Yesterday, CBS Money Watch posted an article that echoes the calls made by all those who work in New York elder law: failure to account for long-term care costs can torpedo even the most well-crafted retirement plans. Efforts to save assets and create streams of income that can last for twenty, thirty, or more years of retirement is a difficult challenge that most residents spend their lives working toward. Yet, if that goal is achieved without accounting for the needs and risks of specialized long-term care, then it often only represents an illusory security that disappears once health challenges arise.
Even some area families that are careful in their New York estate planning fail to truly appreciate the necessity of combining the planning with real strategies to combat long-term care costs. As yesterday’s story explains, perhaps the best reality check for many planners is learning of their friends who have watched their own parents retirement savings disappear because of off-the-charts healthcare costs. In many cases the money runs out completely and adult children are forced to scramble to cover the costs themselves.
One reason why many continue to fall short in their planning is that they fail to understand the specific types of long-term care expenses that they might face. While nursing home stays represent one end of the spectrum, a more preferable option to most is the use of at-home custodial services. Aid in food preparation, help with personal grooming, guidance with basic medical tasks, and other forms of assistance allow seniors to live in their own home and maximize their independence regardless of the physical challenges they may face. Yet, these services are generally not considered medical expenses, and so they are not covered by federal aid programs.
As our New York elder law attorneys continue to share with clients, the best strategies to protect one’s family and assets from long-term care costs are preemptive. We believe that the best option is securing long-term care insurance (LTCI). This insurance protects both assets and income from long-term care expenses. In addition, it actually allows for the beneficiary to have at-home care provided–letting the individual maintain their regular lifestyle as closely as possible for as long as possible. In addition to LTCI, many families create a Medicaid Asset Protection Trust (MAPT) to help protect assets from future healthcare costs. Some adopt for a MAPT because they are unable to afford LTCI, while others create the MAPT in addition to the insurance.
There is not a one-size-fits-all approach to long-term care planning, but some planning is a necessity for all those who are serious about having a complete retirement strategy in place to protect themselves and their family.
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