Lewisburg, PA – When we get right down to the nitty-gritty of planning for this particular issue we consistently find it is the toughest question to answer, should one have a plan for LTC? What makes this issue ultimately so difficult to decide is that we do not know until the final analysis if care was needed. As a result it’s one of the very few financial decisions that forces one, to some degree, to predict and forecast the future. We encourage clients to err on the side of emotion and control, over logic and rationalization as they ponder this issue.
Roughly 15 years ago I volunteered at two well-known local retirement communities for one day a week for a year. I was available for anyone in the respective community that had questions related to finance issues: taxes, insurance, estate planning, gifting, etc. I talked to hundreds of residents, families, and visitors in that year and gained insights. Regardless if they were coming from independent living, assisted living, or the nursing home section, there was ONE resounding comment that I heard, “If I had the chance to do it over again, I would retain more control!”
The number one concern ultimately will be that of control, followed by care providers, the coordination of care, alleviation of the burden to the spouse, children, and loved ones, and ultimately asset protection. I have consistently observed that most will look at this from a logical perspective. This certainly makes sense when our health is good and we feel the vitality of life. When our health fails however, logic goes out the window and money seems trivial compared to the desire to regain one’s health and maintain control over decisions. Many regret planning from a logical perspective, once this reality comes to light. The need for care will be one of the most emotional issues we all deal with in life.
Then how does one plan for long-term care? The uncertainty of one’s ultimate demise would dictate we look at this differently than most planning issues. The reality, 7/10 people will linger, three will have a sudden demise, it’s about those who have longevity. The statistics are staggering roughly 92% of people that require care, will start at home, roughly half will progress to an assisted living facility, and roughly a quarter of those will end up in the nursing home arena. The likelihood that a couple will escape a long-term care event is statistically slim. It is the primary reason for depression among the care giving spouses, as well can be financially devastating. The average time care is needed nationally is 3 years; Pennsylvania is 2.9 years, and Alzheimer’s average care is 8 years. There are basically four ways to pay for needed care:
We encourage people to look at this from a co-insured or shared risk perspective. Using long-term care insurance as a component of an overall strategy makes good sense, hedge some of the risk as well as creating an advocate for your future care needs. The reality, we will pay for care when it happens. Understanding this…does it make more sense to risk a larger pool of your life savings if some of the risk can be absorbed by an insurance company?
The key is we believe in creating palatable premiums that ensures one continues to keep the policy until it is needed is vital to the success of the strategy. As we age and would continue to pay this premium like other insurances we carry such as auto home and health, I have found that if the premium is palatable people will more likely use insurance as a component. More importantly they will have created some peace of mind over an unsettling issue. Stay tuned, our next blog will explain how to design a LTC plan using co-insured strategies.