Geriatric financial management update

Dad’s doing fine in the care facility. He’s happy and he’s safe. His Alzheimer’s symptoms have stabilized with their care. He’s coping with his myeloma symptoms and waiting for chemotherapy to start. He’s sleeping more than he should (Vicodin for the pain), and he’s weak (anemia), and he’s losing weight, and these are all bad signs, but all in the category of “as well as can be expected”. I guess the good news is that if Alzheimer’s gives him the urge to wander then he won’t go far.

In the meantime things are moving on the financial and legal fronts.

John Hancock and I have settled into a routine for processing Dad’s long-term care insurance claim. The process is customer-hostile, cumbersome, and error-prone, but it’s a routine.

Let’s say that you want to send a document to someone at John Hancock so that they can pay your claim. A few decades ago you would’ve sent it by snail mail. In the 1980s if you were in a real hurry then you might’ve upgraded to FedEx. Up through the 1990s a fax was your best bet. Today you’d smirk at those archaic options and send an e-mail… or maybe a text from your cell phone. Then a modern banking institution would electronically transfer the funds to your checking account, or even directly to your biller.

(Everyone at USAA who reads this blog is smiling now. USAA knows how to do insurance claims.)

I’ve never owned a fax machine, and the last time I used one was a decade ago (on active duty). I’ve faxed plenty of documents with a scanner and a fax modem, but not during the last two years– not since most of the world’s businesses started e-mailing PDFs or uploading to secure websites.

However, Hancock professes concern for HIPAA and data security, so they won’t pay out a claim with today’s technology. They will not waive HIPAA or security. They will not trust a website, let alone e-mail. They insist on a fax.

Here’s what happens when you “fax” Hancock the monthly documents for your claim:

1. Dad’s care facility e-mails me the bill for next month’s care, payable in advance. Note that the care facility e-mails it to me because Dad’s given them his HIPAA permission.

2. I print out the bill.

3. I annotate the printout with Dad’s Hancock policy number & claim number, his SSN, and his DOB.

I fax the form to Hancock:

4a. The first month I used eFax, which required re-scanning the annotated printout onto eFax’s website. eFax converted the website data to fax tones and transmitted them to Hancock’s fax machine.

4b. eFax’s fees are so high that after a couple of months it’s cheaper to buy a Windows7 license and a fax modem. (Windows Vista no longer includes free fax software.) This would also require re-scanning the PDF printout, importing it into Windows Fax, and faxing the scanned document via landline to Hancock with the modem. We don’t have long-distance service on our landline, either, so I have to program the fax software to dial into a toll-free calling-card number.

4c. While I was grappling with 4b, my spouse grabbed my ponytail and pulled my head out of my computer for a minute to point out that Craigslist has hundreds of cheap used fax machines. We picked up a free “broken” one (although we had to drive three miles to get it). I cleaned the feed tray and it works fine. So now I dial directly on the fax machine to fax the printout to Hancock.

5. Hancock’s fax machine acknowledges receipt of my transmission. They don’t provide any other status. I have no idea whether the fax is legible and I won’t know whether there’s a problem until Hancock’s payment arrives. Or doesn’t arrive.

6. Hancock converts the fax transmission… into an electronic image file! Maybe that happens automatically. For all I know, Hancock’s fax machine is actually in Bangalore or Hanoi and the conversion is done by a minimum-wage employee. Who hopefully can properly handle HIPAA data.

7. The electronic image is (presumably) tagged and filed under the correct claim number. It’s uploaded to John Hancock’s “secure” computer network for the staff to review. I’ve been told this takes about a week, which makes me suspect that steps #6 & #7 are individually handled by human beings.

8. The information is stored in Hancock’s network queue until the billing month is over. This means that the claim payment is a reimbursed expense, not taxable income.

9. After the billing month has ended then Hancock accesses the electronic image, prints out a paper check, and sends it by snail-mail. I have been told that– due to fraud concerns– Hancock WILL NOT send an electronic payment to either Dad’s financial accounts or to the care facility.

10. I receive the paper check in the mail. None of Dad’s financial institutions support deposit by customer imaging. I endorse the check “for deposit only”, attach a deposit slip, and snail-mail it to Dad’s brokerage.

11. A week later, Dad’s brokerage e-mails receipt of the check.

If you’ve counted along with me, you’ve noticed that the 11-step process takes about seven weeks from the time I get the care facility’s bill until the claim payment is available in Dad’s brokerage account.

(Everyone at USAA who reads this blog is chuckling now– unless they’re also handling the finances for elderly parents in care facilities.)

For some reason Hancock is paying the policy’s max limit of $240/day instead of the care facility’s $214/day. This has happened for several months in a row now, and it’s clearly labeled, so it’s deliberate. I guess Hancock figures we have additional expenses or else they haven’t caught a clerical error. I’m almost afraid to ask.

The policy’s annual 5% inflation rider is supposed to kick in next month. (After that it only has one more year’s inflation adjustment.) Of course the care facility may kick in an inflation rider of their own next year, and their inflation rider will probably be bigger than Hancock’s. But hopefully I never have to speak to Hancock again.

Yes, I’m whining, although I’m needlessly reminded of this pain every month when I have to repeat Hancock’s cumbersome process. However, once more I’m thankful that Dad bought the policy in late 1992, before the insurance companies had really figured out how expensive LTC would be. It’s not a lottery I’d want to win but it could pay more than 25x his premiums.

