Plan for the Long Run

Long-term care is an important factor in the plans you create or continue to develop. You are doing that, right? And hopefully with the help of a professional.

For LGBTQ+ individuals, future planning is especially critical. Various studies, including one from Experian in 2018, showed that LGBTQ+ people spent more on discretionary items than on saving and planning for the future. There are many sociological and historical reasons we could explore as to why this is. Many of the extraordinary concerns of LGBTQ+ people in past years are no longer as pressing, including the acceptance of LGBTQ+ and nonbinary people, and the right to marry.  Now, there may be the ability to have more conventional financial and estate planning.

That’s where long-term planning is important. Approximately 70 percent of Americans turning 65 today will need some type of long-term care during their remaining years, according to the U.S. Department of Health and Human Services (HHS). Such care runs the gamut from assistance with the basics of daily living, to in-home assistance, to memory care, or to residential care. According to the Administration on Aging, women will require about 3.7 years of long-term care, while men will require 2.2 years, on average. The Association for LTC Planning estimates that in-home care can cost more than $50,000 per year, and nursing home costs can be upwards of $100K per year. Such expenses deplete savings in a very short time, especially when coming out of a pre-tax IRA.  These expenses can take an emotional toll as well as causing financial hardship.

At the same time, many people turn to their families for their long-term care needs, but many LGBT+ people don’t have children. By the time they need care, there may be no one in the family willing or able to provide it. While this may sound grim, it’s a reality. Clear-eyed planning can provide answers for the future—and peace of mind now.

How to plan for long-term care Depending on your age, health, means and needs, there are several ways to address long-term care.

Long-term care planning options:

Standalone or traditional long-term care

Standalone or traditional long-term care insurance plans generally provide the most robust long-term care coverage based on the premiums paid, can be customized to suit your needs, and offer the option to receive care at home, in an assisted living facility, or a nursing home. These are age-sensitive plans, however, and the premiums can be steep. Many experts suggest that the time to purchase these plans is between ages 45 and 55. And the sooner the better. It may seem simplistic, but it’s easier to get insurance when the likelihood of needing it is further in the future. Plans vary, so it’s best to talk with a financial professional who can guide you to the best possible solution for your unique case.

Linked-benefit or hybrid plans combine long-term care insurance with life insurance, providing broader coverage and greater flexibility usually at a slightly higher price point since you are insuring multiple risks. If you don’t need the life insurance portion of this type of policy, or if you can meet your life insurance objectives through other means, this may not be the plan for you. For LGBTQ+ people considering who their heirs are and how they want to provide for them will be a factor in determining if the increased cost is the way to go.

Self-fund

You may be able to pay for long-term care out-of-pocket if you have significant assets.if you have significant assets. While this may be an option for some, it’s often valuable to weigh the benefits of private insurance versus self-funding, as there are additional advantages that come with private insurance including care management and risk sharing, which can benefit you in the event of a catastrophic long-term care event.

Medicaid

Medicaid does cover some long-term care services (unlike Medicare, which most people are surprised to learn does not cover long-term care) but you need to spend down most of your assets to qualify and you need to receive care in an approved facility. In essence, you would have to bankrupt yourself before you are eligible to receive this. Medicaid also requires you to be unable to perform at least two of the six criteria. for daily living. If you are eligible, however, Medicaid will likely cover the entire costs of care. However, Medicaid does not provide-in home care in many states.

As noted, many people are nervous or uncomfortable talking about these issues. They feel it’s depressing or dark. It certainly can be a downer to think about end-of-life needs. But I like to take a “set-it-and-forget-it approach.” By that I mean, if you spend a comparatively short amount of time facing the inevitable and many potential eventualities, you can make a plan to suit your life and your assets. Once the plan is in place, you can go back to your life, and you have the advantage of knowing you’ve taken care of part of your future. I’d always rather plan today than panic tomorrow.

I also like to think of long-term planning as a bet I hope I lose, but it’s one that makes a lot of sense to take.

**DISCLAIMER: This article is for informational purposes only, and it does not replace professional investment advice, for legal, tax, financial, or any other. It is recommended that you seek such advice from a Financial Advisor or Certified Long Term Care Planner who will understand your individual situation.