By Adam Safdi, WCI ColumnistOn January 31, 2024, I received a call at 4am from a strange number. Normally, I keep my phone on vibrate overnight, but this number kept calling repeatedly. Eventually, I woke up and answered the phone. The caller said, “Adam? This is Adam, right? This is Jack, a friend of your dad. I’m sorry to call so early, but I have some distressing news.”
Jack went on to tell me that the police were taking my dad to the local hospital’s emergency department. Over the next few hours, we pieced together the story. My dad had wandered out of his house the night before, presumably to go for a walk. It started raining, and he became disoriented, unable to find his way home. He found a house with an unlocked door and went inside. He fell asleep in a spare bedroom. When he woke early the next morning, he became frustrated and confused by his unfamiliar surroundings.
The couple who lived there found him wandering in their kitchen. After the initial shock, they realized my dad posed no threat, but they called 911 due to the intrusion. No charges were filed, and the police recognized what our family had feared for some time: dementia. The local ER staff evaluated him for acute medical issues, and after finding nothing urgent, they sent him home.
I must first publicly express my gratitude to the couple who found my dad. I can only imagine how distressing it must have been to find a stranger in their home. I sent them a letter thanking them for their kindness and understanding.
Let me explain a little bit about my father’s situation. My mother passed away in 2018, and my father has lived alone since. He has a new girlfriend who lives 30 minutes away. My brother lives two hours away, and I live three time zones away. Up until that point, we knew he had some memory difficulties, and a local neurologist had diagnosed him with mild cognitive impairment.
But we didn’t think it was that severe.
There had been instances where my dad chose mismatched or inappropriate clothing, burned his toast, or replaced the telephone in the refrigerator instead of on the phone charger. However, after the January 2024 incident, we went back to his neurologist, who sadly confirmed that with my dad’s combination of cognitive and functional impairments—most notably his lack of direction, wandering, and getting lost—meant that he had progressed from mild cognitive impairment to dementia. It became clear that my dad was likely no longer safe to be by himself at home.
While my dad was the breadwinner during his working years, my mother managed the household finances. She and my father had bought long-term care (LTC) insurance policies for the possibility of prolonged illness later in life. As best as I can tell from the paperwork, my parents bought these policies in 2004, they each paid about $14,000 in annual premiums for 10 years, and the daily benefit started at $200 per day. I was unaware of these policies when my mother died (after a relatively short illness), but I became aware of them when an uncle called and mentioned, “Your father has a long-term care insurance policy. I helped him get it.”
Thus began the long process of filing and obtaining claims with the LTC insurance company. I’d like to share some lessons learned from this experience.
What to Do with Your Relative's Long-Term Care Insurance
#1 Call the Insurance Company to Obtain an Application to File a Claim
For a while, my brother and I tried to track down the actual policy. We sifted through stacks of paperwork at our dad’s house and became frustrated (fairly and unfairly) that he didn’t know where the papers were located. When we finally called the insurance company, it, of course, had his policy on file. The company sent us an application, and we began filling out the paperwork. The application included several parts:
- Authorization to obtain and disclose information
- Claimant’s statement
- Attending physician’s statement
- Benefit direct deposit form
- Fraud notice
Try to get a point of contact in the company's call center if possible. We found calling more fruitful than emailing. Many of our emails went completely unanswered, which was a source of frustration and delayed the process.
More information here:
The Challenges of Long-Distance Eldercare
Cost of Caring for Aging Parents
#2 Insurance Companies Do Their Own Evaluations
Most LTC insurance policies require one of two conditions to be satisfied to qualify for a claim: the claimant must be unable to perform at least two activities of daily living (ADLs)—which include bathing, continence, dressing, eating, toileting, and transferring—or the claimant must have severe cognitive impairment. My father was already established with a neurologist, who certified that his dementia was severe enough to require supervision. Despite the neurologist’s (and my dad’s primary doctor’s) signature on the “Attending Physician’s Statement,” the LTC insurance company sent a contracted nurse to conduct an in-home evaluation. This further delayed the process of receiving the claims.
#3 Use Professional Help During the 90-Day Elimination Period and Beyond
When the family learned of my dad’s situation, aunts, uncles, and cousins offered to help care for him. His girlfriend also spent a lot of time with him. But when everyone was busy, we contracted with two companies for in-home health services. This mostly consisted of someone essentially adult-sitting him to ensure he didn’t do anything dangerous—like leaving the stove on or wandering outside at night—and occasionally reminding him to eat lunch or take a shower. After 90 calendar days, I called the LTC insurance company to ask for payments to begin. I should note that while waiting for LTC insurance payments to kick in, we were paying for these services with my father’s income from his retirement portfolio.
