Legal, Financial, and Care Planning for Alzheimer’s Program Recap

Thank you to Ryann Siclari from Porzio, Bromberg, and Newman for her in-depth look into the legal and financial planning elements one should consider if they or a loved one are suffering from Alzheimer’s or other dementia related conditions.  Early planning can save valuable time, money, and headaches while allowing the affected individual maximum self-determination and control over their future wishes and finances.

Legal Planning

Legal planning as it relates to aging individuals, including individuals with Alzheimer’s, is focused on plans for health care, including long-term care, as well as finances and property.  Ultimately, the goal is to ensure that all necessary documents are in place and all decision-makers are selected well before the individual is no longer able to make decisions for themselves, otherwise known as legal capacity.  Legal capacity is usually determined by the court and includes an assessment of judgement and decision-making ability, things that may not become apparent during the early stages of dementia-related conditions.  Let’s take a look at some of these elements in detail.

Advanced Directives

Advanced directives are essentially medical instructions that doctors, nurses, and other medical professionals must follow in a given situation, including treatment, care, and end-of-life wishes.  These can include DNR (Do Not Resuscitate) orders, Durable Power of Attorney for Health Care, and Living Wills.  Multiple family members and all health care providers should have copies of all advanced directives.  While not a legal document, individuals can also have a POLST (Physician’s Order for Life Sustaining Treatment) which informs any medical professionals, such as paramedics, EMTs, or other first responders about an individuals medical wishes should they be unable to reach a doctor or hospital.

Durable Power of Attorney

Durable Power of Attorney are legal documents that allows an individual to declare someone else as their agent to make decisions on their behalf should they become incapacitated or deemed legally incompetent by the courts.  These are lasting, legally binding documents that only terminate upon the death of the individual.  There are two major types of POAs – Health Care and Finances and Property.  POAs do not specify how your agent will act in your stead, just that they have the authority to make decisions related to your health care, finances, and personal property, including real estate.  There are different rules in each state about obtaining a POA, so be sure to check with your current state and any states an individual with dementia may move to ensure that the POA is legal.  For example, New Jersey only requires a notary, but other states may also require the signatures of witnesses.

Will and Living Will

While they may sound similar, wills and living wills are 2 completely different documents that can drastically affect the future of someone with dementia if they are absent.  Wills only take effect at the death of an individual and are used to name an executor or executors of one’s estate as well as beneficiaries of any property that is not already governed by laws or contracts.  Living wills, on the other hand, state a person’s choice for future medical decisions, such as artificial life support.  These only become effective when a doctor, sometimes 2, determine that an individual is irreversibly ill or critically injured and near death.

Revocable Living Trust

A Revocable Living Trust names a trustee for the trust and instructions about how to manage a person’s estate, which can be a substitute for a Durable Power of Attorney for Finances and Property.  This document can help ensure that an individual’s property transfers to the person of their choice and helps avoid the sometimes lengthy process of probate.  Items that can be included in the trust include cash or liquid assets, personal property, and real estate.  Additionally, the Revocable Living Trust can specify whether the trust will end when the last beneficiary dies or it will continue to benefit others, giving more flexible for years after the individual’s death.

Financial Planning

While we all wish that we won’t need help as we age, the reality is that a majority of us will need some type of care as we get older, especially if we suffer from dementia.  Whether the care is through family members, in-home professional care, or long-term care at a facility, it can become very expensive and without proper planning, we can put ourselves and our loved ones in extremely difficult situations.  Therefore, it is critical to determine what our lowest and highest levels of care might be and then, what financial resources we have available to pay for that care.  Let’s take a look at a wide variety of financial options that are available.

Who Will Care

While it is important to determine how we may pay for future medical care, it is also important to determine who will provide us or a loved one with care.  There are a variety of formal care options, such as home health aides/nurses or assisted living facilities.  There are also informal care options that many choose to use, especially at the beginning of dementia, which can include family, friends, neighbors, and faith or volunteer-based organizations.  Informal caregivers who have the family caregiver designation may also be eligible for state and/or federal tax deductions, including personal care items, home improvements, in-home care, nursing services, and long-term care insurance premiums.  In New Jersey, these expenses cannot exceed 2% of the caregiver’s income and medical expenses cannot exceed 10%.

