© 2010 Alzheimer s Association. All rights reserved. This is a official publication of the Alzheimer s Association but may be distributed by unaffiliated organizations and individuals. Such distribution does not constitute an endorsement of these parties or their activities by the Alzheimer s Association.
Helping the person with dementia settle financial issues Putting financial plans in place is important for everyone, but understanding money matters is especially vital for the person with dementia.
Dementia is a general term for the loss of memory, decision-making and other intellectual abilities serious enough to interfere with daily life. Alzheimer’s disease is the most common form of dementia.
Once a person is diagnosed, family and friends should help the person make financial plans.The sooner plans can begin, the more the person with dementia may be able to participate.
The Alzheimer’s Association has identified costs you may face as your loved one lives
with dementia. Inside, you’ll also find different ways to help cover those costs.
1 Getting started Gather financial and legal documents Discuss financial needs and goals
Get professional assistance Look at factors that affect income Costs you may
face
How to cover the costs Insurance Work-related and personal resources Government assistance Financial help that you provide Support services in your community
Money matters is meant to provide general financial information, not to take the place of professional financial or legal advice. New developments – such as legislative and regulatory changes – may affect its accuracy. Consult a professional before making decisions.
Getting started
Begin putting financial plans in place as soon as the diagnosis has been made. Careful planning can help you secure a healthy financial future.
In addition to planning for the cost of care, there are many ongoing financial duties, including:
• Paying bills
• Arranging for benefit claims
• Making investment decisions
• Preparing tax returns
Get started by putting in place all of the information, resources and support you’ll need.
Gather financial and legal documents
Carefully go over all financial and legal documents, even if you’re already familiar with them.
Legal documents include:
• Living wills
• Medical and durable powers of attorney
• Wills Financial documents
include:
• Bank and brokerage account information
• Deeds, mortgage papers or ownership
statements
• Insurance policies
• Monthly or outstanding bills
• Pension and other
retirement benefit summaries
• Rental income paperwork
• Social Security payment
information
• Stock and bond certificates
At this point, it may also be helpful to
identify which necessary documents are not in place.
Professional financial and legal advisers can assist you with this task.
Discuss financial needs and goals
After the diagnosis, determine financial needs and goals. Discussing these early on
enables the person to still understand the issues and to talk about what his or her
wishes are.
Involve all other people concerned as much as possible. Talk about putting financial and care plans in place. If others are available to help, encourage the sharing of caregiving duties. Discuss how finances might be pooled to provide necessary care.
Get professional assistance
Now is also a good time to find the professionals you will need. They will be valuable sources of information and assistance.
Start by contacting your local Alzheimer’s Association office. Our staff can match you with the right professional services, including qualified attorneys, financial planners and accountants.
Financial advisers
Professional financial advisers, such as financial planners and estate planning
attorneys, can help you:
• Identify potential financial resources • Identify tax deductions • Avoid bad
investment decisions that could deplete your finances
When selecting a financial adviser, check qualifications such as:
• Professional credentials
• Work experience
• Educational background
• Membership in professional associations
• Areas of specialty Also, ask the financial adviser if he or she is familiar with elder care or long-term care planning.
Legal advisers
Seek an experienced elder law attorney to help:
• Address estate planning issues • Prepare legal documents If you cannot afford legal
assistance, find out if pro bono (no cost) legal aid is available in your community.
Look at factors that affect income
When making financial plans for the person with dementia, be sure to consider his or her:
• Age
• Types of assets
• Types of insurance
• Tax issues • Long-term health outlook
Costs you may face
Begin planning a long-term budget now. Consider all the costs you might face, now and in the future.
Keep in mind that Alzheimer’s is a progressive disease, and the person’s needs will
change over time.
Costs may include:
• Ongoing medical treatment for Alzheimer’s, including diagnosis and follow-up visits
• Treatment for other medical conditions
• Prescription drugs • Personal care supplies •
Adult day care services
• In-home care services
• Full-time residential care services
These costs vary depending upon where you live.
To learn about care options in your area, contact your local Alzheimer's Association office or visit the Alzheimer's Association CareSource™ at www.alz.org/caresource.There you’ll find a set of online tools and services that will help you coordinate and plan to pay for care. A financial adviser can help design a plan that’s unique to the person’s financial needs – both immediate and long-term.
How to cover the costs A number of financial resources may be available to help cover the costs throughout the course of the disease. Some may apply now, others in the future.
Insurance
Health-care coverage
If you are 65 or older, the primary source of health care coverage is usually Medicare.
However, private insurance, a group employee plan or retiree health coverage may also be in effect. No matter what the age of the person with dementia, it’s vital to keep active any existing health care plans that meet his or her needs.
