Planning for Long-Term Care

A couple of weeks ago, I wrote about filial laws that, in some states, could enable nursing homes to hold adult children responsible for their parents’ unpaid bills. In fact, a board member of the National Association of Estate Planners and Councils called the issue a “sleeping giant” – one that could drive more people to consider long-term care planning. If you’re wondering whether to purchase long-term care insurance, here are some thoughts to consider:

Purchase at the Most Cost-Effective Time

Let’s face it. Long-term care insurance isn’t cheap. But the alternatives could be even more daunting and expensive. Since neither Medicare nor health insurance cover long-term care, you may risk having to rely on family members for your care, or paying out of pocket. In Michigan, the average monthly rate for assisted living is $3,563, while the average hourly cost of home care runs slightly more than $20, and adult daycare averages about $80 per day (this according to reports that the average cost of a nursing home in Michigan is about $249 per day – that’s more than $90,000 per year! And while you may eventually be able to qualify for Medicaid, you’d still be responsible for paying the bills until you’ve exhausted your assets.

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Generally speaking, the ideal timeframe to purchase long-term care insurance is when you’re between the ages of 50-65, but choosing the exact right time to purchase can be a balancing act. For example, premiums are lower the younger you are, but you’ll likely be paying premiums for a longer time. On the other hand, if you wait, and you’re experiencing some health problems, you could be denied coverage and/or could face much higher premiums. Talk with your adviser and study all the options before making a decision. is another great resource for information.

Understand What You’re Buying

If you’re looking for long-term care insurance, you’re probably old enough to remember Toni Tennille singing, “You better shop around.” In this case, that’s great advice. When vetting insurance companies, be sure to ask how long has the insurance company been in business. Does it have the financial strength to operate long term?

Also, try to do an “apples to apples” comparison of any policies you’re considering. Understand how soon the policy’s benefits are available, and how long they last. Learn exactly what’s covered and what the limitations are. For example, some policies may not cover Alzheimer’s, or complications from a pre-existing condition. In addition, ask whether the premiums could increase, and if so, by how much. Will you need to pay premiums even when you’re collecting benefits?

The Bottom Line

Like many insurance policies, long-term care policies can be complex, and you may not always know the right questions to ask. A fee-only, fiduciary adviser can help you understand all the options and provide an unbiased perspective on what’s best for you. If you have questions about how to plan for your long-term care, feel free to contact us. We look forward to working with you!

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