12

Legal and Financial Issues

You may have heard that 80 percent of the dollars that go to the average person’s medical care over a lifetime are spent during the last twenty days of their life. I don’t know that this statistic holds up for those with Alzheimer’s, particularly if you include institutional care, considering that people with Alzheimer’s can live for a long time and their expenses can start adding up right from the beginning. One reason that caregivers give so much of their time is that time is something many have in greater surplus than money. Yes, they love their care recipient and want them to have the best care, but the financial burdens of Alzheimer’s can be overwhelming. Help is available, including financial assistance, but such assistance doesn’t usually come without a cost.

Before I pass on any information, I have to begin with a caveat. Because the services and financial aid available to you depend on the state in which you live, I can’t make blanket statements that apply to everyone. You’ll have to check out for yourself which eligibility rules may apply, if penalty periods exist, and about other factors that depend on where you live. On top of the variety of laws, and how complicated they are, they seem to be constantly changing, and, at the time I’m writing this book, the laws governing this aid seem to be more in a state of flux than ever. So, the best advice I can give to you with regard to what aid is available and what laws apply to your situation is to tell you to consult an elder law attorney in your state. (My co-author’s wife, Joanne Seminara, is an elder law attorney in New York State, with the noted firm of Grimaldi & Yeung, LLP. I am telling you this so that you know that I’ve double-checked the information we’re giving you, but I also have an obligation to disclose that Pierre has a vested interest in this field. But the bottom line is that the advice to see an elder law attorney has nothing to do with my own or Pierre’s self-interest and everything to do with yours! Also, in this chapter, I’ve stated some generalities, but the complexities of the laws are such that these generalities may not apply to your situation. In addition to what the laws say, there’s the separate matter of how they are enforced. So, consulting a lawyer who is well-versed in this area of the law is really the wise move, and it is certainly a move that might save you a lot more money than it costs.)

The main reason you need to consult an attorney is that, when it comes to financial aid for health matters, the financial side is completely intertwined with the legal side. To start with, if someone is not of sound mind, he or she cannot personally sign legal papers, including those having to do with obtaining aid. Also, lawyers are required to make that determination, meaning that if they see someone with Alzheimer’s, they have to decide whether or not that person’s mind is sound enough to make legal decisions. During the early stages of Alzheimer’s, the patient usually retains sufficient mental ability to sign papers such as a power of attorney, health care proxy, living will, the Health Insurance Portability and Accountability Act authorization, disposition of remains authorization, wills, and other documents such as trusts. In fact, they may retain that ability for years, especially if they are taking the proper medication. But for others, especially those who didn’t get their diagnosis until the disease had started to advance toward the later stages, as well as those in whom the disease progresses quickly, the window of opportunity to sign important papers can be quite limited.

There are some legal documents that everyone should have. Although a young person might not need a will, assigning someone as an agent in a power of attorney (POA) could be very important, because anyone can have an accident and find themselves in a mental state where they cannot function. So, for example, if someone were in an auto accident and wound up in a coma, how would their rent or mortgage get paid? They could find themselves fully recovered three months later, but homeless. Considering these factors, even you, the caregiver, need to have certain legal documents in place.

There are people who are afraid of giving a POA to anyone, even a close relative, because they are afraid that this POA might be misused behind their back. But what these people probably don’t understand is there are different types of POAs. You can sign a limited POA that will not pose any risks to you while you are healthy, but could protect you against some very complicated problems if something were to happen to you.

In this book, we cannot explain all the intricacies of the law, especially as they differ from state to state, but, suffice to say, when someone has been given the diagnosis of Alzheimer’s, or even suspects that such a diagnosis might be around the bend, if they don’t have a POA, they should get themselves to an attorney as soon as possible. They should also sign a health care proxy, so that if they have any wishes as to treatment, and later they are not in a condition to make decisions, someone else can enforce their wishes. As to all the other services a lawyer can provide, these are something you need to investigate personally.

