A few months ago I wrote about how finding out your parents financial situation can be stressful and I thought I would touch on that again now that my brother and I have been talking a little more about it. My mom is living off the savings that her and my dad had amassed before he died, his retirement funds and she will begin to get his SS money in a few years. But she pays for her medical care herself, and while she is pretty healthy right now, she does have some issues that could cause her some grief later in life. And in turn, this could cause my brother and I to spend A LOT of money on her care if she needs it after she runs out of her own money. What else would we do, put her out on the street to fend for herself? I don’t think so. So we have begun talking about long term care insurance for her, and whether he and I should just pay for it ourselves because she refuses to look into it or get it for herself. It is a painful conversation to have, but one that needs to be had. We have tried to bring it up several times, but each time she says she cannot afford it.
However, we cannot afford to pay for her care ourselves if and when she needs it; after all, we have and will have our own families to take care of. So long term care kind of looks like a necessity. Long-term care insurance covers care generally not covered by health insurance, Medicare, or Medicaid. The expenses laid out for this kind of care are sometimes income tax deductible, so that is good, and the amount deductible depends on the age of the person getting the benefits. There are generally two types of long term care available:
The Non-Tax Qualified (NTQ)was formerly called Traditional Long Term Care insurance. This type has been sold for over 30 years. It often includes a “trigger” called a “medical necessity” trigger. This means that the patient’s own doctor, or that doctor in conjunction with someone from the insurance company, can state that the patient needs care for any medical reason and the policy will pay. Benefits are taxable.
The Tax Qualified (TQ) long term care insurance policies do not have a Medical Necessity trigger. In addition, they require that a person be expected to require care for at least 90 days, and be unable to perform 2 or more activities of daily living (eating, dressing, bathing, transferring, continence) without substantial assistance (hands on or standby) and that a doctor provides a Plan of Care; or that for at least 90 days, the person needs substantial assistance due to a severe cognitive impairment and a doctor provides a Plan of Care. Benefits are non-taxable. From Guide To Long Term Care
How I understand this is that she would qualify for Non-Tax Qualified care…so I have to do a little digging on the subject. I am thinking it would be a good investment for my brother and I to make to insure that we are protected later in life and are not wiped out by her medical needs, should they arise. Anyone out there have any experience with this? If so, I would love to hear what you have done or are preparing to do, or if your parents went ahead and bought it for themselves.
For a little more info on the subject, a good place to start is Consumer Law. It is all so confusing and scary, but I think it needs to be done.