However, unlike a disability insurance policy that starts paying out after 90 calendar days, LTC insurance policies don’t begin payments until 90 service days have passed. A service day is any calendar day during which professional health services are rendered and paid for, even if limited to only a few hours. Twenty-four hours of care was not necessary to have a “day” counted with our policy, but I would recommend that others going through this process check their own policy for what satisfies a “service day.” All the days our wonderful aunts, uncles, and cousins had stayed with him did not count toward his 90 service-day elimination period. I readjusted my tally and started counting the days on which hired help provided professional services.
#4 Indemnity Rider
Some LTC insurance policies include an indemnity rider that you can purchase in addition to the base policy. If you opt for this rider, the policy pays out a predetermined benefit, regardless of the expenses you incur. For my dad’s policy, he receives a daily benefit regardless of the number of hours of care provided. For example, there are days that he only receives seven hours of care (midnight to 7am when his girlfriend arrives to spend the rest of the day together), while other days he receives 24 hours of care. At $32-$34 an hour, seven hours of care costs $224-$238. My dad’s daily benefit is greater than this amount, so on some days we receive a surplus. However, these days are usually matched by the days he receives 24 hours of care, which can approach $800. For now, the LTC insurance payments are essentially covering the cost of his in-home care. I anticipate that as his dementia progresses and he has more days requiring 24-hour care, we will be paying for his care with both LTC payments and his retirement savings.
When we first signed up with a care provider company, it offered to bill the LTC insurance company directly. Since there were days where the LTC insurance benefit exceeded the cost of care, we wanted to pocket that difference rather than the care provider company keep it. We decided to have the LTC insurance payments directly deposited into my dad’s checking account, from which we then pay the care provider.
More information here:
Evaluating Long-Term Care Insurance for the Government Retiree
#5 Keep Your Own Tally and Double-Check the Dates of Service
The LTC insurance company collects invoices with the dates and hours for in-home care services listed, but it never accepted the invoices directly from me. It required the care provider companies to send them in. Fortunately, the care provider companies were kind enough to CC my brother and me on their emails. I kept a tally of the dates of service, and I was excited when we crossed the 90-day mark. However, when I contacted the LTC insurance company, it said my dad had only received 60 days of service. I double-checked my math and knew I was right. I asked the LTC insurance for its tally so I could compare. The discrepancy turned out to be the company's failure to account for overnight care, which spanned two different dates. After I informed it of its mistake and sent highlighted invoices proving the error, the company updated its records to reflect more than 90 days of service.
#6 Care Notes
My excitement over finally reaching the 90-day elimination period was short-lived because the next hurdle was “care notes.” The LTC insurance adjuster informed me that invoices alone were not enough; they also needed documentation that the adult-sitters were providing care for my dad. We had contracted with two different care provider companies—one for daytime care and one for overnight care. When the companies sent invoices to the LTC insurance company, one included care notes, but the other didn’t.
While I could see that care was provided (e.g., cooking lunch, cueing my dad to eat, reminding him to use the bathroom, helping him get dressed), the LTC insurance company threatened to discount the days provided by the company without care notes. After contacting the company, we learned that it had care notes but had only sent invoices. The care provider hadn’t realized the care notes were necessary. Fortunately, this was easily rectified, and both companies sent the required care notes.
#7 Check the Math
After all the delays, payments finally started coming in, and I was pleased to find that the company had backdated payments to begin on service day #91. Either my brother or I now check every month to ensure the LTC insurance company is paying for all the dates of service; we estimate we spend 1-2 hours per month checking the invoices and payments. Our dad’s LTC insurance company has a portal where we can log in to view received invoices, care notes, and subsequent payments. But the care provider companies must email or fax the invoices and care notes, and then a human at the company files them and adds them to the ongoing claim. The typical payment turnaround time is 1-2 weeks after the care notes and invoices are received.
#8 Ensure That Ongoing Invoices and Care Notes Are Still Being Sent In
Our latest issue is that the LTC insurance company is accidentally combining or mislabeling invoices. We use care providers with similar company names, and they share the words “senior” and “help” in their titles. The LTC insurance company has been misreading the invoices and combining them rather than separating them. We’re still working to get this corrected.
More information here:
Helping Your Parents Financially
#9 Use Your Insurance Agent
My last piece of advice is to use your insurance agent if they’re willing to help. As mentioned earlier, the agent who helped my parents purchase these policies is a family member. I am incredibly grateful that we could reach out to him when we had questions. He also called the LTC insurance company on our behalf when our calls and messages went unanswered. We were close to involving a lawyer due to all the delays, but thanks to our uncle’s help, we avoided that additional expense.
