You Are Not A Burden: Plan For Long-Term Care
"I don't want to be a burden!" This great outcry from millions of older Americans is heartbreaking and unfortunately heard far too often. Instead of planning for their care, elderly men and women remain "independent" and isolated for far too long, forgetting that there is also an emotional burden of watching a loved one suffer. Even those who have the money to spend on care are often too afraid or too proud to ask for help. Planning for long-term care (LTC) through traditional LTC insurance, hybrid policies, self-insuring, or Medicaid asset protection avoids burdensome consequences of incapacity.
You Are Not A Burden
"Let us help you!" These echoes from family members, neighbors, social workers, and nursing aides seeking to offer assistance frequently fall on deaf ears. If you hear someone say, "I don't want to be a burden," remind them that growing old and needing help does not translate to burdensome. It's a natural part of the aging process, and both government and private agencies and individuals are here if and when you need it.
According to recent data from the National Institute on Aging, approximately 2 million people, or 6% of older Americans were homebound in 2019. That percentage jumped to 13% in 2020, likely due to the pandemic. The Medicare & Home Health Care booklet defines homebound as those who cannot leave home without significant effort, without the help of a cane, wheelchair, walker, or crutches, special transportation, or assistance from another person because of an illness or injury. Also, if leaving home isn't recommended because of a medical condition.
Many of these folks are not receiving any assistance as Medicare only covers home health aide services for "less than 8 hours each day for up to 21 days." Medicare may make an exception to extend the three-week limit if your doctor can foresee when your need for daily skilled nursing care will end. Unfortunately, when long-term care is required, needs may go unmet. The homebound may wear unclean clothes, survive without personal items, eat only cold meals, mishandle bills or banking matters, and make mistakes in taking their medications. Activities that are too difficult to do just don't get done.
Planning Is Not Just Financial
Without proper planning, long-term care expenses can significantly deplete household assets or bankrupt a healthy spouse. But eldercare planning is not just financial; it is emotional for all parties involved. Having a family meeting in advance of the need for eldercare can alleviate concern and notify children about your wishes. Discuss the different roles based on what you might need. For example, will you expect your children to handle your care, or will you hire help?
Different roles and responsibilities include:
- The Angel: Willing to assist with dressing, bathing, administering medication, laundry, cleaning, or meal prep
- The Medical Coordinator: Accompanies to doctors' visits or, if remote, arranges and schedules appointments
- The Financial Guru: Pays the bills, files taxes (could be someone who doesn't live close by)
- The Visitor: Someone who lives close by, but is not actively involved in physical, or medical care
- The Shirker: A person you want excluded from any responsibilities for your care (not everyone is a helper)
Traditional Long-Term Care Insurance
When it comes to covering your long-term care expenses, there are several options to consider. With traditional LTC insurance, you will pay an annual premium, and in return, you will receive a bucket of money for long-term care expenses.
- Coordinated care through the insurance company
- Premiums might be deductible based on your income level
- May be eligible for State Partnership Program offering Medicaid asset protection
- Possibility of premium increases
- No cash value
- No return of premium option
- No death benefits
Hybrid Long-Term Care/Life Insurance
With the hybrid option, you pay a set premium (which can be paid in a lump sum or spread over a number of years) into the policy. In return, you receive a long-term care monthly benefit, a death benefit, and in some cases, cash surrender value if you cancel the policy.
- Long term care benefit is guaranteed
- You retain cash value in the policy if canceled
- Heirs will receive a death benefit in the event you do not require long-term care
- Coordinated care through the insurance company
- More expensive because of the guaranteed benefit
- There is usually a multi-year surrender restriction period on your cash value
- Premiums are not deductible
- Not eligible for State Partnership Program offering Medicaid asset protection
If you decide to self-insure your long-term care risk, you will set aside money in an investment account to cover the cost if you need care.
- You control the investments and savings for a long-term care event
- No insurance premiums
- No extra cost to an insurance company for the administration of policy and care
- If you need long-term care, your estate may be significantly reduced
- No coordinated care: the burden of care is on your family
Another option for long-term care is Medicaid, a "means-tested" insurance program. To qualify, applicants need to have low income and limited financial assets. If you want to preserve assets for a healthy spouse or shield assets from needing to be spent down before Medicaid eligibility, consult an elder law attorney who specializes in this type of estate planning.
To Learn More
Long-term care is costly, but with proper planning, all older Americans can receive the care they need with dignity and respect. If you would like to know more about this topic, we encourage you to attend a free webinar on Thursday, October 13, 2021, Financial Considerations for Eldercare. Click the link below to register.
While the difficulties accompanying aging can be emotionally and financially challenging, knowing who to turn to when dealing with those issues can alleviate stress and provide peace of mind. For nearly two decades, the Hurlow Wealth Management Group has helped clients plan financially for their eldercare needs in a thoughtful and personalized way. If you do not yet have a plan in place for your eldercare needs, schedule a FREE consultation today to start the conversation.