Why You Need to Ask your Parents or In-Laws about Long-term Care Insurance

Why You Need to Ask your Parents or In-Laws about Long-term Care Insurance

Many of our clients have the sandwich responsibility. They’re providing care for their own kids and their parents as well. When they ask me what I see as a concern for their folks or in-laws, I ask a question. Do they have long-term care insurance?

A long-term care event is the number one biggest threat to a well-planned retirement.

Long-term care insurance can protect them and cover expenses if there’s a long-term care event. Long-term care insurance can be confused with long-term disability income insurance. Those are two different things. Long-term disability income insurance replaces income if you’re disabled. Usually, it doesn’t replace all of your income (commonly 65%) if you become disabled, and typically it only lasts until age 65.

Long-term care insurance is insurance that you can draw on if you get in a situation where you need significant care that lasts more than 90 days. Most of the time, the folks that go on long-term care insurance have dementia or Alzheimer’s. In other cases, you might use it for physical rehab. For example, we had a client who had a very severe bicycling accident and was on about 12 months of extensive rehabilitation. His long-term care insurance paid for home health aides and therapists to come in and help him with his mobility and his treatment.

Long-term Care Insurance + Dementia or Alzheimer’s Disease

Let’s say your father or mother-in-law is becoming forgetful and doesn’t take medication when he or she should. Maybe isn’t bathing as routinely or forgets to eat. What doctors often say is that they need to stay in their own home. Staying in a familiar environment is a good thing, and a lot of times their spouse wants to stay in the home, too. The right kind of long-term care insurance will pay for the caregivers to come in and provide care in the home.

There are other types of long-term care insurance options that only pay if someone moves into a facility, but that can be helpful as well, because these costs can be anywhere from $8,000 to $12,000 a month, and they can go on for years and years and years. We had one client who was in long-term care for 12 years. Without insurance to cover part of the costs of her long-term care, there’s no way that the family could have survived it financially.

Ask for a Copy of the Policy

If your parents or in-laws already have long-term care insurance, you need to get your hands on the policy. Find out what the provisions are. Find out what is covered and what isn’t covered. They may have been paying for it for years, but they don’t quite remember what it covers. Do them, and do yourself, a favor and find out exactly what that coverage is so that you can use it when the time is right.

Long-term Care Insurance vs. Medicare and Medicaid Coverage

Many people assume Medicare covers long-term care expenses. It’s confusing. For example, if you fall, break a bone, and are hospitalized and then discharged into a rehab facility, Medicare will cover your care to a certain point. But if you need long-term care (90 days or more) that care will not be covered by Medicare. You might think if they qualify for Medicaid, then long-term care events might be covered. It’s true, if your parents or in-laws spend down all of their assets to the point where they qualify for Medicaid, they could get nursing home coverage through Medicaid. However, that coverage does not include in-home care. It can also take a long time to spend down those assets, and that might not be the best use of those assets. That’s why long-term care insurance is often the best way to meet that need.

Is it too late to get Long-term Care Insurance?

It is worth looking into the cost of getting them covered, but for folks who are advanced in age, it may be too late. For the elderly, coverage can be prohibitively expensive, but if they’re younger, in good shape, or if they work for an employer that provides long term care insurance as a benefit, adding coverage may make sense. Employees of the federal government can get coverage at favorable rates, a benefit that is even offered after retirement. Explore what options may be available for your loved ones. Even if they only get a little bit of coverage, co-insurance is better than no insurance.

As you’re looking into this for your parents or your in-laws, think about whether you want to get coverage for yourself. Do you want your children to have the same concerns about you someday that you have right now?


Any opinions are those of Traci Richmond, CFP@ and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. Investing involves risk and you may incur a profit or loss regardless of strategy selected. These policies have exclusions and/or limitations. The cost and availability of LTC insurance depend on factors such as age, health, and the type and amount of insurance purchased. As with most financial decisions, there are expenses associated with the purchase of LTC insurance. Guarantees are based on the claims-paying ability of the insurance company.