POAs cost money. In New York State, they cost even more now than they used to because the form was lengthened to offer more protection to the person signing the POA, so that the POA cannot be misused. But all those complications add to the preparation time and thus the cost. If you don’t have a POA and are totally incapacitated, it’s possible for family members, or some other responsible individual, to go to court to be appointed guardian. But that process costs a lot more money and is also time-consuming. If you could hear the horror stories of people who found themselves in a hospital without a POA—and experiencing the ensuing consequences—believe me when I say to you that you would run to the nearest lawyer. You probably have all sorts of insurance. Well, a POA is in its own way a type of insurance, with a one-time fee, which in the long run makes it quite cheap.

In Chapter 5, I advised caregivers who are not the spouse, such as children, especially those who may live far away, to meet the doctor when they visit, because sometimes even if you have all the proper paperwork, whoever it is you’re trying to convince of that won’t heed the regulations. (Just because they should doesn’t mean they will, and if you’re trying to exercise a POA via long distance, it will be all the harder.)The same can be true in other situations, for example, at a bank. So, if possible, going to a parent’s bank, while the parent is still capable of exercising coherent decision, and making the acquaintance of an officer might pay off later on. Even lawyers with a power of attorney sometimes run into brick walls, so when a layman has to run the same gauntlet, getting what you want can be quite difficult at times.

MAKING DECISIONS TOGETHER

Many of the decisions that need to be made when planning for the consequences of Alzheimer’s are best made together as a family. (And, it is important to be inclusive. Rather than just meeting with one favorite son or daughter, make sure all the children are involved so that a consensus may be reached, or else the bickering that will ensue later by those who were left out could upset the apple cart.) The advice of adult children may be invaluable, as all the planning that needs to be done is quite complicated, and they may have an easier time understanding the more complex aspects. But they will also want to respect their parent’s wishes, so you want to have these discussions early enough that the parent with Alzheimer’s is as lucid as possible, in order to take part in the planning. That’s why putting off such family discussions is a mistake. Yes, when you first hear the word “Alzheimer’s,” you’re not going to be in the mood to think about where you are going to be one, two, or five years from now. But that’s exactly when you do need to face those decisions, particularly if every family member is going to have an opportunity to share in them.

ESTATE PLANNING

If your loved one needs to go into a nursing home, the cost is going to be at least $50,000 a year, and in a place like New York City it can easily soar to $12,000 a month, or almost $150,000 a year. Those are huge numbers, especially when you think that someone with Alzheimer’s can live for many years, even when they are in the later stages of the disease. About 5 percent of the population has planned for this eventuality by buying long-term-care insurance, so that these costs are at least partially, if not fully, covered. (Some policies are capped, either in terms of a total cost or number of years of coverage, and so other plans must be made for Alzheimer’s patients whose needs go above and beyond any possible caps.) And, of course, the very rich pay for this cost out of pocket. But what happens to everyone else, all the families that just can’t afford that amount of money?

The government, through Medicare for short-term home stays that require skilled nursing care and Medicaid for longer-term stays, will pick up most of those costs under certain circumstances. Again, because these costs are shared with state governments, how much funding is available and the eligibility for obtaining this funding depends on which state you live in. Each state has rules regarding eligibility, which I cannot cover in this book, but some federal rules apply nationally, and those I am going to go over in brief.

Medicare is health insurance that becomes available when you attain a certain age (currently it’s sixty-five, but that may soon change). Medicaid is more like welfare in that “means” testing is required for eligibility. Under the current Medicaid guidelines, an applicant can keep a limited amount of cash and income, and other assets may have to be spent down with the money going to the nursing facility until the threshold is met, at which point Medicaid takes over. So, let’s say the patient had $100,000 in a savings account, and Medicaid only allowed $15,000, the other $85,000 would have to be spent on nursing home care before Medicaid picked up the tab.

A logical step would be to give those assets away, to the patient’s children for example, before applying for Medicaid. Logical maybe, but the government anticipated that loophole, so there is a “look-back” period of five years, which means that any assets given away in the five years prior to applying for Medicaid will be considered assets you could have used to pay for care. So, let’s say that $50,000 worth of assets were given away within that five-year, look-back period, Medicaid wouldn’t start paying the nursing home costs until $50,000 of the patient’s money had been paid toward it. (This example is a simplified one, as the entire process of calculating penalty periods and what qualifies as an asset and what doesn’t is quite complicated. The important thing for you to know is that there are ways around some of these regulations, but it will take a lawyer’s expertise to help you out.)

