November is long-term care awareness month, so it seems to be an appropriate time to walk through what long-term care is and options for paying for care.
Whether you are single or in a committed relationship, it is hard enough to take care of the challenges of day-to-day living without having to worry about planning for the future. Despite your hectic life, you may have already taken the time necessary to plan for retirement and for your life insurance needs. However, not enough people have taken the time to evaluate the need for long-term care.
What is Long-Term Care? Long-term care is the service provided by someone helping you manage your day-to-day routine. Typically, this would occur if you could not perform several activities of daily living (commonly referred to as ADLs) on your own. These ADLs could include eating, dressing, bathing, toileting, or ambulating. Cognitive impairments such as Alzheimer’s or Parkinson’s could also warrant long-term care. Those receiving this care could reside at home, an assisted living, or nursing care facility.
What are the Costs? Several factors affecting the population today make long-term care and the costs associated with this care a growing concern. According to a study by the U.S. Department of Health and Human Services, nearly 70% of those aged 65 and over will need some form of long-term care during their lives 1 . A 2018 study from Genworth estimates that a private room in a nursing care facility costs an average of over $100,000 per year 2 . You can see the potential for your retirement assets to suffer greatly if you required nursing care. Worse yet, the costs could escalate should you require in home or assisting living care prior to or after your stay in nursing care.
What are Your Options? Depending on the level of your assets and income, you may elect to self insure, spend down your assets and rely on Medicaid, or purchase long-term care insurance. For those who have a higher net worth, you may be planning on using those assets for your long-term care needs. If you are single and not planning on leaving an inheritance, you may also decide to spend down your assets to provide for your care. Using your own assets and income for long-term care provides you with the greatest flexibility on when to begin care, what type of care you receive, who provides the care, and where the care is administered. The downside to self insuring is that you may wind up using most or all of your assets to provide for your care.
Often people with more limited assets and income may rely on Medicaid to cover their long-term care expenses. Medicaid will require that you spend down your assets and leave you with minimal income should you require their benefits. Medicaid does allow a spouse to maintain some income and assets while his/her spouse is receiving Medicaid payments.
If you want to protect your assets, your income, and your right to choose your options for care, you may want to look into long-term care insurance. When purchasing insurance, you often have the ability to choose your elimination period (length of time before benefits begin), length of coverage, benefit amount, inflation protection, and level of home care (other benefit options may also be available). By adjusting the options, you may create a policy that helps to meet your protection needs while fitting into your budget.
Since I have been in the industry, I’ve noticed a distinct trend with regard to long-term care insurance: the benefits seem to be decreasing while the cost of coverage increases. In some cases, insurance companies have been increasing premiums for people who already have policies in place; and I don’t believe that this trend will stop anytime soon. As a result, you’ll need to consider what’s best and most affordable for you now as well as to prepare yourself for the likelihood of a future rate increase.
I typically view long-term care insurance as a need for couples and individuals who can afford to insure their ability to maintain choice later in life. Couples need to protect income and assets for each other should one of them need some sort of care for an extended period of time. Individuals more often don’t need coverage unless they’re looking to preserve their choice-of-care options.
If you’re single, you’re likely more focused on preserving choice. Evaluate your pension and Social Security income as well as potential income from your investments to determine how much long-term care insurance you may need. Keep in mind that if you require care, you won’t have many of your current daily expenses and could sell your home in order to help meet assisted-living or nursing-care costs.
If you have a higher net worth and want to protect some of your assets yet don’t like the idea of annual premiums that could increase, you can look to a life insurance policy that contains a long-term care benefit. Often these policies allow a single, upfront premium to cover the cost of the insurance. In exchange, the insurance company will provide a benefit payable at your death (usually higher than your initial premium payment), long-term care coverage, and/or the ability to withdraw some or all of your initial premium and cancel the policy.
When we look at long-term care for clients, we help clients understand their choices and help them make a decision that fits their current budget, health concerns, and future goals.
