Fong Law Group

Medicare Advantage Plans Often Wrongly Deny Necessary Care, Study Finds

In an alarming number of instances, private Medicare Advantage plans are denying coverage for medical services that would be covered under original Medicare, according to a federal investigation.  These denials are likely preventing or delaying medically necessary care for tens of thousands of Medicare Advantage beneficiaries each year.

The investigation by the Department of Health and Human Services’ Office of Inspector General found that 13 percent of Medicare Advantage plan denials should have been covered under Medicare.  The findings were based on a review by doctors and coding experts of service denials by 15 of the largest Medicare Advantage plans during the first week of June 2019.   Extrapolating from their findings, investigators estimate that nearly 85,000 beneficiary requests for medical care -- everything from MRIs to skilled nursing facility care -- could have been wrongly denied in 2019.

In an even higher proportion of cases, plans are incorrectly refusing to pay claims. Nearly one-fifth of claims that Medicare Advantage plans initially declined to pay were for services that met Medicare coverage and plan billing rules.  This translates to an estimated 1.5 million refused payments for all of 2019, delaying or blocking payments for services that providers had already delivered.

Hidden Barriers to Care

Some 26 million Medicare beneficiaries were in Medicare Advantage plans as of 2021, more than double the figure a decade ago.  The Congressional Budget Office projects that by 2030 more than half of Medicare beneficiaries will be in a private Medicare plan. Unlike original Medicare, where the federal government is the insurer, Medicare Advantage plans are run by private insurance companies. The government pays the plans a fixed monthly fee to provide services to each Medicare beneficiary under their care. The less money the plans spend on patient care, the more they and their investors make. In this way, plans have an incentive to keep costs down.

For many beneficiaries, Medicare Advantage plans’ most disagreeable cost-cutting strategy is “preauthorization” -- the common requirement that doctors and other medical providers obtain the plan's approval before a beneficiary can receive certain medical services. If the plan administrators disagree that a procedure is medically necessary, the plan may refuse to pay for it.

Medicare Advantage plans often look attractive because they offer the same basic coverage as original Medicare at a seemingly lower cost, plus some additional benefits and services like vision and dental care that traditional Medicare doesn't offer. (One reason Medicare Advantage plans can offer such enhanced services is because the federal government gives them additional payments compared to original Medicare.) The inspector general’s report highlights one of Medicare Advantage’s downsides.

“Beneficiaries enrolled in Medicare Advantage may not be aware that there may be greater barriers to accessing certain types of health care services in Medicare Advantage than in original Medicare,” the report states.

One example highlighted in the report tells of a Medicare Advantage plan that refused to approve a follow-up MRI to find out whether an adrenal lesion was malignant because the lesion was allegedly too small. In fact, Medicare’s rules do not restrict the use of follow-up MRIs based on the size of a lesion. (The plan reversed its initial denial on appeal.)

Denial Appeals Can Work

The report identified two common causes of service denials. First, even though Medicare Advantage plans’ clinical criteria cannot be “more restrictive” than Medicare’s coverage rules, plans often used tighter clinical criteria, such as requiring an x-ray before approving more advanced imaging. Second, plans often claimed that the request for services lacked sufficient documentation, even though investigators who reviewed the denied claims found that the existing medical records were sufficient to support the request.

When a Medicare Advantage plan denies a preauthorization or payment request, the beneficiary can file an appeal with the plan.  The inspector general found that when a beneficiary or provider appealed or disputed the denial of a service that met Medicare’s coverage rules, plans sometimes reversed the denial.  And in certain cases, Medicare Advantage plans corrected their own errors.

The inspector general’s report offers several recommendations for the Centers for Medicare and Medicare Services, which oversees Medicare Advantage plans, including better auditing of plans.   

To read the inspector general’s report, “Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care,” click here.  

Should You Prepare a Medicaid Application Yourself?

Navigating the Medicaid application process can be complicated, especially if you are applying for long-term care benefits. Hiring an attorney to help you through the process can be extremely helpful. 

