Financial Lessons from My Family’s Experience with Long-Term Care Insurance

On 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:

Long-Term Care Insurance

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? 

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