The Devastation of Long-Term Care Costs
I firmly believe that the most significant threat to the assets of my older clients does not come from tenant or other creditor lawsuits. Instead, it comes from the devastating financial liabilities incurred in connection with long-term care.
Modern medical science has made it likely that most seniors will need some form of long term care, and it is usually not covered by Medicare.
The high cost of long-term care can wipe out all, or much of the wealth you have built over a lifetime. In California, the Department of Health Care Services estimated the average daily rate for long-term skilled nursing home care is over $8,000 per month (probably higher in populous counties), and those needing extra services can incur costs as high as $30,000 per month!
Many seniors need this care for years, which can mean costs of hundreds of thousands, or even millions, of dollars.
These costs place a huge financial burden on spouses and other family members, even when they do not devastate all of a family’s wealth.
The Important Role of Medi-Cal Planning in Long-term Care
Fortunately, there are Federal and state benefits that can assist you with long-term care costs, and even pay all of such costs. However, these programs were designed for the truly indigent, and generally require that you impoverish yourself and your spouse to be eligible.
On the other hand, the technical rules of these programs, particularly Medi-Cal (discussed below) currently provide important planning opportunities. These opportunities can allow seniors to both qualify for benefits AND protect substantial property for their spouses and heirs.
I help my clients understand and implement these planning options. With careful and timely planning, these clients can get the state to pay for their long-term care needs, and still preserve millions in family wealth. However, some of these planning options are scheduled to disappear, so concerned families need to plan NOW. And, while we can still save meaningful family wealth when clients need crisis planning (just before or after they need long-term nursing home care), crisis planning is rarely as effective as pre-planning.
This is just another example of my planning motto:
“If you fail to plan well, plan to FAIL”
Long-Term Care Insurance - Will You Have Enough
If you had the foresight to purchase “enough” (but who knows how much will be “enough” in a few years) long-term care insurance when it was affordable, it may provide a great deal of security and peace of mind.
Unfortunately, even families who did buy this coverage often purchased a benefit that does not come close to covering today’s costs, or does not provide enough lifetime coverage. Many elders with long-term care insurance still resort to Medi-Cal (if they can qualify) or exhaust family resources when the insurance proves inadequate. Others, who wait until they are older to try to purchase this coverage find that the high cost, or their age and medical conditions, make the coverage just too expensive, or not even available.