Whether you should prepare and file a Medicaid application by yourself or should hire help depends on answers to the following questions:

• How old is the applicant?
• How complicated is the applicant's financial situation?
• Is the individual applying for community or nursing home benefits?
• How much time do you have available?
• How organized are you?

Medicaid is the health care program for individuals who do not have another form of insurance or whose insurance does not cover what they need, such as long-term care. Many people rely on Medicaid for assistance in paying for care at home or in nursing homes.

For people under age 65 and not in need of long-term care, eligibility is based largely on income and the application process is not very complicated. Most people can apply on their own without assistance.  

Matters get a bit more complicated for applicants age 65 and above and especially for those of any age who need nursing home or other long-term care coverage. In these cases, availing yourself of the services of an attorney is practically essential.

Medicaid applicants over age 65 are limited to $2,000 in countable assets (in most states). It's possible to transfer assets over this amount in order to become eligible, but seniors need to be careful in doing so because they may need the funds in the future and if they move to a nursing home, the transfer could make them ineligible for benefits for five years. Professional advice is also crucial because there is a confusing array of different Medicaid programs that may be of assistance in providing home care, each with its own rules.

All of that said, the application process itself is not as complicated for community benefits (care that takes place outside of an institutional setting, such as in the beneficiary’s home). In short, those over 65 may need to consult with an elder law attorney for planning purposes, but they or their families may be able to prepare and submit the Medicaid application themselves.

But submitting an application for nursing home benefits without an attorney's help is not a good idea. This is because Medicaid officials subject such applications to enhanced scrutiny, requiring up to five years of financial records and documentation of every fact. Any unexplained expense may be treated as a disqualifying transfer of assets, and many planning steps -- such as trusts, transfers to family members, and family care agreements -- are viewed as suspect unless properly explained. Finally, the process generally takes several months as Medicaid keeps asking questions and demanding further documentation for the answers provided.

Many elder law attorneys offer assistance with Medicaid applications as part of their services. This has several advantages, including expert advice on how best to qualify for benefits as early as possible, experience in dealing with the more difficult eligibility questions that often arise, and a high level of service through a long, grueling process. The one drawback of using an attorney rather than a lay service is that the fee is typically substantially higher. However, given the high cost of nursing homes, if the law firm's assistance can accelerate eligibility by even one month that will generally cover the fee. In addition, the payments to the attorney are generally with funds that would otherwise be paid to the nursing home -- in other words, the funds will have to be spent in any event, whether for nursing home or for legal fees.

Medicare Premiums to Increase Dramatically in 2022

Medicare premiums are rising sharply next year, cutting into the large Social Security cost-of-living increase. The basic monthly premium will jump 15.5 percent, or $21.60, from $148.50 to $170.10 a month.

The Centers for Medicare and Medicaid Services (CMS) announced the premium and other Medicare cost increases on November 12, 2021. The steep hike is attributed to increasing health care costs and uncertainty over Medicare’s outlay for an expensive new drug that was recently approved to treat Alzheimer’s disease. Because most recipients have their Medicare premium deducted from their Social Security check, the upswing in Medicare premiums means that the Social Security cost-of-living increase of 5.9 percent, which was the largest in 39 years, will be smaller for most people. 

While the majority of beneficiaries will pay the added amount, a "hold harmless" rule prevents Medicare recipients' premiums from increasing more than Social Security benefits. This “hold harmless” provision does not apply to Medicare beneficiaries who are enrolled in Medicare but not yet receiving Social Security, new Medicare beneficiaries, seniors earning more than $91,000 a year, and "dual eligibles" who get both Medicare and Medicaid benefits.

Meanwhile, the Part B deductible will rise $30, from $203 to $233 in 2022, while the Part A deductible will go up by $72, to $1,556. For beneficiaries receiving skilled care in a nursing home, Medicare's coinsurance for days 21-100 will increase from $185.50 to $194.50. Medicare coverage ends after day 100.   

Here are all the new Medicare payment figures:

• Part B premium: $170.10 (was $148.50)
• Part B deductible: $233 (was $203)
• Part A deductible: $1,556 (was $1,484)
• Co-payment for hospital stay days 61-90: $389/day (was $371)
• Co-payment for hospital stay days 91 and beyond: $778/day (was $742)
• Skilled nursing facility co-payment, days 21-100: $194.50/day (was $185.50)

Your "Medigap" policy may cover some of these costs. 