As a guest writer recently pointed out, long-distance eldercare is difficult. My brother and I hope that, with the financial assistance from our dad’s LTC insurance policy, we can safely help him age in place in the home where he’s comfortable. We know there will be life disruptions, but with the help of LTC insurance, we worry less about financial disruptions.
Have you had an experience with caring for an aging parent? Did they have LTC? Was it convenient, or was there more red tape than you would have imagined?
Thank you so much for sharing your experience in detail. It is so painful seeing beloved parents age, and the financial aspect adds “insult to injury.” How do you think “$14,000 in annual premiums for 10 years,” would compare to investing that money and “self-insuring” long term care?
I’m not the author but can comment that when long term care is used it adds up to large amounts quickly. In this case his parents paid 140k over 10 years. Over that same time frame if that amount was aggressively invested it might have increased 2-2.5x (280-350k).
The author didn’t give us much detail other than with the rider they get paid more than 200 and less than 800 a day. Let’s call it 300. At 300 a day that’s 9000 a month or 108000 a year in benefits. So it would take about 2-3 years to come out ahead with LTC insurance.
For me and my spouse we would rather self insure for the convenience of our family. Even if LTC payments come out ahead mathematically it increases the strain and burden on your family to have to fight an insurance company.
“ Self insuring” quite often creates a conflict in that enough money may not be set aside or relatives may be hesitant to spend it on the patient. Women usually have higher chance of needing LTC and for longer ( usually widowed) and …
The policy started with a daily benefit of $200 per day. The claim started about 20 years after the policy was purchased. That means the policy had 20 years of inflation growth when the claim was started. If the policy had only a 3% compound inflation protection, the daily benefit would be over $350 per day right now. And, with most policies, the inflation growth continues even when the policyholder is on claim receiving benefits (even though the premium is not required to be paid while on claim).
Clearly, in this instance, the policyholder made a smart decision to not self-insure.
Here’s the problem with being self insured. Once whatever you set aside is gone before medicaid will kick in, all of your assets have to be depleted to $2,000. This includes your home. If you have a $500,000 state participating plan, then your assets will be de to $502,000 and then medicaid will kick in. The real purpose of the insurance is asset protection. If there are no assets to protect don’t by the insurance. I’m guessing that since you are self-insuring your banking on only needing $200,000 or so.
Couples with $5M+ can certainly afford to drop $100K a year for five years on a nursing home without leaving the remaining spouse impoverished. That’s what most of us are talking about when we’re talking about self-insuring this risk.
There are a lot of hidden costs to self-insuring.
And there’s very little upside to self-insuring.
Main upsides to self-insuring:
1) Save the premiums
2) Avoid any hassles with the insurance company
Every company that offers long term care will take cash I’m pretty sure.
Josh, please re-read the article. It’s $14,000, not $140,000.
Thanks Josh for your math and adding to the discussion. I’ll clarify a few things. I wrote that BOTH of my parents paid $14K annually for 10 years, and you’re right, that’s a total of $140K of contributions for each parent. I agree that after 20 years that amount, if invested well, might have increased 2-2.5x (280-350K for just one parent, 560-700k for both). We never used my mother’s LTC policy, so the insurance company pocketed that money, but believe me, I do think about it. What if the daily benefit were $500? If my dad used professional care every day, that would be a payout from insurance of ≈$15K per month, or ≈$180K per year. It would take about 2-ish years to come out ahead with LTC insurance for just my dad’s contributions, 4-ish years to come out ahead of what my mom and dad both contributed.
Perhaps there was an editing error. Currently the article says “they each paid about $14,000 in annual premiums for 10 years”. This suggests a combined $28,000 of annual LTC premiums. Maybe the intention was to say that they paid a combined $14,000 per year in premiums.
I see your parents had a traditional LTCI, where you pay an annual premium (possibly an increasing one). Wonder if the interaction with the insurance company would be different for the “Hybrid” (LTC rider on a life insurance or an annuity), since they are paying out of the benefit that you’re accruing.
I completely agree. While the author’s last statement seems to thank the LTC insurance company, it sounds like an enormous headache, with countless hours trying to get money out of them. There’s no question that my wife and I are self-insuring. Insurance companies always do whatever they can to deny or put up obstacles to paying out. They are the biggest reason so many physicians are retiring early.
After dealing with a LTC company for my parents I am done with them! The constant aggravation and protection those companies have for themselves, makes it not worth it! My blood pressure rises just reading this.
Thank you. For those without children this can be a challenge. Hopefully, a spouse or another will be up to the challenge of keeping up with these things to ensure payment.
Thank you Will. I agree, it can be a challenge. I do not have children, and I think about my own future deeply, and whether I would want LTC insurance. Going through this was a huge hassle and took a lot of time, but my brother and I did it because we love our dad, and we want to protect and preserve our father’s nest egg and our eventual inheritances. I’m not sure how much time a non-relative would have devoted to this process of ensuring payments. Another commenter, Scott (https://www.ltcshop.com/contact-info/), suggested having the care provider company file the claim, because they will want the payments from the LTC insurance company, so that could help ease the burden of this application and payment process.
