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What Does Long Term Care Really Mean?

When working with a wealth advisor or financial planner the topic of long term care often comes up. This conversation usually centers on whether or not to purchase a specific form of insurance that protects against the expensive cost of extended care. But is this really the only definition of long term care? In this day and age, aging can take many forms and can affect families in a variety of ways. So before we get into the insurance conversation, let’s take a look at the emotional and logistical process of planning out one’s later years.

How did your parents handle it?
This prior experience will go a long way in shaping your perspective on the prospect of aging and arranging for care. Did you provide care for a loved one or assist your spouse in arranging for care for an in-law? If so you have a unique understanding of the burden this immense task presents. If not, perhaps you have witnessed a friend or another family member go through this process with their parents. Alternatively, a generation ago, care was handled differently and life expectancy was shorter for those who developed health issues.

How is your health now?
If you are healthy when you decide to discuss this issue with your family and advisors many more options exist than if a health event has occurred. While you are able a health assessment can be done and insurance can be considered. Also you can consider restructuring assets to qualify for programs designed to cover long term care later on in life. Or you might look into the option of a continuing care retirement community (CCRC). These residences are becoming increasingly popular and offer a plan for long term care if it’s necessary down the road.

What planning have you done already?
Do you plan to stay in your home as long as possible? If so, is it a residence conducive to aging? Is it one level or are there steps? Have you discussed with your children their feelings toward the family home or how contributing to a family members’ care might affect them? Some parents feel they don’t want to be a burden. However, the children may feel a duty or honor in coordinating the work.

Regarding asset planning, do you have a proper Health Care Power of Attorney and Advance Directive in place? Has it been reviewed in a year and is it stored in a place where those involved can access it? Specifically does it allow the decision maker to gift assets if it means you will better qualify for government services? Does the document use language and medical terminology that are the latest methods in life sustaining care?

Are there any programs you can utilize?
There are two main government programs that people associate with long term care: Medicare and Medicaid. Medicare does not cover long term care beyond 100 days. During the initial 100 days it can cover some of the costs, but only in certain circumstances. Medicaid, on the other hand, can cover long term care costs in a nursing home, though one has to have negligible assets to qualify. Care is almost always provided in a nursing home, which isn’t the usual preferred choice.

What is covered by long term care insurance?
If you buy a form of long term care coverage is it the best kind for your preferences and asset profile? There are many varieties of coverage in the marketplace today. There are a couple of different ways for your family and you to receive funds for the cost of care. Terms like “reimbursement” and “indemnity” are often used to outline when and how much of the benefit may be utilized. Reimbursement generally only allows benefits once a bill for the actual care has been produced and paid. Indemnity on the other hand allows funds to be used for a wide variety of costs once care is defined as needed and a plan of action has been put into place. Most traditional long term care policies, including the program available to federal employees, use a reimbursement model in their contracts.

This article written by Brian Kuhn is originally attributable the following URL: http://www.psgplanning.com/blog/for-federal-employees-what-does-long-term-care-really-mean/


Securities offered through Triad Advisors, Member FINRA / SIPC.  Advisory Services offered through Planning Solutions Group, LLC.  Planning Solutions Group, LLC is not affiliated with Triad Advisors.  PSG Clarity is a division of Planning Solutions Group, LLC.

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