Long Term Care: Is it right for you and your parents?

Genworth, an insurance company founded in 1871, published a study from more than 15,000 surveys that showed the average private room in a nursing home costs a staggering $100,00 a year and the median for a home health aide was over $50,000 a year. In California, the median monthly cost in 2018 for an assisted living facility was $4,500. In 2020, that number is estimated to rise to $4,774 a month.

With the Baby Boomer demographic quickly approaching full retirement age, it’s concerning to see that costs are going up while solutions are becoming less obvious to people everywhere.

Most financial advisers focus just on wealth management and estate planning. At McClure Wealth, we pride ourselves in being different by looking at the big picture – your health, your wealth, your family. This is why we provide LTC options to our client base.

One of the reasons we bring up LTC in conversations is because we genuinely believe some families need it, and if coverage is not pursued, children may be on the hook per a little known legal doctrine called filial law. Looking at the numbers above, you can see why we are concerned about the lack of discussion surrounding long term care.

Working toward financial independence is something that drives our financial practice, so naturally, long term care is one of the pieces we recommend adding to your financial planning life. Here are some things to consider if long-term care is right for you and your parents:

  1. Underwriter: It’s important to pick an insurance company with high financial and consumer ratings in order to compare the best plans and fit for you and your family. Checking an underwriters financial stability and credit ratings is part of our process.
  2. Age: If you feel you might want a long term care policy, it’s better to apply early versus later for coverage. While it’s better to apply early in life, many of our clients at McClure Wealth are healthy far into their 70s and 80s, but statistically speaking you have a much greater chance of being approved the younger you are.
  3. Income Needs: Long term care insurance policies should not break the bank. If you would struggle to make payments, it might be better to consider other options.
  4. Dependents: If something were to happen to you, do you have dependents who would be willing and able to take care of you? With the stress of modern day living, parental care can be too unrealistic for some children. What would happen to you if you needed daily care and your children could not afford it? These are some of the difficult questions we must ask ourselves as we age in order to be prepared for what’s next.
  5. Policy Payments: If you have a monthly LTC policy, you will want to make sure payments are made every month and on time. If you, your partner, or your parents are at risk for dementia or memory-loss, consider having someone else pay the monthly premiums. The last thing you want is for the policy to lapse when you need it the most.
  6. Responsible Party: Make someone in your family the responsibility party for the insured under the LTC policy. Give photocopies of the policy for them to keep in a safe place in case they ever need to advocate for you.

Have you started thinking about a long-term care policy for your family? Reach out to us at McClure Wealth and we can explain more about why it might make sense for you.