Medicare covers inpatient hospital care and some of the doctors’ fees and other medical items for people with Alzheimer’s who are age 65 or older. Medicare also covers outpatient prescription drugs.
If the person with dementia is younger than 65, Medicare can provide coverage if he or she has been on Social Security disability for at least 24 months.
Medicare provides some home health care, including skilled nursing care and
rehabilitation therapy, under certain conditions.
Custodial long-term nursing home care is not covered by Medicare. Medicare will only pay for up to 100 days of skilled nursing home care under limited circumstances.
Medicare will pay for home or inpatient hospice care for qualified people who are terminally ill.
You may be able to choose a “managed care” form of Medicare, such as:
• Medicare health maintenance organization (HMO)
• Preferred provider organization (PPO)
• Point of service (POS) plan
These options may provide services not covered by traditional Medicare. But these forms of Medicare usually have limits on which hospitals,doctors and other health care providers you can use.
To learn about the many Medicare options, and whether they are right for the person with dementia, read each plan carefully. You can also contact your State Health Insurance Assistance Program (SHIP) for free one-on-one help and publications. Call us at 1.800.272.3900, and ask for the SHIP location nearest you.
You also may be able to supplement the person’s Medicare coverage with Medigap insurance, which fills gaps in Medicare coverage, such as paying for coinsurance.The more expensive Medigap policies may cover additional items.
Learn more about Medicare Call 1.800.633.4227 Visit www.medicare.gov or find your state’s SHIP at www.medicare.gov/contacts/static/allStateContacts.asp If the person with dementia is younger than 65 years old (considered younger-onset Alzheimer’s), he or she may have private insurance, a group employee health plan or perhaps retiree medical coverage.
If he or she changes policies, check how soon expenses from Alzheimer’s disease will be covered under the new policy.
Most policies do not cover “pre-existing conditions” for up to a year. However, these exclusion periods (when coverage is not provided) don’t apply in all cases.
The exclusion period won’t apply if the person:
• Has been covered for the past 12 or 18 months, depending on the policy,
• Has already met an exclusion period, and • Has not been without health coverage for more than 62 days
COBRA may be another option for a person younger than age 65. COBRA stands for the Consolidated Omnibus Budget Reconciliation Act of 1985. COBRA applies to employers with 20 or more employees. Under COBRA, an employee may continue group plan coverage for up to 18, 29 or 36 months,depending on the circumstances, if he or she:
• Leaves the employer
• Has his or her hours reduced to the point that he or she nolonger qualifies for the health plan
The insured employee must pay the full cost of coverage, plus up to 2 percent more to cover administrative costs. COBRA can be especially helpful until the person with dementia:
• Gets new coverage through an employer, or
• Becomes eligible for Medicare You must activate the COBRA option within 60 days of when the person with dementia leaves work or has work hours reduced. Some private health care plans will extend coverage under a disability extension of benefits. In other words, even though the medical plan may lapse, an insured’s disability (in this case, Alzheimer’s disease) remains covered.
Disability insurance
Disability insurance provides income for a worker who can no longer work due to illness or injury. With an employer-paid disability policy, 60 to 70 percent of a person’s gross (overall total) income is usually provided. Benefits paid out of an employer-paid plan are taxed as income.
If the person with dementia bought a personal disability policy, then the benefits paid will be the amount he or she chose.The benefits from a personal disability policy are not taxed as income.
Long-term care insurance
If long-term care insurance is in place, carefully review the policy to find out:
• Is Alzheimer’s disease covered? Most policies say they cover Alzheimer’s disease, but take a closer look to be sure.
• When can the person with dementia begin to collect benefits? Most policies require a defined level of physical or cognitive impairment.
• What is the daily benefit, and is it adjusted annually for inflation?
• How long will benefits be paid?
• Is there a maximum lifetime payout?
• What kind of care will the policy cover? Examples include skilled nursing home, assisted living, custodial care and licensed home care.
• How long after diagnosis will the policy begin to pay? This is often called the
elimination period.
• Are there tax implications for getting this money? Unfortunately, after symptoms of Alzheimer’s disease appear, it is usually no longer possible to purchase many types of insurance, like disability and long-term care insurance.
Life insurance
Life insurance can be a source of cash. You may be able to borrow from a life insurance policy’s cash value. Or the person with dementia may be able to receive a part of the policy’s face value as a loan. This is called a viatical loan and is paid off upon the person’s death.
Some life insurance policies may offer accelerated death benefits. This means that some of the insurance benefits can be paid if the insured person is not expected to live beyond the next six to 12 months because of a terminal illness. The payout may run as high as 90 to 95 percent of the policy’s face value and will not be taxed as income. See if any policies contain a waiver of premium rider. That means that the insured,if disabled,does not have to pay premiums to continue coverage.
