Marianne D. Fishler//Special to The Daily Record//November 29, 2011
//Special to The Daily Record
//November 29, 2011
A friend of mine recently moved his elderly mother into an assisted living facility. It was a difficult decision for the family to make, but a necessary one given the human and financial resources required for her to continue to live on her own.
This scenario is played out daily in families all across the country — and a reminder that while medical advances have prolonged life expectancy, there is no guaranty that the quality of life will be ideal. While the decision to transfer an aging loved one to an assisted living facility is difficult, the nursing home decision can be even harder.
It is estimated that approximately 70 percent of people over age 65 will require some type of long-term care (LTC). And while we typically associate the need for LTC with the elderly, injury and disease can trigger a need at any age. Christopher Reeve, who became a paraplegic at age 42, as a result of an equestrian accident, is one of the most glaring examples.
While we are accustomed as a society to insuring our homes, our automobiles, our lives and, increasingly, our pets, the need to insure the cost of long-term care is not so clear. As a result, families are absorbing these significant costs of care.
According to an AARP study, in 2009, about 42.1 million family caregivers in the United States provided care to an adult with limitations in daily activities. The estimated economic value of their unpaid contributions was approximately $450 billion in 2009, up from an estimated $375 billion in 2007.
There are basically four ways to pay for LTC: Medicare, Medicaid, self-insure or LTC insurance.
Medicare is a federal program that has fairly stringent requirements and little flexibility in the type of care provided. Medicaid is designed for low income individuals. For those with options, these alternatives may not be the most advantageous.
The decision to self-insure, purchase long-term care insurance, or a combination of the two, requires planning, and a good working knowledge of the costs of various types of care (institutional, assisted living, home health care), local costs, and your particular preferences.
There are many different LTC insurance products on the market. Many are traditional — the owner of the policy pays for the coverage annually. If LTC benefits are needed, a claim is made against the policy. If no benefits are needed, the policy expires unused, much like auto insurance.
There is another product available, which is a life insurance policy, where portions of the death benefit can be used for LTC needs. So — if there is a LTC need, the funds are available. If there is not an LTC need, then the life insurance policy pays a death benefit to your beneficiaries. In effect, you are repositioning a portion of your investment portfolio to protect the rest of your portfolio.
Your insurance advisor or financial planner can help you sort out the options and determine the best solution for you and your family.
Marianne D. Fishler, CFP®, is president and co-founder of Baltimore-based Foundry Wealth Advisors LLC. Investment Advisory Services are offered through Donnelly Steen & Co. d/b/a Foundry Wealth Advisors, a US SEC Registered Investment Advisor, 1201 N. Orange St., Wilmington, Del. Securities are offered through Coastal Equities Inc., member FINRA/SPIC, 602 Main St., Cincinnati, Ohio. Foundry Wealth Advisors LLC is a separate company from Donnelly Steen & Co. and Coastal Equities Inc. Contact Marianne Fishler at [email protected] or 443-692-8833.i