Elder care planning: An important part of the long-term care message

Elder care planning is essentially a comprehensive strategy that helps define a senior's wishes and assists designated caregivers and/or advocates in handling the physical, personal and financial affairs of a senior aging into the last phases of life. Long-term care (LTC) is just one, very important segment of total elder care planning.

Unfortunately, LTC as well as other elder care issues are topics of discussion often avoided or put-off by families. But planning for elder care is one of most important discussions a family can have.

When planning takes place at the eleventh hour, mistakes can happen and opportunities are lost. Helping clients become aware of what issues should be in order and how important planning is for an elder's comfort shows the client the total value you bring as an advisor.

Discussing long-term care and elder care issues takes time and should be done step by step, with compassion. Unless you also practice as an attorney, you likely won't be the person to implement some of the elder care plan's steps. But you can provide a checklist your clients should consider completing, and if your clients lack the appropriate professionals to help get their plan in order, you can refer them to one of your recommended contacts, such as an attorney.

Getting paperwork in order

It is important not only for legal documents to be up to date, but also for copies of these documents — as well as other pertinent information relating to identification, health and finances — to be in the hands of a family member willing to act as an advocate. Some parents find this difficult, especially when they're not comfortable discussing their financial affairs with the children. At the very least, parents should disclose to a trusted adult child (or other advocate) who their financial advisors are and provide information about and the location of financial accounts.

Here's some of the crucial information that should be organized, up to date and easily available to the person who will be handling the affairs of a loved one.

Financial checklist	Health care checklist	Parents' advisors	Basics
Wills	Living will	Financial advisor	Driver's license or state-issued ID
Trusts	Health care power of attorney	Lawyer	Insurance cards
Durable financial power of attorney	DNR (do not resuscitate) order	Accountant/tax advisor	Medicare, VA, Medicaid cards
Life insurance and annuities	HIPAA release form	Religious counsel	Phone numbers of friends
Investments	Health insurance policies	Doctors	Safe deposit box
Bank accounts	Long-term-care insurance		Marriage records
Charge cards	List of medications		Military records
Burial plots & pre-paid funerals	End of life wishes (discussion)		Copies of birth and death certificates

Helping with long-term care planning

The risk of needing LTC increases with age. According to the 2012 Medicare Handbook, a person at age 65 has a 70 percent chance of needing some type of long-term care during the remainder of his or her lifetime. Yet, too many families have no plan in place.

While adult children and parents should talk together about potential LTC needs that could arise, these conversations can be unpleasant. Too often, they take place too late, after a parent's poor health may no longer qualify him or her for a policy. Delay in taking action also runs the risk that the parent will be at an age when premiums are too high to be affordable. The results of postponing the conversation and implementing a plan can have a huge impact on the entire family.

Questions a family should consider in preparing for LTC needs

Most people would like to stay in their homes as long as possible or at least receive care from a community-based service, not a nursing home. Unfortunately, families attempting to save money often think they can handle care themselves. Mom cares for dad, and then the adult children care for mom. Sounds good on paper, but there are some pitfalls a family should think about and discuss, including:

Do you have the physical ability and training to give quality care to your spouse or parents?
Have you thought about how you would pay for care and what it would cost, if needed?
How would paying for long-term care affect the financial security of your spouse?
How long would your assets last if you were saddled with long-term care expenses?
Are you aware that health insurance doesn't cover LTC expenses, and that Medicare offers only 100 days of care under limited circumstances and with significant co-pays after day 20?
Are you aware that Medicaid only kicks in after you're broke and limits your care choices?

For those assuming their children will tend to their care, here are some additional considerations:

Are your children aware of your intentions?
Can your child financially afford to quit work or substantially cut work hours to provide you care?
Where do your children live? Would you be willing to move so your child could care for you?
Siblings may not agree on what constitutes a fair split when helping with the cost of a parent's care.
Siblings may not agree with how the primary advocate is handling the LTC plan for the parent.
Dissention may occur when care falls primarily on one or two family members.

Offering solutions

Some people object to traditional long-term care policies for many reasons, but there are other solutions offered today that provide a payout no matter what direction life takes. One of these solutions is for the client to purchase a rider on his or her life insurance policy that will allow the death benefit to be used to pay for qualifying LTC expenses. The advantage of this solution is that any unused portion of the life insurance death benefit will be paid to the client's beneficiary, eliminating the risk of "leaving money on the table."

Adult children concerned with footing their parents' long-term care bill may also want to consider purchasing, and being the beneficiary of, a life insurance/LTC combo policy on their parents to minimize the potential financial risk to their own savings. (Please consult your tax professional on the exemption to gift tax rules for the direct payment of health care expenses this concept may offer).

A well thought-out strategy that includes both elder care and long-term care planning will help families work together and ensure better care without sacrificing the health or financial well-being of a spouse or adult child caregiver, thus helping to maintain a longer, better quality of life for all concerned.

For more on estate planning, see:

Rich or poor, we're worried about health care

Unclaimed life insurance benefits: How agents can help

Endangered estate planning tools? At least we still have life insurance