Select a Carrier

Insurance varies greatly: for age 55 to 64 costs on average are 2200 year, and for ages 65 and up, 3250 a year. The costs are too high for most people age 70 and up, because they rise as you age, or become unavailable.

You can save about 40 percent a year with a time-limited policy, for example 3 years of coverage. This can be used for a healthy individual who foresees needing care only in the final years of life.

Consider deductibles, similar to auto insurance. Higher deductibles mean lower annual rates and vice versa.

90 day waiting periods:

One way to lower the annual premiums are waiting periods. This option can be beneficial for those who have friends or relatives to rely on until the end of the waiting period when their coverage takes affect.

Medicare - if you have a stroke or other unforeseen illness, Medicare will cover medical expenses, in most instances for twenty days, which is another option during a waiting period.

Do some sleuthing to check out complaints on an insurance company and to see their record of prior rate increases. If they have a history of them, that may mean more to come.

Look for an insurer with a well-known credible reputation.

Consider the level of care if any that you want and need - some cover a relative or friend providing in home care, others require you hire a professional care-giver, some cover assisted living, some don't, and the variations go on from there.

It is not a good idea to try to compare companies on line because of these complex variables. Consult with your doctor, attorney and a non-affiliated insurance broker about long term care insurance. Look for a company that has been in business over 20 years - they have to be there when your time comes to collect on your investment. And be sure their specialty is long -term care insurance. On the other hand, they should offer other types of insurance because long-term care is not that profitable and they need to be solvent when it is your time of need.

Insurance policy "triggers": The company can require you have 2-3 activities of daily living (ADLs) or some other number, that you need help with, such as waking and eating, before benefits kick in. These ADLs can be complex and the trigger plan vague, which dishonest companies use to disqualify seniors from receiving payments.

Contact the insurance department for your state if you think your insurance company is unscrupulous:

For many state of the art tidbits by top financial gurus on finances for seniors, paying for long-term care, managing retirement and more, visit BlogRunner under the topic "retirement" at the following link:

Long term care services and supports (LTSS) can be affordable for seniors if the new CLASS Act works as hoped. CEO of Leading Age Larry Minnix stated in a conference in March 2011 that the US Department of Health and Human Services could design a successful program. CLASS ACT is the dream of former senator Edward M. Kenney - federally funded long term care insurance.

A Basic Look At the CLASS ACT

CLASS Act (Community Living Assistance Services and Support Act) became law with the Affordable Care Act in March 2010. It is consumer funded and helps those who choose to pay into it to cover costs of care, from independent living to 24 hour nursing care. It provides cash that the user can apply to any setting, so there are not to be any limitations regardless of where one receives care - their own home included.

If will not be activated before October 2012 although it is already a law that it be made available. Projected time to begin signing up: 2012 or 2013. Working Americans including self-employed are all eligible to sign up for CLASS Act, if age 18+ and not currently living in a nursing home or other institution. When the enrollee becomes physically or mentally incapacitated the plan should pay 50.00 a day in cash or more if more care is needed for daily living and medical assistance. In general, to qualify a person will need to be unable to perform 2 or 3 activities of daily living. Students who work and low-income people may pay about 5.00 a month to participate in the program. Other costs for middle or high income and for older people are not yet clear, but should be announced by Oct. 2012. One suggested average per month has been 123.00.

The best hope for middle class Americans to pay for ALTC seems to be the CLASS Act, so keep your eyes and ears opened to the developments of this program.