September 5th, 2019 | Kelli Young

Long term care, why should that subject and mapping out a proper plan be so important to me?

Few of us have gone without a sleepless night or two wondering or worrying about what will happen should we face a long term care event. Often this is prompted by a family member or friend needing help, then wondering “what if it had happened to me”?  Few of us go into new territory without a map or GPS in hand to guide us. Yet most of us rationalize not creating a proper plan for future care by talking ourselves into believing it’s not going to happen to us.  Unfortunately many will need to transition to care at some point.  In fact, if you are a couple that reaches the age of 60, there is a 70% chance one will need care and 50% underestimate the costs involved in such care1. We all need to have a clear understanding of what long term care involves and a map for how this care is to be provided.

Government at all levels has been taking notice of these increasing costs and are very concerned about the number of uninsured Americans- as high as 90%.  The expected pressure this transfers to state budgets has been called a slow moving train wreck. The reason for this concern is once families spend down all their resources, Medicaid takes over for certain types of skilled care, which is funded by individual state budgets. 

Washington State recently announced they are offering the first public long-term care plan.  It will take several years to finalize the details but is intended to provide support for caregivers, and other limited care whether it be needed at home, assisted living or nursing home. (There will be strict parameters in order to access the insurance, and many details are unknown at this time.)  In its current form the benefits will pay up to $36,000 of benefits per vested resident2. This new plan will be funded through mandatory W-2 payroll taxes of $0.58 per $100 of earnings for every Washington resident. With a start date of 2022, partial benefits can start after 3 consecutive years of payroll deductions, earliest in 2025. Often, family members, primarily children, are the ones providing support for their parents so Washington hopes this will provide some relief financially, to both the families and the state Medicaid system.

Living a long life may very well be in your future.  When your children or prospective care givers are faced with the decisions required to care for you and don’t know what your wishes are, or how best to pay for your care, this can cause untold stress on your loved ones.  Most important: A map for extended care is an essential element in your retirement portfolio, from where most dollars are extracted once care begins. This may incorporate the partial benefits that the new WA LTC Trust plan provides, if you’ve paid into it and vested. If you don’t have a written plan in place, it’s critical for you to work through all of the necessary details with your investment advisor.  This includes talking about family health history and walking through several scenarios of care; not only how to achieve each but mitigating the effects on your family and your investment portfolio. If your advisor isn’t comfortable with or does not specialize in this topic, find someone who is! 

Miller Advisors, Inc. is a SEC Registered Investment Advisor. The information contained in this report does not purport to be a complete description of securities, markets, or developments referred to in this material.  The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Expressions of opinion are as of this date and are subject to change without notice. Past performance does not guarantee future results.

Sources: 1 How Senior Care Impacts Families Financially, Emotionally and in the Workplace, Care.com, 2016. Most recent data available used. 2. https://www.agingwashington.org/files/2019/02/2019-Long-Term-Care-Trust-Act-Factsheet.pdf