As with so many aspects of planning for our futures, many people try to hide their head in the sand when it comes to planning for living a long life that might involve a period of time when our expenses are high and our resources are not as robust was we would like. So take your head out of the sand and think about these planning ideas for the long term.
1. Life Insurance or Annuities. Life insurance products have changed dramatically over the years. In addition to protecting our families during our earning years, insurance products can also be used as a resource in later years if an unexpected need arises. An insurance expert can discuss how one product might be able to change over time to serve different purposes for you. Long term care can be built in to life insurance policies or separate long term care policies can be purchased. Medicaid qualifying annuities are also available. In many of these products any money that’s not spent on care during your life gets passed to heirs as a death benefit.
2. Long-Term Care Insurance. As noted above, insurance products are available specifically to help cover the cost of long term care. A large percentage of us will spend at least some time in a facility for which long term care coverage will apply. This insurance product helps provide for the cost of long-term care. Long term care is not simply for a nursing home at the end of life. If you have an extended rehab from surgery, you may need qualifying care for several months before returning to your normal life. Long-term care insurance is for people who can’t perform basic daily activities and need someone to help them. Many people don’t feel comfortable relying on family members financially so start planning now to have money available for your long-term care.
3. Medicaid. Medicaid covers long-term care costs for people whose income and assets fall below a certain level. It can only be used when you have no other financial resources to cover the cost of your care and your options may be limited by the programs that are available to Medicaid patients. It’s a good idea to save as much money as possible in your younger years so you’re not fully dependent on Medicaid to help you in your later years. If you think you might eventually need government assistance to pay your medical expenses, you should contact an attorney who specializes in this area. Many people think they know what they need to do and end up impoverishing themselves unnecessarily. Through careful and expert planning many assets can be retained for the other spouse or family members. But don’t wait until the last minute and don’t do planning on your own in this area.
4. Personal Savings and Investments. Some people will be able to use their own assets for long-term care by calculating an amount of money to set aside to pay for their care, or by savvy investment plans over the years. Just make sure you understand the Medicaid guidelines that might affect your spouse and other family members. As with Medicaid planning discussed above, it is a good idea to consult with an elder law attorney when doing this planning.
Each option has its advantages and disadvantages and can be very complicated to understand. Make sure you talk to an attorney, insurance agent, and financial advisor to discuss what long-term care plan works best for you and your family.