Many Americans overlook planning for long-term care, often until it’s too late. As people age, the likelihood of needing extended care increases. Without a solid plan, they face significant emotional and financial consequences. A lapse in planning can burden families, deplete life savings and even lead to challenging healthcare decisions.
When preparing for the future, long-term care planning is often postponed. This hesitation usually stems from common factors: many people underestimate the costs involved, mistakenly believing that their retirement savings or Medicare will cover all potential needs. Medicare only offers limited assistance, and retirement savings often fall short.
Another problem is a widespread “optimism bias,” which means people assume they will remain healthy enough to avoid extensive care and, instead, live in their homes until they die. This bias can lead to inadequate preparation, leaving individuals and their families unprotected. Many people are also unaware of the often-staggering costs of long-term care, which can prevent them from seeking guidance or preparing a plan.
The costs of long-term care are often far greater than people anticipate. Nursing homes, personal care/assisted living facilities and in-home care have high price tags. Individuals frequently deplete their savings or burden family members with costs that can strain their finances.
In 2023, the national median annual cost for a private room in a nursing home was around $108,000, and the expenses continue to climb yearly. Medicare only covers certain short-term care services, meaning most long-term expenses come out-of-pocket unless covered by long-term care insurance or Medicaid.
Failing to plan for long-term care can lead to rushed decisions during a medical crisis, limiting available choices. An excellent approach to avoid this involves several steps.
Assessing future health and financial needs is crucial. It is helpful to consult with medical professionals to discuss possible health outcomes based on personal and family history, which gives a clearer picture of what care needs may look like in the future. This insight should then be paired with a financial assessment to understand the potential costs.
Long-term care insurance may be a practical solution. The financial support it provides can help cover substantial care costs and protect assets. While this may not be an option for everyone, it can be an invaluable safety net.
Another important step is engaging in open discussions with family members about care preferences and expectations. This ensures that future care needs align with family capacity and that loved ones are informed of any plans in place.
Having essential legal documents is a vital part of long-term care planning. Without these, family members may struggle to make decisions or manage finances. These documents include a Will, a Financial Power of Attorney, a Health Care Power of Attorney and a Living Will.
A Financial Power of Attorney authorizes a trusted person to make financial or legal decisions on behalf of an individual, providing essential protection if they become incapacitated. This document, if properly drafted, also allows your trusted person to move your assets in such a way that you may be able to qualify for Medicaid while setting aside an inheritance for your heirs. A Health Care Power of Attorney outlines medical preferences, allowing families to avoid making difficult choices without clear guidance. These documents protect individuals' wishes, while sparing loved ones from unforeseen decisions and legal battles.
Beyond finances, neglecting long-term care planning also affects emotional health. Families frequently experience stress and guilt when forced to make hasty decisions or absorb unexpected costs. Planning allows individuals to communicate their preferences while they still have capacity to do so, minimizing guesswork for loved ones and reducing emotional tension.
Consider the story of Steven and Nancy Braun, which KUNC brought to light. After Steven suffered a traumatic brain injury in 2019, Nancy cared for him as he experienced three years of progressive dementia. Eventually, he started to forget who she was and became frustrated and aggressive, thinking his wife was a stranger in his home. When she finally accepted that long-term care was necessary, it took weeks to find a solution.
Long-term care planning goes beyond creating a Will or funding a retirement account. It involves building a buffer against the potential financial impact of care expenses. By not planning, many fall into common traps, including depleting savings, placing financial strain on family members, or limiting future care options. Without insurance or other backup strategies, retirement funds can erode quickly. Family members may also feel compelled to take on these costs, leading to financial stress, conflicts and other bad outcomes.
Working with a lawyer or financial advisor can help you understand options, like Medicaid and asset protection. Contact our life care planning law firm, Curran Estate & Elder Law in Berks County, Pennsylvania, today to start preparing for the future and protect yourself and your loved ones.
Reference: KUNC (May 31, 2024) "Older Americans Often Don’t Prepare for Long-Term Care, From Costs to Location to Emotional Toll"
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