Our money worries began in earnest the day we realized our dad was going to need full-time care.  He didn't have long-term care insurance and eventually the money would run out.  The worrying intensified when Dad's Medicare coverage for skilled-nursing care (a.k.a. rehab) ran out.  We all knew that rehab was critical to his recovery, but after so many stays for various infections, as well as amputations of both his legs, Dad’s coverage was gone.

It helps to first understand your parent's medical coverage.  And so:

• If your parent is 65 or over, then Medicare is probably the primary insurance provider.
• The Medicare website - Medicare.gov - outlines coverage by state.  Medicare also has a great booklet called, Medicare & You (PDF), which outlines all the basic coverage information. 

It would've been helpful if we’d had a basic understanding of Medicare from the very beginning.  Instead, we learned all about Medicare the hard way, when our dad's coverage reached its limit.  And so we thought we'd share with you the essentials of Medicare to help you better navigate the system.

Medicare is a government health-insurance program for people 65 and over, regardless of their income level.

Since our mom was our dad’s main caregiver, we were able to keep certain costs down while he was at home.  But as his health deteriorated, we had to start introducing care services.  It started out with a home health aide providing a few hours of respite care a week, then turned into assistance each night, and continued to escalate from there.  The costs can pile up quickly.  Though the cost of care varies from city to city and town to town, we found this terrific guide called the Genworth 2015 Cost of Care Survey (PDF) that might prove helpful to you.  The survey reports that the national average median cost for:

Medicare generally pays for short-term care for rehabilitation purposes, which is referred to as skilled-nursing care.  Medicare covers 100 days in a skilled-nursing facility but only after three consecutives days in a hospital (which does not include the discharge day).  Medicare covers 100% of the cost for the first 20 days.  The next 80 days, your parent is responsible to pay $148.00 per day, which likely will be picked up by the secondary ("gap") insurance, and Medicare covers the balance. 

Not Medicare.  Medicare generally only pays for short-term care for rehabilitation purposes.

There are three basic ways to pay for long-term care:

1. Your parent would use his or her own financial resources,
2. Long-term care insurance, if your parent has a policy, or
3. Medicaid, if your parent qualifies, and, generally, Medicaid only covers nursing homes, though some states now pay for assisted-living facilities as well.  The business office in the nursing home should be able to answer your eligibility questions.

Medicare, like most insurance providers, will pay most of the cost of hospice care.  To qualify for hospice care, a doctor must assert that your parent has six months or less to live.  But gauging life expectancy is difficult, so Medicare requires doctors to review their original life-expectancy prognosis every couple of months.  The first two reviews are after three months, and then every two months thereafter.

One of the options our family needed to explore was Medicaid.  Between the cost of medical expenses, and the looming cost of long-term care, we had to look at all of our options.  Eventually, most people need to explore this option, especially if they're considering nursing home care.  Medicaid pays for about 60% of nursing home care in the United States.

We began by asking the nursing home for general assistance.  We were lucky to have a kind and knowledgeable woman named Marie Cauchi from Life Care in Ocala who taught us the basics about Medicaid.  We talked to her about our situation, and she let us know that our parents didn't qualify for Medicaid, but we thought it was important to understand the system.

Here’s some essential information about eligibility requirements:

If you are considering the Medicaid option, then we think you might find this helpful.  This comes straight from the Medicare and Medicaid booklet called Guide to Choosing a Nursing Home (PDF) which can be found on Medicare.gov.

Though the stress of our dad’s illness was seriously impacting our mom’s life, she was still in good health and had (and still has!) many active years ahead of her.  But we knew that if Dad survived, it would mean round-the-clock care in a nursing home or full-time in-home care.  Our parents had no long-term care coverage for this type of expense.  The medical costs, which were already overwhelming, would become staggering.

We needed to understand how far our parents’ resources would go and what our options were, both short-term and long-term.  We consulted with a variety of people:  an eldercare lawyer, our parents’ accountant, their financial planner, and their banker, to name but a few.  We looked at the pros and cons of a reverse mortgage, and also we explored how Medicaid worked.  And, because certain information was always asked of us, no matter where we looked for help, it became clear that you must be equipped with very specific data when making these inquiries.

There are many more questions you’ll be asked, but here is some of the basic information you’ll need to know:

• Is your parents’ home rented or owned?
• If owned, is there a mortgage?

It’s vital to have certain legalities in place.
 

• Durable Power-of-Attorney - This allows a trusted person or persons to handle your parent's personal business affairs, from banking to investments to real estate, etc.  A "durable" power-of-attorney is preferable to a standard power of attorney because it's set up specifically to deal with the possibility of your parent's becoming disabled or incapacitated.  
• Living Will - This is essential as an advance medical directive regarding any life-prolonging procedures (such as being kept alive on life-support equipment).  A living will can also direct any organ donation, if this is your parent's choice.  A living will is not a Do Not Resuscitate order (commonly called a DNR).  A DNR form can be picked up in any hospital and must be signed by your parent's doctor.  It's undoubtedly difficult to talk with our parent about personal end-of-life wishes, but it's very important to do so.  These issues can prove to be divisive to a family if your parent's requests have not already been put down in writing.
• Healthcare Proxy – This is necessary in case your parent is incapable of making his or her own healthcare choices regarding such options as surgery, hospice, experimental treatments, etc.  A living will already designates a healthcare proxy, but if your parent decides against a living will, it's essential to have a healthcare proxy drawn up separately.
• Will or Trust – This makes certain that your parent's final decisions regarding the disposition of any estate are known.