Myths of Long-Term Care
Long-term care costs can devour the finances, time,
and quality of life from a patient in need and his or her entire family.
Families that have experienced the struggles of long-term health costs with a
parent or grandparent are often the first to urge others to have a plan in
place ahead of time. For four years, we urged a particular client to obtain
long-term care insurance as part of her plan.
Over time, she had accumulated wealth that
would enable her to pay the premiums and protect her estate. She made it as far
as filling out the application. However, she did not carry out the plan. She
recently suffered a stroke that has left half of her body paralyzed. She is in
good health otherwise. She will now be forced to spend down her retirement nest
egg and her children’s inheritance for care. Because of her good health,
she may outlive her assets and use state-sponsored Medi-Cal, which is designed
to provide assistance for poverty-level individuals. Unconsciously, many middle-income
and wealthy Californians use Medi-Cal as “Plan A.” A
patient’s quality of life choices are diminished with government aid.
Children are often left with no financial legacy.
Many people overlook the importance of
long-term care planning because of several myths:
Myth #1: My family will take care of
me.
The Bible tells us to take care of our family. The responsibility is so serious
that the Apostle Paul calls someone who neglects his family worse than an
unbeliever. This command works two ways. Children, take care of your parents.
Full-time care may create an immense burden on a child, financially,
emotionally, and physically. The child or caretaker is often torn between
tending to a sick parent, taking care of their own kids, and maintaining a
career. Many children are forced to relocate. In addition, when every second of
free time is spent on care, none is left for recovery, enjoyment and quality
time in a parent’s last days. Even families that potentially have
multiple caretakers often hire a professional to manage the duties.
Myth #2: I will not need care. Hopefully you
won’t. However statistics show that for people age 65 and older, 3 of 4
people will require long-term care in their homes at some point, and 1 of 2
will require some form of assisted living or nursing home care. (HIAA LTC,
Knowing the Risk, Paying the Price, 1997)
Myth #3: Long-term care insurance is
a waste of money. People have basically four possibilities:
• Buy a policy and never need care
(small mistake).
• Buy a policy and need care
(possibly the best financial move you will ever make).
• Not buy a policy and never need
care (count your blessings).
• Not buy a policy and need care (you
could be wiped out financially).
Could long-term care
insurance be a waste of money? Never! The purpose of insurance is protection
from the larger risk. Nobody buys health insurance hoping they get their
money’s worth. The chance of a house fire is 1 in 1200, according to the
Underwriter’s LTC Council, yet most people would consider it vital to
protect against fires. People buy it because the downside of not being
protected is so steep. The Generations Journal of
the American Society of Aging says, “Long term care is the single biggest
threat to whatever wealth an older person has.”
Myth #4: Medicare or Medi-Cal will
pay.
Medicare and long-term care insurance cover two different needs. Medicare
covers acute care. Long-term care covers chronic illnesses and disabilities
that reduce your ability to do daily living activities. Medi-Cal (or Medicaid
outside California) is designed purely as a safety net. In addition to the
potential costs of relying solely on Medi-Cal, lies the quality of care issue.
Most nursing facilities are for-profit businesses. They cannot legally
discriminate against Medi-Cal patients once accepted, but when beds are full,
cash and insurance paying patients will receive priority.
The state of California offers a more
practical alternative to relying solely on Medi-Cal. California is one of four
states to currently offer Long-Term Care Partnership Policies.
And that is just one more Principle of
Prosperity!
Anthony Saffer helps
Christian families develop principled financial strategies to address their
financial goals and leave legacies. You may contact Anthony at (619) 297-2003,
ext. 119 or e-mail: asaffer@wradvisors.com (Broker/Dealer Waddell & Reed,
Inc.).