Not everyone will wind up needing care in an assisted-living facility in old age, but everybody should plan for it, just in case.
“When people hear the term ‘long-term care,’ they immediately think, Oh, my gosh, long-term care insurance. That’s for old people,” said certified financial planner Marguerita Cheng, CEO of Blue Ocean Global Wealth.
“Just because you don’t talk about planning for long-term care, it doesn’t mean that it’s not going to happen,” she said.
Paying for long-term care can be a costly and complex undertaking if you’re unprepared. Last year the national median annual cost of a semiprivate room in a nursing home was $85,775, according to Genworth Financial.
Cheng suggested using these three questions as guidelines in drafting your long-term care plan.
1. Where do you want to receive care?
Would you rather have a home health aide come to your house for part of the day to help you with certain activities? When you’re older and need a little more help, would you prefer to move to an assisted-living facility?
Both of these options come with different costs: The national annual median cost of a home health aide was $49,192 in 2017, compared with $45,000 for an assisted-living facility, Genworth found.
If you hash out your preferences early in the planning process, you can work with your financial advisor to find a way to pay for those expenses.
Funding options for long-term care costs include a traditional long-term care insurance policy, a hybrid cash-value life insurance policy that can help you cover these expenses, or self-insuring with your own cash — if you have the resources.
Discuss each of these options with your advisor.
2. Who’s in charge of your medical decisions?
Head off familial conflict at the pass by putting in place a health-care proxy — in other words, designate a trusted individual to oversee your medical care and ensure that professionals comply with your wishes should you become unable to communicate.
You might also know this as a health-care power of attorney.
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“You want to make sure that you have documented who is able to help make medical decisions for you,” said Cheng.
3. Who should make financial decisions for you?
“If you are unable to make financial decisions, it’s important to appoint one or two people who can do that for you,” said Cheng.
Consider a power of attorney for your finances: This should be an individual whom you can trust to make decisions over your finances and ensure your bills get paid if you’re incapacitated.
“By planning and talking about this early, you are able to have more control and more choice,” Cheng said.