Financial planning needs to include long-term care needs
By: Chris Farrell
Elder Law Associates Newsletter dated August 24, 2017
Try this experiment. Get together with a group of people — neighbors, colleagues, acquaintances — in the second half of life. Open the conversation with some remarks about aging parents. My guess is at least some will share stories about the stress of taking care of elderly parents.
The Republican health care bill is in shambles, and deservedly so. Among the many disappointments from the current sad state of health care proposals in Washington is the lack of focus on repairing and improving our broken-down caregiving support and long-term care service system.
Families absorb much of the cost of caregiving support, a drain on household finances. Take this representative calculation on the value of informal, unpaid caregiving services for the elderly by the Rand Corp. The figure includes an estimate of the “opportunity cost” of caregiving — money that isn’t being earned because of caregiving demands. Rand researchers calculate that Americans spend more than 30 billion hours a year providing informal elder care at an annual cost of $522 billion.
The “formal care” system is fraying badly. Medicare picks up very little in long-term care expenses. The private long-term care insurance market is a minor factor with premium prices too high for most families. Medicaid is the nation’s long-term care public financing option. But it’s a means-tested program, and qualifying requires impoverishment before joining. The Medicaid long-term care safety net will erode further if the proposed multibillion-dollar cuts to the program are signed into law.
The typical 65-year-old has a 52 percent chance of needing some long-term care services and support, according to the Urban Institute and U.S. Department of Health & Human Services. But needs vary considerably, with 19 percent needing care for less than a year and 14 percent requiring services for more than five years.
An aging population needs Washington to get its act together. In the meantime, people in the second half of life with elderly parents should develop a caregiving plan. Build it into your overall financial plan. Hold ongoing conversations with elderly parents on their living situation and quality-of-life goals.
People in the second half of life with children should also plan for their changing needs. You want to reduce the risk of saddling your children with too much caregiving responsibility. One impact of increased longevity is that anticipating caregiving needs has become an integral part of estate planning.
Chris Farrell is senior economics contributor, “Marketplace,” commentator, Minnesota Public Radio.
Article source : startribune.com