Considerations for Long-Term Care Planning

Friday, December 13, 2013

By Matthew Camrud, CFP®

Thanks to the power of modern medicine, humans are living longer lives. But the additional quantity of years hasn’t necessarily equated to improved quality of years, relegating a large number of our elderly population to assisted living facilities and skilled nursing homes. Most of us have parents, grandparents, or even personal experience with this phase of life, and are therefore aware of the substantial costs associated with providing ongoing care.

As wealth managers, we think it’s important to have periodic conversations with our clients about their plans for long-term care. How will it be paid for? Where will the care be provided (in-home, assisted living, etc.)? How will it affect the rest of the family? Although circumstances beyond our control often dictate how a long-term care scenario plays out, by discussing the issue in advance and having a plan in place, we can help alleviate some of the anxiety associated with this life transition.

Managing the cost of long-term care usually comprises the lion’s share of our conversations with clients on the topic. With median costs running $140/day for a home health aide to $265/day for skilled nursing care^ (and much higher depending on location and type of care), preparing for these costs is an important part of comprehensive planning. There are four main options for covering these costs: 1) Self-insure 100%; 2) Purchase long-term care insurance; 3) Combination of 1 and 2; 4) Government assistance (if personal resources are exhausted). What funding mechanism is best for you will be entirely dependent on both financial and non-financial factors.

By having thoughtful conversations now and preparing in advance, we can hopefully minimize the impact of long-term care costs for you and your loved ones in the future.

^As reported on Genworth’s Cost of Care website for Washington state.

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