Thinking About Long-Term Care Planning? Here’s What You Need to Know

Jason Underwood, Financial Advisor

By: Jason Underwood, Financial Advisor
CNC Financial Group, LLC

While it may seem prolonged medical circumstances are unlikely to happen to us, unexpected events can occur and can be costly if not adequately planned for. Special situation planning – a component of holistic financial planning – can help alleviate some of these unexpected costs. But with the absence of a long-term care plan, you’re missing a critical area where a proper plan is vital to your ongoing financial situation. With annual Medicare enrollment approaching (October 15 – December 7), it is the perfect opportunity to start thinking about a protection plan in case you or your loved ones become ill and are unable to care for themselves.

What is Long-Term Care?

Long-term care (LTC) offers various services that help meet the medical and non-medical needs of people with a chronic illness, injury or severe cognitive disorder who cannot care for themselves for long periods. LTC typically involves providing help with Activities of Daily Living (ADLs), which may include bathing, eating, dressing and more. These services help individuals live as independently and safely as possible when they can no longer perform everyday activities on their own.

Retirement Planning and Long-Term Care

Retirement and LTC planning are intertwined, as these are some of retirees’ most prominent expenses. It’s common in our profession to see families depleting their savings or having to tap into all or most of their retirement savings to help pay for LTC. Not all retirees will need LTC, but for those that will – it’s wise to review all your coverage options in the event you need financial assistance for care.

Options to Pay for Long-Term Care

Traditionally, four avenues are used to pay for LTC: government assistance, traditional LTC insurance or hybrid policies, or personal savings. Essentially, you’re choosing to assume the risk yourself or transfer that risk. These options need to be weighed based on your unique financial circumstances.

  • Government assistance – Medicare and/or Medicaid will most likely not adequately cover all your LTC expenses, mainly because of the eligibility requirements to qualify for assistance. In addition, you may be facing additional tax burdens and exorbitant costs if your recovery isn’t at a quick pace. If you are a Veteran, there are benefit options to consider through the Department of Veterans Affairs, which could offer some reimbursement for LTC services.
  • Traditional Long-Term Care Insurance – By self-insuring your LTC plan, you’re choosing to insure with an insurance company where you can choose the amount of coverage, how long it lasts and how long you must wait before receiving certain benefits. It’s common in 2022 for most insurance companies to move away from traditional policies and offer “hybrid” policies where your LTC insurance is coupled with your life insurance. If you don’t end up needing LTC benefits, it can pay a life insurance death benefit to your beneficiary upon your death.
  • Personal savings – Time and time again, we see individuals and families deplete their personal savings to pay for unexpected LTC. Nursing home care in the State of Washington can run anywhere from $5,000-$10,000 a month.1 It brings up the question if your retirement savings is built to withstand the costly undertaking of LTC expenses. If you work to plan ahead, you can preserve your hard-earned savings and use those funds for what they were intended for.

Choosing the Right Solution for You

LTC planning might seem complicated, but it’s ultimately about protecting you and those you love. Each solution type has advantages and disadvantages, so it is essential to speak to a financial advisor who reviews your complete financial picture and can make recommendations that fit your unique circumstances and what works best for your financial goals. We would be happy to discuss how we can help you prepare for the unexpected. Since 1988 Cordell, Neher & Company, PLLC ­­has assisted clients on their path to success by offering tax-smart advice for your complete financial picture you can count on.

  1. com – Cost of Care Survey



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