By Marv Law, CLTC
Long-term care is often very misunderstood. Here are three costly common mistakes people make when planning for extended care in the home, an assisted living home or in a skilled nursing facility.
- “The government will pay for my long-term care.” Health insurance and Medicare pay for medical care but not custodial care, and only short term in a skilled nursing facility. Medi-Cal typically only pays toward a skilled nursing facility, but only after assets and income are reduced to near poverty levels. Without proper planning individuals must often pay for their custodial care out of their own pocket and may be in danger of losing nearly everything for which they have spent a life time working.
- “My family will take care of me.” We often see family members stepping in to assist in care giving in order to preserve retirement savings and other assets, however there can also be a high price to pay for family providing care. Sometimes the highest toll is not financial but rather the impact to a care givers health, who often become more ill than the one for which they are providing care. We also frequently witness significant stress on family relationships when there is a need for care when addressing how each family member will participate financially and or in the actual physical care giving, or both. Even if this topic has been discussed with family, when care is actually needed, circumstances often change and what seemed like a good plan initially is no longer viable due to the availability or health of those family members.
- “I will pay for it myself.” Even those who have the resources to pay $50,000 to $120,000 or more annually for the cost of care, unless those funds were allocated to pay for care in the planning and accumulation stage, the need for care can devastate even the best financial plan. Also, if those funds are being taxed when withdrawn then the reduction of principal is accelerated even faster, leaving substantially less available for interest income and other obligations for which those resources were planned, including legacy issues.
In addition to traditional long-term care insurance, there are a number options that might be used to help pay for care. A licensed professional who is Certified in Long Term Care (CLTC), working with your financial advisor, can assist you in planning to avoid these costly mistakes. Although plans are most cost effective when made early, it is often never too late to find solutions when it comes to the high cost of long-term care.