(Note: The pdf for the issue in which this article appears is available for download: BIFOCAL Vol. 35, Issue 5.)
This article is the text of a lecture given by Professor David English in March 2014 at the Institute of Gerontology, University of Tokyo, Japan, and at Beijing Administrative College in Beijing, China. An overview of legal issues related to aging in the United States, the article serves as a useful introduction to our international readers and as a helpful snapshot of current issues for our domestic readers.
The study of aging is a multi-interdisciplinary activity involving experts in law, social work, medicine, and many other fields. I am a lawyer with a second degree in economics.
I am also the Chair of the American Bar Association’s Commission on Law and Aging. The Commission on Law and Aging is a 15 member group of lawyers and non-lawyers that conduct research on legal and policy issues relating to aging in the US. The Commission is assisted by a full-time staff of seven.
There is a growing interest in the US in legal problems relating to aging. While the elderly have always needed the help of lawyers to solve legal problems, the field of “Elder Law” was not recognized as a specialty subject in the US until about 25 years ago. “Elder Law” may be defined as the study of legal issues that exclusively or primarily affect the elderly. Reference is made here to issues that “primarily” affect the elderly because many of the topics discussed below also impact younger adults with physical, mental, or cognitive disabilities. Most attorneys who specialize in Elder Law also work with younger clients with disabilities.
The definition of who is elderly varies from country to country. In the United States, the usual standard for deciding who is elderly is age 65. This is the age that an individual qualifies for Medicare, which is the national health insurance program for the elderly. It was also the former normal retirement age under the national Social Security program.
At the University of Missouri, I teach a course in Elder Law that focuses on the legal challenges encountered by elderly individuals in obtaining government benefits, in protecting their rights, and in planning for their futures. We begin with a discussion of demographic changes followed by a discussion of nine legal topics on which any attorney specializing in Elder Law must become expert. I will follow that same format here.
The Demographic Challenge
Much policy making for the elderly in the US is driven by demographic changes. There are an increasing number of individuals over age 65, and the age group over age 85 is growing even more quickly. The increases in the number of individuals over age 65 places stress on the funding of the US retirement system. Because many of the very old have dementia or other chronic conditions, the increase in the oldest group has serious implications for long-term care and the appointment of guardians. Women also live on average longer than men, and many elderly women live alone without family nearby or available to provide care. The birth rate in the US, while not falling as quickly as in some other countries, is low enough that over time there will be less working adults to pay taxes to support government programs trying to serve more and more elderly clients.
The Challenge to Employer Pensions
In many countries, pensions provided by employers are closely coordinated with government Social Security payments. In the US, the two systems are independent. Except for individuals with lower incomes, the national Social Security program replaces less than half of an individual’s pre-retirement income. To assure a decent standard of living, the retiree should supplement Social Security payments with an employer pension or private savings. However, only about half of US households have a retirement account of any kind other than Social Security.
Pensions providing fixed payments for life (known as “defined benefit plans”) have also declined, often replaced by plans known as 401(k)’s where it is up to the employee to decide whether or not to contribute to the plan. Many employees, occupied by more immediate financial concerns, decide not to contribute. Individuals in the US also save much less of their salaries than do individuals in many other countries. Individuals should plan for their retirement well in advance of the target date, but for those who do, such planning is sometimes faulty.
Sometimes individuals approaching retirement age unexpectedly lose their jobs and are unable to secure equivalent work. Many people also underestimate their life expectancy, leading them to underestimate their financial needs. The result of all of the above factors is that many individuals, when they retire, will live in reduced financial circumstances.
The Challenge to Social Security
Social Security in the US is paid from the Social Security Trust Fund. The Fund balance equals total Social Security taxes paid in since 1935 less benefits paid out. Due to the demographic changes discussed above, beginning in 2010, the Trust Fund for retirees and survivors began to pay out more in benefits than it collected in Social Security taxes.
It is predicted that the Trust Fund will run out of money in 2033. The program will thereupon have to cut benefits by about 25% in order to match payments to current Social Security taxes. To avoid such a sudden cut, Congress should act well in advance of the 2033 deadline to either increase Social Security taxes or modify benefits. Each year that the US Congress waits to act, the necessary adjustments will become more severe. But while many bills to reform the system are introduced each year, there is little likelihood that the political parties in the US Congress will agree any time soon on how to amend the Social Security Act.
The Health Care Financial Challenge
Health care for the elderly in US is paid for by the federal Medicare program. For elderly persons who are poor, Medicare is supplemented by Medicaid, which is paid for partly by the federal government and partly by the individual states. Due to the increasing number of elderly persons, Medicare is under severe financial stress; it is predicted that the Trust Fund for hospital benefits will be depleted by 2026.
