It’s incredibly challenging to watch your parents age. But considering that around 53.1 million adults are caregivers in the United States, there’s a good chance you are or will be responsible for helping your aging parents.1
One thing you don’t want slipping through the cracks is Medicare bills. Unpaid premiums have the power to wreak havoc on your parents’ retirement plan. When gone unchecked, they could snowball into debt or experience costly gaps in coverage.
To prevent this from happening, you and your loved ones can designate Medicare and Social Security representatives. Here’s a quick guide to getting started.
It’s Not Enough to Have Power of Attorney
Depending on your parents’ current health status, you may have discussed their estate and finances. If that’s the case, the idea of granting you or your sibling’s power of attorney likely came up.
Power of attorney gives you the authority to make decisions on your parents’ behalf. There are different types of power of attorney, including medical, financial, general, or limited. What you control depends on the kind of power of attorney your parents established.
Unfortunately, no matter the type of power of attorney, you will not be able to change your parent’s Medicare plan or Social Security benefits. To help manage these plans and benefits, you must take it a step further and be listed as an authorized representative for Medicare and a Representative Payee for Social Security.
Medicare Authorized Representative
If your parents want you to be authorized to make Medicare decisions on their behalf, they need to name you as a Medicare Authorized Representative.
What Do They Do?
A Medicare Authorized Representative helps a participant research and select Medicare coverage, handles plan payments and claims, and assists in filing complaints or appeals.
Once a participant gives authorization, this person can speak to Medicare representatives on the participant’s behalf. When filling out the Authorization to Disclose Personal Health Information form, your parents will have the option to allow Medicare to disclose all or limited information. For example, your parents may authorize you to discuss Premium payments with a Medicare representative, but not specific claims.
Your parents can specify when or for how long the Medicare Authorized Representative has the authorization to make decisions or collect information on their behalf. If your parents cannot sign the authorization forms, you may sign on their behalf, but you must include proof of the power of attorney or other qualifying legal documents.
Who Can They Be?
Your parents can authorize a family member, friend, advocate, attorney, doctor, or anyone else they trust to act on their behalf.
How Do They Become One?
If your parents have a Medicare Advantage (Part C) plan, Medicare-approved private party provides their insurance. You and your parents will need to work with the insurance provider directly to establish authorization for acting on their behalf.
Your parents’ explanation of benefits (EOB) should provide more information on how to complete this process. An EOB is typically mailed directly to participants, or they can use their account info to log in online and access this document.
For Medicare Parts A and B, your parents or a power of attorney must fill out that Authorization to Disclose Personal Health Information form mentioned earlier. You cannot submit the form online. It needs to be printed, signed, and mailed.
The plan provider may require additional authorization if your parents have a Medicare Part D plan or Medigap insurance.
Who Needs One?
If your parents are experiencing physical or cognitive decline, especially with memory issues, it may be time to establish a Medicare Authorized Representative. In general, this can be useful for anyone who needs help choosing a plan, researching options, or handling claims and payments.
Why Are They Important?
Without the Medicare Authorized Representative title, a caregiver can’t help their loved one make decisions regarding Medicare.
Here’s an example of what happens when Medicare premiums go unpaid:
An older couple, Cynthia and Charlie, are both 78 and live a few states away from their son, Adam. One day, Cynthia is admitted to the hospital after falling and breaking her hip. Adam flies home to help his parents during her recovery. The hospital calls the home phone, and to Adam’s surprise, it’s the billing department asking about payment arrangements. He knew his parents had hospital coverage through Medicare.
Upon further investigation, Adam discovers that his dad, Charlie (whose been experiencing memory issues), has neglected to pay the premiums for about a year. As a result, Medicare canceled the coverage. Now, Adam must tap into his personal savings to help his parents manage the hospital bill.
Getting involved with your parents’ Medicare coverage early is crucial for avoiding costly losses in coverage like this.
Not to mention, a coverage gap can make it harder in the future for your parents to qualify for certain Medicare plans, or it may increase premiums and incur penalties. This makes healthcare, an already costly line item in your parents’ budget, an even more significant expense.
Social Security Payee
A Social Security Payee can help beneficiaries manage their Social Security payments when they cannot do it themselves.
What Do They Do?
This person, whether you or another caretaker, should know the beneficiary’s needs and understand how to use their Social Security benefits in their best interest. For example, using the payments to cover basic needs like food, clothing, housing, and medical care.
A Social Security Payee has the authorization to respond on your parents’ behalf and report any changes in circumstances that may affect eligibility. The Social Security Administrative sends payees an annual Representative Payee Report each year. They use this report to account for your parents’ payments throughout the year.
Who Can They Be?
A Social Security Payee can be anyone concerned with the welfare of a Social Security beneficiary, including parents, spouses, adult children, relatives, guardians, or friends.
Some SSA-approved institutions can serve as payees, though they may charge a fee for their payee services:
- Nursing homes
- Healthcare providers
- Public or nonprofit agencies
- Social Security agencies
- Financial agencies
- Homeless shelter officers
- Community-based non-profits
- State mental institutions
Unlike the Medicare Authorized Representative, the beneficiary does not have a say in who is named the payee. Instead, the SSA appoints one. However, you can apply to be a representative payee at your local Social Security office.
Who Needs One?
Children under 18 are typically appointed a payee and legally incompetent adults (those the courts have deemed incapable of managing their own affairs). The SSA will select a payee if someone cannot direct or manage their benefits.
Why Start Thinking About This Now?
Defining your evolving role in their lives and finances is a delicate situation, especially if your parents aren’t open to the idea of being cared for or talking about money.
Conversations about money are never easy with your parents, especially if they’ve been guarded about their wealth. While having these discussions can be uncomfortable, it’s better to talk through the “hard stuff” now before something happens.
An unexpected cancellation or change in Medicare coverage can diminish your or your parents’ savings, but taking preventative steps helps avoid these unwelcome surprises.
If you’d like more information on how to obtain authorization or need help addressing your parents’ financial picture, don’t hesitate to reach out to our team. We’d be happy to take a look and build a plan that keeps your and their financial future top-of-mind.
Sources:1Caregiving in the United States 2020
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