Many Americans are coming face-to-face with the reality of a parent in need of Long-Term Care.   Far too often, adult children are becoming caregivers for a parent who may no longer be able to live independently, and now recognize that planning for this eventuality would have been a very prudent measure.  

Unfortunately, many families avoid having “The Talk” with parents to discuss how to plan for these life events; often resulting in unnecessary physical, emotional, and financial burdens throughout the family.   If you, and/or your clients, are traveling down a similar path, we strongly recommend you read ‘Having The Talk: The Four Keys to Your Parents’ Safe Retirement‘, by Jack Tatar.

While the book goes into details on a variety of multi-generational planning issues, Long-Term Care planning is at the top of the list.   According to Jack, “all too often these discussions take place too late when mental capacities are diminished or when expectations have been set by siblings and families about what they think their parents want and these unspoken expectations, when unrealized, can cause damage to a family and leave family members angry at each other.”  

Having “The Talk” with parents is part of the process of Long-Term Care planning, however it’s important to understand what lies ahead for Americans as we age, and what options should or shouldn’t be considered.

The lack of family discussions and approriate planning isn’t surprising; especially when you consider families are busy building careers and raising children.  On top of that, it’s hard to envision a time when a parent may need help with even some of the most basic activities of daily living, like eating or bathing.  Fortunately, more and more consumers and advisors are recognizing the reality that Long-Term Care will be needed at some point in the future.  

Accidents or illnesses can strike at any age....

Government studies indicate approximately, 70% of those who reach age 65 will require some period of ongoing assistance or supervision, due to physical or cognitive impairment.    Not only will this care be needed, it’s expensive and costs will continue to rise over time.    According to the John Hancock 2012 Cost of Care Survey, the national average cost of a nursing home is now about $235 a day or $85,775 a year, for a private room……Depending on the location, costs could be higher.   Home health care is usually the preferred method of receiving Long-Term Care services, and while it’s less expensive it will also present financial challenges, as the national average cost is $31,200 per year, for just six hours of care, five days a week.

If parents don’t need care for another 10 to 20 years, they should expect to pay significantly more, particularly if care is required for a long period of time.  Few families are ready to assume these costs, and if they do there may be a significant impact to their lifestyle or hard earned savings.  That’s why it’s so important to have “The Talk” and put a plan in place.  Until then, it's likely you or your clients will hear the following.....

Typical responses from Mom & Dad.....

#1:   “The government will take care of me”

Don’t allow parents to mistakenly believe Uncle Sam will pay expenses for Long-Term Care!!   Medicare and Medicaid are not resources they should depend on when it comes to funding Long Term Care expenses.   Medicare does not cover chronic or age-related conditions resulting in the need for Long-Term Care..... Medicaid will provide coverage for Long-Term Care needs, however becoming eligible there are strict assets and income limitations.   Perhaps the most ominous fact lies in the reality that the changes to both programs are looming in light of the ballooning federal deficit.

#2:   “I’m already covered”

We've adressed Medicare/Medicaid, but Long-Term Care expenses are not covered by individual or corporate medical or disability plans.   Health insurance coverage is designed to pay for acute medical conditions which an individual will recover from, like a broken arm or the flu.  Disability insurance is meant to replace the income lost when someone can’t work due to illness or accident, without anything extra designated to pay for Long-Term Care needs.

#3:   “You will take care of me”

Depending on your family dynamics, this may not be possible.  It may have been a more reasonable assumption years ago, however today's families are spread out across the country and are usually unable take on the responsibility of becoming a caregiver.   For those children willing to assume responsibility for the care of a parent, they will likely find it to be huge impact on their lives and create animosity among siblings.   Most parents, when given alternative through propper planning, want to maintain their independence and don't want to become a burden on their children.

Time to plan ahead.....

Once a family initiates “The Talk”, it’s then possible to determine how to mitigate the financial, physical and emotion risks associated with a parent’s future Long-Term Care needs.   The planning process will help quantify the cost of future care and identify potential solutions to include in plan implementation.   If done properly, a Long-Term Care plan will also augment existing retirement, financial, estate and risk management plans.

Once again, we highly recommend you read ‘Having The Talk: The Four Keys to Your Parents’ Safe Retirement‘, by Jack Tatar.   Whether you’re considering planning discussion for your own family, or the clients you advise, it will be a helpful resource.