How to have that Awkward Conversation about Long Term Care

“Dad, Sandra and I have been thinking about how we can best take care of you when you get older. When can we set aside some time to talk about your plans and expectations?”

Chances are, your parents have been thinking about this very issue, but didn’t know how to bring it up. When you finally breach the subject, just the idea of a discussion feels like a load of bricks off their shoulders. If they are open to discussion, it may be a good idea to schedule for a later date, so you can give each person time to prepare their thoughts.

1. Hope for the Best, Plan for the Worse

We hope that you (or your parents) die at the ripe old age 100, after several years of a healthy, active retirement. But here are a few statistics to help wrap your minds around planning for the worst:

  • According to Investopedia, research shows that by age 60, 50% of men and 65% of women are likely to need some form of long-term care.
  • According to the American Association for Long Term Care Insurance (AALTI), the current average cost per year of nursing home care is $76,000, and the average length of time is 3 years.
  • In 20-30 years, the cost per year is likely to increase to $253,000, due to inflation. This means that the average cost for 3 years of care 30 years from now would be a total of $760,000! That might be enough to deplete someone’s nest egg entirely.
  • Assisted living costs $43,000 per year on average.
  • The median cost of adult day care is currently $17,904 per year.
  • The cheapest option is at-home care: at 3 visits per week, this can cost around $9,000 per year.

2. Determine your parents’ wishes

As you start your discussion, you can review the facts, but also make sure you and your parents are on the same page. Asking them a few questions will help you determine what type of care they prefer, and the estimated costs for long term care, if it is needed.

Here are a few sample questions to kick off the discussion:

  • Where do you plan to retire?
  • Who would you like to take care of you if you needed help performing everyday tasks? Would you prefer a family member if possible, or a medical professional?
  • What type of nursing home options would you consider, if at all? Note that services vary, affecting prices. For example, some lower cost facilities may not permit spouses to share a room.
  • What are your wishes regarding physician’s orders for life-sustaining treatment?
  • Do you have long term care insurance or some specific account set aside to cover long term care?

Determining your parent’s wishes will help you to be able to make plans to ensure they receive the type of care that they expected, should they need it.

3. Analyze your options

Once you have a good idea of what you or your parent’s preferences are, you can go about identifying a long term care solution. For example, if the plan is for Mom to care for Dad until he passes, who will take care of mom if she becomes unable to perform everyday tasks? In this case, nursing home care may become the best option.

Let’s compare the cost of nursing home care for one individual with and without long term care insurance:

  • Without Long Term Care Insurance:

Assume she selects a high quality nursing home with a cost of $100,000 per year. If she needs coverage for 5 years, the total cost of her care will be $500,000.

  • With Long Term Care Insurance:

Assume Mom’s insurance coverage kicks in after 30 days (the elimination period) and there is an $8,000 deductible. If her premiums are $200 per month for 20 years, she will have paid $48,000 in premiums, plus the $8K deductible. Her total out-of-pocket cost is $56,000, a mere fraction of what she would have paid out of pocket.

4. Select a Long Term Care Insurance Plan

If you are selecting long term care insurance coverage, it can be helpful to compare products using a side-by-side comparison of key features. Your ‘key features’ list may look like this:

  • How does the carrier define ‘disability’? Assuming that the inability to perform 1 or more ‘activities of daily living’ qualifies the insured for benefits, the longer the list of activities, the more likely you will be to qualify for coverage.
  • What type of inflation protection is offered? You can select a policy that increases the benefit year over year at an agreed rate, in keeping with inflation. Inflation protection can help guarantee that your insurance policy will still be able to cover the full costs of long term care when you need it.
  • How much money will you receive per day? The more coverage you have here, the better quality of care you can afford.
  • What is the period of coverage? How long will the insurance company pay for your long term care? The longer the coverage period, the higher the premiums will be.
  • What type of care is offered?: In-home, respite, assisted living, and nursing home care are the most common options. Here is a list of services covered by a typical long term care insurance policy.

Alternatives to Long Term Care Insurance

If long term care is needed for any length of time, insurance will always work out to be the cheaper option; but you also risk not ever needing the care. Life Insurance with an Accelerated Death Benefit either added to an existing life insurance policy or purchased with a new policy is another great option. An annuity with a healthcare rider is another option. It may be best to work with a financial professional who can help you determine which option makes the most sense for you.

After you’ve had your meeting, looked at the facts, analyzed your options and come up with a solution, you will sleep easy knowing that your loved ones are receiving the best possible care. And your parents will sleep easy knowing that they are covered.

Here’s to a long and happy life for you and your parents! If you need help determining which long term care solutions are best for you, please give us a call. Axia Global can partner with existing financial advisors or work independently. It is our goal to make a measurable difference in your financial life.

Note: the statements above should not be considered financial, legal or tax advice, but ideas for careful consideration with trusted financial advisors and lawyers. For current tax or legal advice, please consult with an accountant or an attorney.


About Axia Global

J. Michael Roney, founder of Axia Global, has worked alongside the best financial and legal professionals in the field to craft profitable solutions for even the most complex wealth preservation and estate planning cases. Together, the team at Axia Global has nearly a century of combined experience in the financial services sector.