Most Americans lack formal planning for Healthcare In Retirement and Long-Term Care (LTC) in their comprehensive planning, and that’s simply a reality.  Regardless of your advisory relationship with a client, it’s your responsibility to ensure they address this topic, and it may be beneficial to implement a data-driven PROCESS to allow precise, customized planning to fall into place.  The following 4-step process may be a helpful expectation to set for clients.....

Step #1 – You will begin to help clients understand the need for LTC planning and clarify why answers to basic questions on the subject should be found in their financial, retirement, estate, or risk management planning.  Then you can move forward to determine potential risks from Healthcare In Retirement and Long-Term Care. 

Step #2 – Clients should complete a HALO Assessment to quantify the current and future cost of Healthcare In Retirement and LTC based on their health situation, lifestyle, and family dynamics.  This will allow you to more easily explain how and why this unfunded liability may be hiding on their personal balance sheet and must be addressed.  

Step #3 – You will inventory their assets and evaluate their health/insurability.  Doing so will help determine how to achieve the planning targets highlighted in the HALO Report and which of the four available solutions for their LTC Plan is most appropriate and suitable.

• Rely on Family or Friends:  If there are insufficient assets to cover the potential liability, there must be a determination whether siblings or adult children should become part of the discussion.  Are they willing or able to accept the physical, financial, or emotional responsibility role as a caregiver in the future?   It can become quite clear how there are seen and unseen events that make this a potentially disastrous planning scenario.

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• Rely on Government:  If there are insufficient assets to cover the potential liability, you will discuss the need to determine whether siblings or adult children are willing or able to accept the physical, financial, or emotional responsibility role as a caregiver in the future.   If not, and there’s no alternative support system, this reliance can become a potentially disastrous planning scenario.

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• Go It Alone:  Your client might believe "self-funding" is the best choice to cover potential LTC expenses excluded by Medicare, their  Medigap plan, or health insurance, but they should first understand why self-funding this risk is a poor choice.  Then, if self-funding remains your client's intention, that choice can't be considered viable planning until you've made sure the Essentials of Self-Funding LTC are addressed.

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• Risk Mitigation:  There are insurance solutions to cover your future LTC expenses, and you will recommend options that complement their comprehensive financial planning.  Mitigating the LTC risk and transferring the potential liability to an insurance carrier can be advantageous and often as simple as reallocating or repositioning some assets. 

Step #4 – Complete the process of implementing their Long-Term Care plan.

When considering all of life's eventualities, healthcare in retirement is simply a mandatory expense that must be addressed. As your advisor, this should be a reality check:  Will your clients take control of their plans for healthcare in retirement, or will healthcare eventually take control of their plans? 

Please don't hesitate to contact us with questions or to discuss specific client planning scenarios.....

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