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Asset Protection and Long Term Care.

By John Dietz - Email Editor - Editor Bio

Date: 16-Aug-2005

You probably would not think that these two subjects go together, but they do. Unless you’re of the age when you have either needed long term care, or know someone that does, it’s a pretty good bet that somewhere in the back of your mind, you believe that when you reach 65 the government will take care of you.

Ask someone around you about the differences between Medicare, Medicaid, and Medical. Does Medicare pay for long-term care? The questions could go on and on. While these programs can be confusing, what they are certainly NOT is all encompassing.

Let’s take a look at some statistics: You have a 1 in 88 chance of filing a claim on your homeowner’s policy; 1 in 47 of you will have an auto accident; and by age 65, 2 out of 5 of you will need long-term care. How do people currently pay for long term care? Here’s the truth: Most families will pay out of pocket!

The National Center for Women and Aging found that the average lost income of caregivers, including wages, promotions, and social security income was $659,000 per caregiver.

What makes this argument for Asset Protection so compelling is that currently 40 percent of Americans receiving long-term care are under the age of 65. Long-term care does not discriminate. It can strike at any time and devastate a family and their assets for many years. For example, even former President of the U.S., Ronald Regan, had Alzheimer’s for 10 years.

Let’s try and calculate what 10 years of long-term care may cost. The MetLife Mature Market Institute in 2004 stated that the national average nursing home cost is $192 per day or $5700 plus per month. Now the kicker: Costs are rising nearly four times that of inflation. I hope long-term care isn’t pegged to the price of gasoline. The cost for home health care is generally $15 to $20 per hour, therefore, an 8 hour day could easily cost $140.00.

Roccy Defrancesco, JD, CWPP™, founder of the Wealth Preservation Institute (www.thewpi.org) gives a compelling argument for long term care planning when asked if people should buy long-term care insurance:

“Going beyond comfort and care, it’s really economics,” says Roccy. “The average 65-year-old who buys a long term care policy may spend $3,000 per year. Let’s say he/she pays premiums for 10 years before going on claim. They have paid $30,000 in cumulative premiums. Our client’s initial daily benefit of $150 per day has now increased to $233 per day because they selected the 5% compound inflation protection option. Let’s say our client has a stroke, and then enters an assisted living facility. Let’s say the daily rate is close to his maximum daily allowance. In less than 5 months, the client has now recouped the whole premium paid.”

Roccy is also quick to point out that “there are endless lists of insurance options, and it is vitally important for clients to find an advisor who works with all the viable insurance carriers and can help design a LTCI policy that best fits a client’s needs, and NOT the insurance agent’s pocketbook.”

Is long-term care an Asset Protection issue? The long and short is absolutely!

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