Not having a long-term care plan can put your family at financial risk.
A government report estimates a vast majority of those over 65 will end up needing long-term care. However, many people do not have plans to meet the expenditures, according to Westfair Online in “Keybank poll reveals clients aren't planning for long term care.”
A U.S. Department of Health and Human Services report found that people age 65 and older have a very good chance—70%—of needing long-term care. Despite this, most people do not have plans in place.
This is true for people with assets exceeding $1 million and for people with more modest assets. In a study by Keybank, fewer than a quarter of high net-worth clients had plans in place for long-term care. This poses real financial risks, to the individuals and their families.
Consider the costs of long-term health care. One study from Genworth Financial reports that in 2017, the national median cost of a home health aide was roughly $49,000 a year, assisted living facilities could cost $45,000 (that's not including medical services), and a private room in a nursing home came close to $100,000 annually. Costs vary by region, so if you live in an expensive area, those costs could easily go much higher.
Why don't people plan ahead for long-term care? Perhaps they think they will never become ill, which is not the case. They may think their health insurance will cover all the cost, which is rarely the case. They may believe that Medicare will cover everything, which is also not true.
Everyone's hope is that they are able to be at home during a long illness or during their last illness. However, that's often not a choice we get. This is a topic that families should discuss well in advance of any illness. Talking with family about potential end-of-life care and decisions is important for setting expectations, delegating responsibilities and avoiding unpleasant surprises.
The other part of a long-term care discussion with family members needs to be about estate plans and decisions about the disposition of assets. Everyone should have a will, and all information including deeds, trusts, bank and investment accounts and digital assets should be discussed with the family. You'll also need a power of attorney and health care proxy to carry out your wishes. An experienced estate planning attorney can help create an estate plan and facilitate discussions with family members.
Reference: Westfair Online (Sep. 7, 2018) “Keybank poll reveals clients aren't planning for long term care”