Thanks for this post. The long-term care companies are not customer service oriented to help with claims. There are many delaying tactics used to avoid payment. Do your kids a favor and keep policy, statements and correspondence in an easily found folder or notebook.
I absolutely agree. I manage the family finances, but at my wife’s request I bought a product online which consisted of a large assortment of well labeled file folders and a hanging file box with almost every aspect of what a next-of-kin would need. This includes policies, account statements, property papers, insurance info. This sits in an easily found area and gives her a lot of comfort. Frankly, I makes me feel better as well, since I had to find copies of everything just to file in the box.
I am being bombarded with FB ads for such a product and almost bit. Handling the deaths of both our mothers in the past two years wasn’t the incentive, it was misplacing (wonder where it is! We’ll find it if we move someday) the portable fireproof lockbox with the wills when I was revising the what to do/ where stuff is. We think we have a fix- and disliked the concept of paper copies of all the things we do on line anyway and having to continually update the after we die file folders- but might really need a huge fixed safe we can’t relocate absentmindedly.
Hey, at least we aren’t storing packs of $100 bills in the walls like someone once did [“kids if it falls to you remember to search Greataunt and uncle’s house thoroughly- I mean pull up floorboards- if she dies; before you let in repair folks or sell the house”]. Sometimes I think those relatives were bank robbers, assassins, or spies. IIRC the cash was to preserve money for the second spouse’s nursing home if the first spouse used up all the known money on their nursing home stay (no LTCI).
Haha! You bring up a funny point. We aren’t bank robbers, but I have a few friends who like to prepare, and one of those endeavors was for the year 2K disaster that never happened. So I have a stack of bills of various denominations that i have had for decades (I know, lost out due to inflation…). But at least it’s in a safe and not under out floorboards.
I think as long as you are secure about where all those papers are, you don’t need these products. A big heavy safe will accomplish this.
This is a super helpful and informative article! It’s a blessing that your father was wise enough to get long-term care insurance, and I’m glad that you were finally able to get the insurance company paying out. Good luck sorting out the invoice issue! Unfortunately, I am certain that the insurance company will not make that problem easy to fix. Their financial incentives run in the opposite direction from yours.
My own father was not wise enough to get long-term care insurance, and the result is that I am currently bleeding out money until I can get his house sold. and the money from his house will not last long, so if he lives long enough, he is going to exhaust his resources. it’s a worry, but he did not plan well for his old age. (unlike your own father).
Artemis, I am so sorry for you and your situation. I am very grateful to my mother for doing this hard financial planning for herself and my dad. I wish my mom were still around. I hope your father will be able to qualify for medicaid soon, if not already.
Thanks for this very informative post. As a retiree in my early 70s, I am trying to keep good records to make it easy on my children if they have to take over my care. I have long-term care insurance and hope to never need it. However, I am copying this article to file with my long-term care insurance policy. It could make their life a lot easier!
Thanks Cherie for your comment. My goal with this post is to help people exactly like you and your children. Please feel free to send them a copy of this article now along with the name of your LTC insurance policy holder; that should be enough to get them started should you ever need the LTC policy. Had it not been for my uncle telling me about this policy, I would have never known, even if my dad did keep the records somewhere (that my brother and I never found). My dad started losing his cognitive function in his early 70’s, so it’s not too early for you to loop the adult children in on the conversation.
Thanks for articulating the idea to save this article in the file with my LTC policy – I was just thinking the same thing!
Excellent post! Thanks for sharing this incredibly personal story and highlighting the bureaucratic nightmare of actually dealing with a LTC insurance company. I’m certain their sleazy delays and low-ball service credit logging are by-design. This solidifies my decision to self-insure for my family.
What is the overall opinion on long term care insurance for us readers? Is it recommended we all get it when we are younger so it is cheap? Should we self insure instead? What insurance companies do you recommend for LTC insurance? What happens if you don’t have the LTC insurance and can’t pay for these services out of your portfolio, what are the other options?
We hope most WCIers will retire wealthy enough to self-insure long term needs. If you can’t pay and don’t have LTC, you do what most people do, spend down until they become eligible for Medicaid and if married, leave their spouse impoverished.
If you can buy a reasonably priced LTCi policy that can help protect against a catastrophic loooooong term care situation, why not do it?
If you can buy a reasonably priced policy on your lawnmower, why not do it?
Because you don’t need it. Insure against financial catastrophes. If the risk showing up isn’t a financial catastrophe, then you don’t need to insure against it. Insurance, on average, must be a losing proposition or the insurance companies would go out of business.
