Mother is in late 80s and has had LTC insurance policy for 15+ years; started when she was assisting with her parent who needed 24/7 care in her home and saw it was expensive. Then and now, mother has no idea of the value of her assets, her income or expenses and whether she can afford the policy premium, to pay for the care out of pocket, the cost of care. etc. She knows what she paid for her mother's in-home care many years ago -- which was in no way standard and was likely way below market -- and required her to be available almost daily to assist. Each year the LTC premium increases and each year she agonizes over renewing. I live local and assist as needed, my sister and I are co-POA, my sister is executor and I will be another siblings guardian when mother can no longer to do it, so we are involved in her life. Sometimes she appreciates it and sometimes she does not. She often asks my sister for her thoughts on these matters and not me, so the sisters discuss on the sidelines and other sister gives guidance/opinion so it doesn't seem like double-teaming. She is lucid and can reason and will ask for advice, but she will focus very much on the cost of the issue or item right in front of her and make her decision in a vacuum. She is looking at this premium as a large expense in general as opposed to a large expense which she can handle given her sizeable assets and solid fixed and investment income and gives no thought to the fact that she is getting ever closer to needing the insurance and that it would likely take another 10 years of annual premiums before the total costs equals just one year of coverage from the policy. I have suggested to my sister that we prepare a list/total of all her assets, income and expenses so she understands her financial standing, as well show her the cost-benefit analysis related to the insurance so she is not just looking at a bill for $XX,000 and refusing to pay because she just did work on the house recently and is worried she is spending too much with no clue about her strong financial condition. To compile these schedules she will need to either give us a fair amount of info we don't have or fill in the spreadsheet, she will get annoyed and just say she is cancelling. She tends to like to take the path of least resistance and as a result made a disastrous financial decision -- without asking any of her kids thoughts -- a while back which cost her a lot of $$ and wiped out much of her estate, which she maintained it was her job to pass along to her family. She is very fortunate she is still on solid ground financially after that debacle. I have also suggested to sister to speak to an unbiased insurance agent (cousin) to better understand the policy, because our mother doesnt fully understand the specifics. I know she has the $$ to pay the premium or to stop and likely has funds to cover several years of care out of pocket, she however, doesn't know any of this because she never does any accounting nor does she seem interested in understanding, she just wants to make a decision and be done. I believe if she can afford the premium and the coverage will help avoid depleting the estate -- again which she claimed was her job to pass on to her family (before she made some bad decisions) -- then she should keep the insurance. I haven't been very vocal on any of this with her, but the clock is ticking and paying for another year and given I am the most analytical of the three of us, I am wondering how hard I should push on this matter before she makes a decision she cannot walk back on. Interested in thoughts on LTC insurance in general and getting an elder to focus on facts to make an important decision in particular. THX
Definitely, get someone from the company to tell you both in easy words just what that policy will grant her. What exactly can she get from them? For how long? Is there a payout maximum? And so on...
Is it possible that the policy might pay for in-home care for herself if she needs it? This might save her spending money on in-home care and help use up some of those funds she spent on the insurance.
& the Trust is all new, right? So how is the Trust funded? And are these items in the Trusts name? Do they produce enough $ to “feed” Trust?
what seems to happen is the probate & tax avoidance aspects that a Trust provides is often touted as the reason to do one and move the title into the house into the Trust. But the Trust does not also get investments titled in Trusts name or doesn’t put a big enough pile of $$$ in the Trusts name to start off with pay all property costs for several years. The classic scenario is the elder uses their SS income to pay house costs (taxes, insurance, repairs etc). The Trust has no $, it’s just the house. Then they die & that SS income or other retirements die with them. Trust doesn’t have $ to pay taxes, insurance etc so it falls to family or beneficiaries. If everybody doesn’t pay thier % on the costs of the home owned by the Trust, there will be problems. If several beneficiaries to the Trust, likely 1 (or thier spouse) will not pay their share. Then what?
Ive done tax sales and every year there’s homes titled into a trust that have not paid the property tax & go up for tax sale and then a redemption. Please please either get some of moms more solid investments to become owned by the Trust or have enough $ in the Trust account to cover 5 -7 years of estimated property and Trust management costs. Plus if you get some of her portfolio moved to Trust you as the Trustee can do the oversight so lessens her ability to do another bad financial decision.
Reason being that at her age she cannot ever, like never ever get any other insurance policy whether it’s life insurance or a long term care one. Should she stop paying & policy cancels all that $$$$ paid to date was all for nought….. i bet if it’s a old policy it does not build any cash out / recoverable value. Your gonna be beyond some kinda pissed off should she fall in February and then needs to go into a facility and it’s all private pay as she has too much in assets to realistically be eligible for Medicaid and there’s no LTC insurance to pay at least something towards a $ 8,000 - $15,000 a month bill at a NH or MC.
Then this winter & spring you make it a priority to get an independent evaluation done by an agent who does LTC underwriting to see just what her LTC policy does or more importantly does not do, what the wait period is, if it requires a certain type of health care professional and if it can be changed to a hybrid policy; AND you or whomever is her POA finds all her financials and does an Excell type of file on her, with valuation on all her accounts with their # and who’s signatory and when things come up for renewal. Your mom is having “executive function” issue and it’s only going to get worse….. sound like she’s being secretive and does things in a fit of pique. Once dementia starts to really set in, she’s going to be vulnerable to be taken advantage of.
