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VOL. 131 | NO. 151 | Friday, July 29, 2016

Dana and Ray Brandon

Long-Term Care – Not for Everyone

By Ray and Dana Brandon

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Ray’s Take With people living longer due to advances in medicine and lifestyle changes, chances are that most of us will become disabled for some time before we die and will need some long-term care. The projected numbers are at least seven in 10 Americans over age 65, and the vast majority underestimates the cost. 

Many people operate under the assumption that Medicare will cover costs when, in fact, the program does not pay for ongoing long-term care. Medicare kicks in very little for these costs and only on a short-term basis. Medicaid does not kick in until the assets of an estate are spent down (i.e., you are broke). Most people must pay for these costs out of pocket.

There are really only two ways to deal with these expenses – your investment/retirement portfolio and long-term care insurance. Most people take a look at what long-term care insurance costs and opt for taking their chances without it. Then if that first round of expenses hits, they may wish they had bought the insurance. But it’s usually too late to buy it then. Keeping adequate liquid and conservatively invested assets available is a drag on portfolio returns and difficult to sustain at times. But if you can afford to self-insure then you may have saved you and your estate a lot of money.

Making long-term care insurance part of your overall retirement plan is an option you should consider early if you don’t see another way to cover costs. If passing on an estate to your heirs is a priority then shifting some of the risk to an insurance company also makes sense. The ideal time to start evaluating coverage is around age 55. Those who wait longer face higher premiums and an increased possibility of being denied coverage.

Consulting an estate-planning professional can go a long way toward finding the solution that works best for your individual circumstances. 

Dana’s Take Active aging is the best-case scenario. I’m happy to report that my 83-year-old mother and a friend just returned from touring France in a rental car. If, however, age dovetails with injury or illness, it’s time to examine options. 

Relying on family for long-term care is the one option most experts don’t recommend these days. It looks like a good option, but it can take a huge toll on caregivers. In these days where most families are two-income and kids are participating in multiple activities, the additional burden of caring for elderly family members can be real.

If this is something you are considering, make sure to discuss it with all family members. Look into additional sources of help like adult daycare to potentially ease feelings of being overwhelmed. If the discussion is likely to be difficult, an outside facilitator such as a social worker, religious leader or geriatric care manager might be helpful. 

Care giving can be physically and financially draining, and it may lead to resentment and broken relationships within a family. Make sure you’ve taken into consideration the emotional cost as well as the financial cost before making your decision.

Ray Brandon, CEO of Brandon Financial Planning, and his wife, Dana, a licensed clinical social worker, can be reached at brandonplanning.com.

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