What comes to mind when you consider the phrase long-term care? You may think of the services provided by a nursing home, assisted living facility, or in-home caregiver. In fact, long-term care can be any one or a combination of these services needed for yourself, your spouse, your parents, or in-laws.
One might think that retina specialists, as physicians, anticipate the medical, family, and financial challenges of long-term care and make proper planning decisions before the need for care creates a tension-filled issue. Unfortunately, this is often not the case.
In this article, we describe the background of long-term care planning and give an overview of some key issues all physicians should understand.
As physicians, retina specialists should be aware of the medical reasons people need long-term care services. Very simply, as we age, basic daily functions (called activities of daily living or ADLs in long-term care jargon) become difficult to perform without assistance. ADLs include eating, bathing, dressing, toileting, transferring, and continence.
Retina specialists should also be aware that assistance with such activities, whether in a nursing home, in a skilled nursing facility, or even at home, can be very expensive—and the need for assistance may last for years. In fact, the yearly cost for full nursing home care can be $100,000 or more. Thus, for both family and financial reasons, giving careful thought to these challenges in advance of a long-term care need is wise.
Looking at the macro statistics,1 just a few numbers can tell the story:
1. 15 million: The number of Americans expected to have a high long-term care need by 2050.
2. 52.3%: The expected percentage of people turning 65 who will have a long-term care need during their lifetimes.
3. $225 billion: Long-term care expenditures in the US, 2015.
4. $470 billion: The dollar value of long-term care provided by unpaid caregivers, 2013.
5. 129,000: Number of individual long-term care insurance policies sold, 2014.
6. 305,068: Number of hybrid life/long-term care policies sold to individuals, 2013.
What Does The Government Provide?
Generally, the government will pay for long-term care as part of the Medicaid program, but only after the care recipient meets certain state-specific income, asset, and physical minimums. In other words, you must be poor by state standards before the government will assist you under the Medicaid program, and the assistance will likely be provided in a nursing home.
For most retina specialists and their spouses, meeting these minimums would mean losing most of the assets they have worked hard to earn over their careers—an unacceptable proposition. However, for the parents and in-laws of some physicians, Medicaid qualification may be a suitable solution. With advance planning, the use of Medicaid trusts and other tools to qualify for benefits by moving assets to family members can be a viable option that should be explored.
Having Family Members Provide Care
While siblings, children, grandchildren, and further-removed family members can play an important role in providing care, there are a myriad of issues to consider, including time management, geography, and funding. Think about how pressed for time most people are today, balancing the demands of their families and careers. Ponder also the challenges that could arise if some family members live near the person needing care and others do not. Will all geographically close relatives split duties equally? Will some be compensated for their time? At what rate? Can family members do a good job of providing care—or even adequate care? Even in the best of circumstances, these are issues that can build resentment, anger, and stress, and can often lead to serious repercussions throughout the family.
Paying Out of Pocket
Certainly, many retina specialists can afford to pay out of pocket for months if not years of services for themselves and their spouses. But, is this a wise choice from an overall financial planning perspective? It may not be, especially when insurance coverage is considered (see below).
Even more problematic may be paying out of pocket for parents or in-laws, especially when other siblings do not have the ability or desire to pay their fair share. Anger, stress, and resentment among family members are common in these situations.
Purchasing insurance to cover long-term care needs can be a sound part of a financial plan. Long-term care (LTC) insurance is an insurance product that pays for long-term care services in many settings, such as at home, in a nursing home, assisted living facility, or adult day care facility. Since there are many different LTC insurance plans and insurance carriers who offer them, it is important to make sure the plan you select will meet your foreseeable needs. Some plans cover facilities-only care, while others cover facilities care and home care. Some policies exist as stand-alone LTC policies and others can be hybrid life insurance/LTC policies.
When deciding on the best choice for you or a family member, it is essential to work with an experienced insurance advisor who is familiar with the products in the marketplace. Also, as with most insurance, costs typically increase with the age of the insured, so there can be a significant benefit in locking down favorable coverage sooner rather than later.
The Benefits of Being Proactive
Because long-term care planning will impact nearly every family in some way, it is wise to proactively examine options for you and family members before the need for care arises. Timely implementation of long-term care planning strategies can have a positive effect on family dynamics, while helping to protect the wealth a physician has worked hard to earn.
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This article contains general information that is not suitable for everyone. The information contained herein should not be construed as personalized legal or tax advice. There is no guarantee that the views and opinions expressed in this article will be appropriate for your particular circumstances. Tax law changes frequently; accordingly, information presented herein is subject to change without notice. You should seek professional tax and legal advice before implementing any strategy discussed herein.
Mr. Mandell is an attorney, consultant at the OJM Group, and author of more than a dozen books for doctors. To receive free print copies or e-book downloads of For Doctors Only: A Guide to Working Less and Building More and Wealth Management Made Simple, text RETINA to 555-888, or visit www.ojmbookstore.com and enter promotional code RETINA at checkout.