Making Sense of Long-Term Care Planning

Long-term care costs. In order to make sound financial decisions for meeting long-term care needs, start with a realistic understanding of the cost of long-term care. A quarter of all seniors will need to shell out over $50,000 for long-term care. If someone elects to pay for in-home care, the national median annual cost of an in-home aide in 2017 was around $48,000. Unless your client is very wealthy, chances are they will need a safety net in place to cover long-term care costs. When deciding how to move forward, discuss these factors with your client:

• How close is the client to retirement?
• What savings and insurance programs are available to help pay for long-term care?
• Does the client have a plan to pay for the costs of long-term care?

Weighing options.  Many people are under the impression Medicare or Medicaid will pay for long-term care, so it’s important to explain to clients their ability to use Medicaid is linked with their assets, and the cap is at $2,000. Thankfully, there are a number of alternative means for covering care:

Long-term care insurance. Much is made about rising premiums on long-term care policies, however as Suze Orman points out it’s still financially advantageous for many of those who fall into the gap between qualifying for Medicaid and being wealthy enough to afford long-term care outright. What if it’s a financial stretch for your client to cover the premiums associated with long-term care? One suggestion for those who struggle to meet premiums is to opt for a policy with a lower benefit.

Supplemental insurance. Some clients may benefit from Medicare Supplement insurance or Medicare Advantage plans. Medicare Advantage plans are an alternative to Medicare Part A and Part B. Medicare Supplement insurance helps pay for deductibles, co-payments and other out-of-pocket expenses.

Prepayment of funeral costs. Even with a sound plan in place, many families are strapped when loved ones pass away. One way to ease some of a family’s financial burden is with a prepaid funeral plan, such as:

• Joint savings account, allowing family members to tap funds, which potentially would otherwise be frozen.
• Pre-need insurance plan through a funeral home; details vary, but these plans are straightforward.
• Purchase a final expense insurance policy, which usually covers funeral and end-of-life expenses.

Sensible decisions. Nobody wants to believe they will need long-term care. However, most people do eventually require assistance. Talk with your clients and find the best way to meet their needs.

— Related on ThinkAdvisor:

• 15 Cheapest States for Long-Term Care: 2017
• 15 Most Expensive States for Long-Term Care: 2017
• How to Get Medicaid for Nursing Home Care Without Going Broke

June Duncan is the co-creator of Rise Up for Caregivers, which offers support for family members and friends who have taken on the responsibility of caring for their loved ones. She is author of the upcoming book, The Complete Guide to Caregiving: A Daily Companion for New Senior Caregivers.