Premiums for higher-income beneficiaries ($91,000 and above) are as follows: 

• Individuals with annual incomes between $91,000 and $114,000 and married couples with annual incomes between $182,000 and $228,000 will pay a monthly premium of $238.10.
• Individuals with annual incomes between $114,000 and $142,000 and married couples with annual incomes between $228,000 and $2846,000 will pay a monthly premium of $340.20.
• Individuals with annual incomes between $142,000 and $170,000 and married couples with annual incomes between $284,000 and $340,000 will pay a monthly premium of $442.30.
• Individuals with annual incomes above $170,000 and less than $500,000 and married couples with annual incomes above $340,000 and less than $750,000 will pay a monthly premium of $544.30.
• Individuals with annual incomes above $500,000 and married couples with annual incomes above $750,000 will pay a monthly premium of $578.30.

Rates differ for beneficiaries who are married but file a separate tax return from their spouse. Those with incomes greater than $91,000 and less than $409,000 will pay a monthly premium of $544.30. Those with incomes greater than $409,000 will pay a monthly premium of $578.30.

The Social Security Administration uses the income reported two years ago to determine a Part B beneficiary's premium. This means that the income reported on a beneficiary's 2020 tax return is used to determine whether the beneficiary must pay a higher monthly Part B premium in 2022. Income is calculated by taking a beneficiary's adjusted gross income and adding back in some normally excluded income, such as tax-exempt interest, U.S. savings bond interest used to pay tuition, and certain income from foreign sources. This is called modified adjusted gross income (MAGI). If your MAGI decreased significantly in the past two years, you may request that information from more recent years be used to calculate the premium. You can also request to reverse a surcharge if your income changes.

Those who enroll in Medicare Advantage plans may have different cost-sharing arrangements. CMS estimates that the Medicare Advantage average monthly premium will be lower in 2022, from an average of $21 in 2021 to $19 in 2022.

For Medicare’s press release announcing the new premium, co-payment and deductible amounts for 2022, click here.

Hiring a Caregiver: Should You Employ One Yourself or Go Through an Agency?

Most seniors prefer to stay at home as long as possible rather than move into a nursing home. For many families, this means eventually hiring a caregiver to look after an aging relative. There are two main ways to hire someone: directly or through a home health agency.

Hiring directly
When you hire a caregiver directly, you need to consider all the tax and liability issues. As an employer, you are responsible for filing payroll taxes, tax forms, and verifying that the employee can legally work in the United States. If you pay $2,300 or more in wages in 2021 to any one employee, you need to withhold and pay Social Security and Medicare taxes. If you pay more than $1,500 in wages in 2021, you need to pay unemployment taxes. In addition, a private caregiver may not carry his or her own liability insurance or workers' compensation. If an accident occurs on the job, you could be responsible.

The benefit of hiring a caregiver directly is that you have more control over whom you hire and can choose someone whom you feel is right for your family. Another benefit is that hiring privately is usually cheaper than hiring through a home health agency. For more information from Caring.com on hiring a caregiver directly, click here.

The agency route
When you hire through a home health agency, the agency is the employer, so you don't need to worry about tax and liability issues. The agency takes care of screening the employees, doing background checks, and providing insurance. In addition, a licensed home care agency must provide ongoing supervision to its employees. It can help the employees deal with difficult family situations or changing needs. The agency may also be able to provide back-up if a regular caregiver is not available.

The downside of going through an agency is not having as much input into the selection of the caregiver. Another consideration is that caregivers may change or alternate, causing a disruption in care and confusion. To find a home health care agency near you, click here.

In 2022, Social Security Beneficiaries Will See the Biggest Increase in 39 Years

The year was 1983: The U.S. invaded Granada. A gallon of gas cost 96 cents. Michael Jackson’s ‘Thriller’ video premiered. That year was also the last time that Social Security recipients saw a cost-of-living increase steeper than the one just announced for 2022. This year, Social Security benefits will rise 5.9 percent, the sharpest upsurge since 1983’s 7.4 percent jump. 

