Insurance and the aging boomer
By Christine Barlow
Last month, we discussed the issue of when children return to the home. This month we're going to look at the opposite end of the situation, when the aged parents move in with the children or the children are setting up long-term care for the parents. By 2030 the youngest baby boomers will be 65 years old, and boomers will by then make up a quarter of the population of the United States. How to provide coverage for aging, and sometimes ill, relatives is a growing issue.
Who is an insured is relatively straightforward until mom or dad need more assistance than the children can provide at home. The parent may need to be in a nursing home or rehabilitation facility for a period of time, and eventually may need to live there permanently. Most facilities allow and even encourage the residents to bring a few pieces of furniture, pictures, and such in order to make the room feel like home. But once in the facility, is mom or dad still covered under the child's policy? They are no longer a resident relative, although they may be moving back in with the adult child after an extended stay.
Short term stay
Until she needs more care, mom is a resident relative, and therefore an insured, when she moves in with her son. Her property is covered under his homeowner's policy, although it would be practical to review personal property limits once mom has moved in. She may have antiques and other property that would leave the son underinsured in event of a loss.
However one day mom suffers a stroke and is paralyzed on one side. The family cannot maintain mom at home for several weeks until she recovers, so mom is temporarily moved to a rehabilitation facility until she can manage a little better. Mom takes her favorite chair, her favorite handmade quilt, clothes, photos, and other personal items to make the stay more comfortable. Similar to the child living at home with the folks who is on a temporary job assignment, mom is still a resident relative. While she is temporarily away from home for an extended period of time, the intention is that she will return to the son's home. Most of her possessions are still there since this is a temporary stay. If a loss occurs at the rehabilitation facility, for example a fire starts in the kitchen and spreads, and mom's chair is burned, there is coverage under the son's homeowner's policy for the damage to mom's chair.
After suffering a second stroke and receiving extensive therapy and rehabilitation, mom is now unable to return to her son's home to live. She has trouble walking and eating, and her mental status is somewhat confused. Therefore, mom moves into an assisted living facility or nursing home that provides a certain level of care to mom on a regular basis. Meals are provided, assistance with activities of daily living is provided, and medications are dispensed by nursing staff. Mom is no longer a resident relative of the son's household, and there are no provisions in the policy for elderly people who had at one time been part of the household and are now in a residential facility. If a loss occurs now to mom's property at the facility, there is no coverage under the son's homeowner's policy.
Assisted living endorsement
Because of the aging of the boomer population, this situation became more and more common. In light of that, endorsements were developed to handle such issues. ISO developed endorsement HO 04 59 10 00, Assisted Living Care Coverage, and AAIS developed HO 6235 01 06, Coverage for Resident of Assisted Living Facility.
The ISO form begins with a schedule in which to name the individual, the facility and its location, and the desired coverage for personal property and liability. The scheduled individual must be a relative of the insured by blood, marriage, or adoption, and is not a resident of the household. This is to be used when the person has permanently moved into the facility, and not when she is there temporarily as was discussed previously. The facility must be one that provides assisted living services such as dining, therapy, housekeeping and medical services. The insured is to represent the scheduled person in all provisions of the endorsement. Generally the insured is handling mom's affairs at this point, and this only makes sense. Coverage is provided for personal property for the named coverage C perils in the policy. Because the form provides coverage for those in a residential facility special limits of liability are established for certain types of property that is either easy to damage or lose or is medically necessary for the person. The special limits are:
- $250: hearing aids or other audio enhancement devices
- $100: eyeglasses
- $100 : contact lenses
- $500: false teeth/dentures
- $500: Medi-alert devices
- $250: all walking aids including walkers and canes
- $500: wheelchairs
Additional living expenses up to $500 per month for no more than 12 months are provided and liability coverage, excluding medical payments to others, is provided as well. Any injury to a care professional of the facility, either while on or off duty and tending to the named individual is excluded.
Aside from minor wording variations, the AAIS form provides virtually the same coverage as the ISO form. Both forms are providing coverage for a relative of the insured who now needs to live in a care facility.
As stated previously, by 2030 boomers will make up a quarter of the population of the United States. While many will remain healthy and active, many will also need assistance, either from relatives or residential facilities. To fill what was a coverage gap the assisted living endorsements were created. It's important to note that while the example here for use of these endorsements is for the elderly, the endorsements themselves have no age restrictions. If a young person must permanently move into a residential facility the endorsement can be used for them as well.
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