Being prepared for a long-term illness, disability, or reduced physical ability is crucial to making your final years comfortable and dignified. Many seniors find themselves with a plan for how they want to be treated in their final years, but no plan for how to pay for it. In an upcoming seminar at the Northeast Law Center, Rhonda Rooney from the Quintala Agency in North Grosvenordale CT will help members of our family-care plan consider their options for long-term care financing.
This blog post will explain certain long-term care financing options available to seniors and their families. It will explain how financial planning choices made now can affect the care you receive in your final years. At the Northeast Connecticut Law Center, we can help you sort through the different ways to prepare for your future health needs, so you can make the choice that is best for you and your family. To get started with us, click here to Contact Us. Fill out the form on our website and send it in. You can also call our Putnam office at 860.928.2429 or our Danielson office at 860.779.0348.
Safeguard Your Tomorrow with a Long-Term Care Financing Plan
For seniors over age 65, paying out-of-pocket for long-term care can be devastating. AARP estimates one in four people age 65 will pay over $50,000 to cover things like nursing homes, assisted living, or in-home assistance with everyday tasks.1 Without proper planning, these expenses can have a significant and unexpected affect on your ability to provide for your loved ones after you are gone.
To protect your interests, it is wise to adopt a long-term care financing plan to account for the cost of day-to-day care. This will give you the confidence to know that you are financially covered in the event of a late-life illness or disability. How you do this will depend on the care you expect to need, your ability to pay premiums now, and the availability of funds later in life, such as from a pension or retirement account. Depending on your circumstances, you may consider some combination of:
- Long-term care insurance
- Hybrid life insurance
Set Aside Money Today in a Trust for the Future
If you have enough assets to fund your own long-term care, there are several different trusts that can be a good option. By placing your money, home, and other assets into a trust and naming an alternative trustee, you can be sure the assets are available, even if you are no longer able to sign the checks. If mental or physical disability makes it so you can no longer care for your own needs, the trustee is permitted to spend your assets to pay for your long-term care.
A trust has the advantage that everything you put in, you – or your beneficiaries – can take back out. These are your assets, and you have control of them. There is no insurance company telling you what is or is not covered. All those decisions are up to your trustee and the person you grant your power of attorney for medical purposes.
However, a trust is also limited by the assets you put into it. If you have a smaller estate, the cost of your final illness could deplete your savings and force your trustee to sell your home or other assets just to cover the cost of your long-term care.
Long-Term Care Insurance Provides Financing for Living Assistance
Another option for long-term care financing is a dedicated long-term care insurance policy. You pay premiums into this policy over the years. Then when you need to pay for assisted living, nursing home care, or home health care, you can file a claim with your insurance company to receive benefits to cover the cost.
The benefit of a long-term care insurance policy is that you pay the premiums over time. This means even if you don’t have the money to pay for your long-term care right now, as long as you are paying the premiums, you will be able to make a claim for benefits when you need them.
However, long-term care insurance policies are becoming rarer, and more expensive, as insurance companies adjust for people living longer. Premiums can often be quite high, especially if you want a high enough level of benefits to pay for all your long-term care needs. If you end up not needing long-term care financing, your family can’t get those premiums back. Also, these policies give insurance companies a say in what care they will or will not cover. That could leave you living below your expectations.
Hybrid Life Insurance Policies Provide for You and Your Family
A third option to cover your long-term care financing is often called a hybrid life insurance policy. This is a whole life insurance policy that you can draw from while you are alive to pay for long-term care up to the policy limit.
Unlike a long-term care policy, when you pass away your heirs receive whatever has not been used up to the chosen limit. That means you won’t lose your money if you don’t end up needing long-term care.
However, these hybrid policies have certain down-sides. They tend to be even more expensive than long-term care policies or traditional whole life policies. They also still require you to file a claim to receive benefits, which means the insurance adjuster gets a say in your care.
Choosing the Right Balance for Your Future Health Needs
Each of these options have pros and cons. Any option on its own may not be able to provide everything you need. By combining these products and tools, you and your estate planning team can customize your long-term care financing provisions to match your needs, care preferences, and assets.
The details of how these long-term care financing plans work together are more complicated than can be explained in this article. There are different approaches available and the factors to consider before signing up for long-term care insurance or another life insurance policy.
At the Northeast Connecticut Law Center, we want to make sure our clients are ready if they need long-term care. Our family care plan, called Safeguarding Tomorrow, gives peace of mind to families and makes sure your estate plan is always up to date. Whether you are just starting on your estate plan, or a member of our Safeguarding Tomorrow Client Care Program, we will review your current assets, goals, and any health concerns you may have. Then we will help you consider the flexibility of a trust as well as the costs and hassle of using an insurance option to help you find the balance that is right for you.
Don’t Wait on Your Long-Term Care Financing Plan, Call Us Today
It is important not to wait when planning for end-of-life financing. The sooner a you sign up for a long-term care or hybrid insurance policy, the lower your premiums will be. That means delaying the decision could end up costing you hundreds, or even thousands of dollars. To learn more about long-term care financing or estate planning, click here to Contact Us. Fill out the form our website and send it in. You can also call our Putnam office at 860.928.2429 or our Danielson office at 860.779.0348. We practice law in many Connecticut counties including Dayville, Hartford, New London, Tolland, Vernon and Windham.
1 5 Things You SHOULD Know About Long-Term Care Insurance, AARP, March 1, 2018.