The Mandatory Nature of LTC Planning

It's a FACT.....From the day a client receives their first paycheck (Medicare deduction) until the month they pass away after having their final Medicare Part B premiums deducted from social security benefits, healthcare is a mandatory expense.   For some, that could also mean a more significant Medicare premium for higher income earners or the out-of-pocket retiree healthcare expenses project by Fidelity Investments.  Even worse, all the healthcare-related costs mentioned so far exclude coverage for Long-Term Care (LTC), making that a specific planning item that cannot be ignored.  


In a "post-pandemic" world, many of your clients want to make LTC a priority planning consideration, especially when Medicare or health insurance won't cover it, a large percentage of your clients will need some form of it, and too few have planned for it.   Addressing this topic is more than another great way to impact your clients positively, and it simply cannot be ignored.   While Experience tells you many clients won't implement an insurance-based LTC Plan, that doesn't eliminate the risk or the need for formal planning as outlined here: A Repeatable Process Will Bring Clarity to Necessary Planning.


Perhaps the primary reason most advisors and their clients don't consider options for LTC Planning is due to the use of the average need for care and the average cost of care for clients who are not average.  However, you can facilitate the best planning outcomes by encouraging EVERY client to quantify their unique need for care and project what that care will cost with a HALO Assessment Doing so will allow you to explain the "mandatory" nature of LTC Planning to even the most reluctant clients and why they should have a formal plan to access, receive or pay in one or more of the following ways.....


  • 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.
  • Rely on Government:   If insufficient assets cover the potential liability, plans should be set in motion to qualify for Medicaid, including a "spend-down" of assets - based on the state of domicile - to become eligible.  Consulting an estate planning or elder law attorney should be part of your recommendation.
  • 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.
  • Risk Mitigation:  Insuring Long-Term Care may be the most efficient and effective route and can be accomplished in many different ways.  Using various insurance solutions to mitigate the risk and transferring some potential liability to an insurance carrier can be advantageous and easier than you might think.   


Incorporating this approach into your planning discussions will be an effective way to maximize your LTC Planning opportunities.




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