More adult children are being legally required to pay for their parents’ long-term care, according to a prominent senior law specialist.
Thirty states have laws obligating adults to pay for their parents’ long-term treatment; a Pennsylvania court, for example, recently ordered an adult to pay for a parent’s nursing home stay, Bernard Krooks, a past president of the National Academy of Elder Law Attorneys, said today at a seminar sponsored by the Practising Law Institute.
Nursing homes have become increasingly aggressive in going after those who have the power of attorney or other control over their parents’ funds, Krooks said.
If a child controls the money and doesn’t use it for their parents’ well being, nursing homes can sue him or her for misappropriation of funds, he added.
“Nursing homes are winning those cases left and right,” he said.
Long-term care insurance has lost much of its appeal because carriers have raised premiums as policyholders have left the workforce, leaving them with less income to pay for the policies as retirees, Krooks said.
Some rates have gone up by 80 percent, he added.
“[Long-term care insurance] is a bad deal for a lot of consumers. It’s worse for companies,” Krooks said, adding that eight or nine carriers offer the policies, down from about 20 in recent years.
One of the reasons long-term care rates have gone up is fewer people are dropping their policies than expected, he said. Among life insurance policyholders, for example, 10 percent to 15 percent of people drop their policies and the money that was being set aside for their benefits can be used to pay expenses at the companies.
Long-term care premiums can be 40 percent greater for women than men, he said. Carriers have proven to regulators that the gender bias is justified because in a marriage, typically the man will become severely disabled first but won’t ask for a payout because his wife will be able to take care of him. But when the man dies and the wife is ill, she is more likely to receive benefits, Krooks said.
States Make The Kids Responsible For Parent Care, Expert Says
September 16, 2013
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Long Term Care insurance is both affordable and a very good deal for consumers. For insurance companies the low interest rates do pose issues but those won’t last forever. People need care today due to illness, accidents and the impact of aging. More people are living longer and surviving health events and accidents than ever before. This means the issue of Long Term Care isn’t going away and the need for people to have a plan for the physical, emotional and financial burdens Long Term Care creates is essential to retirement planning. Yes, some companies have raised rates. Compared to other types of insurance or other products the increases have been few are far between. Yes, very few people lapse these plans and that was unexpected. Even with the increases the premiums were so low that they were still an outstanding value. In addition, while some companies had large increases this is a bit misstated. Most companies provided options for policy holders to keep the premiums the same. For example, John Hancock allowed policy holders to choose a number of options including reducing the inflation rate from 5% compound to a lower rate without any increase at all. The consumer was able to lock in the gains they had enjoyed and still have inflation protection going forward. The end result, even with increases very few people lapse the policies. Today, many consumers understand that health insurance and Medicare do not pay for a majority of extended Long Term Health Care. People in bigger numbers are seeking out skilled specialists in Long Term Care to learn about their options and design affordable solutions. At ACSIA we still see increased growth and bigger numbers every month responding to the many forms of marketing we do for our specialists. The key for consumers is to work with true specialists. The key for financial advisors is to team up with a real specialist who works with all the top carriers, understands underwriting and knows how these plans actually get used at the time of claim. Any advisor who wishes to team up with a specialist to benefit their clients can contact me at: [email protected] .