Powers of Attorney Come in Different Flavors

A power of attorney is a very important estate planning tool, but in fact there are several different kinds of powers of attorney that can be used for different purposes. Before executing this crucial document, it is important to understand what your options are.

A power of attorney allows a person you appoint — your “attorney-in-fact” or agent — to act in your place for financial or other purposes when and if you ever become incapacitated or if you can’t act on your own behalf. There are four main types of powers of attorney.

• Limited. A limited power of attorney gives someone else the power to act in your stead for a very limited purpose. For example, a limited power of attorney could give someone the right to sign a deed to property for you on a day when you are out of town. It usually ends at a time specified in the document.
• General. A general power of attorney is comprehensive and gives your attorney-in-fact all the powers and rights that you have yourself. For example, a general power of attorney may give your attorney-in-fact the right to sign documents for you, pay your bills, and conduct financial transactions on your behalf. You could use a general power of attorney if you were not incapacitated, but still needed someone to help you with financial matters. A general power of attorney ends on your death or incapacitation unless you rescind it before then.
• Durable. A durable power of attorney can be general or limited in scope, but it remains in effect after you become incapacitated. Without a durable power of attorney, if you become incapacitated, no one can represent you unless a court appoints a conservator or guardian. A durable power of attorney will remain in effect until your death unless you rescind it while you are not incapacitated.
• Springing. Like a durable power of attorney, a springing power of attorney can allow your attorney-in-fact to act for you if you become incapacitated, but it does not become effective until you are incapacitated. If you are using a springing power of attorney, it is very important that the standard for determining incapacity and triggering the power of attorney be clearly laid out in the document itself.

Regardless of what type of power of attorney you use, it is important to think carefully about who will be your attorney-in-fact. Your attorney-in-fact will have a lot of control over your finances, and it is crucial that you trust him or her completely. For more information on choosing an attorney-in-fact, click here.

While many pre-packaged do-it-yourself power of attorney forms are available, it is a good idea to have an attorney draft the form specifically for you. There are many issues to consider and one size does not fit all.

To discuss powers of attorney or other Elder Law matters with an attorney, please email the Elder Law Center or call 630-844-0065. The Elder Law Center is located in Aurora, IL, Kane County, in the Chicago Western Suburbs.

Getting Medicare While Traveling or Living Overseas

Many retirees look forward to traveling in their retirement, and more and more are actually retiring overseas, in part as a way to stretch savings. But what happens to retirees’ federal benefits while they are out of the country? The short answer is that although Social Security benefits are available to retirees in other countries, Medicare generally is not. In this installment we look at Medicare.

Traditional Medicare does not provide coverage for hospital or medical costs outside the United States (although Medicare does cover residents of Puerto Rico, Guam, the U.S. Virgin Islands, American Samoa, and the Northern Mariana Islands). In rare cases, Medicare may pay for inpatient hospital services in Canada or Mexico. (For details, click here.)

Some Medicare Advantage (private Medicare) plans may provide coverage benefits for health care needs when enrollees travel outside the United States. (Check with your plan before traveling.) But those retiring overseas — or travelers enrolled in the traditional Medicare program or whose Medicare Advantage plan does not cover foreign travel — will need to purchase health insurance from another source.

Medicare beneficiaries who are traveling and who have no other coverage must either buy short-term travel insurance or a Medigap policy that covers foreign emergencies. Medigap plans C through J offer travel emergency coverage, but the benefit applies only during the first 60 days of any trip. This Medigap benefit covers 80 percent of emergency care administered outside the country. A $250 deductible and $50,000 lifetime maximum apply. In addition, many travel agents and private companies offer insurance plans that will cover health care expenses incurred overseas, including evacuations. The State Department’s Bureau of Consular Affairs provides information on medical insurance while overseas, including a list of companies that offer travel medical insurance, at its Web site.

Retirees who are moving to a foreign country cannot use Medicare to pay for health care while they are living overseas. The options for retirees are to buy private coverage, to pay into a government-sponsored system in their new country of residence, or to go without coverage. If the retiree is moving to a country with a strong national plan, he or she may be able to pay into the plan and receive coverage similar to that accorded residents of the country. If national insurance isn’t an option, many companies offer “expatriate” health insurance plans. Choosing the right plan depends on where the retiree is moving. For example, if a retiree is traveling somewhere remote or with poor local health care, evacuation coverage may be important. Another country may offer excellent health care, but each doctor visit may cost a lot of money, so a plan that covers outpatient doctor visits may be necessary there. No matter where the retiree is moving, another consideration is whether the plan covers pre-existing conditions.

Whatever option retirees choose while abroad, if they return to the United States they will still be covered by Medicare Part A. Medicare Part A covers institutional care in hospitals and skilled nursing facilities, as well as certain care given by home health agencies and care provided in hospices. There are no premiums for this part of the Medicare program and anyone who is 65 or older and is eligible for Social Security automatically qualifies.

Medicare Part B, which covers outpatient services, charges a monthly premium. Unless retirees continue to pay the premiums while they are overseas, they will not automatically be covered by Medicare Part B when they return to the United States. Retirees who drop Part B and then move back to the United States will have to pay an enrollment penalty. Premiums increase by 10 percent for each year that an individual is not enrolled in Part B. Therefore, retirees who think they may return to the United States may find it worthwhile to continue paying Part B premiums while they live abroad.

To discuss Medicare or other Elder Law matters with an attorney, please email the Elder Law Center or call 630-844-0065. The Elder Law Center is located in Aurora, IL, Kane County, in the Chicago Western Suburbs.