The opinions voiced in this material are for informational purposes only and are not intended to provide specific advice to any individual. Consult your legal, tax, and/or financial advisor to determine what is appropriate for your situation.
Long-term care insurance policies contain exclusions, limitations, reductions of benefits, and terms for keeping them in force. Your financial professional can provide you with costs and complete details. All policy guarantees are based upon the claims paying ability of the issuer.
2 Genworth 2016 Cost of Care Survey, conducted by CareScout ® , June 2018
Events & Sponsorships
Debbie did great at her first marketing event. The Home and Garden show was slower than expected, but that didn’t dampen Debbie’s spirits. She’s already scheduling appointments with people she met at the show. If you’re interested in meeting with Debbie for an appointment, call the office at 410-732-2633 or email Debbie at email@example.com . All new clients meet with both Woody and Debbie and have two pairs of eyes looking over the clients’ financial information.
Giving back to the community is a passion of ours at Partnership Wealth Management. Last year we donated to over two dozen silent auctions and sponsored events for FreeState Justice , Blue Water Baltimore , Women’s Law Center of Maryland , Charm City Rooftop Day , and, of course, Paws for a Cause .
Additionally, PWM is a member of the National Gay and Lesbian Chamber of Commerce (Bronze Pioneer), a Partners member of HRC, the Maryland LGBT Chamber of Commerce, the EPA’s Green Power Partnership, the first member admitted into Maryland’s Green Registry, Businesses for the Bay, the Canton Community Association, the Catonsville Chamber of Commerce, the Capital Area Gay & Lesbian Chamber of Commerce, and the Financial Planning Association.
Woody serves as the treasurer for FreeState Justice and is the co-founder/president of Paws for a Cause. He has also served on the boards for Equality Maryland, the Canton Dog Park, and the Baltimore Humane Society.
Debbie will soon be volunteering for Invest in Girls by teaching girls in high school the basics of financial planning. She’ll also serve on a panel to help inspire girls to get into the financial field after graduation.
In the past, Debbie has volunteered for Best Buddies, Relay for Life, and National Safe Night Out.
Away from the Office
Woody will be out of the office.
Wednesday, November 21st
Debbie will be out of the office.
Thursday, November 22nd & Friday, November 23rd
Our office will be closed for Thanksgiving and the day after. Have a wonderful holiday with your loved ones!
We are always accepting donations for the local animal shelters- toys, tennis balls, collars, leashes, food, cat litter, cardboard trays, office supplies, cleaning supplies, towels, mats, washcloths, etc. We will accept donations Monday-Friday between 9am & 5pm.
Elise is getting her first real taste of Halloween this year. In past years at her former school, they did an intentional day so that kids learned more about different cultures. Without a costume to wear during the day, she was content to hand out candy to the kids coming to our house. This year, she’s been all abuzz about dressing up as Ladybug Girl. We’ll be trick or treating with her friend Maya and family. Heidi will be Ladybug Girl’s friend Dragonfly Girl and I’ll be Bumblebee Boy. (for context on the Bug Squad from the Ladybug Girl series) We can’t wait!
Fall is full of birthdays and anniversaries. October’s big event was Heidi’s birthday. Heidi and I took a little adult time to have an overnight in DC’s up-and-coming District Wharf . We watched a concert, ate dinner, and walked around the waterfront. A nice and relaxing night away for us both.
As a Registered Investment Advisor (RIA), Partnership Wealth Management is committed to providing our clients with financial planning and wealth management services to help them work towards their financial goals. At Partnership Wealth Management, we have a long history of working with the LGBT community. Among the many services we offer are financial planning and estate planning strategies for gay and lesbian couples. Financial planning is an important part of preparing for the future; contact us today to get started.
Partnership Wealth Management (PWM), is a registered investment advisor located in Maryland. PWM and its representatives are in compliance with the current filing requirements imposed upon registered investment advisors by those jurisdictions in which PWM maintains clients. PWM only transacts business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements.