Aging & Caring: A Guide for Families and Caregivers

Financial and Legal Issues and Medical Insurance

Financial matters are often one of the first areas where the older adult needs a helping hand.

Unopened Mail Equals Trouble

Betty noticed that the table where the mail was kept was getting higher and higher each time she visited. If she sat with her mother
and went through the papers, she often found late notices for unpaid utilities, new credit cards, and insurance terminations for non-payment. It was clear that some help was needed. Betty and her mother Sarah arranged to spend time every week going through the mail. Betty would write the checks that were due, and her mother signed them. This helped Sarah feel that she still had control over her money and how it was spent and helped Betty feel confident that important bills were being paid. They also discussed the dangers of accepting new credit card offers and Sarah’s discussing financial affairs with telemarketers, who often called in the evening, when Sarah was lonely and eager to talk. Betty added Sarah’s telephone number to the national and state Do Not Call List to help cut down on the number of telemarketing calls. Eventually, Sarah and Betty went to the bank and signed new signature cards so that Betty could sign checks and withdraw money from Sarah’s bank accounts.

The first step to financial and legal organization is a review of important documnets. This is a brief list of documents which might be needed. They shholud be located and updated, as the needs of the older adult change. 

Financial Records Inventory

(See Resources and Inventories Chapter for copies of forms)

  • All bank accounts with the account numbers and who is authorized to sign. Certificates of Deposit and interest rates and due dates should be noted. Safe Deposit Box contents should be listed and renewal date noted. The location of the safe deposit key is very important. If the key is lost, it will take time and money to have the box drilled so that the contents can be accessed. Some bank accounts can be set up to be payable on death to someone named by the owner, and if this is the sole asset of an estate, can eliminate the need to probate a will. This account type can also be used to leave money to someone, regardless of what a will may state. In most instances joint accounts or payable on death accounts will become the property of the joint owner or named beneficiary, regardless of the terms of any will. There may also be automatic deductions and deposits that should be identified.
  • Life insurance policies with the insurance company name, type of policy, policy number, and beneficiaries. Also, list the due date and amounts of any payments. Make sure that the expired policies are not mixed in with current ones.
  • Investments. This would include brokerage accounts and account numbers, location of any stock certificates held by the older adult, location and type of ownership of all real estate, and details of any mortgages.
  • Income tax returns for at least three years. These are also useful to find details of investments such as dividends and interest, limited partnerships, and any interest paid on real estate loans.
  • Military Service Discharge Papers (DD214) needed to determine Veteran’s benefits and to receive American flag for funeral. Records need to be retained to receive widow/widower benefits.
  • Marriage License needed to file for Social Security using spouse’s benefits. 
  • Automobile titles or registration and details of any loans outstanding that are secured by autos.
  • All property insurance policies with the insurance company name, type of policy, policy limits, and due dates for premiums. 
  • All health insurance, Medicare Part D, and long-term care policies with the insurance company name, types and amounts of coverage, and due dates for premium payments.
  • Burial insurance and prepaid funeral plans: Locate cemetery plots and determine the wishes of the older adult regarding the funeral, burial or cremation, and whether any expenses have been prepaid. If a spouse has died, a joint headstone may have been purchased, along with a burial plot. If the prepaid funeral plan is irrevocable, it may not count as an asset for Medicaid purposes.
  • Death certificate of predeceased spouse.

Legal Capacity

Legal Capacity is the term used to denote the level of judgment and decisionmaking ability needed to sign official documents. The requirements for legal capacity may vary from one legal document or proceeding to another. This is an especially significant issue for caregivers of those with dementia. If the person with dementia is able to understand the meaning, the importance, and the consequences of a given legal document, he/she likely has the legal capacity to execute or carry out the signing of the document. It may be necessary to ask for medical advice from the older adults's physician in determining a person’s level of mental ability.

Legal Documents Inventory

(See Resources and Inventories Chapter for copies of forms)

  • Last Will and Testament
    This document should be reviewed to be certain that it still conveys the wishes of the older adult and is current on the property it conveys and the beneficiaries to whom the property is bequeathed. Any special items they wish to leave someone should be listed very specifically. The original will should not be kept in a safe deposit box, as it may be difficult to get into the box, depending on who is authorized, or the bank might not be open. Often the original is kept at a lawyer’s office, in which case copies sholud be made for beneficiaries and/or for those named by the will as Executor or Trustee. 
  • Durable Power of Attorney This document can allow the person named as attorney, often a caregiver, to do anything the older adult could do for themselves if they were competent. An attorney familiar with the financial and legal affairs of the older adult should draw this up. A Durable Power of Attorney can grant very broad powers or can be limited and may be made effective only upon the mental or physical disability of the senior or the occurrence of certain events. You may have to record the Power of Attorney in the county where the senior resides and obtain certified copies to give to banks, brokerage firms, and others holding assets and to sell any real estate.
  • Power of Attorney for Health Care or Appointment of Health Care Agent
    Doctors, hospitals, and other medical agencies will want to know if the older adult has a Power of Attorney for Health Care (now called Appointment of Health Care Agent). Copies are often kept in the doctor’s records or at a hospital where the older adult has previously been cared for. This document allows the person named as attorney to make healthcare decisions for the older adult if they are not capable or able to decide for themselves. The person named as the attorney can consent or refuse to consent to treatment, and the power can be subject to any limitations the older adult wishes to have included. An Appointment of Health Care Agent form which complies with Tennessee law can be found at
  • Living Will or Advance Care Plan
    This provides direction to physicians and family regarding a person’s wishes if he or she becomes terminally ill or permanently unconscious. Very specific directions are provided regarding the withholding or provision of food, water, and other nourishment and regarding organ donation. It is a record of decisions the person has made for him/ herself. This form was designed to comply with the law in Tennessee and can be found at
  • Appointment of Surrogate and Physician Orders for Scope of Treatment (POST)                                                (This form can also be a Do Not Resuscitate form)
    These forms were developed to record the wishes of the patient in the event that he or she becomes incapable of making such decisions. They also provide a form for a physician to appoint a surrogate (a person who can do the things the patient would do if he/she were able) for a patient, to assist in the healthcare decisions, when the patient is not able to make them and needs a person to protect his/her interests. The physician-appointed surrogate alone cannot make decisions to withhold artificial nutrition and fluid, but if an independent physician also certifies that the continued nutrition and fluids are merely prolonging the act of dying, then they can be withheld. Family members cannot override a POST that is signed by a patient and physician which contains a Do Not Resuscitate order. More information about these and other forms of advance directives can be found at

Next Steps

Once the financial and legal records have been examined, there will be other important issues to address. If the caregiver is to pay bills or take care of investments, an authorization or durable power of attorney may have to be filed with every institution where assets are held. It will be necessary to change the address and telephone contact numbers to those of the caregiver. To have access to a safe deposit box, the caregiver’s name and signature must be added to the signature card at the bank, and a key obtained.

Make sure you know all the sources of income and whether the senior has the ability, and under what conditions, to withdraw funds from any retirement accounts, pensions, or trusts. Some accounts such as an IRA (Individual Retirement Account) require that the older adult begin to withdraw funds at age 70½, but withdrawals may be made without penalty upon disability or reaching the age of 59½.

Upon the death of a spouse (or former spouse), it is important to determine whether using the spouse’s Social Security benefits (which are often higher for men who were primary wage earners) might provide more income. These benefits are available to an unmarried widow or widower of a person who worked long enough under Social Security to be eligible for benefits. The unmarried divorced spouse of a worker who dies can get benefits just the same as a widow or widower, provided their marriage lasted ten years or more. Benefits paid to a surviving, divorced spouse do not affect the benefit rates for other survivors getting benefits based on the worker’s record.

If the older adult owns his/her home and moves to a relative’s home or a senior housing unit, it may be better to rent the property than to sell it. Renting often provides more income than can be made from investments although it does mean more work for the caregiver. If the older adult is able to live on his/her own but lacks income, a Reverse Mortgage or Equity Line of Credit can help use the equity in the home to provide for living expenses. Department of Housing and Urban Development-approved counselors can provide more information about those options.

Of course, all income will have income tax consequences, and it is important to check with an accountant or financial advisor in order to make the best decisions regarding the use of available assets. As the older adult's ability to travel, drive, and live life changes, it may be sensible to cancel unnecessary services such as newspapers, magazines, some phone services, car insurance, home insurance, and cell phones.

If the health and fitness of the older adult allows, long-term care insurance policies can help provide the money needed later if he/she becomes unable to work or live alone. Long-term care insurance can be purchased even when the senior is in his/her 70s, but after 70 the policy may be too expensive or difficult to obtain for medical reasons.

If/when the senior becomes unable to take care of him/herself, a caregiver must review the financial statements to determine the bills being paid and the sources of income. Automatic deductions may need to be discontinued and automatic deposits may need to be changed.

In the event there is not a Durable Power of Attorney when the olde adult becomes unable to take care of his/her financial and legal affairs, it will be necessary to have the court appoint a Conservator or Guardian for the affairs of the older adult. This will require a doctor's certification and the court will appoint an attorney to investigate the situation. If the court appoints a Conservator, Letters of Conservatorship will be issused. The guardian will need several copies of these to present to banks, brokers and whenever assets are sold. The Letters of Conservatorship act in the same manner as the Durable Power of Attorney, but the court requires that a bond be posted and it will have to approve the sale of certain assets. An nnual accounting of all income and disbursements will have to be filed each year along with a plan for taking care of the assets owned by the olde adult. This will account for attorney fees and court fees in addition to the annual payment of the bond. 

A Conservator may be entitled to receive payment for his/her services. In some cases, the caregiver will need a salary to help cover the cost of the time and effort he/she will devote to safeguarding the assets of the older adult. The Court will decide whether the Conservator will be paid, but a caregiver will have to work out an arrangement with the older adult and possibly with
other relatives. In the case that an interest in a house or other asset of the older adult is promised in return for care, this should be carefully put in writing, preferably by an attorney, and always while the older adult is still competent.

If you are caring for someone’s assets, is is essential to keep meticulous, detailed records. If you are storing information on a computer, keep backup copies and let others know how they can access the information if you become unavailable. This will protect you and the older adult you are caring for. If possible, the older adult and the caregiver should work together as soon as feasible to address finances and legalities. Being aware and prepared will provide a much smoother transition into the future for all concerned.


Medicare is a federal government health insurance program that provides medical care and prescription benefits. You become eligible for Medicare when you turn 65 years of age or if you are under the age of 65 and have a disability. Medicare has several parts: Part A (Hospital) and Part B (Medical) and Part D (Prescription drug coverage).

Medicare Part A and B

Medicare Part A covers care in hospitals, skilled nursing facilities, hospice care, and limited home healthcare. Most people do not have to pay for Part A and will receive it automatically when they turn 65. Medicare Part B is optional and covers doctors’ visits, outpatient services, and other items that are medically necessary. There is a standard premium for people who choose Medicare Part B that in most cases is deducted from monthly Social Security checks. If one decides not to enroll in Medicare Part B, there may be a penalty to enroll at a later date. To avoid this penalty one must sign up within three months before and three months after one’s 65th birthday. When becoming eligible for Medicare, you either choose traditional Medicare or a Medicare Advantage Plan (see below for more on Medicare Advantage Plans).

Persons with low income may qualify to have the state pay the premium. This is called QMB, and the local Department of Human Services office can provide an application. When talking with physicians regarding your Medicare, make sure to ask if the doctor accepts assignment. This means the doctor has agreed to charge no more than the amount Medicare has approved for any given service.

Supplemental (Medigap) Insurance

Supplemental insurance, or Medigap, is a separate insurance policy purchased from a private company that covers deductibles and copayments that Medicare does not cover. This is popular for individuals who opt for traditional Medicare.

Medicare Part D

Medicare Part D provides outpatient prescription drug coverage. Part D is optional but has a built-in penalty if not chosen when first eligible. The penalty is one percent per month. Considering there is only one open enrollment period a year, that one percent can add up. It is recommended, even if you are not on medications at the time you are eligible, that you consider enrolling in a low cost plan as a safety net. An exception to this recommendation is if your present Supplemental or Medigap Insurance
policy covers prescription medications.

When choosing a plan, you can choose a stand-alone plan or a Medicare Advantage Plan (see below). A stand-alone plan provides a prescription rug benefit separate from the Medicare Part A & B coverage. Most, but not all, drug plans charge a monthly premium; this varies from plan to plan. Other cost will vary depending on which drugs you use, which plan you choose and whether or not you get extra help paying your Part D costs. Medicare drug plans have had a coverage gap known as the “donut
hole” in which the individual was required to pay out of pocket costs up to a certain level. The coverage gap is gradually being phased out and should be eliminated by 2020. 

Medicare Advantage Plans

A Medicare Advantage Plan combines Parts A, B, and D into one private insurance plan. You pay one monthly premium for your doctor, hospital, and prescription benefits. To get the best value from your Medicare Advantage plan, you need to stay within the plan’s network of providers If your physician is not in-network, you can either pay extra to see that physician or choose another physician who is in-network. One benefit of Medicare Advantage plans is that they can offer more coverage than original plans. For example, some may cover more preventive care or dental and/or eye care.

Extra Help

If your income and assets are limited, you may qualify for extra help paying for your Medicare drug plan’s monthly premium, yearly deductible, and prescription copays or coinsurance, including any costs you have in the coverage gap. To find out if you are eligible for extra help, or to apply for extra help, contact the Social Security Administration at 1-800-772-1213. Some individuals will automatically qualify for extra help and will not need to apply (such as those on TennCare). However, these individuals will still need to choose a drug plan that best suits their needs.

Changing Plans

You can only change plans once a year during the open enrollment period. Individuals who are receiving extra help are an exception and may be able to change more frequently. Open enrollment for Part D is generally in the fall of each year. Apply as early as possible to allow time for the paperwork to be processed before January 1.

Medicaid for Long Term Care

Medicare pays for very little nursing home care, primarily skilled care after a hospital stay. Medicaid does pay for nursing home care or home and community based care for low-income citizens who medically qualify. In Tennessee Medicaid is called TennCare. A special kind of TennCare called CHOICES pays for regular nursing home care and home and community based services. CHOICES is run by existing TennCare Managed Care organizations. To enroll in CHOICES, apply through the local Area Agency on Aging & Disability.

A person does not have to sell his/her home to get Medicaid to pay for nursing home care. If a spouse is living at home, Medicaid provides certain financial protections for him or her. There are provisions, however, to keep a person from transferring assets just prior to nursing home placement in order to qualify for Medicaid.

Long Term Care Insurance

We are aware that most older adults do not wish to go to a nursing home. Long-term care insurance can help pay for in-home care and assisted living as well as nursing home care that is not covered by Medicare. It is important for you to know if the older adult has this insurance, when it was purchased, and what it covers.

Privacy and HIPAA

Since 2003, under the rules and regulations of the Health Insurance Portability and Accountability Act (HIPAA), access to a patient’s medical information has been restricted, requiring patient permission for disclosure. Doctors, hospitals and other healthcare providers are required to obtain written acknowledgement that they have given patients notice of their right to privacy. They are also prohibited from disclosing certain information other than “as needed” to carry out treatment, receive payment, and implement healthcare operations. Most providers have forms allowing the patient to authorize certain persons to receive their healthcare information. Make sure that each healthcare provider is authorized to discuss the older adult's health information with a designated person, particularly where the senior may be incompetent or unable to speak. Otherwise, caregivers may not be able to get the information they need to care for their loved ones properly.