I worry a bit that you sell this stuff and don’t understand that concept. I’m a big fan of buying insurance and plenty of it when insurance is needed. And not buying it when it isn’t needed.
The people who should be buying LTC policies are typically couples retiring on sums of money in the range of let’s say $200,000 to $2 million. Below $200,000ish, spending down to Medicaid is reasonable. Above $2 millionish, you can afford to self-insure without leaving the spouse impoverished.
Do you own flood insurance?
Not on my current house. Thanks for asking. I don’t have earthquake insurance either, which is a far more likely risk in my current location.
If you could get earthquake insurance for an annual premium of one-tenth of one percent of the value of your home would you buy it? For example, if your home was worth $900,000 would you buy earthquake insurance if it cost $900 per year?
It would depend on how the policy works. Last time I looked at it I didn’t find the offered earthquake coverage particularly appealing. My recollection is that it doubled the annual cost of my policy.
Get to your point instead of trying to draw some analogy with another type of insurance.
Your answer is surprising. I thought you were going to say: “Because I don’t need earthquake insurance. I insure against financial catastrophes. If the risk showing up isn’t a financial catastrophe, then you don’t need to insure against it.”
It sounds like, if you could find an earthquake policy that works well, has appealing benefits and is a good value, you’d buy it.
I’d consider (and have considered) earthquake (I do have fire/regular insurance on the home) but not LTC or flood. But this article is about LTC. Feel free to submit one on earthquake/flood if you want.
https://www.whitecoatinvestor.com/contact/guest-post-policy/
How about I submit a guest post comparing the advantages and disadvantages of self-insuring for long-term care or owning long-term care insurance.
We don’t approve guest posts until we see them, but we even run posts that I disagree with occasionally with an editor’s note attached to them. We like having other voices on the blog.
https://www.whitecoatinvestor.com/contact/guest-post-policy/
Scott, are you an insurance salesman?
When my mother-in-law needed to use her long-term care policy, we did not file the paperwork for the claim. We had the home care agency file the paperwork for us. All we had to do was sign a HIPAA form for them to contact the insurer on her behalf. Also, my mother-in-law had to have the home interview with the nurse from the insurance company. That was it. The claim was approved in three weeks. The only time we had a glitch was when she transitioned from home care to facility care. The assisted-living facility dragged their feet and took almost two months to send a copy of the state license to John Hancock. But once the copy of the facility’s license was received, John Hancock reimbursed us for those two months of expenses within a few days.
It’s in the interest of the home care agencies to file the claims because long-term care insurance is a HUGE percentage of their revenue.
I expect it depends on how the payments work- was the policy unlike Adam’s dad’s- ie no incentive to manage the receipt and passing on of the payments? However sounds like might have been worth avoiding that hassle if the care companies would truly await the LTCI company’s payment without penalizing the family.
We had a home health aide come to her house for a few hours every day for 90 days. That satisfied the elimination period (deductible). Shortly after that she moved into an assisted-living facility. We paid for the “last month” as well as a security deposit. We also paid for the first month in advance. At the end of each month we would send the monthly statement (along with the care notes) to the insurance company. They would reimburse us with 5 business days.
During COVID she moved in with us. We hired a home health aide to come to the house every day to take care of all the hardest tasks: bathing, dressing, etc… We paid the home health aide at the end of each week. Once a month we sent the insurance company a statement showing when the aide arrived each day, when she left, and ‘care notes’ of what she did when she was there. Again, the insurance company would take about 5 days to reimburse us after we sent them this information.
Thanks Jenn and Scott for your comments. The home care agency we used offered to file the claim (and that would have made things so much easier!), but then they keep the entire daily benefit. In the beginning of this journey, we were using two different home care agencies (one for daytime care and one for nighttime care) and it didn’t make sense for the daily benefit to go to only one company, because they would have pocketed an excess compared to what they provided and we would need to make up the difference for payments to the other company.
Adam, the home care agency we used filed the claim for us but the insurance payments came directly to us. If a home care agency told you that they would have to keep all of the daily benefit regardless of the actual cost of care, that sounds like fraud to me. I’ve been in this business for over 30 years and I’ve never heard of anything like that before.
Adam, what you’re describing is called an “Assignment of Benefits.” It’s always optional for the policyholder. It can make it easier for al parties, but I only ever recommend it if the LTC policy is a “reimbursement” contract (by far the most common type inforce). Even with a reimbursement policy you don’t want to do an assignment if there is more than one provider as in your case. With a single provider it might make sense, but the assignment only transfers the right to receive the benefit check. The agency doesn’t have any other rights – or responsibilities, so careful, consistent review is still important.
