The New York City Department for the Aging, Health Insurance Information, Counseling and Assistance Program (HIICAP) by calling (212) 333-5511, or visit their website.
Assessing the Financial Situation
Financial planning should begin soon after the diagnosis of dementia has been made. The first step is to take stock of the person's income and financial resources. If the person with dementia is not able to provide financial information, a properly executed Power of Attorney may be necessary to access the relevant documents.
Income and Resources
Regular monthly income as well as assets need to be taken into account. Assests may include life insurance policies, retirement savings, real estate holdings and the like. It may be helpful to gather the following documents:
- Social Security and/or pension statments
- Bank account statements
- IRA's, Annuities, and other retirement vehicles
- Bond certificates
- Stock portfolios
- Real estate deeds
- Insurance policies
Current as well as future needs should be factored into planning for the care of a person with dementia. Some expenses to consider are:
- Monthly living expenses such as utilities, food, transportation
- Medical & prescription drug costs
- Personal care supplies (e.g. incontinence pads)
- Home care costs
- Adult day care fees
Once the person's resources and expenses have been reviewed, it may be helpful to meet with a professional experienced with elder care. Our staff is available to provide consultation and referrals. Professionals with expertise in financial planning include certified financial planners, elder law attorneys and geriatric care managers. Assistance may also be obtained from social service programs such as those funded through the Department for the Aging.
- To contact us, please call (646) 744-2900 or email us here
- To locate an elder care lawyer on the site of the National Academy of Elder Law Attorneys Inc., click here
- To locate a geriatric care manager on the site of the National Association of Professional Geriatric Care Managers, click here
Note: If the person with dementia is dependent on you financially, you may be eligible for medical expense deductions and dependent care credits on your tax return. A qualified tax consultant should be able to advise you.
Tools For Money Management
As discussed in the Legal Planning section, caregivers are advised to obtain a Durable Power of Attorney to enable them to manage the finances when the person with dementia is no longer able. The following tools may also be helpful.
Direct or automatic deposit into the person's bank account protects against loss, theft, or the destruction of checks. To arrange to have a Social Security check deposited directly, call the Social Security Administration toll-free weekdays from 7:00 AM to 7:00 PM at 1.800.772.1213. Direct deposit can also be set up at Social Security Online or by visiting your local Social Security office. To arrange for the direct deposit of government funds, file a standard authorization form that can be obtained from the bank or the government agency from which the individual is receiving benefits. In addition, many employer plans enable retirees to receive their benefits by direct deposit.
When a caregiver needs access to the retirement benefits of the person with dementia, he or she can be appointed as a Representative Payee. Once approved, the caregiver receives benefit checks on behalf of the person with dementia. A representative payee does not automatically gain access to any other income or resources of the person with dementia. This option is available for benefits from the following sources:
Joint Bank Account
A joint bank account is held in more than one person's name. While joint accounts are a useful way to maintain access to another person's resources, they can cause complications when applying for Medicaid or other public benefits. Many government programs assume that the money in the account belongs only to the person applying for the benefits. Be sure to review any joint accounts with an elder law attorney or other benefits expert prior to making applications for public benefit programs.
A trust is an entity that may be created to hold the assets of a person with dementia. There are two kinds of trusts. A trust created during lifetime is a "living trust"; a trust created in someone's will is a "testamentary trust." Different types of trusts accomplish different goals. There are two kinds of living trusts: revocable and irrevocable. Only irrevocable trusts protect assests in the event of long-term care needs. An additional advantage of a living trust is that it may avoid the necessity of probate when the person with dementia dies, allowing for the immediate distribution of assets. It is important to consult an elder law attorney if you are setting up a living trust.
Long Term Care Insurance
The cost of a nursing home stay in the New York metropolitan area can range from $72,000 to $165,000 per year. Long-term care insurance is now available through a number of companies. While some employers offer long term care insurance, usually a person must purchase it independently.
Long-term care insurance is often unavailable, or extremely costly, unless an individual purchases it well in advance. Most insurance companies make specific reference to dementia as a pre-existing condition; in other words, a policy will usually not provide coverage if a dementia diagnosis has already been made.
As an alternative to a long term care policy, certain insurance companies have developed long term care riders that can be added to a life insurance policy. This option must be purchased before the individual becomes incapacitated or disabled. For more information contact your insurance provider. Visit New York State's website for information about insurance options. Several long term care insurance plans should be reviewed before selecting one that best meets the needs of the applicant.
Veteran's benefits are administered through the Department of Veterans Affairs. For most benefits, the claimant must be a veteran or a veteran's spouse, widow or widower, child, or parent. Further eligibility may determined based on cause of disability, character of discharge, period of service and length of service.
In addition to income benefits and burial benefits, there are a number of medical benefits available to qualified veterans and certain dependents and survivors. These benefits may include adult day care, home care, prescriptions, outpatient care, hospital care, home care and nursing home care.
