Is Self-Insuring a Good Option to Fund a Long-Term Care Crisis?
Does self-insuring make financial sense for your client? Should your client use their own money to fund their care when they become dependent?
The downsides of self-insuring
Your client may need care longer than expected or care may cost more than expected. For the average woman who may need 3.7 years of care, costs for professional services can range from about $203,000 for home healthcare services to over $391,000 for Skilled Nursing facility care. Men, whose average need is 2.2 years, may incur a total cost of $120,000 for home healthcare services to over $232,000 for Skilled Nursing facility care. These averages are based on today’s dollars – healthcare costs especially for long-term care services have been increasing rapidly due to staffing shortages and supply and demand.
Depending on how long care is required, there might be less of an inheritance than expected. Are the assets ear-marked for an inheritance or a charity? If these assets are used for care, how would that affect the beneficiaries?
Their spouse’s lifestyle may be affected if assets are depleted for their care. Will there be enough money left for their spouse to travel, pay day to day expenses or even their own long-term care needs when they become dependent?
Family members may delay needed care because they are afraid of running out of cash. It’s always easier to spend someone else’s money (the insurance carrier). Oftentimes, family members delay hiring professional care because they are hesitant to spend money. Also, if they don’t hire professional care, the care burden falls on the family members.
Are their assets subject to changes in the economy? Many investments can fluctuate over time and world circumstances. Investments may not be as lucrative today as they were yesterday. Is there a tax consequence that needs to be considered?
Long-term care insurance is usually recommended for those under 65 years old with a net-worth of $200,000 to $2,000,000. Under $200,000 is typically not financially viable since Medicaid will kick in once assets are depleted or planning is established with a **Medicaid Compliant Annuity purchased through an Elder-Care attorney. Over $2,000,000, they will most likely have enough assets to pay for care from their assets. For those that fall in between, the protection that comes with long-term care insurance often makes sense. Long-term care insurance can act as a coupon - leveraging your client’s money to be used at a later date. For information on the long-term care policies available in your state, please contact our marketing team at 1-800-945-1953.
** Krause Financial Services (our parent company) is the creator of the Medicaid Compliant Annuity (MCA) – please call us to be connected with one of our Attorneys in your area if you are interested in discussing the advantages of the MCA