That said, any home care agency should be expected to directly send invoices and care notes to assist in the claim.
You’re right to be especially careful about an assignment when a policy is an “indemnity” contract like your dad’s. Sounds like his is what is called a “daily” or “professional” indemnity that pays the full daily amount on any day any cover professional care is received.
There are also “cash indemnity” contracts that pay the full benefit monthly regardless of who provides care – those also should not be “assigned” to a professional providers.
One thing I did not know is that services that would not be reimbursable can count towards your elimination period. For example, if your loved one falls and goes into an in-patient rehab facility, that is not covered by LTC insurance/ is covered by Medicare and whatever supplement they have. BUT, those days can count towards the LTC elimination period. I found this out later and fixing the records and getting all of that straightened out was a colossal pain and a constant headache. But, I will say that once it was straightened out, the LTC company has been pretty no-hassle. I just have to deal with nursing home bills, though, not multiple in-home providers.
Thanks Juli for your comment. That is very interesting. I imagine you can use that knowledge to your advantage if the reason for Long term care is physical disability (loss of ability to do 2 of the ADL’s), more so than with cognitive impairment.
While many policies – especially those written 20+ years ago – have a “service day” elimination period exactly as described, there are policies that do use a “calendar day” system that allows for friends/family to provide care during g the EP.
A common variation on service days is if care starts at home, then one paid, professional (service) day each week (Sun-Sat) provides a 7-day EP credit. A few companies provide this credit with 3 paid days during the week.
Some policies have a 0-day EP for home care (often called “waiver of EP for home care.”
You have to read the actual contract, sometimes looking at several different sections. For example, many Prudential policies clearly state in the EP definition that it’s “service days,” but in the home care section it says they provide a 7 for 1 credit for home care.
Wow, what a nightmare for the family to have to fight w/ the insurance company. It reminds me of when I was dealing w/ an insurance company to keep my disabled son on our health insurance after he had reached the age of 26. It took certified letters from me corresponding w/ them and they actually said 2x that they never received the certified letters. Each time I showed them that the post office showed that they were delivered. It became very obvious that they did not want to keep covering my son. I fought and fought and fought, sending emails and faxing documents to a contact person I eventually got. It was still a hassle and a half.
I eventually got my son covered for 2 additional years. I learned that insurance companies are not our friends the hard way.
So NO, I will NEVER purchase a LTC policy from an insurance company. I would not put family members through the nightmare of dealing w/ an insurance company. We are self-insuring. Period.
Happily my experience has been much less hassle. I was not involved when my Mom claimed benefits for my Dad before he passed in 2018. They only paid out about 3 months before he passed. Afterwards the company ‘awarded’ my Mom 500k benefit (minus what was paid for my Dad) and she no longer had to pay the premiums. I moved her into assisted living in 2023, aware of her increasing dementia but both the facility and myself felt she didn’t meet the criteria, so I never filed a claim and she was paying the costs out of her retirement portfolio. Last summer I called the insurance company to basically establish myself as a point of contact as I was managing everything by that point. I inadvertently started a claim. So I made sure her doctors did support her diagnosis. She also had a nurse evaluation but it was by video. Surprisingly her insurance pays out a base value per day as her facility is ‘qualified’. We went through the 90 day periods and it started paying out. Last winter my mother started wandering and was moved into the memory care unit. She had another video evaluation to ensure she still qualified and now the amount paid almost matches the facility costs. Everything has been pretty seamless though her facility doesn’t want to deal with the claims as they are not aware of what her qualifying criteria are. They don’t want to mess things up. I’m sending the monthly bill and they pay out about 2 weeks later. I’ve learned to never submit more than one month at a time! They will screw it up. Otherwise I am blessed that her income is actually exceeding her expenses. Her benefit will run out in about 5 years however and then the costs will be on her. Happily her IRA and the house proceeds should last whatever time is needed.
I however will never purchase this insurance. I already have a chronic medical condition that disqualifies me from disability insurance and I doubt I am ‘insurable’. I am going to have to self insure.
My mom purchased LTC from Transamerica in 2000. Not sure how much she paid but purchased a policy with unlimited benefits and a 5% simple inflation per year. She went into assisted living in 2020. They paid consistently and increased her daily rate each year. She had to requalify every year but had no issues until last April. We did not realize she was no longer receiving benefits and, that she was not able to understand their requests. The facility was bought and billing was delayed. In Sept, she owed over $21,000! We immediately contacted the insurance to refile for benefits. She fell 4 times in Oct. We submitted all medical records and facility notes. They approved her but only for a portion of Oct through June. We appealed and received letters that state she has exceeded her benefits and the policy is canceled. Her monthly expenses are $5300 plus medicine. We filed a complaint with the Texas Dept of Ins. Next step is a lawyer as they have failed to provide her policy, application, and financial payments to confirm the changes in coverage. It’s disheartening! Transamerica transfred all claims handling to Illumifin in 2024 which is when the issues started. Cannot imagine how elderly handle this without family. She has no money other than Social Security. Any advice or help is welcome!
