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MY MOTHER WAS AN elementary school teacher, with a large break in her work history to raise three daughters. My father spent three years in the Navy before enjoying a successful career as a business executive in sales. Because of my father’s job, we moved a lot when I was growing up. My parents bought and sold eight homes during their working years.
They eventually settled in Connecticut and retired in their early 60s. They continued to live frugally, but enjoyed travel, volunteered their time and spoiled their nine grandchildren. I was chosen 25 years ago as both my parents’ power of attorney and the executor of their estate. I encouraged them to purchase long-term-care (LTC) insurance in 2005, with coverage that included a generous per-diem rate, an inflation escalation clause, a 90-day waiting period and six years to use the policy once opened.
LTC was something I knew a lot about: During my 30-year career, I’ve looked at aging from a legal, financial, medical, business consulting and legislative advocacy perspective, most recently spending 10 years building a geriatric care management company in the Washington, D.C., area.
Once they turned 70, my parents talked about selling their home and moving to a community with a more robust health-care system. But it was clear that all the moving early in their marriage had left my mother somewhat emotionally scarred, and my father didn’t insist. Their home was over an hour from medical specialists and a good hospital. My sisters and I didn’t push them because our grandparents had lived into their 90s. We thought we had plenty of time.
But then mobility concerns surfaced with my father. As a former college football player, his needed knee replacement didn’t seem surprising. But soon he also developed a drop foot, along with weakness in his arms and hands. About the same time, my sisters and I noticed my mother was losing weight and breathing heavily. Both were smokers who’d quit decades earlier. They were now ages 74 and 76. As their health began to deteriorate, I became more involved.
My sisters and I began to accompany our parents to doctor’s appointments, where we learned that my mother had chronic obstructive pulmonary disease, a failing heart and an autoimmune disease that affected pulmonary function. My father, by this time, was getting weaker and began to fall. With his blessing, we triggered my father’s LTC policy so we could get some at-home support, which he readily accepted and which my mother angrily acquiesced to. Though eligible as well, my mother lacked insight into her condition and stalwartly refused to open a claim for herself.
By early summer 2017, both my parents were unable to climb stairs. They agreed to move to a small single-level home nearby and across the street from my sister. Their home sold relatively quickly, netting $350,000, which was immediately placed in an interest-bearing bank account.
Not long after, my father was diagnosed with ALS, often called Lou Gehrig’s disease. The clinic that diagnosed him connected us to Veterans Affairs (VA) right away. All we needed were my father’s discharge papers from 1965. Fortunately, my mother located the file immediately and he was approved to receive VA benefits, since his service was found to be somehow linked to his disease.
These diagnoses for both parents, the move, the VA benefits and opening a claim for LTC insurance all happened between March and October 2017. By the time we got to November, both my parents were weaker, and it became evident that decision-making for my father and financial oversight for them both needed to move over to me. For this to be done, both had to resign as each other’s agent on the power of attorney (POA), which automatically put me, the successor agent, as the new authority. For dignity purposes, we didn’t do this by triggering the incapacity clause in the POA.
Both parents were demonstrating obvious confusion and lack of insight into each other’s medical condition. We added 24/7 aides to the home after a series of falls and my mother’s increasingly prolonged cyanosis. The cost for the aides was $26 an hour, plus travel, for a total cost of $19,000 to $20,000 a month. This was largely offset by money coming in from the VA ($8,530 a month) and the LTC insurance ($8,550 a month).
My parents also received Social Security and their pensions, and they had $350,000 in cash from the home sale, another $150,000 in unrelated savings and $875,000 in investments at Merrill Lynch. During this time, I found legal documents establishing a living trust that had never been funded. With my parents’ blessing, I placed the $350,000 from the home sale in the trust, thereby sheltering those assets from probate upon their death.
My father passed away peacefully in July of the following year. Hospice support, which was paid by Medicare, had been added a month earlier. For the remainder of that summer, I went about settling the estate and negotiating with my mother to open her long-term-care insurance claim, which she had—until that point—still refused to do.
To open the claim, the insurance company sent out a nurse to assess her medically and cognitively. We were now beholden to another 90-day waiting period before money would begin to flow. In the meantime, we decreased aide support from 24 to eight hours a day because my mother didn’t need round-the-clock care and, indeed, didn’t want it, plus she had my sister nearby if she needed help at night.
In September 2018, I finally closed out my father’s affairs and finalized my mother’s survivor benefits for my father’s pension, IRA and small VA benefit. My mother died three weeks later, having just received her first LTC insurance check after the 90-day waiting period ended.
My parents left $450,000 in unused LTC benefits, which can’t be inherited. For the next year, I worked to settle the estate. Ironically, the two most difficult matters to close out were their car lease and cell phones. In both cases, it took more than eight months to find the correct person and provide them with the right documentation.
Even after spending my career in the senior care industry, I was shocked at how traumatic all of this was for our family. My advice: Discuss the above issues early on with your parents, keep copies of all documents and—if you can afford it—hire professionals to support you, so you can be fully present as a son or daughter. Below are some steps I recommend for families faced with the challenges of eldercare.