Cost-of-living increases are tied to the consumer price index, and rising inflation rates and gas prices caused by the ongoing coronavirus pandemic mean Social Security recipients will get a large boost in 2022. The 5.9 percent increase dwarfs last year’s 1.3 percent rise, and over the past decade hikes have averaged just 1.65 percent. The average monthly benefit of $1,565 in 2021 will go up by $92 a month to $1,657 a month for an individual beneficiary, or $19,884 yearly. 

The cost-of-living change also affects the maximum amount of earnings subject to the Social Security tax, which will grow from $142,800 to $147,000.

For 2022, the monthly federal Supplemental Security Income (SSI) payment standard will be $841 for an individual and $1,261 for a couple.

Part of the increase will be eaten up by higher Medicare Part B premiums, however. The standard monthly premium for Medicare Part B enrollees has not been announced yet, but it is projected to rise $10 a month to $158.30.  And the 5.9 percent Social Security increase may not be enough for seniors to keep pace with rising health care and prescription drug costs.

“You’re glad that you get a 5.9 percent increase, but it doesn’t feel like you’re getting 5.9 percent when all of your other costs are going up much higher,” said Nancy Altman, president of the advocacy group Social Security Works.

Most beneficiaries will be able to find out their specific cost-of-living adjustment online by logging on to my Social Security in December 2021. While you can still receive your increase notice by mail, you have the option to get the notice online instead.

For more on the 2022 Social Security benefit levels, click here.

It’s Medicare Open Enrollment Time: Is Your Plan Still Working for You?

Every year Medicare gives beneficiaries a window of opportunity to shop around and determine if their current Medicare plan is still the best one for them. During Medicare's Open Enrollment Period, which runs from October 15 to December 7, beneficiaries can freely enroll in or switch plans. 

During this period, you may enroll in a Medicare Part D (prescription drug) plan or, if you currently have a plan, you may change plans. In addition, during the seven-week period you can return to traditional Medicare (Parts A and B) from a Medicare Advantage (Part C, managed care) plan, enroll in a Medicare Advantage plan, or change Advantage plans. 

Beneficiaries can go to www.medicare.gov or call 1-800-MEDICARE (1-800-633-4227) to make changes in their Medicare prescription drug and health plan coverage.

According to the New York Times, few Medicare beneficiaries take advantage of Open Enrollment, but of those who do, nearly half cut their premiums by at least 5 percent. Even beneficiaries who have been satisfied with their plans in 2021 should review their choices for 2022, as both premiums and plan coverage can fluctuate from year to year. For example: 

• Are the doctors you use still part of your Medicare Advantage plan’s provider network? 
• Have any of the prescriptions you take been dropped from your prescription plan’s list of covered drugs (the “formulary”)? 
• What are your total out-of-pocket costs? 
• Could you save money with the same coverage by switching to a different plan?

For answers to questions like these, carefully look over the plan's "Annual Notice of Change" letter to you. Prescription drug plans can change their premiums, deductibles, the list of drugs they cover, and their plan rules for covered drugs, exceptions, and appeals. Medicare Advantage plans can change their benefit packages, as well as their provider networks.   

Remember that fraud perpetrators will inevitably use the Open Enrollment Period to try to gain access to individuals' personal financial information. Medicare beneficiaries should never give their personal information out to anyone making unsolicited phone calls selling Medicare-related products or services or showing up on their doorstep uninvited. If you think you've been a victim of fraud or identity theft, contact Medicare. 

Here are more resources for navigating the Open Enrollment Period:

• Medicare Plan Finder, which helps you find a plan to match your needs: www.medicare.gov/find-a-plan 
• Medicare coverage options: www.medicare.gov/medicarecoverageoptions/
• The 2022 Medicare & You handbook, which all Medicare beneficiaries should have received. The handbook can also be downloaded online at:  medicare.gov/forms-help-resources/medicare-you-handbook/download-medicare-you-in-different-formats
• The Medicare Rights Center: www.medicareinteractive.org
• Your State Health Insurance Assistance Program, which offers independent counseling: www.shiptacenter.org

President Biden Proposes Billions in Increased Funding for Home Health Care

President Biden has introduced a plan to spend $400 billion over eight years on home and community-based care for the elderly and people with disabilities. The money would go to expand access to care and support higher-paying caregiving jobs. 

