As your parent's age, having “the talk” about their finances and financial planning can be one of the most difficult discussions you face. Your parents probably do not want to have this talk any more than you do. In fact, they may be resistant to your desire to discuss their money and financial situation. But the fact remains that in order to ensure their financial and physical well being, you all need to be on the same page. So some discussion needs to take place.
How do you have this discussion in an open, caring manner that allows everyone to walk away feeling good about the results? It can be difficult for sure. The key is to have the goal of helping your parents make better, more informed decisions and to not come at them from a place of judgment. If you sense your parents are unwilling to talk about financial issues, try using your personal retirement or estate planning as a jumping-off point for the discussion. You can also try using a situational story to spur a discussion about whether they have recently updated their wills or met with a financial planner. Getting them talking in a non-threatening way is the key.
Some key topics to discuss regarding financial and estate planning with your parents include:
Medicare. Make sure your parents understand their Medicare coverage and how their physicians work with Medicare. Medicare sets the amount it will pay for services related to a condition or procedure. If the doctor takes the set amount from Medicare as payment in full, they accept “Medicare assignments.” This means your parents will not have to pay any additional charges. If, however, they charge an additional fee on top of the Medicare charge, your parents will be left to pick up the difference. This difference should not exceed 15% of the Medicare assignment.
Medicare Supplement Insurance. Medicare supplement insurance plans exist to cover the difference between the cost of the Medicare assignments and the additional 15% charged by physicians. Medicare supplement insurance can be purchased from a variety of different insurance carriers. It is important to price Medicare supplement insurance plans carefully as the coverage plans are set by Medicare and remain consistent; it is only the cost of coverage that changes from carrier to carrier.
Geriatric Care Managers. Geriatric Care Managers specialize in helping families with care assessments, screenings, and other financial, legal, and medical issues. They can be a valuable resource for your family. Read more about Geriatric Care Managers here.
Financial Power of Attorney. A financial power of attorney gives someone else the authority or responsibility for taking care of your parent’s finances. This is often the last step that would not need to be put into place unless your parents are ill or dementia has set in. Powers of attorney can be set to “spring” into effect upon the occurrence of a specific event, such as the death of a spouse or the onset of illness or dementia. A power of attorney can also be limited by time or spending.
Health Care Power of Attorney. This type of power of attorney refers to the authority to manage your parent’s health should they be unable to make decisions regarding their healthcare on their own. It can also be limited or set to “spring” upon various events. It is essential that both types of powers of attorney are established while your parents are well because once they are unable to make decisions for themselves it is simply too late.
Living Will. A living will deal with concerns related to life support issues and what measures your parents wish to have taken to prolong their life should a serious illness occur.
Aging In Place? Do your parents have a desire to stay in their home as long as possible? Do they wish to retire to another location? Where do your parents imagine they will live should they become seriously ill? Questions about where your parents plan to live as they age will help you to make decisions about investments and how monies should be spent.
Long Term Care Insurance. The cost of retirement homes and assisted-living facilities is extremely high and most families find it drains retirement income well before they thought it would. An investment in long-term care insurance can help to manage these costs.
Stay Organized. It is vital that you know where your parents keep their insurance policies, wills, powers of attorney, bank accounts, and other important documents. Along with these important pieces of information, you should also have login and password information and PIN numbers for the computer and all other accounts that require security information. Update this information every two to three years.
When working with your parents to develop an estate and financial plan for the future, it is important to remember that you are not alone. There are many professionals available to help you make the important decisions that will lead to a happy and healthy future.