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How Healthy is Your Long-Term Financial Plan?

| October 22, 2018
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When it comes to long-term planning, the realist has an edge. No one wants to think about the prospect of his or her own failing health, but considering it now, in the short run, may make your future more comfortable and secure. One of the most important realities to face is that as people’s longevity has increased so has the need for long-term care(LTC). While the services available for assistance, such as nursing homes, assisted living facilities (ALFs), adult daycare centers, and in-home care options, have expanded and improved to keep pace with the “graying of America,” public programs and private health insurers have not necessarily adjusted to make long-term care a funding consideration. 

The Real Need for Long-Term Care 

Long-term care refers to the broad range of services that assists those with chronic conditions in performing the essential activities of daily living (ADLs), such as getting around the house, dressing, bathing, or eating. A person is generally considered to be in need of long-term care if he or she has difficulty performing two or more ADLs, because of physical limitations, cognitive impairments, or both. 

Already, increased longevity has spurred a “Sandwich Generation”—people who have the dual responsibilities of caring for aging relatives, as well as children. With limited coverage for long-term care provided by public programs and private health insurers, the burden of costs and services often falls on younger generations. 

Funding Realities 

No public program—neither Medicare nor Medicaid—is specifically designed to fund long-term care. While many people mistakenly assume Medicare will cover the costs, it actually only covers short-term care. Medigap—private health insurance intended to supplement Medicare—also generally does not pay for costs associated with long-term care. As a result, Medicaid has become, by default, the primary funding source, but an individual must be in a position of financial need to receive assistance. 

Get Real Now 

Planning early is important not only for your own emotional and financial well-being, but also for the peace of mind of family members who may need to provide assistance in the future. Thinking about long-term care in the short run may put you closer to the quality of life and financial independence you seek in the long run.

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