As the elderly population grows, our long-term care system is becoming increasingly strained. The AARP found that in 2020, more than one out of every five Americans -- 21.3 percent -- were acting as caregivers, either caring for a relative or a close friend. Many women have had to drop out of the workforce to care for aging family members. In the meantime, paid caregivers are typically underpaid and overworked, with one in six paid caregivers living in poverty. And our elderly population is only expected to grow: By 2030, one in five Americans is projected to be over 65.

Recognizing that the United States is “in the midst of a caregiving crisis,” President Biden has proposed boosting funding for home and community based long-term care as part of his $2 trillion American Jobs Plan. While the plan does not have specifics, it proposes to expand access to long-term care services under Medicaid that help people stay at home and avoid care in an institution. Currently, only nursing home care is mandated under Medicaid, with states providing care at home or in the community at their discretion. Waiting lists for home and community-based services under state Medicaid programs can stretch on for years, and only a small fraction of those who need care receive these services, according to Kaiser Health News.

Among other things, President Biden wants to extend the Money Follows the Person program, which is a federal initiative designed to move people out of nursing homes and into home-based care. The program provides grants to states to create innovative home and community-based programs. 

President Biden is also proposing that money be put toward creating well-paying caregiving jobs and that home health care workers be able to join a union and engage in collective bargaining. The White House states that this “will improve wages and quality of life for essential home health workers and yield significant economic benefits for low-income communities and communities of color.”

President Biden’s plan does not provide details, leaving It up to Congress to fill in the particulars when drafting its legislation. It is unclear how much of Biden’s proposed funding will make it into a final bill. 

To read about the American Jobs Plan, click here.  

For more about the home health care proposal, click here and here.

How the $1.9 Trillion COVID-19 Relief Bill Aids Seniors

President Biden has signed the latest COVID-19 relief bill, which in addition to authorizing stimulus checks, funding vaccine distribution, and extending unemployment benefits, also provides assistance to seniors in a number of ways. 

The $1.9 trillion American Rescue Plan Act (ARPA) delivers a broad swath of relief, covering families, employers, health care, education, and housing. The following are the provisions that most directly affect older Americans:

• Relief checks. The ARPA provides $1,400 direct payments to individuals earning up to $75,000 in annual income and couples with incomes up to $150,000. The payments phase out for higher earners, and there are no payments for individuals earning more than $80,000 a year or couples making more than $160,000. Eligible dependents, including adult dependents, also receive $1,400. People collecting Social Security, railroad retirement, or VA benefits will automatically receive the payment even if they don’t file a tax return. The checks will not affect eligibility for Medicaid or Supplemental Security Income as long as any amount that pushes recipients above the programs’ asset limits is spent within 12 months.  
• Medicaid home care. The Act provides more than $12 billion in funding to expand Medicaid home and community-based waivers for one year. This funding will allow states to provide additional home-based long-term care, which could keep people from being forced into a nursing home. The money will also allow states to increase caregivers’ pay. 
• Nursing homes. Nursing homes have been hit hard during the pandemic. The Act supports the deployment of strike teams to help nursing homes that have COVID-19 outbreaks. It also provides funds to improve infection control in nursing homes. 
• Pensions. Many multi-employer pension plans are on the verge of collapse due to underfunding. The Act creates a system to allow plans that are insolvent to apply for grants in order to keep paying full benefits. 
• Medical deductions. If you have a large number of medical expenses, you may be able to deduct some of them from your taxes, including long-term care and hospital expenses. The Act permanently lowers the threshold for deducting medical expenses. Taxpayers can deduct unreimbursed medical expenses that exceed 7.5 percent of their income. The threshold was lowered to 7.5 percent under the 2017 tax law, but was set to revert to 10 percent for some taxpayers in 2021.  
• Older Americans Act. The ARPA provides funding to programs authorized under the Older Americans Act, including vaccine outreach, caregiver support, and the long-term care ombudsman program. It also directs funding for the Elder Justice Act and to improve transportation for older Americans and people with disabilities. 

