Adult with elderly parent © Digital Vision\SuperStock

A hospital waiting room is a lousy place to discover that Mom and Dad are broke.

Unfortunately, a parent's health crisis often provides the first warning sign that your folks have made a major financial blunder by dropping or downgrading their Medicare supplement health insurance to save money.

"In a lot of cases, this comes up at the last minute when a parent suddenly needs care and there's a lot of running around. When you throw dementia into it, it becomes even harder," says Jim Sullivan, a CPA and personal financial specialist in Naperville, Ill., who specializes in retirement planning. "That should never be an emergency meeting."

Medicare doesn't cover everything, and Medicare supplement insurance -- also known as Medigap insurance -- is meant to fill in the gaps. The most popular plans can be expensive for seniors, costing thousands of dollars a year, according to the U.S. Department of Health and Human Services. Some simply can't afford it. As a result, Sullivan is seeing a lot of family meetings in the emergency room these days.

One of his clients dropped a Medicare supplement to save money just months before undergoing emergency heart surgery and could not afford the resulting $15,000 in deductibles and copays the policy would have covered. Another client tried to save money by choosing a Medicare supplement that does not cover copays for stays in a skilled nursing facility, leaving her on the hook for $145 per day in deductibles for a 50-day stay she subsequently needed.

Had their children known what their parents were doing, they might have stepped in, sought guidance and even helped pay the supplement premiums to keep Mom and Dad on the right path.

But that would have required having the dreaded conversation about money.

Take on 'the talk'

"It's easier to talk to your parents about sex than it is about money," says Kathleen Kelly, the executive director of the Family Caregiver Alliance, a nonprofit support group. "It makes several presumptions -- about earning and worth, about decline, even about motivation -- that nobody really wants to think about."

Sally Hurme, an AARP senior project manager in education and outreach, says making the necessary role reversal is uncomfortable for both parties.

"As parents, you make sure that your kids are on sound financial ground and may even step in when they struggle financially," she says. "How do you put that shoe on the other foot?"

Many of us are about to find out. According to AARP, roughly 30 million American households are providing care for an adult over age 50, a number that is expected to double over the next 25 years.

Here are some gentle ways to ease into the money talk with your parents:

  • Seek their help. Your senior parents likely know more about Medicare and long-term care planning than you do. Why not ask for a tutorial? "It brings it up in a natural way," says Kelly.
  • Use current events. Headlines in the news and upcoming Medicare open enrollment seasons can be good opportunities to draw Mom and Dad out regarding their health insurance coverage. "When open season comes, help your parents do the comparative shopping because there are lots of options," says Hurme.
  • Enlist a trusted adviser. "Use a physician or attorney to broach the money conversation and bring the kids in later," suggests Kelly.
  • Consider a geriatric care manager. Uncomfortable discussions may prove more palatable coming from a professional. "Try to interview several to find a good personality match with your parent," says Sullivan.

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Help is available

You don't have to become a Medicare expert to help your parents; you just need to connect with one. Assistance abounds to bring you up to speed on the Medicare supplement options available to your parents.

A good place to start getting help with these issues is the State Health Insurance Assistance Program, or SHIP, a national program that provides free one-on-one counseling and assistance to Medicare recipients and their families. ShipTalk.org can connect you with agencies and free resources in your state that can help you compare Medicare plans, providers and options.

To start a little closer to home, your local Area Agency on Aging offers a valuable clearinghouse of community resources as well.

"They provide free services and information to help you navigate all the various systems, whether it's residential, transportation or nutrition, that can really help stretch Mom and Dad's money," says AARP's Hurme.

Looking to connect with other caregivers? The National Family Caregivers Association hosts an online forum and a "community action network" that allow caregivers to share stories and offer and receive advice and encouragement.

Your family may need a professional

Should you find yourself seated in that hospital waiting room, suddenly overwhelmed by what you don't know about your parents' health insurance or financial health, Kelly of the Family Caregiver Alliance says hiring a private geriatric case manager can be a good investment, especially if you don't live nearby.

"I think it's just easier to be able to shortcut through all of the fragmented options and have somebody walk you through the paperwork, how and where you apply, and what services you may be qualified for," she says. "In that case, having someone help you navigate through the system is a really wise investment because you're time-starved anyway."

Above all, proceed gently. "Kids tend to forget that they're the kids and not the parents," says Sullivan. "They can be overbearing and upset that relationship."

Caregiver checklist

AARP also suggests that children identify or set up the following to help aging parents with their finances:

  • Durable power of attorney (POA): Authorizes you to access accounts and act on parents' behalf without obtaining a court-ordered guardianship.
  • Advisers: Physician, lawyer, accountant and financial adviser.
  • Financial records: Bank account numbers, CDs, investment portfolio and safe deposit box keys.
  • Annual and monthly income and expenses.
  • Federal and state income tax returns.
  • Paperwork on loans, liens, rental agreements and business contracts.
  • Public benefits: Social Security, Supplemental Security Income (SSI) and state property tax relief.
  • Medicare, Medicaid and other health insurance.
  • Life and long-term care insurance.
  • Directives: Living will and do-not-resuscitate (DNR) order.

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