Yes, I’m trashing Hancock on a public website. If you’re a Hancock employee and you want equal time, please post here or contact me. I’d love to improve the procedure– maybe Hancock could license a claims-paying system from USAA?

(Everyone at USAA who reads this blog is laughing now…)

My brother (who lives near Dad) has been driving Dad’s ’99 Ford Explorer for him since Dad moved into the care facility. The vehicle was still registered and insured in Dad’s name, and I wasn’t sure how to renew them when both expired next month. Luckily Dad decided to sell my brother the Explorer for $1 so that my brother can retitle/insure it in his name. Dad can still be driven around in a familiar vehicle and he’ll still reimburse my brother’s expenses. I’ve canceled Dad’s auto insurance, so now his only expenses are:  the care facility, his Medicare supplemental (Medigap) insurance policy, prescription co-payments, and state/federal taxes.

Last month our lawyer filed the guardianship & conservatorship petitions. (I’ve learned that these petitions are considered a low-margin service, and many lawyers are tempted to drop them to the bottom of their “To Do” list.) A few weeks ago we got a call from the probate court’s interviewer. He’s paid $100 to talk with the parties to the petition and report back to the probate judge. It’s his job to get you talking, but even so it was enjoyable and he answered all my questions. (He also commented on how smoothly my Dad bluffs through conversations by affably socializing without actually contributing hard info. If he’d run into Dad at a coffee shop and struck up a chat, he never would have realized that Dad was so far into Alzheimer’s.) The interviewer’s confirmed that Dad voluntarily wants my brother and me to take over his affairs (not that Dad’s considered competent to make that choice) so the hearing should go quickly.

Over the 30-minute interview I learned what to expect from the court appearance, what questions the judge might ask, and how the court oversees the conservators. (The state’s website includes a manual and the report-filing requirements.) The interviewer mentioned a state association of guardians who help families file their petitions without any lawyers at all, and who also help guardians with support groups & counseling. (I’ll have to see if Hawaii has a conservator group.) He even asked why I thought I was qualified to be a conservator– that pushed our conversation way beyond the petition’s documentation into a discussion of early retirement, investing experience, blogging, and publishing the book. He said that when you petition for conservatorship it is not a time to be humble about your credibility.

The interviewer asked a few questions about how Dad’s bills are being paid now, and he seemed happy with the answers. He also said that the court has no problems with conservators reimbursing themselves for expenses incurred for their ward’s benefit. (This means I can continue to reimburse myself if I have to use my credit card.) The judge is more concerned that every penny is accounted for without fraud or neglect.

I’m concerned about the hearing.  These days my father’s Alzheimer’s symptoms make him think I’m his old college roommate, so if I appeared in a courtroom and was addressed as his son in his presence then it would cause quite a bit of confusion. The court has flexibility with uncontested petitions, and the interviewer said that he’d log our concerns and request that my “appearance” be done by phone.

Last week the lawyer’s paralegal let us know that we’re on the court calendar for 19 December– in less than three weeks. I’ll be able to phone in (voice only, no Skype required). Assuming everything goes well, I should have my conservator’s appointment letter shortly afterward.

Once I get the appointment letter, the next step will be contacting Dad’s bank manager. Dad’s pension and Social Security deposits have piled up in his checking account for the last nine months, but with the appointment letter we can move those funds (earning 0.05% interest) into a CD ladder. I’ll also set up an EFT link to his brokerage account so that we can transfer funds as needed. (The bank CDs might be better than the brokerage.) Finally, Dad has a minimum-balance Vanguard account that he hasn’t touched in years. I’ll ask his brokerage to transfer those shares in-kind and then shut down the Vanguard account. I don’t need to use Dad’s credit cards (which have already expired) so I’ll just keep the company’s new (unactivated) cards in our files until they decide to close his account.

In 2012 I’ll do more rebalancing. I’ll sell more of Dad’s stocks (and equity mutual funds with high expenses) to raise his cash allocation. (He’s about 70% equities now, and that needs to drop to 25%. Earlier this year he was over 85%.) Last year his tax return only took a couple of hours. This year, since I don’t have to search for his tax files, it should be even faster.

Taking care of his finances has been a steep learning curve but it’s starting to flatten. I’m reading “A Bittersweet Season” by Jane Gross so I have a new appreciation for “bad”, and this is actually working out pretty well. I’ll post a review of Ms. Gross’ book in a few weeks.

I’m thankful that Dad lived such a low-key lifestyle for the last 20 years. (I know that he enjoyed its simplicity and freedom.) For most of that time he was easily banking half his pension check and all of his Social Security. He lived in a bare-bones 2BR apartment in a small town and drove an old reliable vehicle. He bought few toys, owned minimal material possessions, and his closets were mostly empty. His hobbies were investments, reading, and hiking national parks. He substantially bolstered his net worth. His spending steadily declined during his ER and his consistent savings left him financially sound for the rest of his life. Ty Bernicke claims that elder spending drops as we hit our 70s, and that’s been the case with my Dad since his 50s. Between his insurance and his modest assets, I’m pretty sure that he won’t run out of money.

I hope these posts have helped you start a financial-management conversation with your parents.  Let me know what you’ve learned about the probate court hearing or the guardianship process…

Related articles:
Financial lessons learned from caring for an elderly parent
More on caring for an elder’s finances
Geriatric financial management

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About Doug Nordman

Author of "The Military Guide to Financial Independence and Retirement" and co-author of "Raising Your Money-Savvy Family For Next Generation Financial Independence."
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