What’s all the fuss? How serious is the problem of Long term Care?
The problem is huge! As a society, the American people traditionally do not revere our elders: rather, we have a history of discarding them, which hasn’t been a problem because life- spans have been shorter, which meant people spent down their assets and died. With the increases in technology and medicine, we will live longer than our finances allow.

This is going to create an extreme economic problem for our country, as well as for families and individuals alike. Most Americans do not achieve true financial freedom as it is. Sure some people will be successful in accruing and accumulating significant assets, but more likely most will be dependent upon Social Security just to pay their basic living expenses.

The costs and dollars for any form of extended care are simply un-calculable, open-ended, and an absolute financial disaster.

So, you ask what is all the fuss? Planning for Long Term Care is essential. It requires a proper combination of financial and estate planning combined with open and honest family planning.

How does a client begin planning to guard against the costs of Long Term Care?
The basic spirit in planning is to assure that there is liquidity and a properly designed asset protection plan in effect. We all want to preserve our assets, but the challenge is to create income streams to assure there is money available to make choices about care. Mostly, we want to eliminate the undue burdens that will be placed upon our families.

Most people obviously want to protect their health and protect their family from financial disasters. Planning for long-term care is critical, because it is a family disaster: dollars flow out, assets are liquidated, and estates are quickly depleted.

Could your family sustain a $60,000 annual loss? If so, for how long?

Can the costs really be that much? I have assets, so do I need it?
I think this is an area where self-insurance is ridiculous. After all, the exposures are unlimited. That’s when you buy insurance! This isn’t a $1,000 problem; it’s a potential total elimination of your assets. What’s the price to protect a lifestyle and lifetime of accumulation?

My thinking is this: To preserve a $1,000,000 to $4,000,000 estate, we might be talking about less than 1% annually. For estates larger than that, perhaps the expense is manageable. On the flipside, if you have assets under $1,000,000, you’d be crazy not to guarantee you don’t have to sell your home to pay LTC expenses. So insuring becomes a logical choice for most. That’s Long Term Care Insurance!

But, the real reason to plan for LTC expenses isn’t totally financial. It’s emotional – (Have you ever been in a medical facility?) Ask someone who has been through this and they will tell you that having cash flows from insurance to allow choices in care is a godsend.

That reminds me – Doesn’t MediCare pay for LTC expenses?
No! That’s the fallacy that many people who are in denial about this issue want to rest upon. MediCare pays 90 days! (And the days come with many strings attached!)

Many people falsely believe they can shift or transfer assets to qualify for MediCal (California), but they are absolutely mistaken. Those days are over! If you have assets greater than $50,000.00, you had better do some planning.

Okay, so the need is great, and MediCare is not an answer. Won’t the government come up with a plan for a problem this big?
I think it’s too early to predict. Clearly the dollars are not there. My impression is that the covered medical costs alone, plus prescription drugs, create more challenges for Social Security without the additional cost of LTC. So, my answer is, no; although there is bound to be a lot of discussion on the subject.

So why aren’t more people doing LTC planning?
That’s a great question. There are lots of reasons. More people are aware of the need to do planning, yet there continues to be a huge obstacle in approaching this issue. We really have overcome this!

You see, people don’t want to spend money for something they don’t want to think about and don’t want to use. But collectively, as a society, we have to plan. We need to help our clients address the impact of a debilitating sickness or illness. Families have to talk and prepare planning.

This is a societal problem, and each of us has a responsibility here. Firstly, we must create an infrastructure that induces people to enter jobs to care for and help this segment of our society. So that people changing bedpans and helping people ambulate or toilet aren’t paid the same as people flipping burgers.

There is much confusion in the media and press that is contradictory – you seem to indicate that LTC planning is for almost everyone! Isn’t it just for older people?
We all need to begin planning for this now, for our parents, for our employees, and for our selves. The need does become greater beginning at ages 50 and up, but this is not a senior problem, it can happen to anyone.

Let’s say 15 or 20 out of 100 people will require some form of long-term care before they die. All 100 should get insurance coverage, because they are creating Financial Certainty.

Financial planning involves the creation of financial certainty. 100 out of 100 people have to address the LTC issue. Some may self insure and many will buy coverage. You could be worth $50 million, but it has to be addressed because if a family member requires care (and I don’t care how wealthy you are), it affects the family dynamics.

There’s an emotional / psychological component and a financial component. Both require a type of communication that breeds frank and honest planning.

So, if you think I have strong opinions about this issue, you are correct. The problem is huge, and the press has been negligent on this issue.

Financial Certainty is appealing and obviously insurance creates that. But at what cost? Surprisingly, not that expensive. In many cases the premiums are tax deductible, both to individuals and business owners.

You can go wild with plan design, but a properly designed plan should fit your budget. I’ve written plans for as little as $400 a year, and as much as $80,000, so there’s quite a spread.

What should someone look for in a good LTC insurance plan?
Billions of dollars in assets. (I am referring to the carrier you buy from). Buy from a big, reputable company. This is a fairly new risk for insurers and we have yet to see the real impact on claims.

Plan design requires making five decisions: how much, how long before benefits begin, how long does it pay, does it address inflation, and does it cover Home Health Care? There are a lot of complexities, but with good council, the solution is really an easy one – a good broker does this for you.

Where do I begin?
Begin with a discussion with your attorney; prepare current wills, trusts, Durable Power of Attorney; and make sure your financial house is in order. Seek out a Long-Term Care specialist, one who is an individual Broker rather than a “captive” agent. Run the numbers and think with your heart. This is a take action issue!