Cents and Sensibility
Cents and Sensibility
Help aging parents cope
with health insuranceQuestion: My parents are getting on in years. What should I be monitoring regarding their financial situation?
Answer: First, you should make sure their estate plans are in order. Second, if you're not familiar with their health insurance situation, you could run into serious and expensive problems.
Make sure you know your parents' medical histories and acquaint yourself with any prescriptions and over-the-counter medications they're taking. You'll need this information in a medical emergency and to correctly complete claim forms. Ask your parents for names and phone numbers of their medical care providers.
Once you've got all this information, keep it in one place that's readily accessible. If you need to act quickly, you don't want to scramble around, looking for a dozen scraps of paper.
It's also important to know who's insuring your parents. You need to know where your parents keep their health insurance cards and bills. You also should have a basic understanding of Medicare, the national health insurance program for Americans age 65 and older. Keep in mind that Medicare pays for most doctors bills and related services, but it doesn't cover prescription drugs. Consequently, your parents may need supplemental insurance policies.
In reviewing your parents health insurance situation, you'll want to pay special attention to long-term care coverage. Long-term care costs may be the single largest threat to your parents' financial independence during their retirement years. Right now, the average cost of a year's stay in a nursing home is $50,000 -- and it's twice that amount in some cities. If your parents don't already have a long-term care policy, you may want to discuss it with them. If they do have a policy, ask to see it, so that you'll know exactly what types of services and facilities are covered. If your parents become incapacitated and are unable to choose a long-term care facility for themselves, you may have to do it. And if you don't choose the right type of place, their long-term care provider could decline coverage.
If you'd like to make sure you can step in at any time to deal with your parents' health-care issues, you may want to establish a "durable power of attorney." This document gives you the authority to make financial and legal decisions and transactions on your parents' behalf. You may also want to obtain a durable power of attorney for health care, otherwise known as a "health care proxy." A health care proxy, which only becomes effective when your parents are not competent to make their own health care decisions, gives you the power to access medical records and refuse or consent to medical treatment.
As you can see, many of these issues are quite sensitive -- so you'll want to discuss them with your parents when they're physically healthy and emotionally stable. By acting early, you can head off health-care related financial problems at the best possible time -- before they occur.
Guy Steele is a financial planner and head
of the Pali Palms office of Edward Jones. Send
planning and investing questions to him at 970
N. Kalaheo Ave., Suite C-210, Kailua, HI, 96734,
or by email at: gsteele2@pixi.com