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Long-Term Care Part 2 of 3…


I met a woman in Indianapolis a few months ago whose father was deteriorating because of a chronic illness. The costs for his care had continued for years.

She alone was providing the sole care of her father and it was time consuming, exhausting, and untimely. She shared, with a group of us, how her own health started to decline because of the seemingly constant care she was giving to her father.

It was heart-wrenching to hear of their family’s struggle.

You may never need long-term care, but if you did, how will that affect your family?

When a parent needs long-term care, typically one child (maybe the eldest or the child living closest) takes most of the responsibility of caring for their ailing parent.

Parents want their adult children to be happy, successful, and independent, however, adult children often-times have no choice but to put their own lives on hold to care for the parent they love.

Caring for a chronically-ill family member can impact that designated persons’ emotional, marital, financial, and even physical health.

Yes, all too often, perfectly healthy family members find themselves ill after experiencing the stress of the burdens that come with becoming a primary caretaker.

The death of a parent can bring children together, but a parent needing care could tear siblings apart. Adult children rarely agree on how money should be spent or how care should be given.

Tension and resentment can appear between siblings and enlarge as the years go by.

Many people think they will avoid long-term care in their lives, but the fact is: 1 in 1.4 Americans above the age of 65 require long-term care. Odds are, you’re going to end up needing long-term care.

With long-term care, not all of the losses can be avoided; emotionally, spiritually, physically, and…financially. Long-term care for a parent can be very expensive and erode a well-designed financial plan down to nothing, and more quickly than most people think.

Those financial losses can be capped or mitigated if there is a specific plan in place.

If one of your parents became chronically ill, how will you pay for it? If you needed care, how would you or your children pay for it?

Our options to pay for long-term care (LTC) today are:

a) To rely on the government

b) Self-pay (completely out-of-pocket)

c) Purchase long-term care or asset care insurance

The Government: Medicare is health insurance. There is confusion because it pays for nursing home care for a short period of time designed to be rehabilitative type care.

Medicaid DOES pay for long-term care, however it is “needs based”, which requires a spend-down of your assets to qualify. And, it may or may not cover care at home. With Medicaid, options and choices are limited.

One thing we probably all agree on… government programs have changed, and can change over time, so we may assume these programs could be different in the future, so in the off-chance that you were interested in whittling down your assets, a program may not even be in place like it is today.

Will the care the government provides you be adequate?

Who knows…maybe you’ll wind up in a facility you don’t want to be in because of lack of government funding. Nobody wants that.

Self Pay: There are two reasons that people self -pay:

1) They self pay out of default because they didn’t plan and will do the best they can when they need care.

2) They believe or have been told “you have plenty, you don’t need insurance”, therefore they decide to self- pay.

If you planned for retirement and have a large net worth, you probably want to protect it. With the increasing costs of long-term care, you can bet that self-pay will erode your net worth.

Depending on the gravity of your long-term care needs, with self-pay, the legacy you wish to leave to family or charity could be great depleted or even wiped out.

Long-Term Care Insurance: It is always recommended to transfer the risk of the unknowns to an insurance company. But many people do not for a number of reasons.

1. It could be too difficult to qualify for LTC because of health conditions.

2. Many people view LTC as being expensive.

3. People view LTC as a “use it or lose it” policy, meaning that if they don’t need care, all of the premiums that they have paid for the care will be lost. This can be true if you do not choose your policy carefully.

However, we recommend using a different type of long-term care policy which gives you the best of both worlds.

More on this next week…

Just as it is smart to plan for retirement, it is smart to plan now for long-term care. In the next article, we will look for long-term solutions to help preserve your assets.




Barry Brooksby