Money & Career
Long-Term Care Requires More than Wait-and-See
4/3/2013 10:49:49 AM

Seventy-five percent of people over the age of 65 will need long-term care, according to certified long-term care consultant Philip O'Quin, LPL financial advisor with Rau Financial Group. Unfortunately, a large bulk of that population won't be prepared to face the costs, which have steadily increased every year.

Long-term care insurance is designed to provide a safety net for some of those costs. By investing in a customized premium, the insured can avoid much larger financial burdens down the road, O'Quin said.

"If you don't set something aside for long-term care, you're putting everything aside,” O'Quin said. "If you don't have protection in place, you – or your loved ones – may be faced to use your own assets to pay for care.”

According to the AARP, there's a 68 percent change that people age 65 and older will become disabled in at least two activities of daily living, or of being cognitively impaired. In many cases, unprepared family members step up to the plate. Financially speaking, however, the costs are substantial. O'Quin said the average annual cost of long-term care in Louisiana is nearly $40,000 for assisted living, about $35,000 for home care, and more than $51,000 for nursing home residency.

"The best time to get long-term care insurance is when you're healthy and young. The younger you are, the more affordable it is,” O'Quin said. "It's best to get as much as you can afford, but anything is better than nothing.”

Plans can be designed to fit a person's needs, budget, other insurance and overall financial situation, he added. Some plans also offer hybrid options that couple long-term care and life insurance.

"Most plans also include care coordinator service to help with decisions about long-term care when it's needed,” O'Quin said. "That's a valuable part of the package.”

The investment isn't just for you, O'Quin noted. It's to protect those who may have to take care of you, in the event that you need it. The National Alliance for Caregiving estimates that about one in five caregivers provide more than 40 hours of care per week, including the more difficult tasks such as dressing, bathing and toileting. Those caregivers aren't just nurses or aides, O'Quinn said. "They're loved ones—usually family, and often children of elderly parents,” he said.

Perhaps the most troubling aspect of modern long-term care is the number of baby boomers who currently need—or will soon need—caregiving services, yet choose not to invest in protection, O'Quin said. According to research from U.S. Bancorp, only 20 percent of baby boomers plan to use long-term care insurance to cover those expenses, although studies show that well more than twice as many will need long-term care.

"Baby boomers tend to believe that other sources will be available if and when they need it. As a result, 70 percent have no funds earmarked for long-term health care. They plan to rely on resources like health insurance, Medicare or Medicaid, Social Security or retirement funds. Unfortunately, these types of resources have limitations—sometimes vast limitations—which will become stark when faced with real-world options,” said O'Quin, who explained that baby boomers, or others without long-term care insurance, may be faced with care options that are far below their basic standards. "They'll also realize how quickly that retirement savings dwindles when it has to be funneled toward caretakers or nursing homes. The costs are significant, and increasing eh year. And if that happens, all their years of hard work and saving will be gone much more quickly than they ever expected. The best way to protect your assets for yourself and your loved ones is with advanced planning that includes long term care insurance.”

For more information on long term care insurance or to schedule a free consultation, call Rau Financial Group at (337) 480-3835.

Posted by: Erin Kelly | Submit comment | Tell a friend

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