Perhaps the most difficult financial planning subject to address is the question of long-term care.
Much of the “common knowledge” about this topic is inaccurate, and because the subject of long-term care often evokes a strong emotional response I find many families simply ignore the topic altogether until the need for care is imminent and the opportunity for planning is passed.
According to government data, about 70 percent of Americans over age 65 will need some level of long-term care services in their lifetime, with 40 percent needing care in a nursing home.
I think it is important to differentiate between the phrase “long-term care” and notion that this type of care always means nursing home care.
All of the seniors in my life value their independence above any other lifestyle consideration. Planning properly for the potential need for care in the future can go a long way in ensuring the greatest level of independence for the longest period of time.
One of the biggest misconceptions about long-term care is that government programs will provide for this need.
Medicare is not designed to pay for long-term care needs and only provides benefits for a limited time, typically during a recovery period.
Medicaid does provide long-term care benefits for low-income individuals, but in order to qualify for Medicaid an individual or married couple must first pay for their own care until, for all practical purposes, their savings are almost completely gone.
The Medicaid qualification process is difficult and sobering, and individuals receiving Medicaid have very little independence left in their lives. In my opinion, assuming Medicaid is going to be your long-term care solution is equivalent to doing no planning at all.
The Veterans’ Administration does provide care of honorably discharged veterans’ in designated care facilities, but once again, little independence remains in a VA home situation.
The desire to remain independent is simply not enough. Responsibility is the key to independence and planning is the cornerstone of responsibility.
The good news is the home health care industry has developed substantially in the past decade and now offers many competitive options for families focused on maintaining independence. In addition there are a number of attractive multicare senior life style centers available locally offering innovative financing options.
While seniors have more options nowadays, there is no doubt care remains fairly expensive. Home health care can cost $30,000 per year and nursing home care roughly $65,000.
Planning can range from obtaining insurance to provide for these costs, to repositioning assets for greater long term returns. Long-term care is not a “one size fits all” topic. In my experience simply starting a conversation is the most important part of the planning process.