If she has a financial advisor, & you r POA for her I’d suggest that you schedule a zoom meeting or in person with the FA to see what her portfolio is like and if she’s overextending herself. You don’t mention what she did in the past to clusterF her financials but if it was bad investments or margin calls or not paying taxes, there’s probably pattern to it and you want to be on the lookout for things that would fall into the pattern that she will clusterF again.
My late MIL was a real financial terrorist, she in a fit of pique in being irritated by neighbors, refused to pay condo HOA assessments. LSS HOA placed a lien on the property and she refused to deal with it and moved into a hotel. Who does sh*t like this? Turns out something similar had happened with a property she leased for a business & apartment, she got peeved and walked away (returned to marital home) leaving rent & utilities in arrears. It was a bad behavior pattern for her. I’d be real concerned there’s things that puts your mom at financial risk that you don’t know about & she doesn’t understand & realize exists. Good luck.
I would get someone to review the policy and then do a simple explanation to all of you.
Policy costs annually vs LTC costs annually
(Be sure and explain that she will pay out of pocket until her assets are under 2k, then she can get public assistance, in the event she cancels and needs assistance.)
How much she has already paid vs what it will pay annually in the event she needs it.
Help her understand what type of help it covers, ie home help, nursing home or whatever.
Explain that as we age, one medical issue, doesn't even have to be an emergency or a crisis, can change everything and that is why she bought the policy to begin with.
Remind her what motivated her to purchase the policy. It may have been to preserve wealth but, it may have been to ensure that she could get the best care possible while preserving her families inheritance.
Just a heads up, any doctor that says she's doing well for her age, isn't being completely honest about any deficits they are seeing. They are being chicken, imo, and don't want to investigate if the decline can be helped or not, it's just an age thing and that isn't necessarily the truth. Saying for her age tells me she has obvious decline. She may not be as able to think these things out logically. Executive function or lack of is a sign of aging and dementia, just something to keep in mind while you are monitoring her actions.
The POA can visit a Licensed Fiduciary or an Elder Care Attorney to work out the match of the assets versus the estimated length of life. This will help. You will total what WOULD have been spent on LTC if policy dropped over a decade that the million might keep Mom in ALF first, then in something more expensive such as memory care. Would the amount spent on LTC yearly over a decade add up to two more years of payment for care.
As to inheritance? Yeah, as long as we live now, and as expensive as care is, I hope there aren't a lot of the young whose parents aren't part of the 1%-ers who will inherit much at all. I would give up thought of inheritance in this day and age.
At age 80 I am kind of wishing we had Sarah Palin's death panels. I would be raising my hand high as a volunteer real soon. The amount of joy ones gets of life versus the price to pay becomes too expensive for some of us; I think there would be many who would willingly opt out, though I could be wrong. As a nurse I know that it is always "I want to die" but quickly moves to "but not just today. Maybe tomorrow". Hee hee.
Good luck trying to figure it out. In these things we do the best estimates we can and hope we make the right educated guess. Do read this policy as well. Some don't even pay up unless there is an RN on duty 24/7 and that never happens anywhere at all, so know how good this policy is, what it pays and for how many years. The Fiduciary could help you with that.
I'm no expert on LTC insurance, but I think that money is better used invested somewhere than on insurance. My aunt had LTC insurance, and they wouldn't pay a dime for her in-home care because her caregiver wasn't licensed. I completely understand that, but her care situation didn't turn out to be what she planned for, so all those years of premiums were wasted because of the inflexibility of the policy.
My folks did not have LTC insurance, but my rother did end up in a nursing home for almost three years. It cost a total of about $220,000, but thanks to careful investing of her money, she died with more money than she had when she first went in to the nursing home.
They bought it in the early 70's, and paid on it until it was 'paid off' and when we had to access it to help pay for care after a surgery, came the shock that it was paying almost nothing.
Read the fine print! Geaton's comment that older policies paid better may be true in some cases, but in 1972, $25 a day was a day's work for a lot of people.
Insurance premiums go up as we age. We dropped one we had to pay off the mortgage and have a little extra to help me get on my feet if DH died. At age 58 when the house was paid off, the premiums were already rising. The kids were on their own so we dropped it and cashed it in. I wonder if LTC insurance has a cash in value? Your cousin should be able to explain the pros and cons of the policy and if its worth keeping up.
Which begs the next question: has she assigned a PoA for medical and financial? You don't mention this anywhere. If not, I would worry far more about this than an insurance policy payment. You and siblings can make the case as to why it is critical for her care to do this. If she agrees take her to an elder law/estate planning attorney. At this appointment the attorney will interview her privately to ascertain whether she can comprehend what she is about to do. Then if all looks good, the attorney will explain everything and she can create the durable PoA, an Advance Healthcare Directive, a Medical Representative, and Last Will. Please explain to her that if she doesn't put these legal protections and authorities in place and she loses cognition (mental or physical) then it would force her children to pursue guardianship through the courts, which would probably be more expensive than the insurance premium. Or, the state becomes her guardian -- there are only those 2 outcomes.
If she creates the PoA (or has it existing right now) I would figure out a way to get her in for a cognitive exam. This lets you know where she is at so that better decisions can be made on her behalf. You can find out ways to get this done in other posts on the forum to learn how.
I do agree that the cousin should be invited to review the policy so that everyone involved knows what it will cover and under what circumstances. I have read on this forum (and in speaking to other people I know) that the LTC policies which were purchased back in the 70's and 80's cover far more than more current ones. So analysis would be extremely helpful and most important is to know WHEN it provides the coverage.