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Educating Your Clients About End-of-Life Care Costs

End of life careNo one wants to think about death, much less how much it will cost. But as the population ages and life expectancies rise, it is likely that your clients will need to think about and prepare for their later years, including the possibility of age-related illness. End-of-life care is a financially and emotionally complicated topic, but starting the conversation with your clients long before they might face age-related illnesses is an important first step.

There is no one-size-fits-all approach to preparing for end-of-life care. Variables include a client’s net worth, investments and family history of illness.Additionally, clients need to recognize that the patterns and costs of illnesses vary.No two illnesses are treated the same way, and this can have a big impact on what is covered. Short illnesses whose expenses are primarily medical, for example, are often covered by Medicare. Longer illnesses, such as Alzheimer’s disease, often require custodial care that is not paid for by Medicare. Near the end of life, no matter the disease, hospice care may be provided, and is, for the most part, paid for by Medicare. [For additional information on hospice costs, download the Centers for Medicare and Medicaid Service publication #02154, Medicare Hospice Benefits (updated January 2015).] So, how can you help your clients prepare for this great unknown?

Perhaps the most difficult aspect of planning for end-of-life care is to determine what options clients have for paying for custodial care should the need arise. Unfortunately options are limited, and vary by state. They include long-term care insurance, self-funding, and in certain cases, Medicaid. Long-term care insurance is expensive, and the market for this insurance has been in turmoil over the last few years. High-net-worth clients can choose to self-fund these expenses, but this is not possible for most clients. Unlike Medicare, Medicaid will pay for custodial care, provided the client meets the asset and income limitation tests. Elder law attorneys can help clients understand the complex federal and state Medicaid laws and help the elderly qualify for Medicaid through careful planning.

Have these conversations sooner rather than later. It is difficult to talk about end-of-life care with clients, but you can help them avoid having to make adecision when a loved one suddenly needs care. This is the worst possible time to make these kinds of decisions. Encourage clients to talk with their family members before care is needed to discuss financial resources, how care would be provided and the client’s wishes regarding care. As your clients’ trusted adviser, you play an important role in educating them on these issues, and it starts with having a meeting.

Take advantage of end-of-life care resources from the AICPA PFP Section. PFP Section members, including CPA/PFSTM credential holders, have access to a robust suite of retirement planning resources, including The CPA’s Guide to Financing Retirement Healthcare—a handbook explaining the basic rules of Medicare and paying for long-term care—along with planning tools and adviser responses to commonly asked client questions. Non-members can download a free excerpt of the guide.

James Sullivan, CPA/PFS, Core Capital Solutions, LLC. James has been a personal financial planner and investment manager for almost 30 years. His practice focuses primarily on seniors—those about to retire or those who have already retired. He has written more than 60 articles on a variety of retirement planning topics and also writes a monthly column on aging for the AICPA newsletter, CPA Insider.

Hands courtesy of Shutterstock.



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