Work-related and personal resources
Employment
In the early stages of dementia it’s often possible that a person will continue
working. This may mean adapting job duties to fit the current level of ability.
The Americans with Disabilities Act (ADA) offers limited protection to those with
Alzheimer’s. The ADA requires that companies with at least 15 or more employees make “reasonable” accommodations for job applicants and employees with physical or mental disabilities. For example, an employer may switch the worker to a less demanding job or reduce work hours.
Be sure the employer is educated about Alzheimer’s disease and its symptoms.
If you think the person with dementia has been treated unfairly at work, first try to resolve the issue with the employer. If that doesn’t work, you can file a claim under the ADA through the federal Equal Employment Opportunity Commission or under your state’s disability law.
Employee benefits
If the person with dementia continues to work:
• Review the employer’s benefits handbook. • Ask the benefits specialist what benefits may be available. For example, the employer may provide paid sick leave or other short-term disability benefits (usually for one year or less).
• Keep written confirmation of all benefits. The employee may be able to convert an
employer-provided life insurance policy to an individual plan. If the person with
dementia is still working, he or she may have available a flexible spending account. This allows payment for out-of-pocket medical expenses with pretax dollars, for potential savings of about 20 to 30 percent.
Retirement benefits
Retirement plans include:
• Individual retirement accounts (IRAs)
• Annuities Benefits from retirement plans can
provide critical financial resources, even if the person with dementia hasn’t reached retirement age.
Pension plans typically pay benefits before retirement age to a worker defined as
disabled under the plan’s guidelines.
The person with dementia may also be able to withdraw money from his or her IRA or
employee-funded retirement plan before age 59 1/2 without paying the typical 10 percent early withdrawal penalty. This money usually will be considered regular income, and taxes will have to be paid on the amount withdrawn.
In that case, if withdrawals can be delayed until after the person leaves work, income taxes due will likely be less because he or she will probably fall into a lower income-tax bracket.
Social Security benefits are also available before retirement age if Social Security disability requirements are met.
Personal savings, investments and personal property
Investment assets like these can be sources of income:
• Stocks
• Bonds
• Savings accounts
• Real estate
• Personal property, such as jewelry or artwork For example, the equity in a home could be converted into income, a process called a reverse mortgage. This is a type of home equity loan that allows a person age 62 or older to convert some of the equity in his or her home into cash while remaining the homeowner. The amount the person is eligible to borrow is generally based on the:
• Person’s age • Home’s equity • Lender’s interest rate Reverse mortgages do not have an impact on Social Security or Medicare benefits, but they may affect qualifying for other government programs.
Government assistance
In addition to Medicare, the person with dementia may qualify for a number of public programs. These programs provide income support or long-term care services to people who are eligible.
Social Security Disability Income (SSDI)
A worker who is younger than age 65 may qualify for Social Security disability payments. To qualify for SSDI, the person must meet the Social Security Administration’s definition of disability. Meeting the definition of disability generally means proving that:
• The person with dementia is unable to work in any occupation.
• The condition will last at least a year or is expected to result in death. Family
members also may be eligible to receive SSDI benefits. File for SSDI benefits as soon as possible:
• Benefits do not begin until the sixth full month of disability.
• The Social Security Administration often takes a long time to decide whether to
approve a claim.
• It’s not unusual for disability applicants to be rejected initially. Be prepared to appeal.Your professional advisers can assist in this process.
After receiving SSDI benefits for at least 24 months, the person with dementia will
qualify for Medicare benefits.
Supplemental Security Income (SSI)
SSI guarantees a minimum monthly income for people who:
• Are age 65 or older, • Are disabled or blind, and • Have very limited income and
assets – these asset and income levels vary from state to state To qualify for SSI
benefits, the person with dementia must meet the Social Security Administration’s
definition of disability.
If you think he or she qualifies for SSI benefits, begin the application process as
quickly as possible after the diagnosis. SSI payments begin upon approval of the
application.
Learn more about SSDI and SSI Call 1.800.772.1213 Visit www.ssa.gov
Medicaid
Medicaid is a program jointly funded by federal and state governments. It is
administered by each state. Medicaid pays for:
• Medical care for people with very low income and asset levels
• Long-term care for people who have used up most of their own money, under most circumstances Most Medicaid dollars go toward nursing home care, but most states have home- and community-care options for some people who qualify for nursing home care. (Not all nursing homes accept Medicaid, so choices are limited.)
In most states, Medicaid will pay for hospice care. If the person with dementia is
eligible for SSI, he or she usually is automatically eligible for Medicaid.
Those not on SSI must have minimal income and assets. The amount is determined by each state.
