Archive for April, 2014

A Family Member As My Caregiver?

April 25, 2014

So having your long term care insurance policy pay a family member for being your caregiver sounds appealing. Here is: a) How you can make it happen and, b) why this may not be such a good idea.

Most policies do not reimburse you for payments you have made to family caregivers. Here are a few ways to get around this limitation:

  1. Many policies cover family caregivers IF they are employed by an home care agency and payment is made directly to that agency. If your family member is (or could be) employed by a home care agency, this may work. Not very practical for most people.

  2. Policies that pay either a full or partial cash benefit (instead of reimbursement for what you paid for care) generally allow you to use the cash benefit for anything you want…to include payment to family caregivers. If a family member caregiver is important to you, this is likely your best answer.

  3. A very small number of reimbursement policies will pay for family caregivers.

Reminder: Insurance policies are contracts. Read yours carefully to see if #1, #2, or #3 above apply. Or ask me and I will be happy to review your policy.

Even if your policy does cover family caregivers, there is a very important conversation that must happen before care begins. This conversation is between you and the potential caregiver: “I need you to take care of me ___ hours per day, ___ days per week for the foreseeable future. I will pay you $_____ dollars. Taking care of me includes: List everything needed such: as bathing me, preparing my meals and feeding me, helping me with personal hygiene when I go to the bathroom, cleaning me if I am incontinent, watching me to make sure I don’t hurt myself or others if I have dementia, lifting me if needed, just being in the house with me so I’m not lonely, repeatedly laughing at my old jokes, etc, etc.

Why you may not want a family member as your caregiver:

  1. Start with the task listing in the above “important conversation”. Which one of your children do you want helping you with bathing and using the toilet? If your spouse is to be your caregiver, how many times a day do you think she/he can lift you without becoming injured or dropping you on the floor?

  2. Do you really want your adult child or other family member to place her/his life on hold? Giving up careers, school and often relationships? As a personal note, I do not want to do this to my children or anyone else I care about.

  3. How difficult will it be for you to fire a family member who is not doing what needs to be done?

  4. What about the tax reporting and liability issues? If you pay someone directly (instead of engaging an agency), you become that person’s employer…with all the legal responsibilities that come with being an employer.

  5. One of the reasons for buying a long term care insurance policy is so your family (particularly your children) will not have to take care of you when you become frail. Long term care insurance changes your children from hands-on caregivers to managers of care. So why, now that you do not have to, do you want your children (or other loved ones) to be your hands-on caregiver?
    It is a funny thing about adult children. If you did a good job of raising them, and you later ask, they will take care of you. But they won’t want to…and you won’t want them to.

    Disclaimer: Actual policy language, rather than the contents of this eNewsletter always takes precedence. Long term care insurance policies vary widely from company to company and within the same company. Raymond Smith, The Long Term Care Specialist, does not give legal or tax advice. Consult your tax advisor or attorney for these matters.

© Raymond Smith, The Long Term Care Specialist, 2014