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With an estimated 70% of Americans needing long-term care after age 65, planning for long-term care is an integral part of an estate plan. It’s better to talk about long-term care and make a plan before the family is confronted with an emergency situation. Advance planning means that you’ll have more options to secure proper care, protect family wealth and ensure that the community or surviving spouse will not become impoverished.
Start With a Calm Discussion About the Future.
Aging parents may be reluctant to discuss the possibility of needing long-term care, so it must be addressed thoughtfully. If one or both parents have chronic illnesses, they may be more receptive to the discussion. If the discussion is kept short and pleasant, you’ll be more likely to have follow-up conversations, which will be needed.
Financial Concerns for Long-Term Care
Most people’s first concern about long-term care, in-home or facility, concerns its impact on their finances. While costs vary from region to region, long-term care costs are expensive. Living full-time in a skilled nursing facility can easily cost $100,000 a year. Home health care is less costly. However, there are limits to the level of care that can be provided at home, and staffing shortages often make home health care complex.
Do You Have Long-Term Care Insurance?
Find out if your parents bought long-term care insurance and ask to see a copy of the policy. If you don’t understand it, ask a professional for help. There are waiting periods for most policies before coverage begins. If they are not in good health or are too old, premiums for a new policy may be prohibitive.
Are They Eligible for Medicaid?
If the family anticipates relying on Medicaid to cover the cost of long-term care, a Medicaid Asset Protection Trust (MAPT) should be discussed. Trying to simplify qualifying for Medicaid by transferring assets to children, including the family residence, creates many unexpected problems. Medicaid has a five-year look-back period. Any transferred assets will be uncovered, resulting in coverage being denied. A MAPT protects assets from being counted for Medicaid eligibility. However, this trust must be created and assets transferred five years before applying for benefits.
Long-Term Care in a Continuing Care Community
Moving from the family home to a continuing care residence is another solution. These communities offer different levels of care, which change as the individual or couple’s needs change. Finding the right one requires considerable due diligence. The financial health of the organization, whether or not there is a doctor on premises, what local hospitals are affiliated with the community, whether or not the apartment will be guaranteed to be sold and money returned to the family upon the passing of the individual or surviving spouse, etc., are all questions to be asked.
Plan for the Legal Aspects of Aging
If your aging parents have an estate plan, when was it last reviewed? They should address this (if they don’t have one) as soon as possible. Their estate plan should include several documents addressing incapacity. These include Power of Attorney, so a designated person can manage financial and business affairs. A Medical Power of Attorney is also needed if the parent cannot express their wishes for medical care. A Living Will is a separate document containing their wishes for treatments they do and do not want to be used to be kept alive.
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