Parents and Children: Have “The Talk” This Christmas

Giving your family the financial support to deal with long-term care needs is one of the most meaningful things you will ever do for them. 

Two of my cousins are caregivers.  One is taking care of her 73 year old husband with Alzheimer’s.  He was an oral surgeon and a very private person. She receives a monthly cash check from his long-term care insurance policy of $6300 and she uses the money to hire people with whom he is familiar. The monthly cash benefit grows 5% compound every year.

My other cousin is a tiny woman. She is struggling with wanting to bring her mother home from the rehab center because she can’t lift her. My aunt wants to come home and doesn’t understand why she can’t. My cousin’s husband agrees that it’s too difficult for her.  So now my cousin is torn between wanting to take care of her mother and wanting to please her husband. If my aunt had long-term care insurance, there would be no discussion. They could hire caregivers to help my cousin and everyone would be happy.

Can you identify with either of these scenarios?

Three things have changed dramatically since I started helping people plan for long-term care back in 1988.

1. All too often I heard “we don’t need that insurance; our kids will take care of us”.  That was 27 years ago.  Today, I’m hearing from the kids who DID take care of their parents…and got a divorce…who don’t speak to their siblings now…who had to keep a child home from college to be a caregiver…who got sick and had to have care themselves. The “kids” who did all this caregiving are saying to me, “We NEVER want to put our kids through this with our care!” And so thanks to people like Suze Orman and Terry Savage, I have the privilege of helping them plan so their children don’t suffer someday.
2. Financial planners who used to tell their clients to self-insure are now telling them to get long-term care insurance. What a relief! It’s been difficult for me over the years to negate the advice of a trusted financial advisor. But try I must, to the point of dedicating an entire chapter to this in my book Protecting Your Family With Long-Term Care Insurance. The chapter is entitled “So You Think You Can Self-Insure?” I’ve helped people with $10 million and $100,000. No one really wants to use Medicaid as payer of first resort once it becomes clear how limited the choices for care are. Medicaid doesn’t cover the “country club” assisted living facilities and options for home care vary regionally. Some children help with the premium so their parents can be private-pay.  But there’s another side to the self-insuring picture besides money. My friend Deb Newman with Newman Long-Term Care in Minneapolis says it so well:

When care is needed, spouses or kids of people who self-insure are reluctant to use cash to spend on care, and the family starts providing care, which can take a terrible toll on the caregivers. By having long-term care insurance, you are giving your family PERMISSION to hire someone to care for you so they don’t have to be your constant caregivers.*

It’s called allowing your children to care ABOUT you, not FOR you…and there’s light years of difference between the two.

Almost every day people come to me for help by completing the questionnaire under the Contact Us button and when I ask the reason for their inquiry, almost always it is because they have just finished being a caregiver or they are in the middle of it. Either way, they can’t stand the thought of their own children having to deal with it.  So I love helping as many people as I can but I haven’t told you the third big thing that has changed.

The number of insurance carriers that have been brave enough to stay in the long-term care insurance business has dwindled significantly. Most of them have started gender-rating, which means women have to pay MUCH more than men, since 2/3 of the claims are made by women.  Women also live longer than men and are therefore more likely to make a claim. Only a few carriers aren’t gender-rating yet but will eventually: Banker’s Life and Casualty, Massachusetts Mutual, and New York Life. Women who are part of a couple can deal with this a little better as premium for men is lower with gender-rating.  But SINGLE WOMEN – take heed. If you want a policy that is much more affordable, don’t wait.  Also, the days of “Facilities-Only” policies are numbered.  This is the policy that allows you to put your premium into being sure you can afford that country club assisted living facility someday. It doesn’t cover home care. You saw in my last post that people without a primary caregiver usually can’t stay home very long so why pay for a benefit that you probably won’t use?

Thankfully there are more options for combining long-term care insurance with life insurance or annuities.  The caution here is to not fall for the “Give me $100,000 and I’ll give you $300,000 (or more) for long-term care.” Be sure to ask what the daily or monthly benefit will be 20 or 30 years from now, depending on your age today.  I am using 5% compound to project the future cost of the really nice assisted living facilities, because the baby boomers are just starting to discover how nice they are. So a place that costs $5000 a month today at 5% compound will double twice in 30 years to $20,000 a month!  The good news is that home care is growing much slower…maybe 2% a year,,,so a policy that fully funds a really nice assisted living facility in the future will buy a lot more home care than it would today.

So that’s what I’m doing. By helping my clients fully fund the “country club” assisted living facility (and significant home care if that’s important to them), they can self-insure the difference between the assisted living facility and the nursing home if that care location becomes necessary. Thankfully, most people are never in the nursing home so I believe most will be taken care of comfortably with this approach and it sure does make long-term care insurance more affordable!

Again, looking for the perfect Christmas present? If you don’t want your children to bathe and dress you someday, seek out a knowledgeable financial professional in your area and buy long-term care insurance. If you are in poor health but have assets, there are a few annuities that pay for long-term care and can be purchased without health questions…plus they protect your money from a stock market crash. If you are in poor health but don’t have assets, there may be a short-term care policy that will provide some coverage without as many health questions. Whichever direction you go, then you can look forward to quality time with your children by allowing them to stay your children and not become your personal caregiver.

If you are an adult child and you don’t want to be forced to choose between taking care of your parent or spending time with your spouse or your own children and grandchildren. have “The Talk” with your parents this Christmas.  If you have siblings, split the premium.  It’s a lot more affordable than sacrificing your other relationships to provide the care yourself.

*”Starting the LTCI Conversation”, Advisor Today, Nov-Dec 2015