Big Changes to Long-Term Care and How It Affects Your Plan
THE BIG THING I WANT YOU TO KNOW:
Long-term care is changing and it affects us all. Because the future is leaning towards universal healthcare for all, now is not the time to invest in a significant long-term care policy.
I want to pick topics that actually impact your life, and this somehow snuck under the surface. There was too much Avengers Endgame and Joe Biden in the headlines to talk about this issue, but this is huge!!
NEWS FLASH: Last week, the state of Washington passed the first state-subsidized long-term care program!!!
I can’t think of one client, 25-years-old or 55-years-old, who has not brought up the issue of long-term care. The reason this matters to you: 1. you are in a place where you’re thinking about long-term care for yourself or your spouse, or 2. maybe you have parents that are grappling with this.
There’s all sorts of reasons, but it’s a really big deal regardless of your age.
a refresher on how long-term care became more and more crazy expensive.
When you get to retirement age at 65 you are eligible for Medicare, because in our country the assumption is that our healthcare comes from where you work. Medicare, which traditionally covers things that healthcare would cover like surgery or the flu, does not cover long-term care expenses.
If you have to go to a nursing home or assisted living home, Medicare is not giving you any money there. And yet, a majority of Americans are dealing with or will be dealing with, at some point, long-term care expenses. And they ain’t cheap!!
what happened was the cost of care skyrocketed and people realized that they really, really needed it, so they didn’t drop the policies? So all of the sudden, these long-term care insurance companies started raising rates.
this is major news in financial planning
OVERALL PICTURE: There’s this risk in financial planning that if someone has to go into a long-term care facility for a number of years and thousands of dollars are spent, a surviving spouse can be left with very little money and still a significant number of years left to live. (Or if you’re single, very little money left to pass on to kids or grandkids.)
The answer to this has long been private long-term care insurance.
THE PROBLEM: The problem is private long-term care insurance, by and large, has been a big, old dumpster fire. And you know this if you have this insurance or someone in your family has this insurance.
When long-term care insurance was first thought of, they had no idea what the cost of care was. Also, insurance companies assumed recidivism, and all that means is that you’re going to buy a policy and a percentage of people who buy that policy will let it lapse.
THE GROWING PROBLEM: But what happened was the cost of care skyrocketed and people realized that they really, really needed it, so they didn’t drop the policies? So all of the sudden, these long-term care insurance companies started raising rates.
People living in retirement right now on a fixed income who bought their long-term care policy twenty years ago are getting notices every quarter that their rate is going up 20%. That’s not just an easy fix, so you can see why this is a massive issue.
Let’s look to the future of long-term care and how it affects you and your financial plan
Regardless of your politics or whether you like the idea of the government spending a whole lot more money to cover this for us, do we really think that in twenty years it will still be a private thing? Or, do you look at the scope of healthcare in our country and bet we’re moving in the direction of some sort of universal healthcare, including coverage for long-term care?
My assumption, politics aside, is the latter. If you look at the platform for Medicare for all, which has been a popular platform for democrats, you know what’s included in that platform? Covering long-term care! Also, consider the current state of Washington and the fact that they just passed the nation’s first publicly funded long-term care premium.
be very cautious about going out and spending a whole lot of money on a significant long-term care policy…
I could be wrong, but the counsel on long-term care, in my humble opinion, is to be very cautious about going out and spending a whole lot of money on a significant long-term care policy, unless you have a lot of disposable income.
If we are seeing a movement towards state-funded, and even perhaps federally-funded long-term care coverage, taking a significant chunk of your money and focusing it on long-term care would not be the wisest option.
Are You Juggling Long-Term Care Questions?
If you’re living in a long-term care situation right now and you don’t know what to do about that, well that’s our job, to look at every aspect of your financial world and figure out how to fit it together to get towards your dream for the future.
Start a conversation with us, and when you’re ready to dig in and figure out a plan to make all of this work, we’d love to do that with you.
All of these changes can feel overwhelming, but we can sit down and make your specific situation clear.