How To Pay Your Child To Care For You During Retirement


“Why can’t Long Term Care insurance pay me to quit my job and stay home with mom?”

I have been asked a variation of that question twice in the last month.  The first person had to quit work in order to stay home and provide caregiving services to her mother.  The second person lived several states away from his mother.  Fortunately, she did not require caregiving around the clock but he still had to fly out to see her every month or so to make certain that the home health aides were doing what they were hired to.

In both cases, a child incurred major expenses that were not reimbursed by Long Term Care insurance.  The first person lost her salary.  The second person was forced to pay for expensive airline tickets.

At the risk of depressing people across the nation.  These expenses that used to not be paid by Long Term Care insurance are payable today.  Everything depends on if the insured has the right plan.

There are two types of Long Term Care insurance that is available.  Only one of them will help defray a child’s lost income or expensive travel expenses.  If your Long Term Care insurance is not able to do that, you have the wrong type of insurance.

REIMBURSEMENT

Click the photo to read the brochure.

Reimbursement plans will only pay for specific expenses that are unique to Long Term Care.  The insurance company will require receipts or invoices for the care for approved expenses only.

Until recently, most Long Term Care insurance policies that were offered were reimbursement types.

INDEMNITY

United of Omaha - Assured Solutions Gold
Click the photo to read the brochure.

Indemnity, also known as “Cash” plans will pay a person who is “on claim” a specified amount of cash each month.  The insured is able to use that money in any way that he feels is best.  That includes paying a family member to quit their job so that they can care for a parent who is unable to perform 2 of the 6 Activities of Daily Living (ADL).

It also allows a parent to pay for the expensive travel costs that are required to allow a child to fly home from another state.

WHICH LTCI PLAN IS RIGHT?

Both types of Long Term Care insurance plans are excellent options to using your savings to pay for Long Term Care expenses.  Ultimately, you will need to determine which type of plan is best for you.

My advice is that if you are counting on your spouse to care for you at home in your senior years, the Reimbursement type of plan will serve you just fine, provided your spouse has also retired.

If, however, your spouse is significantly younger than you or you would have to rely on a child to miss work or travel to care for you, you should probably consider looking at an Indemnity type of Long Term Care insurance policy.

If you or your parent already has a Long Term Care insurance policy, it is advisable to pull it from the files and verify which type of plan you have.  If you have a Reimbursement type of plan but need an Indemnity type of plan, once the insured has gone “on claim” it is too late to make any adjustments.

If you or your parent has no Long Term Care insurance of any sort at this time, my advice is for you to gather your loved ones and have a serious talk about priorities.  It would be a shame for you to have to “spend down” most of the savings for which you have worked your entire life just to qualify for Medicaid.

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