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  • Writer's pictureBrigitte Bromberg

Crafting Your Long Term Care Safety Net

Imagine trying to design a home if you didn’t know the local building codes, zoning laws, what materials were available and what they cost.

Now you know how most people feel when they (or a family member) need long term care. Doing some thinking ahead now, in advance of an acute care need, can reduce some of the stress when an emergency situation arises.

Here are 5 worthwhile planning considerations for whether it’s you, a relative, or a friend that you’re concerned may someday need care. Pay special attention to item 5—and, if you haven’t yet, take action now!

1. Identify Who You Can Count On

Just as we all like to think we’d be the hero to rush into the burning building, a lot of people have all the best intentions when it comes to caregiving. However, intentions may not hold up when faced with the reality of a prolonged care need. Competing demands, such as work or children, may make it impossible for someone to pitch in at caregiving time. Moreover, some people’s personality or temperament may make it harder for them to step up.

All of this means that in the important process of identifying the right individual, you should try to cast your net wider than perhaps you normally would. Think about this: if you were home sick and needed help shopping or someone to accompany you to doctor visits, who could you rely on for help? If it’s a relative or friend who might need care, ask them who they would rely on.

Once you’ve identified a potential caregiver or helper, you want to assess their relationship, availability and willingness. And, before you decide you can count on them, consider any prior experience in asking them for help.

2. Logistics

Your solution to the search in #1 above should take into account logistics: Where will the person needing care be located? Consider travel time and costs to caregivers, friends and family.

3. Get Connected to Learn About Resources

Unfortunately, there is little standardization of caregiving programs and resources. However, caregiver support groups, disability and Medicaid planning attorneys, mayors or town managers, state offices of elder affairs, and even public libraries can help. And don’t forget to utilize the nearest senior center as a resource. Ask if social workers are available and if the senior center hosts programs on caregiving resources.

Be sure to ask any organizations you come across to add you to their newsletter list and request they notify you when they hear of something that may be a useful resource! Ask, ask, ask!

4. Strengthen Your Physical & Mental Health

We all know we should do it. Eat healthy. Exercise. Get enough sleep. Meditate. It’s said that fresh air, sunshine and a good night’s sleep help mental health; when more help is needed, therapy or other treatments can make sense.

Taking care of yourself may mean you will be able to avoid—or at least delay— developing a need for long term care yourself. And, should someone you’re fond of need help, your healthy body and mind will allow you to be more help to them!

5. Prefund your long term care need

Making sure you have enough money to pay for care at an unknown time in the future can be daunting. Acknowledging that most people don’t need long term care until their 80s, imagine this: what if the need for care arose the week after next due to an accident! Visualizing the problem in this way—not as something to be solved someday in the future, but one you want to take care of right now— can be helpful.

Generally, the funding solution comes down to one of the two following actions:

ONE: If your financial situation allows you to do so without compromising other important goals, you could take liquid assets today and isolate them—perhaps even in a special account earmarked for use only to pay for long term care. You’d need to consider inflation (which will erode the account value), although that could be mitigated somewhat by the accounts’ earnings. Also, the tax consequences on earnings or withdrawals must be factored in. Remember, the need for care could arise in days and not decades. This means the amount you’d need to put aside now to prefund care needs to be substantial.

TWO: You could purchase long term care insurance. This allows you to immediately fund a large pile of money for care, with a relatively small payment. The policy design, including inflation coverage, will determine how much (if anything) you will personally pay out-of-pocket when care is needed. Since U.S. tax policy confers advantages on policyholders, most policy benefits are tax-free, and the premiums you pay may be tax deductible.

If you choose the insurance option, what kind of policy should you purchase? Like most financial products, there are pluses and minuses to each choice. Be aware that there are some non-insurance, non-regulated products that may be presented as long term care insurance equivalents, but they are not. This doesn’t mean they are bad, just different. Depending on your financial and health situations, certain solutions make more and less sense.

In closing, let’s listen to a person quoted in a recent article posted by AARP (Family Caregiving: A View from the Inside): Laura Crews (age 64) contributed her take on the financial reality of caregiving for her 67-year-old husband: “Right now we’re OK, but who knows? Don has a pension from Boeing, he’s getting Social Security, I’m still working. But most of my salary and then some goes to the lady who watches him during the day. I’ve had to buy a hospital bed, a lift chair. I pay an extraordinary amount for an expensive medication he needs. I wish we would have gotten long term care insurance.”

Brigitte Bromberg, MS, CFP®, CSA® is an independent insurance specialist who provides unbiased, consultative, solutions for long term care, life and disability insurance needs.

For more than 30 years Brigitte has worked diligently to provide clients the information and insight they need to make informed insurance decisions. President of Winning Strategies Group LLC, Brigitte loves speaking to groups, and she also loves helping people implement creative, smart insurance strategies.

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