From gaining legal authority to knowing the steps to take and when to seek help
Belleville, Ill. (Vocus) August 19, 2008 -- Each year millions of individuals suffer a sudden or progressive impairment that makes it difficult or impossible for them to make sound financial and healthcare decisions on their own, according to http://www.allsup.com/ [Allsup], which offers services that support the financial well-being and health of individuals with disabilities. Stepping in for these individuals are caregivers, generally family or friends who don't have professional financial consulting experience. In addition, these caregivers now are in the very serious role of making critical decisions for the individual they've agreed to care for.
"The most important thing caregivers can do is to educate themselves on their responsibilities once they've taken on this role," said Paul Gada, an attorney and personal financial planning director of the http://allsup.com/Financial-Matters/Financial-Matters-Overview.aspx [Allsup Disability Life Planning Center]. "It's not easy and can be further complicated by the emotional involvement the caregiver often has with the person they're caring for, be it a spouse, parent, other close relative or friend.
"It's also important, however, that caregivers recognize they are not alone and that they seek help when they need it," Gada added.
Having committed to be a caregiver, there is a lot of work that will need to be done. Following, Allsup outlines five crucial first steps.
Secure power of attorney
A power of attorney for property provides a caregiver the legal authority to make decisions about and exercise control of various assets and transactions. A healthcare power of attorney, directive or proxy allows an individual to designate someone to make decisions about their healthcare, including carrying out an individual's wishes about whether or not to use artificial life support (sometimes provided for separately in a living will document).
Most state governments and state bar associations offer a statutory template of these forms that can be pulled from their Web sites. Many hospitals and healthcare organizations also can provide individuals with the health-related forms.
While someone can designate the power of attorney for financial matters to one person and healthcare power of attorney to another, it's often simpler and avoids conflicts to have one person take on both roles.
"Inevitably, when you begin talking about someone's healthcare, financial matters come into play. So you want to designate someone you can trust who will be able to look at the whole picture," said Gada.
Healthcare power of attorney forms generally follow a similar format. However, a power of attorney for property and finances can be set up in various ways. These include:
"As a caregiver with power of attorney, you are acting on another person's behalf," said Gada. "You want to make sure that you have a very clear understanding of what the individual you are caring for wants and that you truly are committed to acting in their best interest."
Gather and organize records
Caregivers should make certain that they have a copy of any power of attorney and living will, plus have secured access to other important legal and medical documents, including the individual's will or trust documents.
Other important financial information to gather includes:
Create a financial profile and budget
The caregiver needs to understand the individual's financial circumstances. This means getting a handle on the resources available, or assets (e.g., home, investments, life insurance contracts, etc.) and liabilities (e.g., loans, mortgage, credit card debt, etc.).
Also, the caregiver likely will need to establish a monthly http://www.allsup.com/Financial-Matters/Financial-Planning/Budgeting.aspx [budget]. This requires understanding income (e.g., from a long-term disability insurance policy, Social Security, investments or other resources) and http://www.allsup.com/Financial-Matters/Financial-Planning/Decreasing-Expenses.aspx [expenses]. As with any budget, this will need to be adjusted as circumstances change, but it's an important roadmap for ensuring that assets are available to support the individual, or recognizing where there are shortfalls so http://www.allsup.com/Financial-Matters/Financial-Planning/Increasing-Cash-Flow.aspx [additional resources] can be sought if possible.
"Many working adults don't set up monthly budgets. So long as the money coming in is far more than the money going out or needed for savings, this lack of planning can work," Gada said. "But when you're dealing with an individual that has a disability that is likely increasing their healthcare costs and keeping them from ever returning to full-time work, good planning is essential."
Depending on the individual's resources, the caregiver may want to consult with a professional financial advisor. Various financial software and online tools also can help caregivers determine a budget and monitor income and expenses, including free resources offered as part of Allsup's http://www.allsup.com/Financial-Matters/Financial-Planning.aspx [Financial Matters] site.
Identify income resources
An individual with a severe disability generally will be relying on insurance payments for all or part of their future http://www.allsup.com/Financial-Matters/Financial-Planning/Increasing-Cash-Flow.aspx [income]. Approximately three in 10 workers is covered by a private long-term disability policy.
A caregiver should determine if the individual they are caring for has a long-term disability policy and, if so, what the qualifications and restrictions are for collecting on the policy. Examples include how soon the policy begins offering income, offsets to that income and when the policy expires (in some cases at age 65). Also, some policies include a Social Security rider, which requires that the individual http://www.allsup.com/About-SSDI/Free-SSDI-Evaluation.aspx [apply for Social Security Disability Insurance] (SSDI) in order to comply with the long-term disability insurer's requirements.
Most individuals who have worked are http://www.allsup.com/About-SSDI/SSDI-Guidelines-by-Disability/General-Guidelines.aspx [eligible for SSDI]. To qualify, a person must have worked and paid into the program for five of the last 10 years; been disabled before reaching full-retirement age (65-67) and meet Social Security's definition of disability. The Social Security Administration (SSA) uses a process called sequential evaluation to determine who receives benefits.
Any caregiver responsible http://www.allsup.com/About-SSDI/SSDI-Process.aspx [for securing SSDI benefits] should understand that it's a complex and time-consuming process and can take several years to complete. Organizations like Allsup, however, can http://www.allsup.com/Allsup-Representation/Who-We-Are.aspx [facilitate the SSDI application process] and ensure the individual begins receiving SSDI benefits as quickly as possible.
"Two-thirds of SSDI applications are rejected and the average time it now takes, from initial application through appeals, to get an award is two to four years. Given all the responsibilities a caregiver has, getting help from a representative reduces the burden substantially," said Gada.
Determine health insurance coverage
If the individual was employed immediately before becoming disabled, the caregiver may look into helping him or her secure http://www.allsup.com/Financial-Matters/Managing-Healthcare-Costs/COBRA-Coverage.aspx [COBRA] coverage. COBRA coverage can continue for up to 18 months after employment ends. This may be extended by an additional 11 months if an individual is awarded SSDI benefits.
"While these plans can be costly, they can be an essential financial planning component for individuals unable to get any other insurance and facing mounting healthcare costs while awaiting Medicare eligibility," said Gada.
Caregivers also need to be aware that after receiving SSDI benefits for 24 months, an individual - regardless of their age - is eligible for http://www.allsup.com/Financial-Matters/Managing-Healthcare-Costs/Medicare.aspx [Medicare], including hospital, medical benefits and prescription drug plans. Just as important is understanding the different options available and which plans are best based on the individual's particular circumstances.
"Not all Medicare plans are created equal and people often opt for the traditional plan thinking it's the 'safe' choice. But for people with disabilities, http://www.allsup.com/Medicare-Advisor.aspx [Medicare Advantage] plans often are the optimal choice: you can't be turned away for coverage due to a pre-existing condition, they usually cost less than a traditional Medicare and supplemental plan combined, and most Medicare Advantage plans include prescription drug coverage," explained Gada.
Allsup, Belleville, Ill., is a leading nationwide provider of financial and healthcare related services to people with disabilities. Founded in 1984, Allsup has helped more than 100,000 people receive their entitled Social Security Disability Insurance and Medicare benefits. Allsup employs more than 500 professionals who deliver services directly to consumers and their families, or through their employers and long-term disability insurance carriers.
For more information, visit www.Allsup.com].
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