When Do You Start Talking About LTCi?

Clients need to plan how to anticipate,
and pay for, Long Term Care

by Lee Berman

Mr. Berman is vice president of policy services with Asset Funding Corp. Connect with him by e-mail: leeberman@sellyourinsurance.com

Long-term care planning is something that’s rarely discussed and most people are unprepared when it comes time to cover the expenses. The average cost of staying in a nursing home, assisted living or long-term care facility for a year can range from $55,000 to $170,000. The majority of nursing homes require payments on a month-to-month basis. Most people in need of long-term care are elderly with approximately 63% being over the age of 65. You should ask yourself “do I have a plan?”. If you haven’t thought about it before, now may be a great time to start.

92% of Americans are without plans for their long-term care and that can cause financial devastation. Preparing now for the unexpected can significantly reduce the amount of stress and financial hardship you experience in the future. Not only do you want to protect yourself, but you also want to make sure your family will not be impacted .

A good rule of thumb is to develop a plan no matter what your age. If you are a parent, create a strategy in the event you need long-term care. First, choose a person who will take responsibility for your medical needs by picking a medical power of attorney. In the event you can no longer make decisions for yourself due to an illness, a medical power of attorney can guide you to the right kind of care. Typically, a parent will choose a child, spouse or another close relative that can make informed decisions.

Second, seek out legal assistance to formulate all of the necessary paperwork you may need in the future. Documents such as a will or power of attorney can clearly communicate your wishes and needs.

Lastly, search for reputable long-term care facilities. Although it may seem uncomfortable to visit a potential facility, it is better to tour a facility prior to needing one. You will get the added benefit of knowing the costs, the location and the types of care offered in advance. Be sure to tour a few facilities to have comparable rates and options to choose from. It is much easier to search for a long-term care provider early rather than scrambling at the last minute and having to settle for what’s available.

Will they come to you?

Another recommendation would be to find on-site service providers that have a medical team that will come to you. There are healthcare services that provide at-home care and this option could be an alternative to assisted living or nursing home. Keep in mind that you should have a companion help you on your search. This will make it easier for you to make decisions and discuss the appropriate plan of action. Once you have concluded your research, discuss your preferences with loved ones to ensure your wishes will be honored.

Once you have explored all of the possibilities, put it all in writing. Document all your thoughts of each option and develop a pros and cons list which can help you determine the best choice for you. The documentation also helps provide a paper trail of your wishes.

The Advisory Career

Unexpected costs like funeral bills, past debts and your estate should all be addressed in order to effectively plan for the future. If during your planning you realize that you may not have enough financial resources to cover these costs, you do have options other than long-term care insurance.

Long-term care insurance can create a difficult decision for consumers as paying these insurance premiums can drain your current financial resources. So is long-term care insurance worth it? It really depends on your point of view.

An ironic twist…

The issue with long-term care insurance is that usually people who can afford it don’t need it and those who need it can’t afford it. With the increasing and aging baby boomer population utilizing long-term insurance, premiums and costs have sky-rocketed. Insurance companies are trying to pass their costs onto new customers to pay for their current payouts. Many businesses have already begun to pull out of long-term care insurance because of lack of profits.

Think of it like car insurance as car accidents will generally raise auto insurance premiums. That is essentially what’s happening in the long-term care insurance industry. All those with existing long-term care insurance are cashing in on those policies and those costs are being passed onto the next customer.

Another issue in finding appropriate funding is applying for Medicare. Applying for this supplemental, government insurance is complicated due to the eligibility requirements. Qualifying for Medicare can be a difficult process and requires extremely careful review of all the fine print.

In many cases, if long term care is necessary, tapping into an existing life insurance policy to draw cash via a life or viatical settlement could be an option. These settlements help ease the financial burden and may cover any other expenses as well.

The funds received from selling an existing life insurance policy can cover costs that are associated with long-term care facilities as well as other expenses. There’s no risk of losing a house or property. Preparing for the future is important when it comes to long-term care and having the option of life and viatical settlements can ease the burden down the road.

The reason you may need financial assistance for long-term care can vary from age to fighting cancer. By the end of 2014, it’s estimated that nearly 1.7 million new cancer cases will be reported. The questions are how old are these individuals, do they have enough financial resources to cover treatment and how many can afford everyday costs of living after paying medical bills? What if these individuals need long-term care? The questions are limitless, but one thing is for certain – life or viatical settlements could help lessen the financial struggle.

We all know one thing: Nobody knows what the future will hold. However, it’s important for individuals to know that they have many options when it comes to long-term care planning, whether for themselves or for a family member. Knowing all of the facts and exploring all of the available options is a sensible thing to do at any stage of life; especially when it impacts your quality of life. It’s never too early to start preparing for your financial future.