Ask Terry Questions Medicare supplemental insurance necessary for Parent

Medicare supplemental insurance necessary for Parent

By Terry Savage on October 30, 2014 | Insurance & Annuities

Terry, here’s the situation. My mother is 92 years old, just sold her home and had to move into assisted living facility. The facility is nice and she enjoys living there. Anticipated problem we see on the horizon is her running out of money. Nursing home costs $8500 a month of which roughly half comes back to her with her social security and long term care. She has roughly $45K total left in bank before she must start dipping into her etrade of $230K. She is also medicare and would also like us to not resuscitate when time comes. At this point and given her age of 92 with the possibility of she living upwards to 100, which she says is good possibility since she is (cross your fingers) in good health now, would you recommend we drop her blue cross/blue shield supplemental insurance policy? The policies premium is $550 every couple months. Again, we are concerned she may run out of money so we’re beginning to look at where she can possibly do without.

Terry Says:  Oh my — it’s a wonderful problem to have, but an expensive one!   OK, do the math.  How much is she “short” each month?  Simply divide by the total assets of $45,000 plus $230,000 — and you will see roughly how long it will take for her money to “run out.”  Looks like not much of a likelihood, given her social security and LTC insurance benefits you describe.  (And you should also ask the facility if they accept Medicaid to pay for patients after assets run out — but assure them she has a long way to go before that happens!!)

BUT, you simply can’t drop her supplement policy!  It covers huge expenses that are not covered by Medicare.  She probably has the best policy available at her age.  So definitely don’t drop it.  And she should have Part D, prescription drug coverage, as well.  Go to and they will walk you through the policies available — and take a look to make sure her supplement is the appropriate one.

AND, there is no reason at her age to have money in an etrade account!  She should not be speculating, or having any possibility of losing her capital.  So unless a switch would trigger long-term capital gains taxes (consult with her accountant on cost basis of any stocks), you might want to move all of that money into a money market mutual fund or deposit account (and I know it will earn no interest, but she won’t lose any money, either!)

AND, you say he has a “living will” with end-of-life instructions, but does she have a current will or revocable living trust?  And do you have power of attorney over those bank and brokerage accounts?  Now is the time to get this done, while she is still competent and can participate in the process.  You must consult an estate planning attorney.

Yes, this is a lot to do — but it will be a LOT easier to do it now than when she becomes incapacitated.



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