The Team Approach to Planning for Long-Term Care

Patricia was a lively, outgoing 78-year-old widow, with a small stock portfolio and about $400,000 split between two money market accounts. Thinking ahead, she did not want to be dependent on Medicaid when the time came for in-home care or a nursing home. Instead, she wanted long-term care insurance.

She and Rebecca Eddy worked closely with a Long-Term Care specialist to find the right insurance for Patricia. The least expensive plan cost $11,000 a year. That appeared financially challenging until Rebecca took Patricia to a financial planner. A spreadsheet of Patricia's assets and a description of the situation were sent by Rebecca to the planner in advance so that the planner was prepared to lay out a course of action. The financial planner advised Patricia to re-allocate $350,000 of her cash into a bond stepladder, which generated the $11,000 needed annually. Patricia was able to live comfortably on the social security and pension of her deceased husband without tapping into her savings, but she was happy to still have a cushion of the $50,000 left in her money market account. As it turned out, at the end of three years she had a stroke and needed the Long-Term Care insurance. It covered her care for the next three years that she lived. During that time of insurance payout, the annual premiums were no longer due.

The net result: by paying $11,000 for three years (or $33,000):

  • Patricia ultimately saved well over $450,000 in nursing home costs
  • She did not have to go on Medicaid, so her family was able to choose a nursing home that did not take Medicaid
  • Her beneficiaries inherited the assets she and her husband had accumulated during their lifetime

As people age, it is very important to develop a long-term plan to ensure that financial and legal affairs are under control, no matter what life brings.

  • First and foremost, Power of Attorney and Health Care Proxy documents need to be in place
  • A long-term care plan requires an assessment of a person's ability to self-insure (use the person's own resources for in-home or nursing home care) or pay for long-term care insurance, and, if those are not options, to do Medicaid planning in conjunction with an Elder Law Attorney
  • Estate-planning with the help of a Trusts & Estates attorney may include a revocable or irrevocable trust which, besides being important after death, also would be helpful when a senior does not have the capacity to handle his or her own money
  • Plan for who will help make sure that bills are paid, dividend checks deposited, health insurance claims properly processed, and the required documents sent to the accountant to ensure that taxes are filed annually
  • Planning for medical assistance is essential - is there a family member or friend who has the time to help navigate the medical system and supervise medicine use, or should a Geriatric Care Manager be hired?

It is important that trusted professionals, such as daily money managers, elder law and trusts and estates attorneys, accountants, financial advisers, bankers, geriatric care managers, and geriatricians be identified early on, so that they can assist the senior in the important areas of a senior's life, as needed.

As much as friends or family may want to fill the role of daily money manager or geriatric care manager, distance or careers and other family responsibilities may make it impossible to devote the time needed to sufficiently care for a senior. In addition, learning on the job is less efficient than turning to trained professionals.

One of the important things that Eddy & Schein does for clients is assist them in building and maintaining communication with a team of professionals to help manage their affairs. Once we identify who our clients need on their team, we can introduce them to and help them maintain relationships with any of these trusted professionals. We help the senior (or the family of  a senior) gather the information needed for good decision-making.

March 2012 - FEATURE
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