Managing Money: Don’t Be Shortsighted, Start Preparing for Long-Term Care

Financially speaking, planning for your future entails a certain degree of foresight.

It's hard to sit down right now and predict exactly where you'll be in 10 years, 20 years or even further down the road. And while looking ahead to the joys of travel, relaxation and other benefits we typically associate with retirement, it's easy to overlook unexpected events that may occur during that time — or even sooner.

When you think about building your nest egg, you probably have goals in mind for what you want to accumulate, and you may even have ideas on how you will spend that money. But long-term care is probably one of the last things that comes to mind. Unfortunately, more than a few of us likely will be affected in one way or another by a serious illness or injury that will require some form of long-term care. The prospect of depleting your hard-earned retirement funds to pay for such care is frightening. However, if you take the time now to plan ahead, you can be financially prepared should you ever find yourself facing this type of situation.

Long-term care refers to the assistance you may need as a result of a disability or prolonged illness. It usually encompasses a broad range of supportive medical, personal and social services designed to help people who simply can't meet their basic needs to live independently for an extended period of time. This type of assistance can be given either in the home or at a long-term care facility.

Funding for long-term care can be expensive, depending on the length of time and the specifics of the type of care required. For these reasons, you should be careful to assess a variety of possibilities and develop a plan that could cover different situations. Here are three basic ways you can fund long-term care:

• Self-insurance: If you have assets that can be easily converted to cash, you can plan for long-term care by setting aside a special fund just for that purpose. Investments such as an IRA or annuity provide a means for money to accumulate until an illness occurs.

The main advantage of insuring yourself this way is that the money will be available for other purposes if you never need it for long-term care. On the other hand, the main setback of setting aside your own funds is the possibility of falling short in your savings, causing you to dip into other funds to pay for long-term care.

Also keep in mind, taking large distributions from an IRA could affect your income taxes. If you take it upon yourself to establish the funds, make sure you plan carefully so you will have enough if you need it.


We wanted to establish a bit of extra income. There was a good recommendation about ImmediateAnnuities.com on CNN. We also liked that we could see excellent reviews about them on Google. They were very thorough from our first inquiry to when we decided to buy our annuity from Mass Mutual. They always answered our questions promptly and followed up with the insurance company, too. We have been receiving our monthly payments since last November and couldn’t be happier. What more can we say?
Keith and Samantha Isley
Read 650+ verified reviews
• Medicare, Medicaid and health insurance: Many people believe they can count on their current health insurance, Medicare or Medicaid to pay for long-term care expenses.

Unfortunately, most health insurance policies do not cover the costs associated with long- term care. While Medicare offers medical benefits to eligible seniors, its long-term care benefits are very limited. Medicaid, designed for individuals who do not have the income or assets to pay for long-term care, requires that you first deplete most of your assets (with limited exemptions) before you can qualify. Relying on any of these three options could put you in a bad position if you eventually require long- term care.

• Long-term care insurance: While providing tax-free benefits, long-term care insurance offers specific protection against the high costs of extended health care. For a simple monthly premium, you get a policy that pays a fixed dollar amount for care you can receive in a variety of settings, including your own home.

This specialized insurance can help you avert spending your assets, and may even allow you to maintain your lifestyle without suffering from the financial burden of long-term care costs.

However you decide to prepare for your future health care needs, just be aware that you eventually may need the services of long-term care.

Planning accordingly can help you avert a financial disaster down the road.

Source: naplesnews.com - 07-14-2004