Click here to go to the US Department of Veteran's Affairs website, or call the US Department of Veterans Affairs at (800) 827-1000 or the New York State Division of Veterans Affairs at (888) VETS-NYS (838-7697)
Medicare is health insurance for the aged and the disabled, administered by the US Department of Health and Human Services. It consists of three parts. Part A provides coverage for inpatient hospital care as well as limited skilled nursing and home care, and hospice services. Part B is a voluntary program in which enrollees pay a monthly premium. Part B covers many of the costs associated with outpatient medical care.
On January 1, 2006, Medicare began offering prescription drug coverage under Part D. Unlike other Medicare benefits, the drug benefit is only provided through private health insurance or managed care plans. Although there is a standard benefit, each plan has some flexibility to set its own premium, deductibles, coinsurances and benefits. Enrollees should choose a Medicare Part D plan according to their specific drug needs. For help in choosing a Part D prescription drug plan, Medicare provides a user-friendly Prescription Drug Plan Finder. For details about Medicare eligibility and benefits under Parts A, B and D, see Medicare.gov. More information and advocacy tips are available through the nonprofit Medicare Rights Center (212-869-3850).
Medicare Parts A and B are designed to pay for limited, medically-related care. In-home nursing and homecare are covered only when the person with dementia has a "skilled nursing need" (i.e. wound care, physical therapy), such as after a hospitalization or when a bedsore develops. Medicare does not pay for long-term "custodial" care required by a person with dementia as the illness advances.
For answers to many of your Medicare questions, contact:
- The Health Insurance Information, Counseling and Assistance Program (HIICAP) at (212) 333-5511
- The Medicare Rights Center, at (212) 869-3850
Helpful Tips about Medicare
Skilled Nursing Facility Care:
Medicare covers up to 100 days of care in a skilled nursing facility (SNF) for each benefit period if all of Medicare's requirements are met, including your need of daily skilled nursing care with 3 days of prior hospitalization. Medicare pays 100% of the first 20 days of a coverage SNF stay. A copayment of $133.50 per day (in 2009) is required for days 21-100 if Medicare approves your stay.
Home Health Care:
Medicare provides home health health aide services on a limited basis as long as the patient requires skilled nursing or rehabilitation and is homebound. Skilled nursing services are tasks that can only be performed by a registered nurse or other certified professional under a nurse's supervision. Once a skilled need no longer exists, Medicare will not continue to pay for home care. The number of home care hours covered by Medicare is generally limited to 35 hours per week.
The Medicare Hospice Benefit provides a variety of services not otherwise covered by Medicare. To be eligible, a beneficiary must be certified by a physician to be terminally ill with a life expectancy of 6 months or less. Those who choose hospice care receive non-curative medical and support services for their terminal illness. Regular Medicare continues for medical treatments not related to the terminal illness.
Benefits Under Medicare Part B
There is a monthly premium of $96.40. The premium is automatically withheld from the Social Security checks unless otherwise requested. An annual deductible of $135 must be paid before Medicare Part B benefits are reimbursed.
Medicare Supplemental Insurance
Although Medicare covers many health care costs, beneficiaries are responsible for coinsurance and deductibles. There also are many medical services that Medicare does not cover. Medicare beneficiaries often decide to buy private supplemental insurance, sometimes referred to as "Medigap" insurance. A Medigap policy provides reimbursement for the out-of-pocket costs not covered by Medicare. For help on choosing a Medigap policy, call HIICAP at (800) 701-0501 or visit the HIICAP website.
Medicare: Annual Wellness Visits
An annual wellness visit is like a check-up or physical exam. Until now, Medicare did not cover annual physicals. Under the Affordable Care Act (the health care reform law), Medicare will now pay for an annual wellness visit, which will include the creation of a personalized prevention plan and detection of possible cognitive impairment. This new benefit began on January 1, 2011.
Medicaid is a joint federal and local program designed to meet the health care needs of low-income people who have little savings, or have exhausted their savings. For those who meet financial eligibility criteria, it covers the cost of many services needed by a person with dementia as their illness advances. People with dementia who live at home may need Medicaid-funded home care or day care in order to remain safe, or to provide respite for caregivers. These services are covered under Community Medicaid. When a person with dementia requires long-term skilled nursing care, the cost of a nursing home stay may be covered under Nursing Home Medicaid. The eligibility criteria for Community and Nursing Home Medicaid differ in some important respects, as described below. Medicaid requires extensive documentation to establish eligibility, including verification of identity, age, residency, citizenship, marital status, income and resources and additional personal information.
You can take advantage of our Legal and Financial Meetings three times a month, conducted by elder law attorneys. These meetings are a good way to get an introduction to Medicaid eligibility. We also hold a hands-on Medicaid Home Care workshop once a month to guide caregivers through the application process. All sessions are free of charge. To register, please call (646) 744-2900.
Financial eligibility: Medicaid considers both a person's income and resources (savings) in determining eligibility. As of January 2009, a single person must have less than $13,800 in total resources and no more than $787 in total monthly income. Resources include stocks, bonds, cash value of a life insurance policy, etc.
