Trusts can be an effective tool for preserving the assets of a person suffering from Alzheimer’s or dementia. In a trust, one or more trustees can be charged with overseeing assets for the benefit of the patient and, ultimately, the heirs of that patient. The trustees must also take care to make sure there is an appropriate balance of assets or other resources readily accessible for the individual’s care at the standard he or she (and the family) desires. Special needs trusts and Medicaid trusts should also be considered and, if used, expertly designed to meet the needs of the individual and family while adhering to the laws that govern such trusts and their use.
Other Forms Of Asset Ownership
The use of joint accounts and the joint ownership of bank accounts and homes may help children or others manage finances and assets needed for the patient. Nevertheless, simply putting a name on an account or asset comes with risks both to the patient and the individual signing up for that responsibility. There can also be income, gift and estate tax implications, with the potential for current and future tax liabilities.
Health-Care Insurance
Health-care insurance can help defray some of the financial burden of caring for individuals with Alzheimer’s and other forms of dementia. There are tools to help individuals and families that can easily be found at www.medicare.gov. This government website is an excellent resource to evaluate and compare Medigap policies as well as prescription drug riders available under Medicare Part D. Another helpful website on this topic is www.alz.org. It is especially useful in understanding which drug plans will cover the medicines that the doctor has determined are best for treatment.
It is important to set up third-party notifications to alert a family member or other responsible individual in the event a premium is missed so that this coverage (and any other insurance coverage) stays in place. When patients’ cognitive impairment reaches a stage where they need help with everyday activities, their health insurance, Medicare and Medicaid generally don’t cover the custodial care they require. But these types of insurance can cover important cognitive testing, exams and neurologist visits. When possible, patients and their designated representatives should verify that their insurance covers their doctors as an in-network benefit to avoid the higher cost associated with out-of-network care.
Disability Insurance
Disability insurance is a type of insurance often available as a group benefit to employees, though it’s sometimes purchased directly by individuals as well. This insurance is designed to replace income if an individual can’t perform the duties of his or her occupation (or any occupation, if the policy is written that way). One might think this type of insurance would cover dementia, and it can in part; but advisors need to be careful in understanding the terms of the insurance coverage in place.
While dementia can keep people from working, disability policies may exclude such conditions or limit the time period for the payout of benefits. Moreover, the policies often provide coverage through age 65, or just beyond, when the majority of cognitive disorders begin to emerge. Among the cases we are seeing today, most disability policies don’t provide any significant benefit. However, if dementia, mild cognitive impairment and Alzheimer’s occur in individuals who aren’t yet 65, the disability policy might indeed come into the planning equation.
Income through Social Security Disability Insurance (SSDI) may also be available to clients, even those with significant assets. While there are limits on the amount of earned income a patient can make per month to be part of the program, there are exclusions for certain unearned income. The Social Security Administration added early onset/younger-onset Alzheimer’s to the list of conditions under its Compassionate Allowances initiative. This has helped to streamline the process for qualifying individuals to access resources and reimburse expenses through SSDI programs. Helpful materials can be found on the Alzheimer’s Association website, including worksheets and checklists that may be of assistance in determining what aid someone can receive from SSDI programs.