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How to help your parents with health insurance

Aging is an inevitable part of life. As parents grow older, it often falls to their children to provide the care they need. That includes finding the best health care and affordable health insurance for elderly parents.

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While finding adequate medical insurance for our aging parents is increasingly difficult, there are ways to make the process easier. Even if your parents are relatively healthy, it’s a good idea to be aware of 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 current health insurance coverage

Checklist for helping your parents with health insurance

Collect, or know where to find, your parents' medical histories.

Document their prescriptions and over-the-counter medicines.

Obtain the names, addresses and phone numbers of their health care providers.

Know where they keep their health insurance documentation.

Ask your parents if you may read and refer to their health insurance and long-term care benefits handbooks.

Talk to your parents about granting you durable power of attorney.

Understand the difference between Medicare and Medicaid.

Find out whether your parents have a Medigap plan.

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 may need.

 Discuss long-term care insurance

 If your parents are still relatively young (say, in their 50s or 60s) and healthy, you may 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. It helps to start thinking about it now and plan for it early," says Dr. Barbara Stucki, a vice president with the National Council on Aging. "There have been blow-ups in the stock market where many people have lost a lot of their retirement savings. This makes it harder for retirees to make ends meet, especially as the cost of living is rising. Federal programs may have copays or long waiting lists, so the safety net is also shrinking. Long-term care is part of that retirement challenge. It is the largest uncovered liability that seniors face."

 Stucki urges people to plan well before long-term care needs become evident. "Those that plan ahead have the greatest advantage, since the cost of purchasing insurance increases as you get older. The fact is that you can't buy homeowners insurance once your house is on fire. Similarly, you have to get long-term care coverage in advance before there is a health care crisis. Growing numbers of people are buying a policy in their 40s and 50s these days," Stucki says.

 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 out of 10 adults (21 percent) say they have a long-term care policy. The most commonly cited reason among those without a policy is cost (59 percent). About 20 percent say the primary reason they don't have long-term care insurance is that they believe Medicare or Medicaid 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 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.

 Medicaid is the joint state/federal program that provides health insurance for many low-income families, regardless of age.

 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, 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. Some people decide to reduce their assets in order to meet Medicaid's eligibility requirements. 

 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. The Family Caregiver Alliance estimates that 34 million adults provide some care for a family member aged 50 or older—and as baby boomers begin to retire, that number is going to climb even higher.

The National Clearinghouse for Long-Term Care Information, developed by the U.S. Department of Health and Human Services, determined that the annual cost of nursing home care in a private room was $79,935 in 2009, while a semi-private nursing home stay was $72,270 per year. The average cost for an assisted living facility was $37,572 per year.

The Family Caregiver Alliance reports that, as a result of escalating costs at nursing home and assisted-living facilities, 78 percent of individuals receive care at home from family and friends as their only source of assistance, 14 percent opt for a combination of unpaid and formal help and only 8 percent use paid help only.

Consider durable power of attorney

 Because of privacy rules and financial-abuse concerns, insurers may not give you information about your parents' policies without 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.

Discuss the “power of attorney” option with your parents before it’s too late. If you wait until they are unable to assign that authority, you could 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 or her 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 some people may not be able to afford or be eligible for private insurance and will have to dip into their personal resources and savings to fund their health care needs in retirement," she says. "For many, home equity will be their largest asset. For these seniors, it is important to consider saving this resource for health expenses in later life rather than using it to enhance their current lifestyle."

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