I ran into a financial advisor in the town where I live. We’ve had the occasion to speak, in the past, about long-term care insurance at Chamber networking events but because he works with “high net worth” clients, he doesn’t feel it pertains to them. He feels long-term care insurance is suited for “the middle class”. He believes his clients have the means to pay for their care and that life insurance can replace whatever funds are used, if care is needed. You see, his family was not the kind that went to nursing homes. They’re the kind that would receive care at home surrounded by their devoted children. Recently, one of his clients had a long-term care event and reality set in for this advisor. The client was an 82-year-old retired judge and I was called in as a Care Manager to assist the family. According to the advisor, he had about 6 million in assets.
There are three children, two live an hour away and one lives locally. The son who lives locally is a principal at a large accounting firm and was very busy running the practice. The other two also have full-time jobs with children still in high school and active in sports and extra-curricular activities. So, these devoted children thought they would just hire people to care for dad. As is often the case, the care started out slowly. He had private caregivers a few days a week for several months but then the care needs increased. He eventually required care for 16 hours a day then required 24 hours per day due to his cognitive decline. This is when the problems started to surface.
The first issue they argued about was whether to use private caregivers to save money, or to use an agency to eliminate any liability issues that could arise. The difference was $4,700 per month. They voted and the agency won. They began paying a little over $16,000 per month, or $192,000 per year. This was fine for the first three years, but then the kids realized there was no end in sight to the care, but there could be and end in sight for his finances. Dad was physically very healthy and could live for several more years. They had already gone through almost $600,000 and as one son said, “That’s $200,000 that each of us is not getting”. The next issue they argued about was how to save money. It was suggested $5,000 per month could be saved if the local brother and his family took over the night time care. Then, all the conversations revolved around how they could save money on dad’s care. Translation…how can we be sure he has money left in his estate for us.
In the end, they did visit an elder law attorney who was able to use some crisis management strategies to protect some of the assets, but it also required that dad be placed in a nursing home. The children rationalized that this was fine since dad’s cognition declined to where he didn’t recognize his grandchildren. If this client had long-term care insurance perhaps the conversations would have revolved around what were dad’s wishes and what was in his best interest rather than saving money for his estate. In the end, if you have a long-term care event and you are not insured, the premium at that point is everything you own.
*Just a word about a person with dementia. People think they don’t know who they are, where they are etc. But, unless you can be in someone’s body and hear what they hear and feel what they feel… how do you know? A person with dementia should be treated, talked to and cared for just as if they were cognitively aware.[insert page='boxes' display='content']