I’ve said over and over again that as soon as you suspect Alzheimer’s, you need to take action, and since it could take five years, given the so-called Medicaid look-back period, before institutional care is needed, if you take immediate action, some of your assets could be protected. For example, did you know that it may also be possible to get paid for the caregiving done while the patient was still at home, so that the transfer of money is not considered a gift? But you can’t do this without filling out the proper paperwork, called a Care Agreement.

Why is it so important that you protect those assets, aside from the fact that they form a part of your children’s inheritance? You never know why or when you may need those assets you spent a lifetime saving up. Let’s say a husband gets Alzheimer’s, and then a few years later his wife breaks her hip and needs a full-time attendant at home for several months. She would need that money, but it would have all gone to pay for her husband’s nursing home care. Even though there are ways to legally protect those assets, some people don’t feel comfortable doing so because it involves giving up some control. However, since there are ways of maintaining control while also protecting your assets, it makes sense to see a lawyer and discover what your options are. Most lawyers will charge an initial consultation fee, and if you agree to let a lawyer fully prepare all the necessary paperwork, the total amount can be considerable. But you must look at these fees not as a cost but rather as a good investment, since a lawyer can save you hundreds of thousands of dollars in the long run. And, while many people distrust lawyers, many of those who enter the field of elder law are quite compassionate and have a history of serving the elderly far beyond their legal practice. So, while a social worker might be able to help you fill in the various forms required to apply for aid, if you’re not careful, you could fall into one of the dozens of traps that could cost both you and your heirs a lot of money in the long run, more than any possible legal fees.

By the way, Medicaid will only pay for services at places that are government certified, and that certification will soon become harder to get, limiting the places where patients with Alzheimer’s can go for care that is paid for by Medicaid. Exactly how all of this is going to play out is still being argued in Washington and may change by the time you read this book. Again, because these laws are not only complicated, but ever-changing, the wisest move is to see an elder law attorney who keeps on top of such matters.

Most elder law attorneys are also familiar with other options for funding of long-term care in addition to Medicaid. For example, if the patient is a war veteran, there may be benefits available for long-term care. And, if you are employed, there may be tax strategies that you can follow, allowing you to deduct some of the costs of taking care of your loved one. As a caregiver, your plate is already full. Trying to figure out all the options is truly a daunting task. If you’re a younger person, such as the child of the person with Alzheimer’s, you may possess the computer skills to do significant research, but even then the maze of agencies and rules is going to take a lot of time to sort through, and you still might not understand the entire picture, or you might miss an important aspect of what can be done. And for an older caregiver who is not computer savvy, figuring this all out may well be impossible.

Let me give you one small example of what I’m talking about. Money that the patient has in a retirement account that is in payout status, meaning he or she is over seventy and must start taking out 10 percent every year (per IRS regulations), does not count as an “asset” according to Medicaid. The IRS and Medicaid also use different tables when calculating life expectancy. Plus, state laws differ. There are so many details like this that can not only make your head spin, but can lead to your making decisions that will end up costing you, or your heirs, thousands of dollars. Do you really want to take on trying to learn everything you need to know to make the right decisions?

All this can get even more confusing when there are blended families. He has Alzheimer’s, is married to his third wife, and had children with the first two. Who’s in charge? Is there a prenup, and what effect might it have? Are the husband’s assets blended with the wife’s, or are they separate? The possibilities are almost limitless, and figuring out the right course of action takes a combination of expert legal skills and the wisdom of Solomon. In some of these cases, the best solution is to actually file for divorce, not because the spouses no longer love each other but because any other option is financially ruinous.

As our population ages and the Alzheimer’s population grows, paying for the care of people who can’t take care of themselves, and who will likely live for a very long time, is going to become more and more difficult for our society. How this will all play out is anybody’s guess, but for now, there are ways for you to get help, and I suggest taking advantage of them.