CPAs Stress the Importance of Long-Term Care
There is no way to sugar coat it, readers - we are all getting older. I remember when I was a teenager, I would complain about the aches and pains I would get from playing sports and my father would say to me with a wry smile “wait until you get older.” My health was not an issue I wished to consider back when I was a teenager, and I don’t particularly like thinking about it now – but there is certainly no getting around the fact that the older we get, the more important it is to have a plan in place to deal with health issues as they arise.
According to the U.S. Census Bureau, between 2010 and 2050, the U.S. is projected to experience rapid growth in its older population. In 2050, the number of Americans aged 65 and older is projected to be 88.5 million, more than double its projected population of 40.2 million in 2010. This means that an increasing number of Americans will be making important decisions about their long-term health in the coming years.
One such option is long-term care – defined as broad support and health services for anyone of any age who has a reduced capacity to care for themselves because of some form of impairment. That impairment, which could be mental or physical, severely limits their ability to perform certain activities of daily living, such as feeding and bathing oneself. According to a recent John Hancock study, the average yearly cost of long-term care ranges from $39,240 at an assisted living facility to $85,775 ($235 per day) for a private room in a nursing home. With such steep costs, it is important for older Americans to determine if they are likely to need long-term care insurance as they grow older.
Ted Sarenski, CPA/PFS chair of AICPA’s ElderCare/PrimePlus Task Force, has provided 5 questions to ask when considering long-term care insurance:
- Have you included the cost of in-home nursing care or in-home cleaning and maintenance services in your retirement budget?
- Does your family have a medical history that includes longevity and/or dementia?
- Do you have family who live nearby should you need help or are they scattered all over the country?
- Do you know the cost of LTC insurance and/or do you know the cost of daily care should you need it?
- Do you know most of today’s LTC insurance policies cover in-home care, which is the preferred method of care for most of the aged?
Of course, the variables to consider in each person's situation are complex. And the market for long-term care insurance is rapidly evolving. Twenty one major insurance carriers no longer offer coverage, for instance, and premiums are under pressure because of today's low interest rate environment. That means the decision on whether and how to get a policy can be a complicated one. One way to make sense of it all is to consult with a CPA/PFS about which options that make the most sense for your family or loved one.
Sarenski and Leonard Wright, CPA/PFS, recently conducted a detailed free webinar on Long-Term Care.
The AICPA PFP section has an entire library of resources focusing on elder planning issues available to PFP/PFS members. Recent additions include the following:
- The CPA’s Guide to Social Security Planning, authored by Theodore Sarenski
- A Guide to Financial Decisions: Implementing an End-of-Life Plan presented by the PFP Division and 360 Degrees of Financial Literacy
- The CPA’s Guide to Financing Retirement Healthcare authored by James Sullivan, CPA/PFS
Romantic seniors image via Shutterstock.