How to help your parents
with health insurance

For many of us, life has come full circle. Our parents, who made sure as children we had good health care, might now need us to do the same for them.

While finding adequate health coverage for our parents as they age is increasingly difficult, there are ways to make the process easier. Even if your parents are relatively healthy, you need access to their medical histories. You also should document prescriptions and over-the-counter medications they're taking and in what dosages. You’ll need this information to fill in health claim forms correctly, and for potential medical emergencies.

Get a list of all your parents’ health care providers, including addresses and phone numbers. Organize this information in one easily accessible place. If your parent is mentally or physically incapable of giving you this information, you can obtain most of it by reviewing your parents’ insurance or Medicare bills.

Identify health insurance coverage

Find out which companies are providing health coverage to your parents. They might have supplemental coverage, called Medigap, if they qualify for Medicare. (For more, read Medigap insurance: Filling in Medicare's gaps.) Ask them where they keep important papers, including health insurance cards and bills. If they're unable to assist you, and you don't know who their insurers are, contact their doctors for insurance information.

Read your parents’ health insurance policies and/or benefit handbooks. If your parents don’t have those, request them from the insurance company.

Make sure you have the phone number for the insurance company’s customer service line handy, as well as several copies of any claim forms your parents might need.

Long term care insurance

If your parents are still relatively young (say, in their 50s or 60s) and healthy, you might want to talk with them about long-term care insurance. Such policies help cover the cost of home health care and nursing homes.

"Many things have to be considered when you start to look at long-term care. You have to start thinking about it now and plan for it early," says Barb Stucki, a director with the National Council on Aging. "There have been so many blow-ups in the stock market where many people have lost everything in terms of their retirement. Overall today it is harder for retirees to make ends meet. Federal programs have copays or long waiting lists and the safety net is shrinking, while the cost of living is rising. The whole long-term care piece is part of that. It is the largest uncovered liability that seniors face."

"Those that plan ahead have the greatest advantage, but keep in mind the cost of purchasing insurance increases as you get older. A simple example is that you can’t buy homeowners insurance once your house is on fire. You have to get in advance before there is a health care crisis. People are buying it in their 40s and 50s these days," Stucki says.

For more, see Insure.com's long term care insurance articles.

A 2006 survey by The National Council on Aging shows 67 percent of Americans believe the cost of long-term care is the greatest threat to their standard of living, while only 35 percent have done any planning for it. A 2007 Kaiser Family Foundation Health Poll revealed that few Americans have long-term care insurance. Two and 10 adults (21 percent) say they have a long-term care policy. The most commonly cited reason among those without a policy is cost, at 59 percent. About two in 10 say the primary reason why they don’t have long-term care insurance is they believe Medicare (23 percent of the people polled) or Medicaid (21 percent of the people polled) will cover the cost of care.

If your parents already have long-term care insurance coverage, know exactly what types of services and facilities the policy covers. If you don't select an approved facility, the insurance company could refuse to pay for their care.

Medicare vs. Medicaid

Medicare is the national health insurance program for Americans age 65 and older, certain younger people with disabilities, and people with end-stage renal disease.

Medicare pays for most doctors' bills and associated services, but it does not cover prescription drugs. Supplemental insurance policies may be purchased to fill the gaps in Medicare coverage.

While Medicare doesn't pay for most long-term care, Medicaid pays the nursing home bills for older people who have depleted their financial resources. Because each state administers its own Medicaid program, the eligibility requirements vary. Medicaid also has strict "spend down" rules that govern how and when a senior's assets can be disposed of before eligibility begins.

Medicaid is the joint state/federal program that provides health insurance for many low-income families, regardless of age. Some people decide to reduce their assets in order to meet Medicaid's eligibility requirements. Laura Carolson, marketing manager at New York Life Insurance Co., warns that this isn't the best course of action for seniors.

"After a person has depleted their assets, they have also lost control over the quality, convenience and type of care they receive," she says. "In addition, because of state and federal budget cutbacks, the facilities close to family and friends might not have openings for Medicaid patients when care is needed the most."

State Medicaid programs might provide prescription drug benefits to seniors, but states are considering cutting certain Medicaid programs because of budget shortfalls.

The American Association of Homes and Services for the Aging points out many Americans today are facing tremendous burdens in caring for aging parents because they lack the resources for in-home care services or nursing homes. An estimated 34 million adults provide some care for a family member, age 50 or older. And as baby boomers begin to retire, that number is going to climb even higher.

The National Clearing House for Long-Term Care Information by the U.S. Department of Health and Human Services determined that the annual cost of nursing home care at a private facility is $76,285 in 2008, while a semi-private nursing home stay is $68,988. The average cost for an assisted-living facility is $39,096 a year.

As a result of escalating costs at nursing home and assisted-living facilities, The National Family Caregivers Association reports that 90 percent of individuals receive care at home and from family and friends, and 80 percent rely solely on these individuals for assistance. The costs of home care average more than $5,500 a year — $400 more than the average household spends on health care and entertainment.

Consider durable power of attorney

Because of privacy rules and financial-abuse concerns, insurers often will not give you information about your parents' policies unless they have your parents' permission. If your parents are unable to consent, then you need to present the insurers with a legal document naming you as your parents' agent, "attorney-in-fact" or legal guardian.

A durable power of attorney is a document that allows your parents to give you (or another trusted relative, friend or professional) the authority to make financial and legal decisions on their behalf. A durable power of attorney differs from a "general" power of attorney because it remains effective even if your parents become mentally incompetent.

Don’t wait to talk with your parents about giving you the authority to make medical and legal decisions for them, if they are unable to do so for themselves. If you wait until they are unable to assign that authority, you might face a lengthy legal process to gain that power.

You also can ask your parents to give you durable power of attorney for health care, also known as a "health care proxy." This proxy becomes effective only when a parent is not competent to make his own health care decisions.

A health care proxy's powers include:

• Right to refuse or consent to medical treatment
• Right to access medical records
• Right to end life-sustaining treatment

On a final note, Stucki believes that outside of insurance, making wise investment choices is key to planning for the future costs of long-term care.

"The realities are that seniors may not be able to afford or be eligible for insurance planning and will have to dip into their personal resources and savings to fund their health care needs," she says. "For some, home equity will be their largest savings/asset, therefore it is important to make careful decisions about saving that resource rather than using it to refinance shorter term savings."