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How Long-Term Care Planning Can Go Wrong

A New York Times article recently revealed how even the best intentions in long-term care planning can go woefully wrong, providing a cautionary tale for those with long-term care insurance policies.

David Pirron is an only child, and recognized the need to implement a long-term care plan for his elderly parents. He helped his parents purchase long-term care insurance from John Hancock and went the extra step in having his parents assign him with a power of attorney so he could be the third party designee that the insurance company would notify of any policy changes or notifications.

Pirron also made sure that the monthly payments to John Hancock were automatically paid from his parents' bank account. Things went along fine for 10 years, until 2012 when his mother started having mental problems and his father was deemed unable to care for her in their home since he, too, had become forgetful.

Pirron called John Hancock to inquire about the care options available to his parents under their policy and was told that it had been cancelled eight months prior. It seems that Pirron's father had gone to his bank to stop automatic payments on another insurance policy and had turned off the payments to John Hancock by mistake.

John Hancock said that it had sent notices to Pirron's parents, which Pirron later found stuffed in a drawer at their home. His parents had not understood the letters, so ignored them - not an uncommon occurrence when elderly people suffer a mental decline. Hancock also stated that it had sent Pirron notice, but he says he never received any letters.

Pirron took his case to his state's Bureau of Insurance, which investigated but took no action since insurers are not required by law to prove they have contacted third parties. Pirron is now trying to get legislation passed in Virginia to require insurers to notify third parties via certified mail or commercial services like UPS or FedEx so that proof of service can be provided.

This unfortunate case illustrates how vigilant families of those suffering from a dementia diagnosis need to be in ensuring long-term care insurance policies don't lapse. Even if you are designated as a third party, be sure to check your parents' mail for notices and bank statements to ensure payments are being made on time.

The Flanigan Law Group provides Southern California residents with personal attention for estate planning, administration and litigation legal services. When disputes between families, arise, we are very successful in resolving legal estate issues quickly and efficiently while preserving financial and emotional resources. Contact the Flanigan Law Group at 949-450-0041.

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