There are also specific guidelines about protecting spouses from impoverishment (the depleting of finances) in determining income and asset levels. The person with dementia should be very careful about giving away assets to family members to qualify for Medicaid. Strict laws govern this area. Be sure you are fully aware of the legal and financial results of transferring property and wealth. Check with your legal adviser before you proceed.
Learn more about Medicaid
•Your state’s Medicaid telephone number may be listed in the blue (government) pages of the telephone directory
• Call the general information telephone number for your state or county human services or social services department
• Visit www.cms.hhs.gov/medicaid Veterans benefits Veterans
may qualify for government benefits, including health and long-term care. These benefits often change, so call a Veterans Affairs benefits counselor or visit the VA Web site for the latest information. Learn more about veterans benefits Contact the Department of Veterans Affairs: Call 1.877.222.8387 for health care benefits Call 1.800.827.1000 for general benefits Visit www.va.gov
Other public programs
Many states have state-funded, long-term care, including: • Adult day care
•Respite care
Learn more about other public programs
•LocalAlzheimer’sAssociationoffice
•LocalAreaAgencyonAgingortheEldercareLocator: Call 1.800.677.1116
Visit www.eldercare.gov Tax benefits Some financial benefits are available
for the caregiver from the Internal Revenue Service (IRS): Income tax deductions
• Income tax credits The person with dementia is likely considered your dependent for tax purposes. If so, you may be allowed to itemize his or her medical costs. Keep careful records of all medical expenses.
You may be entitled to the Household and Dependent Care Credit if you need to pay someone to care for the person so you can work. This credit can be subtracted directly from the tax shown on your return. Learn more about tax issues
•Alzheimer’sAssociationpublication, Taxes and Alzheimer’s disease, available from your local chapteroratwww.alz.org
•Yourtaxadviser•InternalRevenueService(IRS): Call
1.800.829.1040 Visit www.irs.gov
Financial help that you provide
You may choose to pay out of your own pocket for some or most of the care. Review your own resources, such as savings and insurance policies.
Flexible spending account
If the person with dementia is a dependent under the tax rules, you might be able to use your own workplace flexible spending account. This money can cover the person’s out-of-pocket medical costs or dependent care expenses in some cases.
Family and Medical Leave Act
If you work for an employer with 50 or more employees, you may be able to use the
federal Family and Medical Leave Act (FMLA) to help balance your caregiving
responsibilities.
FMLA allows you to take off up to 12 weeks of unpaid leave each year to provide caregiving. Most workers are guaranteed to keep their jobs.
Paid time off
Some employers provided limited paid time off. You may be able to adjust your schedule or work fewer hours.
In-home care
If you hire a professional to work in your home to help with caregiving, you may be
responsible for paying his or her Social Security and unemployment taxes. Ask your
financial adviser to be sure.
Support services in your community
Many community organizations provide low-cost or even free services, including:
• Respite care
• Support groups
• Transportation to social events
• Meals delivered to the home Learn more about support services
• Your local Alzheimer’s Association office
• Eldercare Locator: Call 1.800.677.1116 Visit www.eldercare.gov
• Your local religious organization •Hospital social worker or discharge
planner
Learn more about financial issues and planning by visiting your local Alzheimer's
Association or one of the following resources:
Alzheimer's Association CareSource™
www.alz.org/caresource
BenefitsCheckUp
www.benefitscheckup.org
Eldercare Locator
www.eldercare.gov 1.800.677.1116
Financial Planning Association
www.fpanet.org 1.800.322.4237
Internal Revenue Service
www.irs.gov 1.800.829.1040
National Academy of Elder Law Attorneys
www.naela.com
Money matters was developed from source material created in a collaboration with the
National Endowment for Financial Education® (NEFE®).To learn more about the NEFE, visit
www.nefe.org.
10 quick tips Money matters
1 Don’t put off talking about finances and future care wishes
2 Organize and review important documents
3 Get help from well qualified financial and legal advisers
4 Estimate possible costs for the entire disease process
5 Look at all of your insurance options
6 Work-related salary/benefits and personal property should be considered as potential income
7 Find out for which government programs you are eligible
8 Learn about income tax breaks for which you may qualify
9 Explore financial assistance you can personally provide
10 Take advantage of low-cost and free community services
The Alzheimer s Association is the leading voluntary health organization in Alzheimer care, support and research. Our mission is to eliminate Alzheimer s disease through the advancement of research; to provide and enhance care and support for all affected; and to reduce the risk of dementia through the promotion of brain health.
For reliable information and support, contact the Alzheimer’s Association:
1.800.272.3900 www.alz.org
© 2010 Alzheimer s Association. All rights reserved. This is an official publication of the Alzheimer s Association but may be distributed by unaffiliated organizations and individuals. Such distribution does not constitute an endorsement of these parties or their activities by the Alzheimer s Association.
