CHANCE OR CHOICE? Why You Need Help with Long-Term Care Planning

I recently met with a representative of another country’s government to discuss long-term care (LTC). At the end of my description of client options, including assisted living, adult day care, group homes and in-home care related programs, his comment was, “You have so many choices here.” It occurred to me that his observation was right. We have so many choices, yet only eight percent of the U.S. population has long-term care insurance (LTCi), and even fewer have a LTC plan.

When someone leaves their LTC planning to chance, they will find that their choices are much more limited. Knowing this, why do so many people leave this important piece of their financial planning to chance?

TOO MANY CHOICES?

Is “too many choices” the real issue? People have become too overwhelmed by the advice and statistics in the media to really understand the impact on their personal financial plan. How do you decide what company to buy from, what benefit period is really needed, what daily benefit amount is right, etc. And with the financial crisis of 2008-2009, the questions now include—what happens if the LTC carrier goes out of business before I need benefits?

The first issue is that good LTC planning begins with a conversation about how you and your family would respond to a long-term care “event.” You need to begin thinking of LTC as an event, not a location (i.e.; nursing home). By keeping the focus on your desired choices, we can begin to create a long term care plan that involves both key elements: the family and the finances.

You may ask yourself : What money is designated for LTC in my current financial plan? Who would be the “quarterback” determining the care needed? Is a family member available and trained to provide that level of care? What would the financial impact to my portfolio be if the LTC event was for an extended period of time, more than 10 years? Is there money in the plan that can support someone receiving care and maintain the lifestyle of the remaining family members? Will I be able to ensure that the financial commitments I had hoped to make to children, grandchildren, charities, etc., can still be honored despite the unintended financial penetration of the portfolio?

A version of this article appeared in the 2010 edition of AZ CPA, the magazine for the Arizona Society of Certified Public AccountantsRead the full article here: Chance or Choice?

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