Additionally, The Older American’s Act, available through Area Agencies on Aging, has authorized funding to be made available for a wide-variety of services, including supportive services (rides), nutrition, family caregiver support, and disease prevention and health promotion.  Whether an individual elects to use informal care options or a combination of informal and formal care options, it is important for everyone involved in be aware each other’s roles and responsibilities so using a calendar, such as the Alzheimer’s Association’s Care Team Calendar, can ensure that the individual is receiving all of the appropriate care at the appropriate times.

Personal Resources

We can certainly choose to pay for our medical care ourselves in a variety of ways, including personal employment, savings, retirement payments, and other assets.  There are also other ways to generate income specifically designed for older individuals, such as reverse mortgages.  Reverse mortgages are designed for individuals 62 or older to receive payments from a mortgage lender based on the equity they have in their home.  The money is tax-free and there are no income requirements, but closing costs and service fees can vary greatly.  Additionally, if a solo homeowner should stay somewhere else for over a year, such as a long-term care facility, they must repay the balance of the loan, which may result in the loss of the house.  Also, while the individual’s Social Security and Medicare benefits will not be affected, the income from the reverse mortgage may impact other governmental benefits programs, such as Medicaid.  Should the home be sold or transferred to another family member, the balance of the loan will come due.

Another way to pay for medical care as we age is through long-term care insurance.  Generally, long-term care insurance is based on care level, not a diagnosis, but it may be denied due to preexisting conditions when applying.  Make sure to check to see if Alzheimer’s or other dementia conditions are covered, when a person with dementia can start collecting benefits, and what kind of care the policy covers.  Additionally, you should understand what the daily benefits are, how long those benefits will be paid out, and if there is a maximum lifetime payout.

Medicare

Medicare is a government sponsored insurance program that is age-based.  Once an individual turns 65, is under 65 and disabled according to the Social Security Administration for at least 2 consecutive years, or at any age with end-stage renal failure, they are automatically enrolled in Medicare.  Medicare is federally administered and in most cases, there are no premiums as long as you have paid into Medicare for at least 40 quarters; however they may be co-payments, co-insurance, or deductibles the individual is responsible for.  Medicare is divided into Parts A – D, which cover a wide array of services, including hospital stays (Part A), rehabilitation (Part A), physician visits (Part B), lab work (Part B), screenings (Part B), and prescription drugs (Part D).  Additionally, supplemental insurance (Part C) can be purchased through a third-party insurance carrier that will administer your Medicare benefits, while providing extra benefits such as dental work, dentures, hearing aids, medical transport, and gym memberships.  However, Medicare WILL NOT pay for long-term nursing home care!

Medicaid

While Medicare is strictly health insurance, Medicaid is a government assistance program, administered at the state level, that can pay for many things that Medicare does not cover, such as long-term nursing home care.  While everyone is entitled to Medicare, Medicaid is needs-based, meaning that an individual must qualify financially, based off of their income and assets.  Currently, in order to qualify for Medicaid, an individual must have an monthly income of $2, 382 or less, $2,000 or less in assets, and if married, the spouse cannot have assets that exceed $130,000.  As a result, many people decide to “spend down”‘ their income and assets in order to qualify for Medicaid; however, Medicaid does a 5-year look back at an individual’s finances.  Therefore, if a person does not meet those qualifications for the past 60 months, they may be ineligible for Medicaid until they qualify for that 60 month period or a penalty may be applied requiring the individual to pay out-of-pocket for expenses for a period of time.  Therefore, it is highly recommended to speak with a financial advisor with experience in elder care to ensure that an individual’s income and assets are properly managed years before they apply for Medicaid.  Should an individual qualify for Medicaid benefits, it is important to determine if the long-term care facility accepts Medicaid and if there are requirements that an individual pay privately for a period of time before the Medicaid benefits are accepted.

If you have any questions about the material covered here, please reach out to Ryann Siclari at rmsiclari@pbnlaw.com.  You can find the recordings for this series at the links below:

Part 1 – https://youtu.be/4zfc7lKTEbk
Part 2 – https://youtu.be/vJSqzzHDKyI

Additionally, please click on the links below to download the corresponding handout:

Part 1 Slides
Part 2 Slides
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