Maryland Bar
Bulletin
Publications :
Bar Bulletin
Editor: W. Patrick Tandy
April, 2004
| |
Long-Term Care: A
Critical Issue for Attorney Advisors |
| By Sally
H. Leimbach |
When the cost of
nursing home or facility care reaches $80,000 per year, even wealthy
people notice. When it is not planned for in advance, that level of
expenditure can be a real eye-opener. It can also put a few new wrinkles
in your clients’ financial plans. As a trusted advisor, you may assist in
their financial planning and provide them with valuable guidance in
managing their retirement resources. Not addressing their possible need
for long term care could jeopardize a carefully constructed and
implemented financial plan.
What You Can Do
1. Bring up the
subject of long-term care.
2. Provide some
necessary education about long-term care so clients will understand the
issues and potential risks. These risks are not only financial but may
also include emotional impact on families and whether or not they will
have choice in and access to quality care.
3. Remind your
clients that long-term care does not mean nursing home care. Long-term
care is the type of help needed when one isn’t able to perform daily
activities such as eating, bathing and dressing by one’s self. Most
long-term care is maintenance or “custodial care,” which generally isn’t
covered by familiar forms of health insurance or retiree health plans,
Medicare or Medicaid.
4. Discuss the
pros and cons of alternatives available to address long-term care needs:
- Using one’s own
income and assets to pay for long term care
- Looking to one’s
spouse, family or others for donations of time or money towards the
needed care
- Alternative
mortgage strategies
- Long-term care
insurance
Educate your
clients regarding the advantages and disadvantages of each alternative.
Some are more proactive than others. For example, long-term care insurance
helps to make long term care a definable expense in your financial plan –
that expense being the premium cost for the insurance (plus any portion of
the care that an individual chooses not to insure, such as the waiting
period and/or a portion of the actual cost of care). Long-term care
insurance only makes sense if the policy design is tailored to address the
specific needs of an individual’s financial plan. An experienced long term
care insurance specialist can provide you and your client with valuable
assistance in this regard.
Long-term care
planning is important for everyone: young, old, rich or poor. As with the
ostrich with his head in the sand, avoiding planning for it will not
change the facts. A recent USA Today article cited that by 2035 (the year
the first baby boomers turn 89), the number of Americans over age 70 will
be 57 million. A Boston Globe article relayed that by 2015 cancer will be
classified as a chronic illness. Americans are living longer. With this
longer life expectancy comes the responsibility to plan for long-term care
needs.
Are You Up to Speed on Long-Term Care Insurance?
It is a rapidly
evolving marketplace. If you haven’t reviewed the particulars recently,
now may be the time. Examples of changes include increased premiums on
newly approved products and more stringent underwriting. A recent
Kiplinger supplement stated, “The market for long-term-care insurance is
undergoing dramatic changes as costs for care soar and insurers rethink
policy offerings and pricing.” The article went on to recommend, “[I]f you
are 50 or older and have considered buying long-term-care insurance, you
might want to think about buying it sooner than planned. Today’s policies
may be the best they will ever be.”
Products are still
available from well-respected, financially strong insurance companies.
Proper design of these products can provide a missing piece to complete an
otherwise sound financial plan.
TLC, Not LTC
To allow families
to cope with and even enjoy the fact that elderly or disabled family
members are living longer, it is imperative to have a plan to allow them
to provide tender loving care (TLC), not long-term care (LTC). There is
enough stress in providing TLC as a family member declines; providing LTC
can be many times more physically and mentally exhausting.
The Bottom Line: Plan for Long-Term Care
Do you own
long-term care insurance? If not, be sure you understood all the facts
before reaching your own conclusion. The bottom line is not necessarily
owning long-term care insurance but rather having a plan for long-term
care and, as a professional, helping your clients to implement a plan for
long-term care.
Sally H. Leimbach, CLU, CEBS, LTCP, is a long-term care insurance
specialist and an associate with FranklinMorris, coordinating broker for
the Bar Associations Insurance Agency, Inc.
