Why Adult Children Might Want to Pay the Long-Term
Care Insurance Premium for their Parents

By planning ahead for an aging parent’s long-term care needs, families may help to reduce the financial and care giving stresses that often fall on family members providing care. Long-term care (LTC) insurance policies, at different levels of coverage and design, may help the families of the insured implement a variety of long-term care planning strategies.

With 70% of women likely to be the primary caregiver for their parents, in their home, husbands and brothers need to recognize that relying solely on a family member for care can be far more expensive and disruptive than ever imagined. The stress on families may become acute when several things occur in giving care to one’s own parents. Family caregivers may have to adapt their schedules and lifestyles, dining rooms may change into bedrooms, and someone, even pre-teen children, may be recruited to be with a grandparent after school until the working parent returns from work. In some cases, caregivers may decide to give up paid work to provide the at-home care diminishing the family’s income. Stress on the caregiver, even in the most loving families, is well documented, as is the depression that can occur among caregivers because of the hard work and dislocation of their lives.

In addition, families need to consider the cost of bringing in home health aides, nurses and/or therapists and there can be un-reimbursed out-of-pocket costs for medical supplies and over the counter medicines, dressings, bedding, and such things as hospital beds.
One solution is for adult siblings of healthy aging seniors (you can not purchase the insurance for an already sick senior) to come together to buy some form of long-term care insurance. These policies can help alleviate the financial drain on seniors and their caregivers and families.

It does not have to be an “all or nothing” design when constructing a long- term care insurance policy. There’s a belief out there that long- term care insurance policies are expensive but there are ways to build a policy that is affordable and can still provide essential coverage. Siblings can look at a range of policy designs that long-term care insurance policies offer. To keep things as simple as possible, I often lay out their choices at three different levels of policy design. Through John Hancock Life Insurance Company (John Hancock), a minimally designed $50 daily benefit, with or without an inflation rider can offer access to care advisory assistance for coordinating long-term care services including home care and potentially valuable provider discounts — both features are offered through third party sources independent of John Hancock. Provider discounts may help "stretch" the benefits of the policy depending on charges incurred and benefits purchased. This may allow the benefits to last longer than they otherwise might and could be a savings compared to an uninsured person who pays "street" price for long-term care services.

As a medium level, a policy with $150 as a daily benefit may be appropriate. If, at the time a Massachusetts resident applies to Medicaid for help with nursing home costs and they have an in-force policy that meets state requirements, they may be able to protect the family home from a Medicaid lien. I encourage clients to consider consulting with an attorney familiar with elder care law to assist them with this process.

For those who may want to protect more assets, they can consider a policy design of $250-$300 daily benefit with an inflation rider. This benefit level will go a lot further in covering the cost of an assisted living facility, a nursing home, or more extensive home care benefits in the Greater Boston area. This higher level of coverage could be particularly appealing to risk averse clients as well as those with a family history of such illnesses as Alzheimer’s, Parkinson’s Disease, Osteoporosis, and other chronic diseases.

An increasing number of states are offering even greater incentives to long-term care insurance policyholders through LTC Partnership programs, which offer Medicaid Asset Protection above and beyond the benefit currently available in long-term care insurance policies. These types of policies can be especially helpful to individuals in these states who have a desire to leave a financial legacy to their children and other loved ones including the healthy spouse. As these programs and insurance policies are very specific, you must meet with an appropriately licensed and trained agent in your state to review the choices available to you.

There is a personal story behind this article. Some time ago, my siblings and I discussed these issues in our own family and came to an agreement to help pay for long-term care insurance policies for my mother and stepfather. Knowing that they had the protection of a long-term care insurance policy put us at ease. However, the benefit of our decision really came to light when my mother broke her hip from severe osteoporosis and filed a claim. Thank goodness she was covered.

Stuart H. Armstrong, CFPÆ, CLTC, a John Hancock Life Insurance Company agent with Centinel Financial Group, a Boston Massachusetts area firm. He can be reached at 617-424-0005. sharmstrong@jhnetwork.com