I know someone who had a Monumental Life long-term care policy. The company was purchased/acquired by/merged with Transamerica. He was diagnosed with early onset Alzheimer’s, in his 70’s. His wife was in her early 60’s at the time of diagnosis. His policy covered the full cost of his care at home and he was at home for almost 12 years. He spent the last few months of his life in a nursing facility (due to the difficulties that occur at the very final stages of the disease). His policy paid over $900,000 of benefits between 2009 and 2021 when he passed away.
Andtea (or is it Andrea?), my heart goes out to you. My father’s LTC insurance company also transferred all claims over to a different company than the original one. I don’t have much advice, other than maybe to hire a lawyer (start here https://www.naela.org/). We almost hired a lawyer because of all the delay tactics. I have heard that LTC insurance policies sold nowadays have limited terms where they will only pay out for 3-8 years of payments, so maybe the new claim handler is getting your mom’s policy confused with newer term policies. Good luck!
I am an agent in MN that sold $100 dollars a day coverage to both of my parents. When mom went into memory care her policy went on waiver. By that time dad had spent $45,000. When she passed SF had paid out $770,000 in benefit. Dad has now been in and his costs were $95,000 in premiums. Currently he is on waiver 6 years in at $6,500 per month and his policy increased to $328 per daily benefit. I handle the reports of course and guide my siblings through the process but none of them purchased an Ltc policy when they were available. Care for a loved one is both expensive and financially devastating to the estate. When you run out of coverage and the state Medicaid program kicks in welcome to clawback and loss of assets you had invested.
Pete, I’m so happy that LTC insurance is working out for you and your parents, and that you are adept at managing the process.
My mother entered a long term care facility several years ago in the independent living part of the facility and has now had to enter into assisted living. She and my now deceased father had the foresight to purchase long term care policies. Not sure what they paid for them. I am now in charge of her estate and finances and yes there may be some effort needed to get claims filed and work around the occasional issue. The question that presents itself is it more stressful for your caretakers/loved ones to deal with the insurance company, or to watch your assets dwindle slowly down to nothing if you live long enough. My mother is in a reputable facility , not a luxury one and her expenses exceed $100,000 per year. Room and board, misc transportation expenses and some occasional non-covered drug expenses and other personal expenses. Her policy covers approximately 80-90 percent of her expenses. Yes every policy is different. Personally her insurance company has been nothing but cooperative to deal with and especially now that things are being consistently filed monthly, my time dealing with it is about 10 minutes a month. Please don’t underestimate the costs of long term care or the ultimate bigger hassle of having to pursue medicaid options if a last resort. I’ve looked into that and it’s pretty disheartening.
MW, I’m so happy that LTC insurance is working out for you and your mom, and I hope it continues to do so.
I have read elsewhere that the amount needed to self insure for LTC is about 300k per person. The rationale is that most LTC is fairly brief, on the order of a few years. However as dementia becomes more common, I think this diagnosis will skew everything upwards. People don’t die of dementia itself very quickly unless they are not cared for. In a full care setting, they can live far more than a few years. My mother in law has been in one for 12 years and the cost is now close to 200k per year. To be fair, it is a Mercedes-level memory care and that’s what she wanted and she had the funds to do so. But I think the estimated self-insuring amount of 300k is low if dementia is involved.
Thanks for your comment Joey L. I agree with you that $300K might be low if dementia is involved. But we can’t know the future, so $300K is better than nothing. If your portfolio gets to a point where you can spend $200K a year ($5million portfolio with 4% withdrawal) without running out, sounds like you could self-insure long term care.
My husband’s parents had no LTC insurance. We lived 3 hours away when my F-in-L was diagnosed with throat cancer and given a short time to live. We began living with my in-laws a few days a week and had caregivers the other days to help support them. My in-laws believed that the $30 per hour care fees were exorbitant and they resented paying those fees. They would, without our knowledge, cancel caregivers because they were “having a good day.” This resulted in multiple emergency calls to us from my in-laws’ neighbors and EMTs because there were falls inside and outside the house, and a car crash when an elderly friend was driving them to an appointment. My M-in-L’s health seriously declined from doing too much. My F-in-L lived 5 years with the wonder of Keytruda. Meanwhile I was losing my mind living with them. I realized then that no matter how much money I saved, my future self would be like them and think “I’m having a good day, I don’t need help, I’ll save that money.”
