In a previous edition of TGIF 2 minutes I reviewed the topic of “Caring for Aging Parents.” The subject remains a big, big topic of conversation with friends and clients. PLUS, as people experience caring for a parent they suddenly say: How much do I need to be concerned about planning for MY OWN Long-Term Care down the line?!
Definitely a smart question and hence the “2.0”. The costs of Long-Term Care are staggering, and the emotions can be too. Let’s take a brief look at recent news on costs.
A recent article caught my eye in The Wall Street Journal titled, “Millions Bought Insurance to Cover Retirement Health Costs. Now They Face an Awful Choice”. The article summarized that premium costs for Long-Term Care policies have in some cases doubled within just two years – yes, doubled in just two years. Annual costs for these types of polices can be in the range of $2,500-$4,000 per year depending on various features like inflation protection and allowances for in-home care. Policies can cost less, and other policies cost even more depending on a covered person’s health. Note that in most cases, States regulate premium increases.
For people in their mid-50’s and younger considering coverage, it is difficult (if not impossible) to determine how high the cost will rise over time…and thus planning can be a real challenge. For even younger people (see Other options below), it makes almost NO sense to buy these types of policies today (there are always exceptions). It may be a matter of saving more each and every year so that one day you could have choices for how to get the care you might need. Saving more almost always leads to more choices in the future.
For people in their 60’s and 70’s who already have Long-Term Care policies, the decision may be whether or not to maintain the policies. If the cost is well budgeted in a financial plan with a buffer for future premium increases, then it likely makes sense to continue paying the premium.
Other options to initiate or increase coverage do exist such as Reverse Mortgages (specifically for the purpose of long-term care) and “hybrid” policies. These other options can be more flexible than locking yourself into a premium for the rest of your life. Especially for younger people, the hybrid approach can make sense. Even if you don’t care today, be aware of the potential future costs.
All of this news on premium increases can be really stressful. But even more upsetting can be facing real choices when the need suddenly arises for assisted living or long-term care for a parent or family member. Rarely is there a true plan in place beforehand (although this is changing). In some cases, there are few obvious warning signs that care is needed until – wham!
Siblings often are not on the same page about who is in charge. Even if there is someone “in charge” communication is not easy when everyone lives in different cities or busy lives with kids leave no time to coordinate next steps for a parent. Sound familiar? And then there are the healthcare privacy laws that make it difficult to assist in medical decision-making when one parent has already passed away.
A possible solution to avoid stress and anger: conversations with spouses and among children and siblings years prior to an urgent need. Simply bringing up the topic TODAY – or even joking about it first and then getting serious – is a big first step. My previous article outlined a checklist of conversation starters. For your own personal long-term care strategy, research the costs and the available savings and policy options (I can help). Set aside monies for “future health needs” – whatever they may be – because the options and costs will change over time.
This topic may be the last thing you wanted to read about on a Friday… but think about bookmarking it for a conversation sooner rather than later. Give yourself the chance for peace of mind down the line. Peace of mind for parents AND children and most important YOU.