Families can be complicated, at least about some things. Making financial decisions together is usually one of those things.
When a loved one needs long-term care (dad fell and broke his hip, mom’s Alzheimer’s has progressed, etc.), it raises a host of questions.
This is a real problem for many people:
- Over half of people who live to age 65 will need long-term care in their lifetimes
- The average long-term care need is about two years
- 14% of people need care for more than 5 years
- The national average cost of a private room in a nursing home is over $8,000 per month (and over $18,000 per month in Manhattan!)
Source: Morningstar's 75 Must-Know Statistics About Long-Term Care: 2018 Edition
Basic questions like, “Where should (loved one) go? How much does it cost? How will we pay for it?” can quickly give way to frustrating assumptions or long-simmering tensions:
- Perceptions that one family member is better-prepared to pay than others
- Perception that someone’s desire to save on care costs is clouded by the fact that a larger inheritance would be more life-altering for them
- Anger or shame that this was not dealt with before it was an urgent problem, who’s fault that is, etc.
Imagine this unpleasant dinner table conversation:
“Carol’s an attorney and Ming is a dermatologist, in NYC - they should just cover it, they can afford it!”
This analysis misses that they are in a very high-cost-of-living area, have a large tax burden, and Ming just finished paying off his own student loans at 41. All while they’re saving for their own retirement and college for their two kids.
Then Carol fires back that the person offering this appraisal - her sister- should have thought differently when making the choice to quit her paying job 5 years ago to live at home, pursue her music career, and travel the world solo for inspiration.
This kind of conversation obviously leads nowhere good for family relations. Nor does it pay the long-term care bill.
The Solution: Make a Plan In Advance. If You Can.
These after-the-fact discussions lead nowhere good. It’s much better to have a plan in place ahead of time. Sometimes long-term care insurance is a good part of the plan, sometimes it’s not.
5 Ways You Can Start the Conversation with Your Parents(-in-Law)
Oftentimes finding the words to get started is the hardest part. Also, release yourself from the expectation that the conversation has to go well for it to be a success. All you need to do is try.
1) The Facts-Based Approach
“I was reading that over half of people who live to age 65 willl need long-term care at some point. The costs are through the roof! Nationally, the average cost of a private room in a nursing home is over $8,000 / month. In high cost-of-living areas like Manhattan, it’s more than double that - over $18,000 / month! Do you have long-term care insurance?”
You can point to this article from Morningstar when you have that conversation.
2) The Anecdotal Approach
“I was thinking about [friend whose parent has had a health crisis] and it occurred to me that we’ve never talked about what you’d want me to do if that happened to you, or you needed long-term care. What would you want to see happen in that scenario?”
3) The Offer of Help
This only works if you’re financially in a position to help your loved one(s) with the cost of long-term care insurance. If you are, this can be a very effective strategy for caring for your loved one(s) and limiting your own future financial liability, too:
“I was thinking about the astronomical costs associated with long-term care, and if you ever needed care like that, I’d want to make sure you’re in a place that’s comfortable, clean and more “Four Seasons” than “flophouse” from a service perspective. There are a number of insurance products on the market where I can help ensure access to that for you, if you qualify for coverage. If we make a plan in advance. And it’s so much less than waiting and paying once you need it. Do you have any long-term care insurance already?”
4) The Play-Forward-What-We-Want-To-Avoid Approach
If you can imagine a scenario where sorting out “who pays & how much?” creates family conflict, maybe you can paint that picture in advance and craft a solution for avoiding it.
“I wanted to talk to you about something that might be a little awkward, but I know that it’s so much better to do it before there’s actually a problem. I’m worried that if you ever had a need for long-term care - the costs can be huge - that it could create some serious conflict in our family. I know that’s not the impact you want to have, so I wanted to talk with you about strategies for avoiding that.”
If you have some concerns about different family members (perhaps siblings) having conflicting perspectives, and you want to try laying that out clearly, you could say:
“I really don’t want to be in a situation where paying for your comfortable care is a zero-sum-game with any inheritance that you leave. I feel like that could lead to some arguments or conflicts that are better avoided. It would be so much more peaceful and calm for all of us if there was a just a pot of money that pays out if you need long-term care.”
5) The Siblings-and-Other-Family-Members-First Approach
For some people, peaceful collaboration with siblings is a way of life. If that’s your situation - excellent! - that same model works well for coordinating parent care needs in advance.
Some people feel this is such a sensitive topic for their loved one(s) that they feel it best to coordinate with other family members first. This can be siblings, aunts, uncles - you might want to approach them first and craft a strategy together.
This conversation can go:
- Surprisingly well - maybe it turns out there’s a binder full of info about the insurance policies already in place! And the code to the safe where the will and list of accounts is. Your loved one is so glad you brought this up!
- Surprisingly badly - maybe you are met by some combination of fury, disdain and / or denial. Your raising any issue about financial preparedness might strike nerves that you did not know were there. It’s OK. Just stay calm, retreat, and try again at another time.
- OK - you might encounter some form of skepticism or denial. It’s not easy for people to contemplate their own mortality and vulnerability. Many people are not familiar with the facts or numbers. This is fine, you’ve started the conversation!
Regardless of which group your conversation falls into, you have succeeded. The only true failure is "not at all".
How AboveBoard Can Help
AboveBoard first started examining long-term care solutions at the request of clients worried about their parents. We’ve expanded our practice to helping clients procure their own long-term care policies, too.
We apply a sophisticated analysis that has its roots in the fundamental investment analysis of companies, but applied to long-term care insurance products.
Some of the “solutions” are absolutely terrible. But some of them are excellent, and do exactly what insurance should do: charge a reasonable price for protection from a risk that you either cannot or do not want to self-insure.
And if there are no good options in the long-term care insurance market - or the policy already in place is the best choice - we’ll be honest about that and simply tell you.
Schedule a 15 minute call with us to learn about our smart, ethical approach to long-term care insurance.