Need suggestions for account to hold funds for medical bills

[Cornbread OMalley]

I am looking for suggestions on accounts or vehicles to stash money that may be needed anywhere from seven to ten years from now for parents' healthcare bills.  My siblings and I just went through two months' worth of debating about whether or not to purchase long-term care insurance for the parents.  I argued against LTC policy; my siblings for.  In the end, a few details about LTC changed their minds, and they agreed with me to not purchase a policy.

Now the plan is for all the siblings to contribute money into a fund that is strictly for parents' healthcare bills.  We are looking to start the fund in the immediate future, but as of today have contributed $0.  We are looking for a place to keep the money that is better than a savings account but not as volatile as a stock fund.  We have dismissed money market accounts, bond funds, stock funds, and commodities funds.  We are considering laddering CDs as a way to keep and grow the money earmarked for healthcare bills.

Any of you have suggestions on options I may consider or have missed?

[ender]

Why did you argue against LTC?

[Cornbread OMalley]

Why did you argue against LTC?

I laid out my argument against the purchase of a policy.  I offered on the basis that our parents receive enough money from social security and pension to cover their living costs.  If they maintain their current cost of living expenses they will not touch their life's savings at all.  I offered that their life's savings are sufficient to cover any LTC costs.  If healthcare costs exceed their life's savings, we siblings can draw from our savings to care for the parents.  No need to give money away to an insurance company.

[ender]

Why did you argue against LTC?

I laid out my argument against the purchase of a policy.  I offered on the basis that our parents receive enough money from social security and pension to cover their living costs.  If they maintain their current cost of living expenses they will not touch their life's savings at all.  I offered that their life's savings are sufficient to cover any LTC costs.  If healthcare costs exceed their life's savings, we siblings can draw from our savings to care for the parents.  No need to give money away to an insurance company.

I'm missing something.

Your parents are wealthy enough to afford LTC without insurance, but you guys are saving money for them specifically for medical expenses?

What is this money supposed to be used for?  Why are you doing this?

[Cornbread OMalley]

I'm missing something.

Your parents are wealthy enough to afford LTC without insurance, but you guys are saving money for them specifically for medical expenses?

What is this money supposed to be used for?  Why are you doing this?

My parents are not wealthy, but they do have savings.  Not a great amount.  We siblings are pooling money as a cushion in case the parents' savings run out due to healthcare costs.  We decided with this course of action as prudent since we are not sure of what the future holds.

[thingamabobs]

But why run the risk of tapping into your own savings when you can just use your parents' money to pay for LTC that would cover the expenses?

[Axecleaver]

Some folks pass on LTC insurance because it is notoriously shady. A friend of mine used to run the division of aging for NYS, and the many horror stories of LTC insurance that found ways not to pay when the policy holders were infirm is long and revealing. It's especially tough because when you need it, you're not in a condition to fight for what's owed to you.

You also don't know if you'll need to pay for a nursing home. What if they live healthy lives into their 90's and just need help with at-home aides and personal care assistance? LTC insurance won't cover that, but OP's plan to save for the expense will.

Here's a good article in Forbes about why LTC insurance is a bad idea. There's links to horror stories in there. http://www.forbes.com/sites/baldwin/2013/03/29/dodge-the-long-term-care-insurance-mess/#73245af81441

To OP, seems like an irrevocable trust would help you solve this problem, but I don't known enough about the specifics of it to advise you. A trust is often used to pool money for a specific purpose and shield it from unintended future consequences like divorce, bankruptcy, or untimely death. The CPA's here probably could advise you better on this.

[Cornbread OMalley]

Some folks pass on LTC insurance because it is notoriously shady. A friend of mine used to run the division of aging for NYS, and the many horror stories of LTC insurance that found ways not to pay when the policy holders were infirm is long and revealing.

Thanks, Axecleaver.  I argued against the policy based on finances.  Further research revealed the aspect that you just mentioned and made the prospect of purchasing LTC insurance very unpalatable.

[Cornbread OMalley]

Axecleaver and Moustaches, thanks for your suggestions.  I will look into them and reevaluate some I may have dismissed too early.