Your aging mother has been slowing down mentally, and doctors say she is showing signs of dementia. They also tell you she should have a Power of Attorney (POA), but when you research the subject, you end up with more questions than answers. What type of POA should it be? When should it go into effect? Is there a special POA for people with dementia? Is a lawyer needed to create the actual document?
Connect with us at Eldercare Resource Planning if you have these questions, or any others, about Power of Attorney documents and their role in long-term care planning. Or keep reading for an overview of the topic.
A Power of Attorney (POA) is a legal document that gives an individual the right to act on behalf of another person. These are important care planning documents because they ensure that someone with your best interests in mind will be handling your affairs in the event that you become incapacitated and can not make decisions on your own, or at least can not communicate them. Without one of these documents, someone who loses the ability to make decisions on their own might have their finances and healthcare managed by the state.
The individual creating the POA is known as the “grantor” or “principal.” The person who can act on their behalf is known as the “agent” or “attorney-in-fact.” For our purposes, the grantor is the senior preparing for long-term care and the agent is usually a family member or loved one, often an adult child.
A common misconception about POAs is that they give the agent total control over the grantor’s life. This isn’t the case, unless the POA specifically states that. In most cases, the agent is given decision-making power in a specific area of the grantor’s life, and the scope of that power is defined in the POA. For Medicaid purposes, the most relevant areas of decision-making power are medical and financial.
POAs can be canceled or changed at any time and for any reason, as long as the grantor is competent enough to make those types of decisions. In all POAs, the agent’s powers end upon death of the grantor.
As mentioned above, anyone who loses the ability to make decisions for themselves and does not have a POA will have their financial resources and healthcare choices managed by the state. If that happens, the state could, for example, choose not to apply for Medicaid for the senior and instead decide to sell the individual’s home and pay for their long-term care with those proceeds. In order to reclaim control of the senior’s medical and financial decisions, family members would have to go to court and establish legal guardianship.
The most common type of Power of Attorney for families considering Medicaid is a Durable Power of Attorney (DPOA). A DPOA is effective immediately and gives the agent decision-making power after the principal has become mentally or physically incapacitated and is no longer able to make decisions on their own.
A springing POA can also be helpful for those interested in Medicaid’s long-term care coverage. Instead of being effective immediately, a springing POA is “sprung” into effect by a predetermined event like an incapacitating trauma such as a stroke or major accident, or a change in a preexisting illness or condition like Alzheimer’s disease or dementia.
A general or non-durable POA will not be helpful for Medicaid applicants and their families. This type of POA is also effective immediately, but the powers of the agent end when the principal is incapacitated, and therefore won’t allow the agent to perform the tasks needed for Medicaid application.
It’s never too soon to create a POA. Simply creating a POA does not mean the senior is incompetent, nor does it take away their rights to make financial, healthcare or any other kind of decision on their own. It just means that if the principal is incapacitated and can no longer make their own decisions, the agent will do so on their behalf.
Creating a POA while a senior is still healthy is critical for people considering Medicaid. If the applicant’s health happens to fail rapidly and they are not capable of completing the Medicaid application on their own, having a POA will allow the agent to collect the necessary financial and medical documentations and complete the application.
A POA will also prove valuable after the Medicaid application has been approved so the agent can make further financial and medical decisions for the principal while they are receiving long-term care.
If a senior is in the early stages of Alzheimer’s or some other form of dementia and still has the capacity to understand what the Power of Attorney documents mean and what powers they transfer, they can still create a POA. Understanding how state Medicaid agencies evaluate Alzheimer’s/dementia cases is critical under these circumstances, and one of our Certified Medicaid Planners can help in this area thanks to their years of experience working with these agencies. If the state decides the senior was not mentally competent, the POA could be ruled invalid and the senior would become a ward of the state. Family members would then have to go to court to gain guardianship of the senior, which can be a lengthy and expensive process.
The situation becomes even more delicate as Alzheimer’s or dementia progresses. A springing POA (which “springs” into effect under certain conditions, such as worsening Alzheimer’s) can be helpful in these cases, but it would need to have been created while the elder was still deemed competent. And some states, like Florida, do not allow springing POAs. To know which POAs are available in your state and how the state handles POAs for Alzheimer’s/dementia patients, connect with us by clicking here now.
As mentioned above, POAs do not simply give the agent total control over the life of the principal. Instead, the agent’s powers are usually limited to one area and they must be specifically detailed in the wording of the POA document. When it comes to POAs for families considering Medicaid long-term care, seniors should grant control in two key areas – healthcare and finances.
Financial POA
The financial POA allows the agent to manage the principal’s finances – access bank and retirement accounts, write checks, pay bills, file taxes, manage real estate, file insurance claims, etc. The financial POA also allows the agent to apply for benefits, like Medicaid, for the principal, and access all the documentation needed in the Medicaid application process. Required documents for the application usually include year-end statements from all bank accounts, investments, IRAs, 401Ks and annuities for the last five years to satisfy Medicaid’s Look-Back Period, as well as proof of all income sources (pensions, interest, royalties, wages), and copies of life insurance policies, real estate deeds, vehicle titles, trusts and any other documents that detail any financial holdings.
Healthcare POA
With a healthcare POA, the agent can make decisions regarding the principal’s healthcare options such as surgery, in-home health care and hospitalization. The agent can also choose choose the principal’s healthcare professionals and types of medications. And the agent can decide if the principal needs to live in an assisted residential setting like a nursing home facility, or maybe an Alzheimer’s care unit, or maybe the principal can receive the long-term care help they need at home.
Even though the agent with the healthcare POA can make all of these choices, they cannot use the principal’s funds to pay for the healthcare without approval from the agent with the financial POA. The decision-making process is streamlined if the healthcare and financial POA agent is the same person, but they don’t have to be.
Multiple POA Agents
It is also possible for a senior to give more than one person Power of Attorney concerning financial, healthcare or any other decisions. However, having multiple POA agents is generally not recommended. Multiple agents could disagree on a decision for the principal, which might result in harmful delays in healthcare or costly financial mistakes.
There is no universal POA form since the document itself varies by state, but the state-specific forms are generally available to download from a state government website, and there are other generic forms one can download for free. However, the rules and limitations for POAs also vary by state, including whether or not the documents need to be signed in front of a notary public or other witness. Plus, each POA must specifically detail what powers it is granting to the agent.
Despite all those variables, you do not need an attorney to legally create a POA. But since the documents can become complex and POAs tend to change with each individual case, we recommend consulting with one of our Certified Medicaid Planners to create the right Durable POA for the situation. Our CMPs know what kind of issues arise for seniors in long-term care and how they should be covered in a POA. They will also help ensure all of the state rules and regulations regarding POAs are followed so the document is, in fact, legally binding.
Our team of Certified Medicaid Planners™ will help you navigate the difficult landscape of Medicaid for long-term care.