Nancy Fagan is an eldercare expert who has spent 30 years working in various aspects of long-term care. She began her career as a legislative advocate for seniors on Capitol Hill. Later, as the associate director of the Continuing Care Accreditation Commission, Nancy guided hundreds of continuing care retirement communities through the accreditation process, and also educated nonprofit boards about ensuring quality of care and financial accountability. For many years, Nancy has served as the chief operating officer with the largest geriatric care management organization in the Washington, D.C., area. She’s now transitioning to a role with a consulting firm.
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You sound like a great daughter who fulfilled the Fifth Commandment: Honor your father and your mother, so that you may live long in the land the Lord your God is giving you. Exodus 20:12.
Thanks for the article! I’m going to print it and give it to my son and daughter — also will put a copy with our LTC policy.
We bought a policy many years ago after I read Jonathan’s article on LTC insurance in the Wall Street Journal. Even as the premiums have increased over the years, it’s a purchase I’ve never regretted. Our policy offers 6 years of benefits split any way between my husband and myself. It protects against inflation with a 5% escalator each year.
Jonathan titled his article something like the “Insurance You Hope You Never Have To Use.” That’s how I feel about it — time in assisted living or nursing care has absolutely no appeal. But I do appreciate that the policy — together with our pensions and Social Security — will likely safeguard our savings and assets so that our children can benefit.
Thanks for sharing your experience and expertise.
One thing that did occur to me was that I assume you could also have avoided probate with the $350,000 by putting it into a savings or investment account with POD beneficiaries.
I also wonder if we shouldn’t think about unused LTC insurance benefits in the same way that we think about other types of insurance policies where we count ourselves lucky if we don’t receive more in benefits than what we pay in premiums (even though it is unfortunate that your mother was unwilling to take advantage of her LTC insurance earlier).
As an eldercare expert, I assume you would recommend that people buy LTC using state partnership LTC policies that are more affordable due to the better control of future premium increases. My policy premium rate has increased at less than the inflation rate.
Dealing with the inevitable aging of our parents is a very tough emotional process and as you noted you “discover” a lot of things, especially financial, along the way. Wills may be poorly written or incorrect, etc. There are frequently disputes within the family on what people’s intent was on certain topics and these can be brutal.
I feel it’s best if these topics can be discussed and properly documented ten years ahead of time by all responsible parties when the parents are mentally strong. I still have mental scars from dealing with the passing of my dad and the very difficult and needlessly expensive process of settling his estate. You seem to have fared fairly well!
Really helpful information. We’ve just this summer helped activate my mother-in-law’s LTC benefits (she has Alzheimer’s). Right now her husband just wants a part-time caregiver to give him occasional relief, but more decisions are on the way. The care manager idea seems important to me, and paying for it is a benefit of the LTC policy.
One more thing: My MIL’s policy has no time limits on benefits, so there’s no need to wait to activate them. My husband and I bought LTC benefits at group rates when we still worked for the state of California. Some years later, the rates were going up dramatically. We had the choice of keeping the lifetime benefit (at much higher rates) or switching to a ten-year or three-year maximum at proportionally lower rates. We took the middle ground and calculated risk of switching to the ten-year policy. Statistically, most people who need to use LTC benefits only need them for a max of a couple of years. But my MIL didn’t switch and they kept paying the full amount, so she still gets the benefits as long as she lives. Another feature: Once a claim is active, they don’t have to pay the premiums anymore.
So it’s worth it to be clear on the terms of the LTC policy and to consider the health of the insured—are they likely to need care for just a short while or for years? My MIL’s Alzheimer’s is in the advanced stage, but she’s otherwise healthy and 83 years old. It’s hard to peg how long her need for benefits might last.
Thank you for the detailed article. I’m sorry for the loss of your parents, and for all the hard work you put in. I hope to short-circuit much of this by moving to a CCRC, and by putting beneficiaries and TOD on my accounts, but I will take another look at things after the actual move.
Thank you so much for sharing your experience and expertise on this topic!
Hi Nancy, Thanks for sharing and my sympathies for the loss of your parents. Thank you also for the great tips. I have one question: What happens with the $350K in unused LTC funds? Thanks.
If this is a standalone policy (it sounds like one), then it is “use it” or “lose it”. As opposed to a “hybrid” policy built as a rider to a life insurance or an annuity, and in case this, typically the heirs get back the unused portion of the money.
As Nancy mentions in the story, the $450,000 in unused long-term-care benefits was lost because her mother waited so long to trigger benefits.
In more than one instance that I know of if there is a cognitive impairment it is not that rare for the person who needs long term care has forgotten they have insurance. So if you have LTC insurance make sure you tell your children or future care-giver/monitor.
Nancy thank you for this piece and all the advice. I’m sorry about the loss of your parents.
Getting older is a lot more complicated than it was in the good old days. Having the systems you mentioned in place will be a big help. We’re also in the process of trying to streamline our lives as much as possible to make it easier to wind things down. It will be simpler for us while we’re alive and simpler for whoever does the final unwinding.