Medicaid Surplus Program: If an applicant's monthly income is greater than $787, they may still qualify under the Medicaid Surplus Income Program. Under this provision, Medicaid recipients are required to contribute their "surplus income" toward the cost of care. For instance, a person who receives $1000 a month from Social Security will be required to pay $213 a month in order to have Medicaid.
Pooled Income Trusts: Applicants who cannot pay their living expenses with the allowable monthly income of $787 can apply for a Pooled Income Trust established by a non-profit organization. Instead of paying their surplus income to Medicaid, recipients deposit the income into a pooled trust account, to be used toward monthly expenses. Elder law attorneys as well as some community agencies can provide guidance in applying for a Pooled Income Trust.
Transfer of Assets: There is currently no penalty for transferring assets prior to applying for Community Medicaid. There are, however, transfer penalties that may affect future nursing home placement. Consult an elder law attorney if you are considering transferring assets.
Spousal Refusal: Since spouses are legally responsible for one another, both members of a married couple would need to submit financial information even if only one were applying. Medicaid law currently allows the non-applying spouse to complete a "Spousal Refusal" form so their resources will not be considered in the application.
Home Ownership: Medicaid recipients are allowed to own their own home, as long as they continue to lived in it as their primary residence. Recent changes in the Medicaid law, including the imposition of a cap on the value of the residence ($750,000), make it particulary important to consult with an elder law attorney when issues involving a residence are involved.
Prepaid Funeral: Medicaid recipients are allowed to prepay funeral expenses by setting up an Irrevocable Funeral Trust with a funeral home. There is no limit on the amount of money that can be placed in the irrevocable trust. An irrevocable trust should be requested from the funeral director at the time pre-paid arrangements are made.
Medicaid Home Care
The Home Attendant Vendor Program is accessed through the CASA offices located in the five boroughs. Home care services are provided by licensed home attendant vendor agencies. Care may range from a few hours several days a week, to 24 hours a day. The number of home care hours granted is based upon Form M-11q that is completed by the applicants's physician, coupled with the CASA office's assessment of the person's care needs. See Steps to Medicaid Home Care for further details.
CDPAP may be used by families who already have a home care worker in mind, or wish to employ a distant family member (not a spouse, child or in-law). The Consumer Directed Personal Assistance Program (CDPAP) is administered by the CASA offices, but involves an additional application. Under CDPAP, families hire, train and supervise their own aides who are paid by Medicaid. See Steps to CDPAP if you are considering this option.
Nursing Home Medicaid
To be eligible for Medicaid in the nursing home, the same resource limit of $13,800 for a single person applies plus a burial fund and pre-paid funeral arrangements. The surplus income provision does not apply. All income for an unmarried individual must be paid to the state to cover the cost of care. Recipients are allowed keep a $50/month personal needs allowance to be used toward incidental expenses at the nursing home.
Community Spouse Provision: When a married individual applies for Medicaid coverage in a nursing home, the law provides asset and income guidelines for the spouse at home. In 2009/2010, the Community Spouse Resource Allowance (CSRA) is $74,820 or one-half the couple's resources as of the date of institutionalization to a maximum of $109,560. In addition, the community spouse is allowed $2,739 in monthly income, which may be drawn from or supplemented by the institutionalized spouse's income.
Transfer of Assets: If assets are transferred to persons other than a spouse and certain individuals (i.e. an adult disabled child), a penalty period is incurred. During the penalty period, an individual is not eligible for Medicaid nursing home coverage. In the past, this penalty period began on the date assets were transferred. As of February 8, 2006, the penalty period begins once the applicant is otherwise financially eligible and receiving institutional services. There are never any penalties for transferring assets between spouses. Medicaid reviews all financial records of the applicant (and his or her spouse) for 36 months before the month that Nursing Home Medicaid is requested to begin. From February 8, 2009 to February 8, 2011, this look-back period will gradually increase to five years. The applicant must disclose all relevant financial records including bank statements, savings accounts, inventory of stocks and bonds, real estate, etc. for the look back period. Also required is documentation and explanation for all transactions of $2,000 or more.
Determining the Penalty Period: When a Medicaid application for nursing home coverage is made, Medicaid reviews all financial records of the applicant (and spouse) for 60 months prior to the month of application.
In 2010, the average monthly cost of nursing home care in New York City is $10,285.
For example: if Mr. S. transfers $102,850 to a trust or a non-exempt individual, he will incur a penalty period of 10 months during which time Medicaid will not cover his nursing home costs: $102,850 ÷ $10,285 = 10 months.
The Role of an Elder Law Attorney: Caregivers are advised to retain an elder law attorney when considering transferring assets for Nursing Home Medicaid eligibility. The attorney can advise the family on the implications of any transfer(s). We can provide referrals to qualified elder law attorneys.
Planning for End of Life Arrangements
Many people do everything necessary to plan for the care of the patient while they are alive, but do not make provisions for end of life arrangements. At the time of death there is often limited time to attend to all the details, which leaves many families feeling overwhelmed. To get more information on planning a funeral, click here to go to the website of Dignity Memorial.