My father in-law Dave, a retired Navy admiral, had a Navy Pension and received benefits from an old corporate job. He also got Social Security, owned stocks and had a substantial savings account.
When he died from Alzheimers, every cent he ever had was wiped out - all of it! His pension, retirement fund, stocks, everything he worked so hard to save was liquidated to care for him in his last days. And, he did not have long term care insurance (LTCI).
Today, the cost of in-home care - which is where he was cared for at first - or a nursing home is absolutely voracious. It eats up every asset.
It doesn't matter how rich you are, LTC demands roll over the family finances like an ocean. And, those medical costs often leave behind oceans of debt.
I often tell people, long term care isn't a "health" problem, it's a financial problem. I am not denigrating the person who is ill, I am simply putting the demands in perspective.
Long term care for a loved-one can destroy an entire family's finances. The costs - and ironically they are usually higher at home than in a nursing facility - can wipe out precious funds put aside to pay for college, pensions or retirement funds. As for Social Security benefits, stocks, and savings - these disappear like they almost didn't exist.
Realistically, Is there a solution?
Right now, MEDICAID claims are bankrupting the individual states. In order to stop the hemorrhaging, the Federal Government just created the Deficit Reduction Act (DRA). What does DRA do? It makes it harder, often impossible, for families to transfer assets to make a person "penniless" to qualify for Medicaid. The DRA has closed most loopholes forever.
The Government telling us that the cost long term care is our responsibility. Using MEDICARE for Long Term Care is a myth. (Check your coverage.)
What's left? Since very few of us are millionaires, the only legitimate way to prepare for potential long term care needs is Long Term Care Insurance (LTCI).
Let me tell you what people say about LTCI: "But I may never need long term care. Paying insurance year after year, is a waste of money."
Here's my answer: "My friend, let's both pray you never need long term care, not you, or I, or anyone else in the family. but statistics tell us, that's very unlikely. The longer we live, the more chance we'll get chosen "it's just the way life works."
People also say, "I hear it costs a fortune." Actually, LTCI isn't that expensive, especially if purchased at a younger age. The reason? You can pay premiums for 30 years and just after 3 months being you will recoup every cent of all premiums you ever paid. Think about it.
I'm not thrilled getting older, and I do enjoy life, so wouldn't I be better off using my premiums for a few extra days vacation each year instead? I've thought about it, but no. LTCI is a safety net I'll never give up. I don't want anyone in my family to give back what I worked so hard to leave them. And, I don't want to be a financial burden for my children.
Sam F. Lamensdorf, Jr. is one of the leading authorities on long term care insurance in the country and a guest professor on the subject. Formerly, president of a Fortune 500 company division in an entirely different industry, he considers what he does today of far greater importance. Lamensdorf says, "Benefits do Matter for a quality life, and Long Term Care Insurance is one benefit no person should have to live without."
