It feels a little silly to be writing about long-term care insurance because only about 10% of the older adult population has purchased it.

But, it comes up a lot in conversations I have with friends and family… either they’re thinking of buying it or they or their parents have a policy that’s hard to understand.

Also, many, many women want to know… “What can I do to make sure I can pay for care when I need it?”

Because remember… as women, we especially face the possibility that old age will bring with it the need for a lot of help with basic life activities that we do for ourselves now without even thinking: like bathing, eating or dressing.

The problem here is that this care can be expensive and it’s not covered by health insurance. Health insurance is just for medical needs – like doctor’s visits and hospitalizations — not day-to-day, long-term assistance with these basic activities.

Not surprisingly, the people who are most interested in insurance for this kind of care are the daughters who so often end up filling in the gaps in their parents’ care needs. They experience firsthand what a burden this can be and want to avoid putting their children in the same difficult position.

But this insurance, called “long-term care insurance” is a strange, complicated product. One that you buy about 20 or 30 years before you’ll ever use it.

So, if you are thinking about buying a policy or you already have one, here are the 6 strange ways this insurance works that you would never guess.

You Buy a Pre-Set, Capped Amount of Insurance.

When you go to buy a policy, you will actually pick your benefit amount. Meaning, you will make a decision about the total pool of money you’ll have available to you 30 years from now.

Crazy, right? I mean you aren’t any more likely to know how long you’ll need care than you are to know what tomorrow’s winning lottery ticket will be.

Most people buy a policy that pays a maximum of $100 to $150 per day for up to three years. This is more than most people need so it’s likely more than enough. But, keep in mind that if you end up needing more…and there are definitely people who do…you’ll be back to paying for it out of pocket.

Confession here: Many years ago, I let my own parents buy policies that pay for six years of care. This was probably too much but, even as an almost 80 year old, my Dad rides nutty borderline deranged horses. I just wanted to protect the likely caregiver …my poor mother.

You Have to “Qualify” for Your Insurance Benefits.

So, my neighbor’s mother is in a wheelchair, lives in a very nice assisted living facility, has a long-term care insurance policy but it’s not paying for her care.

Why? You ask.

Well, this is because you can only get access to that $100 – $150/day when you hit something called a “benefit qualification trigger” which basically means that a nurse has evaluated your need and declared you to be at a very severe level – which is when you need assistance with least two of six very basic daily living activities (like, you need help with both eating AND bathing) OR have severe cognitive impairment.

My neighbor’s mom needs care but she doesn’t need THAT much care, apparently. And, so her insurance policy goes unused for now.

You Can’t Pick and Choose Who You Pay to Provide Care.

There’s another reason my neighbor’s mom or someone like her might not be able to use the insurance.

Even if you do meet the benefit qualification trigger, you can only use it to pay service providers who meet specific insurance company rules.

While nearly all long-term care insurance policies nowadays pay for home care, assisted living and nursing home care, they’re still pretty inflexible about who can provide those services. For example, if you want to pay your housekeeper, neighbor or someone from your church to come get you dressed every day, you usually can’t use your insurance funds to do it.

Given how personal this type of care is and all of the unique challenges we face to make our lives work, it would be nice if this insurance were more flexible. Some insurers offer a “cash” policy – which is more flexible – BUT it is significantly more expensive.

Your Employer Might Offer It, But Definitely Won’t Pay for It.

Unlike health insurance, long-term care insurance is not a standard employer offering. And when employers “offer” it, they don’t pay for any of it.

And, it’s really very expensive – running in the thousands of dollars a year – depending on your age and the amount of benefits you buy.

You can also buy it through an individual agent or through a financial planner. If you do, you’ll go through a process where you are checked for pre-existing care needs or even the chance you might need the insurance sometime in the near future.

Unfortunately, a significant portion – somewhere in the 15 – 20 percent range – of people who try to buy this insurance are actually denied because they “fail” this part of the process. In other words, the insurance companies think many of us are too big of a risk.

Your Premium Payment is Not Set in Stone.

So you buy one of these policies when you’re in your mid-fifties, let’s say. And, the premium you agree to pay per year is not supposed to go up unexpectedly at any point, for the rest of your life.

But, just know that, unfortunately, sometimes premiums do go up. And, this happens because the insurance companies’ benefit paying account drops unexpectedly. So, the only way to make sure they can keep paying out benefits is to charge everyone more in premiums.

You Need Help with This Crazy Thing Called Inflation

Remember that $150 per day in daily benefits you bought? Well, that’s about the price of just a day in a nursing home …… TODAY.

But, the price of a day in a nursing home might be more like $300 in 30 years – just because of inflation. So, when you think you’re buying enough insurance to cover daily nursing home costs for three years, you’re actually only buying something much less than that if you use it in 30 years.

Confusing I know.

But, most insurance policies account for this by giving you the opportunity to add to your policy a feature called, “inflation protection.” I think this is an incredibly clunky way to sell something. But, no one asked me.

You probably want to buy SOME level of inflation protection – long-term care costs are going up by a rate of about 3.5 percent a year. That’s not insignificant.

What to Do

This is a good time to say that there are obviously many things to weigh when you buy this insurance. It gets really complicated really fast trying to sort out how to titrate each of these decisions to get at the right mixture for you.

There is no perfect or best way to do this. There’s not even a good formula for whether you should buy it, given how expensive it is and all the other competing priorities you likely have.

Even though (another confession here) I have not bought a policy yet, my bias is to think that if I end up having a severe need, I’d be glad to have some insurance rather than none. Fully realizing that it may not be enough to fully protect me.

But, what really makes me upset, really, really upset…… is there’s an acute underlying economic injustice in this system of caregiving. Here it is:

….. the lack of a reasonable long-term care insurance system in this country means that many more women end up having to handle ALL of the care for their parents, and are doing so at great sacrifice to their health and own personal finances, – which in turn makes it very difficult for them to purchase this insurance or to save properly for their own retirement

If you and your siblings are footing the bill for a $40,000 a year assisted living facility and taking time from work to coordinate your mom’s care, AND saving for or paying for your kids’ college, it’s hard to find another $2,000 – $4,000 a year to pay for this insurance.

In a terrific piece by NPR on this subject, one daughter interviewed said,

“I do not have [the insurance] because at the time it was offered [through my company], I could not afford it and take care of my mother at the same time,

We daughters are caught in a terrible cycle. We are the very people who most need to be vigilant about saving for retirement and preparing for our own long-term care. But so often our own financial and career sacrifices to care for our parents prevent us from adequately preparing for our own needs, which in turn may put our own daughters in the same position.

Once again, I just want to stress here that you’re caught operating in a system that’s stacked against you. The system is failing. Not you. You rock.

American women are doing heroic and important work for their families — not only without pay but with the knowledge that this work makes it harder for them to prepare for their own economic future. We want solutions that allow us to care for our parents, ourselves and our children. And to secure our children’s future old age by ending the cycle of economic injustice in caregiving.

Please comment here on the website or on the daughterhood FB page and let us know how your ability to prepare for your own long-term care needs and retirement has been affected by your responsibility for caring for your parent.