Self-insuring is not just about having the money it’s about being willing to spend it on care. After a year of providing in-home care to his parents I signed my husband and I up for LTC policies. That way, since we’ve paid for it, I plan to use it. I want to live in my own home as long as possible. The policies cover us for 2 years with a generous daily allowance. If we need care longer we have the means to pay for it and by that time will be inured to having outside help.
My in-laws care journey went from in-home to assisted living after my M-in-L broke her femur. Assisted living cost $120K+ per year. My F-in-L handled the family finances but lost his vision. I had to assure him that they had enough money to go to assisted living and that after he passed there would be enough to support my M-in-L. Four and two years since my in-laws’ deaths I can finally have fond memories of what otherwise was a very difficult and stressful time as a caregiver.
Funny way to think about it, but I guess it isn’t all the differently from buying an annuity. Data shows annuity buyers live longer. Maybe LTC buyers live longer too. “Permission to spend” is the term often used in the industry.
The article mentions that much tracking, reconciling, and follow-up was needed to ensure the LTC policy paid what’s owed.
It would be informative to have a similar article regarding Cancer insurance. My experience was that cancer insurance claims are deliberately mis-processed and scrambled in various ways, making it nearly impossible for one to track reimbursements of claims. I have a spreadsheet with 30-plus tabs, one for every claim submitted.
Cancer insurance is a scam to start with so no surprise that its purchasers have a hard time later. I mean, life insurance, disability insurance, and health insurance all cover cancer. Why buy separate cancer insurance?
I would rather self-insured given the fact that my wife and I are already in our 70s and that we have set aside about 1.5 million in one of our brokerage accounts just for this purpose when one or both of us will need it. Our 3 daughters are close by, and will be our Financial Delegation of Authority (DOA).
I don’t quite understand “setting aside” some huge chunk of money to cover this. If you’re going to do that, might as well buy LTC insurance so you can use that $1.5 million along with the rest of the portfolio.
I just think if the portfolio is big enough, you know that it is big enough that it can be repurposed for LTC if necessary. You don’t actually set that money aside. LTCI is way cheaper than $1.5 million. I mean, even paying cash should be a whole lot less than $1.5 million. $100K a year for 5 years is only $500K. $1.5 million seems like massive overkill. Belt and suspenders and duct tape.
About 25 years ago, I was working for a health insurance company that acquired a long-term care (LTC) company. They offered us a great deal via payroll deduction. Since I was only around 40, the premiums were super cheap, and the plan was excellent (it’s no longer sold) with a 90% cash back option. I was still young enough then to have no idea what my retirement savings would look like. But considering my Mom was in Memory Care for 2 years before she passed, and I seem to strongly match her genetics (compared to my 88-year-old going-strong Dad), I don’t regret it. I just hope my kids don’t have the problems of “using it” for me that you have had!
Thank you for sharing your experiences!
Thanks for the article and all the comments. A factor that doesn’t seem to have been brought up is where in the US you live. Where you live or plan to settle has a huge effect on monthly assisted living/memory costs or at home care costs. My elderly parents live in Northern California where hourly home care costs (for reliable help) are $40-$60/hr and assisted living is $6-$12k or more per month and memory care is more than that. Neither of my parents purchased LTC and my father was diagnosed with Dementia last year. They are both still at home but we are in the process of trying to find a memory care facility that we are comfortable with and won’t break the bank, especially since other than the dementia, my father is healthy and could easily live another 10-15 yrs (he’s 79.) Between savings and the sale of the house, there is maybe enough money to cover both of them for 5-7yrs in a facility. As a result, my mom will have to stay in the house for as long as possible to save money since the house is paid for but then we can’t sell it until she moves. It’s just a financial mess and my brother and I are really worried that we will eventually have to cover their costs which neither of us are really in a place to do so. I’m looking into LTC for my husband and myself but not sure we can afford the premiums that will give us enough LTC when we need it for where we live (also Northern California.) We may be forced to move to another part of the country in order for any LTC we get to actually cover at least most of the costs. At the end of the day, where you live is an important cost factor.
This is such a difficult position to be in. My heart goes out to you all. My healthy mom had a stroke and went from being very old and unsteady on her feet to being pretty helpless. Fortunately she had LTCI. But what I didn’t know, and the reason I am writing now, is that there is a LTCI strategy that I missed involving the waiting period. Often you can submit a claim before you realize you need to.
Many people go along just fine with 2 ADLs with the help and support of a spouse or friends. If you file a claim right away, and perhaps hire an agency once a week to help with showering or whatever, you could satisfy that waiting period before needing expensive intensive 24 hour care. And, you would stop having to pay premiums.
It took me 5 months and two separate appeals to get the date of disability moved back using medical record documentation. I wish I had known to file the claim sooner when I wasn’t under such stress.