Helping Your Parents

If you're like most people, your financial life is more than just piling up dollars. It's about using your resources to help those you love, however you can, and when they most need it. If you have aging parents, particularly if they're in poor health, you know the challenges well. But it's easy to feel overwhelmed, not only by the time commitments and emotional strain, but also by the sheer complexity of the issues involved in caring for an elder--and the pressures of not knowing where to turn for answers. Professional Educators Benefits Company recognizes that the financial and legal issues surrounding eldercare are no less important to you than your own retirement plan or your children's college expenses. We can help you and your parents through the issues, point you toward resources, and, if possible, help you avoid last-minute, crisis-driven decision-making.

The Process Behind Helping Your Parents

Discussing family finances can be difficult, but any help and planning you seek to offer your parents has to start with communication. We offer brochures and Resource Pages which can serve as a catalyst for conversation; you might also bring newspaper clippings to show your parents, or invite siblings to offer support. In later conversations, when major financial moves are discussed, you might even call us direct and have a conference call or bring one of our Financial Advisors along as an expert resource.

Once the dialogue begins, it makes sense to focus first on goals, which will lead into strategies and then, finally, the action steps required. Our Financial Advisors are prepared to help throughout the process.

Questions--To Uncover Goals

You may not even know how to begin helping your parents with the challenges of aging, financial and otherwise. The process starts with questions you probably already have, on issues large and small:

"Do my parents know enough about their investments? Should I know more about them?"
"Could Dad use some help keeping up the house?"
"What if one of my parents is unable to make medical decisions on the other's behalf?"
"How will Mom and Dad stay in touch with their grandchildren?"
"What kind of support can I get for my parents recovering at home after an illness?"
"How vulnerable is my parents' income to interest rate changes or rising costs?"
"Can my parents time a bequest so that my children don't get too much money too soon?"
"What's the best way to talk to my father about his increasing forgetfulness?"
"How do I get help in looking after my parents when they're six states away?"
"I'm the executor of my parents' estate--what are my responsibilities?"
"Are there other options besides a nursing home?"

Setting Goals

By looking over the questions you've raised, you may notice broad themes. Talk them over with your parents. They may arrive at goals like these:

...the knowledge that their home and assets can survive a health crisis
...a long life--for themselves and their investment principal
...continuing independence--with the knowledge that help is there when they need it
...not being a burden to their spouse or children
...income that keeps pace with costs--and doesn't expose them to more risk than they're comfortable with
...an arrangement that ensures medical treatment consistent with their wishes
...a clear statement of intentions regarding their estate

Strategies

Once your parents have set goals, it takes the experience of a financial advisor to come up with the strategies that can help achieve those goals. Once formulated, the strategies dictate the action steps required. Use this list to get a feel for the variety of options our investment advisers can explore with you.

Evaluate risk exposure in terms of income needs and comfort level.
Review all insurance coverage for gaps and redundancies.
Discuss estate intentions with children to reduce misunderstanding.
Evaluate portfolio income opportunities that are consistent with risk tolerance.
Reconcile lifestyle with income.
Consider overall tax implications of the distributions taken from the nest egg.
Consider trust options that allow control of the timing and ownership of estate transfers (both before and after death).

Action Steps

Having come up with strategies, your parents will be better prepared to take action steps toward their goals, with the help of our financial advisor, attorney, or tax specialist. Although individual situations vary, some of the possible steps include:

Prioritize asset liquidations to reduce capital gains taxes on an estate.
Adjust the size of distributions from tax-deferred accounts to avoid triggering the federal "success tax."
Purchase Medigap insurance within six months of enrolling in Medicare to maintain flexibility in policy selection.
Consider cancelling any individual disability insurance coverage, which typically is intended to replace income lost from a health malady and/or injury-related inability to work.
Put together a formal budget to get a realistic picture of income needs.
Compile a detailed inventory of assets and liabilities, and make a child or other trusted person aware of the location.
Authorize utility companies to send duplicates of nonpayment notices to a third party to provide advance notice of any problems.
Purchase a smaller residence in a seniors' community to reduce maintenance responsibilities and ensure nearby help if needed.
Execute a living will to ensure compliance with health care wishes.

Answers To Help You Get Started

Sometimes complex issues are easier to digest "one bite at a time." Here are some basics on topics of common interest:

Key Points To Look For In A Long-Term Care Policy

Guarantee of lifetime renewability as long as premiums are paid.
Coverage of skilled, intermediate, and custodial care.
Coverage for a minimum of three-to-four-year stay in a nursing home.
A waiting period of no longer than 40 days before benefits begin.
A benefit based on nursing home costs in your community.

Medigap Policies

These privately issued policies cover what isn't paid for by Medicare, the government health-insurance program for the elderly. There are 10 Medigap policies from which to select, with annual costs ranging from $400 to nearly $2,000. Here are some of the ways the 10 policies differ:

...payment of doctors' bills beyond Medicare limits
...preventive health care (flu shots and screening for cancer, hearing loss, and other disorders)
...at-home recovery after hospitalization (eight weeks beyond Medicare coverage)
...nursing home copayment (up to 100 days)
...hospital deductible
...doctor's bill deductible
...prescription drug coverage

Remember that the least-expensive "basic" Medigap plan must, by law, be offered by every Medigap insurer. Beyond that plan, insurers compete only on service, reliability, and breadth of selection among the remaining nine. The cost and the items covered by each plan are mandated by the government and will not differ among insurers.

The Medicare Home Health Benefit

Up to 35 hours a week of skilled nursing care is available free, subject to certain conditions, to homebound elders enrolled in Medicare. It's perhaps the least-used health care benefit available to elders. Here are some details on this coverage:

A physician must document that the skilled services are reasonable and necessary.
The home health care provider must perform a needs assessment and draw up a "plan of care" for the physician to certify.
Needs beyond 62 days are covered, but require a new plan of care (and certification).
The home health benefit is available at no additional cost to elders under Medicare Parts A and B.
No bill will be submitted to the patient unless the provider asserts that some care is not covered by Medicare--in which case the elder has a right to appeal.

More details on these issues and many others are available on the Parent Resource Pages. Please understand that while this information was gathered from sources believed to be reliable, it is only a starting point and is generic in nature. Therfore its accuracy cannot be guaranteed for every situation. We encourage you to contact our office so that we may evaluate each situation independently and offer accurate advice based on individual needs. We also encourage you to discuss any recommendations with an attorney or tax advisor. If you do not have an attorney or tax advisor, we will be happy to refer you to one.

For more information or a list of other Heritage Planning educational materials on helping your parents, contact:

Richard Smith or Roger Erickson
Professional Educators Benefits Company
Post Office Box 37102
Tallahassee, Florida 32315-7102

E-Mail: pebco@nettally.com
Telephone: Richard Smith: 850-385-2627, Roger Erickson: 850-385-5135
In Florida, outside Leon County call: 1-800-260-6573