For more information about what is in the ARPA, click here and here.

What is Long-Term Care and Who Provides It?

Long-term care is the care you need if you can’t perform daily activities on your own for an extended period of time. There are a number of different ways that long-term care can be provided. 

Most long-term care involves assisting with basic personal needs rather than providing medical care. You are usually determined to need long-term care if you need help with two or more “activities of daily living” (such as bathing, dressing, eating, and going to the bathroom). Family members usually provide long-term care to start, but as an illness escalates paid care may become necessary. 

The following are the types of long-term care:

• Home care from family member. The most basic form of long-term care is when a family member becomes the caregiver. It can involve simple tasks like buying groceries or more complicated ones like bathing and dressing. Sometimes family members can be paid for their work.
• Home care aide. Home care aides provide companionship and socialization and assist with meal preparation, housecleaning, laundry, shopping, and errands. They are also called homemaker or chore aides.
• Home health care aide. Health care aides provide personal care (bathing, grooming, etc.), assist with range-of-motion exercises, provide some medically-related care (empty colostomy bags, dress dry wounds, check blood pressure, etc.), and provide assistance with housekeeping and errands. They are often referred to as personal care assistants
• Adult day care. Adult day care allows family members to get a respite from caregiving. In general, there are three types of centers: those that focus on social interaction, those that focus on health care, and special Alzheimer's care centers.  
• Assisted living facility. Assisted living facilities are a housing option for people who can still live independently but who need some assistance. Depending on the facility, that assistance may include help with meal preparation, housekeeping, medication management, bathing, dressing, transportation and some nursing care. Residents usually live on their own, in small apartments. Despite the emphasis on independence, supportive services are available 24 hours a day in order to provide different levels of help with activities of daily living. The level of medical supervision depends on the facility.
• Nursing home. Nursing homes are the highest level of long-term care. They provide 24-hour care to residents. Staff provide help with daily activities such as feeding, dressing, and bathing along with medical care and physical, occupational, and speech therapy.

Costs for care can vary widely, from a few hundred dollars a week to pay for coverage when family members are at work to $300,000 or more a year for around-the-clock home care or care in the most expensive nursing homes, perhaps with private aides hired on the side. 

Long-term care costs, whether at home, in assisted living or in a nursing home, are paid primarily from three sources: out-of-pocket, Medicaid, and long-term care insurance. Medicare, the health insurance for people over age 65, only pays for up to 100 days of skilled nursing facility care following a hospitalization, and only for so long as the patient is deemed to need skilled care. It will also pay for skilled care at home -- in theory indefinitely, but this may take some advocacy.

The Ins and Outs of Guardianship and Conservatorship

Every adult is assumed to be capable of making his or her own decisions unless a court determines otherwise. If an adult becomes incapable of making responsible decisions, the court will appoint a substitute decision maker, usually called a "guardian," but called a "conservator" or another term in some states.

Guardianship is a legal relationship between a competent adult (the "guardian") and a person who because of incapacity is no longer able to take care of his or her own affairs (the "ward"). The guardian can be authorized to make legal, financial, and health care decisions for the ward. Depending on the terms of the guardianship and state practices, the guardian may or may not have to seek court approval for various decisions. In many states, a person appointed only to handle finances is called a "conservator."

Some incapacitated individuals can make responsible decisions in some areas of their lives but not others. In such cases, the court may give the guardian decision making power over only those areas in which the incapacitated person is unable to make responsible decisions (a so-called "limited guardianship"). In other words, the guardian may exercise only those rights that have been removed from the ward and delegated to the guardian.

Incapacity

The standard under which a person is deemed to require a guardian differs from state to state. In some states the standards are different, depending on whether a complete guardianship or a conservatorship over finances only is being sought. Generally, a person is judged to be in need of guardianship when he or she shows a lack of capacity to make responsible decisions. A person cannot be declared incompetent simply because he or she makes irresponsible or foolish decisions, but only if the person is shown to lack the capacity to make sound decisions. For example, a person may not be declared incompetent simply because he spends money in ways that seem odd to someone else. Also, a developmental disability or mental illness is not, by itself, enough to declare a person incompetent.