Addressing the predicted deficit may require that Congress reduce Medicare benefits. However, Medicare already has many gaps in coverage, requiring that elderly persons purchase private supplemental policies. Medicaid for the poor isn’t necessarily in better financial shape, and because of low fees paid by Medicaid, many doctors refuse to accept Medicaid patients. Nor are Medicaid benefits coordinated well with Medicare. There are gaps between the two systems.
The Challenge of Consumer Fraud
The elderly are frequent targets of fraud. Federal and state regulation is incomplete and inconsistent. There are many types of fraud. Examples include: mortgage fraud; fraudulent sales of private health insurance; theft by court-appointed guardians; theft by agents under powers of attorneys; funeral fraud; telemarketing, home repair, and sweepstakes fraud. Fortunately, fraudulent activities impact only a minority of elderly persons but these individual cases can result in severe financial loss.
The Challenge of Long-Term Care
The federal Medicare program pays for medical expenses such as doctors, hospitals, medical tests, and medications, but Medicare pays for only a small portion of long-term care. The majority of nursing home expenses in the US are paid for by Medicaid or from private savings. Medicaid is under severe financial stress and adjustments to the program will eventually have to be made. Private long-term care insurance, while available, has not really taken hold in the US.
There are additional concerns. Despite a detailed statement of patient rights in the federal Nursing Home Reform Act, studies indicate that enforcement has been inadequate. There is insufficient staff in many facilities and in others the staff may not have had adequate training.
The Challenge of Guardianship
Guardians are appointed by the court to manage the personal and financial affairs of minors and of adults who lack mental capacity. Because of the increasing number of elderly and the corresponding increase in the number of elderly who lack mental capacity, the number of court-appointed guardians is increasing in the US. But because each state reports its guardianship cases differently or not at all, the exact number of guardians is unknown. There is a need for better data.
Over the past 30 years, there have been major reforms in US guardianship laws. The court is encouraged to explore alternatives to guardianship before making an appointment. In making an appointment, the court is encouraged to give the guardian only such powers as are necessary, a goal which is achieved by appointing what is known as a limited guardian. But there is a big gap between the statute and the actual practice. Many who work in the guardianship field believe that limited guardians could be appointed in many more cases.
There are also concerns that the courts do not sufficiently review the annual reports filed by guardians and otherwise fail to sufficiently monitor the guardian’s actions.
The Challenge to Planning for Incapacity
Most people will lack adequate mental capacity to make their own decisions sometime during their lives. Yet, most adults fail to plan in advance. There is a need for better education on the options and encouragement for people to plan. Methods of planning for management of finances include the revocable trust and the financial power of attorney. Methods of planning for health-care decisions include the health care power of attorney and the health care directive.
In the case of the revocable trust, individuals will typically name themselves as their own trustees but with a successor trustee standing by in the event of incapacity.
In the case of powers of attorney, whether for finances or health care, individuals designate an agent to make decisions for them, with the agent similarly stepping in upon the loss of capacity or where the need for assistance is otherwise apparent.
In a health-care directive, an individual will provide specific instructions on health care to be provided in the future.
The Challenge to Health-Care Decisions
But signing a health care power of attorney or health care directive may not be effective to assure that health care decisions are made in accordance with the individual’s wishes. Paper documents often are not where they need to be when the health care decision must be made or, even if available, will not be examined. Many such advance planning documents are also filled with legal language, making them difficult for doctors and other health care providers to understand. Better methods for delivering the documents electronically should reduce the access problem.
Also, a new technique known as physician orders for life-sustaining treatment (POLST) should lessen the reluctance of health care providers to honor the documents. POLST is initiated by conversations between medical providers and the patient or family. Included in the POLST counseling process is the conversion of the patient’s advance planning document into a physician’s order which uses language that a doctor will understand. POLST shows great promise of creating a pathway whereby a patient’s wishes will more likely be honored.
The Challenge of Elder Abuse
Elder abuse occurs when someone with a prior relationship with the elderly person abuses that relationship in a severe way. It may be a family member who commits the abuse, or it might be an employee of the facility where the elderly person resides. Abuse comes in various forms, including physical, psychological, financial, and sexual abuse. Similar to guardianship, good data on the prevalence of elder abuse does not exist but the increases in the number of elderly suggest a corresponding increase in the incidence of abuse. One reason for the lack of data is that most elder abuse is hidden and is never discovered. Criminal prosecutions for elder abuse are difficult to maintain and once the money is gone, it is unlikely that it will be recovered. All US states have agencies responsible for investigating reports of elder abuse and for providing what is known as adult protective services in such cases, but these agencies have very high case loads. ■