The Basics in Planning for Elderly Parents
The last members of the Baby Boom generation are caught in a difficult and unprecedented time. Our parents or other relatives are living longer, accumulating more, and sometimes needed care while we are still caring for our children. While the emotional, psychological and scheduling issues can be overwhelming, having the proper legal documents in order will allow for a smooth transition and avoid the confusion and expense that can occur when no planning is undertaken. It is important to note that these techniques may only be employed with the full consent and understanding of Elder parents who retain their mental acuity. Other options are available when the parent has already suffered a catastrophic illness, like a stroke, to be discussed separately.
A primer on the terms and basic programs available for the elderly and their caregivers is necessary before the techniques can be discussed. Remember, this is for information only and is intended to assist you in communicating your needs to a capable attorney. Despite the proliferation of forms on the internet, nothing surpasses the skill and compassion of a seasoned elder law attorney.
- Types of Insurance available to the Elderly:
- MEDICARE: Everyone is entitled to Medicare upon attaining the age of 65. If someone opts to get his or her social security at age 62 they do not get Medicare until they are 65. Medicare Part A, which is hospitalization, is free. Medicare Part B, which is medical insurance, has a small premium, as does Medicare Part C (bundled) is usually with a third-party provider, and Medicare Part D (prescription coverage) also has a small premium.
If a person becomes legally disabled under the rules promulgated by the Social Security Administration prior to the age of 65 then that person becomes Medicare eligible on the two-year anniversary of the date on which the person was found to be disabled. For example, if a 58-year-old person becomes disabled but doesn’t receive social security for 16 months after his disability status is granted, then that person will be eligible for Medicare at the expiration of 8 months. Since a finding of disability must be made by the Social Security Administration, the process often involves the passage of time before that finding is made. The two years counts from the date that the person is deemed to have been disabled by the Social Security Administration. Here is the link to the OFFICIAL Medicare website: www.medicare.gov
Secondary Insurance: Medicare covers 80% of most medical care, leaving 20% to be paid for by the parent. While that does not seem like a significant amount, it can add up if someone is hospitalized. Thus, it is recommended that, unless your parent worked for an employer that provides secondary insurance through a union or pension plan, secondary insurance, such as that provided by AARP through United Healthcare, be obtained for a monthly fee. While the fee can seem exorbitant, when the cost of co-payments, medications and other uncovered medical expenses are factored in, it is usually beneficial to have the secondary insurance. It is especially important if someone is placed in a facility for Rehabilitation.
Third-Party Providers: People eligible for Medicare are given the option of engaging a third-party provider to provide for their Medicare coverage. The most famous of these is what Joe Namath and other celebrities hawk on television. This is very dangerous and not recommended. While it seems cheaper, and may be, it is significantly more costly in the long run. Medicare covers up to the first 100 days of rehabilitation. If you choose a third-party provider, they can limit those 100 days any way they chose to by putting various restrictions in place. Medicare remains the most flexible of providers when it comes to rehabilitation and tends to be the most beneficial when coupled with a secondary insurance policy. Note, after the first 100 days the patient is responsible for 100% of the cost of care, but that will be discussed in the Medicaid section.
Also, Medicare does not require referrals and you can choose your own doctors, without being limited to those “in network”. CAVEAT: If you do obtain a secondary insurance plan, they may have some restrictions on providers.
Palliative and Hospice Care: Medicare is also the provider for palliative and hospice care. This is no longer limited to terminal illness but can be put in place if you have up to one year to live depending on the illness. This can be done at home, which means there is no cost to you for room and board, or it can be supplied in a facility.
- MEDICAID: Medicaid is an entitlement provided to the elderly and disabled who are without resources. It is automatically awarded to anyone who receives SSDI, which is what is paid to persons who have never worked, as opposed to SSD (or disability) which is your payroll contributions being returned to you if you become disabled before age 65.
Of course, through planning almost anyone can qualify for Medicaid. There are two types of Medicaid, Community Medicaid (homecare, drugs, etc) and Institutional Medicaid (nursing home care). The infamous five-year lookback period applies to Institutional Medicaid, and a two-and-a-half-year lookback period applies to Community Medicaid, something put in place in New York during the pandemic and taking effect on October 1, 2020. These lookback periods can be accommodated by Medicaid planning, which is discussed later.