Making Sense of Legal and Financial Jargon in Dementia Care

When we're wading through the complicated legal and financial paperwork for our loved one with dementia, there is so much jargon. Making sense of all the pieces of dementia care can be a task in itself.

As a young caregiver who doesn't have much experience with Medicare or end-of-life legal documents, I would have loved it if someone had clearly spelled it all out for me when I was getting Mom's paperwork in order.

Here's my best attempt at defining things in an easy-to-read way. We're going to start with Medicare, Medicaid, and trusts, and why they are important for a person diagnosed with dementia.

Note: I am not a legal expert and laws vary by state. Make sure to consult a licensed attorney in your area.

Making sense of dementia care

I'm only in my 30s and have only had private or employer-based health insurance, so I had given very little thought to Medicaid or Medicare. When I became a caregiver for my mom living with Alzheimer's, I learned why it's such a big deal for people living with dementia.

Welcome to Medicare 101

Let's dive right in. Original Medicare is the federal health insurance for Americans 65 years old and over. It's also called Medicare Part A and Part B. It covers healthcare expenses like inpatient hospital care, some doctor's fees, some medical items, and prescription drugs.

Medicare covers some home health care under certain conditions with lots of limitations. It does not typically cover memory care or other long-term care.1

For someone living with dementia potentially for many years, this is concerning. Memory care or skilled nursing is notoriously expensive and can drain savings accounts in no time.

Long-term care insurance, Medigap, and other insurances

One way to pay for home health aides or memory care is long-term care insurance. If your loved one had the foresight to enroll before a diagnosis, that can solve a lot of problems right off the bat. But after a dementia diagnosis, people can no longer purchase long-term care insurance.1

You can also buy Medicare supplement insurance, commonly referred to as Medigap. These plans lower your share of certain costs for Original Medicare.

There are other options like COBRA, disability insurance, or life insurance policies that can also help with finances. Or some people might have coverage from a former employer or union. They are explained in detail on the Alzheimer's Association website.1

An elder care attorney can also help you navigate all your options.

How does Medicaid fit into this?

Okay, stay with me here. Medicaid is a joint federal and state program for some people with limited income. If you qualify, you can have both Medicare and Medicaid.2

Medicaid does cover long-term care options like memory care, nursing home care, or home health aides for people who have used up most of their own money. It is also available to people younger than 65 if they are disabled.1

Now, say you own a home. Even one modest house can disqualify you for Medicaid because it pushes you above the income requirements.

But even if you are above the requirements, a lawyer can arrange your assets in a legal trust so you can eventually be eligible for Medicaid after a waiting period. Cool!

Talk to me about living trusts

A living trust, specifically a revocable living trust, is a legal document. It puts your assets - investments, bank accounts, real estate, vehicles, and valuable personal property - in trust for your benefit during your lifetime. It also spells out where you would like these things to go upon your death.

You don't need to be rich. Even if you don't have many assets, a trust can be useful. A trust can help avoid probate, a fancy word for the process of proving the will in court after death.

Probate can be very expensive and time-consuming after a loved one's passing, but a trust can keep it out of probate altogether.

These might sound like questionable things but you won't get in trouble with the government if you put together a trust for legal reasons. But you will likely need an experienced lawyer to help do it right.

Have the hard conversations early on

These decisions can be so hard for families to make. The best way to prevent disagreements or additional stress is to have honest conversations as early as possible. Make sure everyone is on the same page about your loved one's end-of-life plans.

This is the third part of a series. Find the first and second parts here. More on breaking down the legal jargon in an upcoming article.

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