Three Critical Components of Long Term Care Planning
It's the time of year when many of us make lists of important things we plan to accomplish. Although it seems every cause has a day, week or month to raise awareness, awareness of a problem isn't enough. Nor does arriving at a solution necessarily translate into action. That's one of the reasons that few of us add "make a decision regarding long term care insurance" to our resolutions list. There's little doubt that most of us would benefit from resolving to make a decision about long term care insurance. Will we take the necessary steps to safeguard our situation against long term care costs?
Many people are aware that long term care costs may not be covered by their existing insurance policies. Sometimes, when reading an article or helping a parent line up long term care, these same people become aware that Medicare and other government programs are unlikely to cover many types of long term care. That's when the seed is planted.
KNOWLEDGE Once an individual reaches awareness at some level of the need for LTC planning, the next step is important: acquiring knowledge about long term care plans. What does someone who needs LTC need? What does a plan look like? Where might care happen? What does it cost? Answers to all these questions are not required to do planning, but knowledge of the subject can be the motivating factor that will nudge a person from merely thinking about long term care into taking action on a specific long term care plan.
I recently heard about a 51-year-old woman who was describing her visit to a family friend who had just moved into an assisted living facility. The 86-year-old woman was a retired nurse and had been blessed with robust health until age 84. Although she had been living alone in a single-family house, she had finally given up driving a couple of years earlier and had been using a cane. Then, 6 months before moving into the assisted living facility, she fell and underwent a hip replacement. That was the tipping point. As she went through initial rehab in a skilled nursing facility, her adult son did some research and eventually relocated her to the assisted living facility, which was close to his home. Her house was put on the market. After her visit, the 51-year-old friend remarked "Everyone should be required to attend an event at an assisted living facility and spend an hour with an elderly person who lives there. Seeing the frail, lovely, intelligent and well-dressed elderly, one can't help but be struck by two thoughts: This could be me in 30 or 40 years AND, I'd better have a TON of money available to help me if I'm ever in that situation." Are you aware of the many types of LTC options that are available? If not, a great source of that information may be someone who is currently caring for a family member. Ask them what kind of care they have found, whether home or facility-based. What has surprised them? What have they learned? Do the LTC options require private payment or are they publicly financed? Keep in mind that qualification requirements for government programs may change in the future, as can the availability of a type of care itself.
This brings us to the topic of funding. Though long term care insurance is not a plan or a caregiver, it can provide the money to fund a plan; it pays for covered charges once the insured is eligible. Take a hard look at the cost of care itself, or, more accurately, what the cost of care is likely to be when you are most likely to need care. Is this a cost with which you are comfortable? Long term care insurance is the only insurance designed to address this risk. Even if one believes in his or her ability to pay for this expense, another question should be asked: Will that funding plan still allow other plans to stay intact? "Other plans" may include income needs for a spouse and other loved ones, as well as legacy/inheritance planning. Taking appropriate action, motivated by awareness, education, and a frank look at funding choices is the goal of long term care planning.
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.