What is Long-Term Care?

Many consider “long-term care” to mean “nursing home.” Not true. Understanding the difference will help you protect your family and finances.

Long-term care, referred to as custodial care, is defined as needing assistance with activities of daily living such as toileting, bathing, dressing, eating, transferring from one point to another, and continence. It also includes cognitive impairment so severe that the individual needs constant supervision.

Most often, custodial care is provided in the home. Caregivers come to the home as needed by the patient, be it a modest schedule to give relief to family caregivers or round-the-clock care. Alternatives include independent retirement communities, assisted living facilities and nursing homes. Blended approaches include “adult day care” where the patient spends days at a care facility but lives at home.

We all know that people are living longer. Many are not aware, however, that modern medicine saves lives but is often unable to fully restore one’s ability to care for oneself. As a result, the need for custodial care is exploding. If this happens to a person in your family, the question is not who will take care of them, because it will be your family – one way or another. The question is what providing that care will do to your family and finances.

Who Covers the Cost?

Consumers must pay for their own long-term care. Unfortunately, the best thought-out retirement plan rarely covers the risk of living a long life. More particularly, the risk that you live many years that require custodial care.

Medicare, the primary health care program for retirees, is similar to health insurance. It pays only for skilled or rehabilitative care, not custodial care. Medicaid, a federal and state welfare-type program for financially needy individuals, will pay for custodial care but primarily in nursing homes.

The Role of Long-Term Care Insurance

Long-term care insurance fills the gaping hole created by the blessing of modern health care. We live longer, but our health care insurance does not provide for the assistance so many will need. Long-term care insurance is a smart way for you to deal with the substantial uncertainty of how long you will live and how much care you will need. Your retirement planning will be much simpler. You build assets and income to provide for yourself during retirement, absent the unpredictability of long-term care expenses. Fail to insure and you risk the unthinkable, including late age bankruptcy due to unforeseen assisted living costs and substandard care.

Finding and Selecting Long-Term Care Insurance

First, get personally familiar with the issues and options. Reading the articles in this issue of The Business Owner is a good start. Second, have your financial planning professional read these articles and then discuss with him/her your own situation and that of your family and its’ members. Third, find a long-term health care specialist that can provide:

a.    Projected future costs for long-term care, and

b.    Policy options and explanations for each, and

c.    Savvy and experienced counsel.

Fourth, make sure you select a company (underwriter) that is very highly rated. You don’t want to have to worry about your carrier running out of money or going out of business. Fifth, know the fine print of your policy. For example, will the policy pay for private assisted living or just nursing home care? Sixth, consult your tax advisor about the most tax-advantageous method for funding and holding the policy. Seventh, cut the first check, get the coverage in place, put it on auto-pay, and place the policy in your safety deposit box. Eighth, be sure your family members, including your children, are aware of what you put in place.

The following experts contributed their expertise to the articles in this special section:

• Carolyn K. Schultz, a Certified in Long-Term Care specialist. She can be reached at the Henderson Financial Group, 918-428-5433 or ckschultz@finsvcs.com.
• Diane Hambric, President of Gold Medallion Senior Housing and Health Care – an owner-operator of retirement and assisted living communities and skilled nursing facilities in Oklahoma. She can be reached at 918-523-0222.