Process

In most states, anyone interested in the proposed ward's well-being can request a guardianship. An attorney is usually retained to file a petition for a hearing in the probate court in the proposed ward's county of residence. Protections for the proposed ward vary greatly from state to state, with some simply requiring that notice of the proceeding be provided and others requiring the proposed ward's presence at the hearing. The proposed ward is usually entitled to legal representation at the hearing, and the court will appoint an attorney if the allegedly incapacitated person cannot afford a lawyer.

At the hearing, the court attempts to determine if the proposed ward is incapacitated and, if so, to what extent the individual requires assistance. If the court determines that the proposed ward is indeed incapacitated, the court then decides if the person seeking the role of guardian will be a responsible guardian.

A guardian can be any competent adult -- the ward's spouse, another family member, a friend, a neighbor, or a professional guardian (an unrelated person who has received special training). A competent individual may nominate a proposed guardian through a durable power of attorney in case she ever needs a guardian.

The guardian need not be a person at all -- it can be a non-profit agency or a public or private corporation. If a person is found to be incapacitated and a suitable guardian cannot be found, courts in many states can appoint a public guardian, a publicly financed agency that serves this purpose. In naming someone to serve as a guardian, courts give first consideration to those who play a significant role in the ward's life -- people who are both aware of and sensitive to the ward's needs and preferences. If two individuals wish to share guardianship duties, courts can name co-guardians.

Reporting Requirements

Courts often give guardians broad authority to manage the ward's affairs. In addition to lacking the power to decide how money is spent or managed, where to live and what medical care he or she should receive, wards also may not have the right to vote, marry or divorce, or carry a driver's license. Guardians are expected to act in the best interests of the ward, but given the guardian's often broad authority, there is the potential for abuse. For this reason, courts hold guardians accountable for their actions to ensure that they don't take advantage of or neglect the ward.

The guardian of the property inventories the ward's property, invests the ward's funds so that they can be used for the ward's support, and files regular, detailed reports with the court. A guardian of the property also must obtain court approval for certain financial transactions. Guardians must file an annual account of how they have handled the ward's finances. In some states guardians must also give an annual report on the ward's status. Guardians must offer proof that they made adequate residential arrangements for the ward, that they provided sufficient health care and treatment services, and that they made available educational and training programs, as needed. Guardians who cannot prove that they have adequately cared for the ward may be removed and replaced by another guardian.

Alternatives to Guardianship

Because guardianship involves a profound loss of freedom and dignity, state laws require that guardianship be imposed only when less restrictive alternatives have been tried and proven to be ineffective. Less restrictive alternatives that should be considered before pursuing guardianship include:

• Power of Attorney. A power of attorney is the grant of legal rights and powers by a person (the principal) to another (the agent or attorney-in-fact). The attorney-in-fact, in effect, stands in the shoes of the principal and acts for him or her on financial, business or other matters. In most cases, even when the power of attorney is immediately effective, the principal does not intend for it to be used unless and until he or she becomes incapacitated. 
• Representative or Protective Payee. This is a person appointed to manage Social Security, Veterans' Administration, Railroad Retirement, welfare or other state or federal benefits or entitlement program payments on behalf of an individual.
• Conservatorship. In some states this proceeding can be voluntary, where the person needing assistance with finances petitions the probate court to appoint a specific person (the conservator) to manage his or her financial affairs. The court must determine that the conservatee is unable to manage his or her own financial affairs, but nevertheless has the capacity to make the decision to have a conservator appointed to handle his or her affairs.
• Revocable trust. A revocable or "living" trust can be set up to hold an older person's assets, with a relative, friend or financial institution serving as trustee. Alternatively, the older person can be a co-trustee of the trust with another individual who will take over the duties of trustee should the older person become incapacitated.

Contact your attorney to discuss ways to protect against a guardianship.