As we grow older, we often become susceptible to various chronic medical conditions, and in turn, require some form of long-term care to treat those medical conditions. Of course, along with long-term care comes long-term care expenses – which can certainly put a dent in your finances. The following will examine how long-term care expenses can have an impact on your estate plan.
Planning for Long-Term Care Expenses: Why It’s Important
As mentioned above, long-term care expenses can be significant. This is just one of the reasons why having a solid plan in place even before you require any form of long-term care is a good idea. It is very important to note that most long-term care expenses are not covered by Social Security, Medicare or typical health insurance policies. There are different ways you can fund your long-term care expenses, including:
- Purchasing long-term care insurance
- Paying out-of-pocket
Purchasing long-term care insurance
One option for funding long-term care expenses is to purchase long-term care insurance. Long-term care insurance policies cover services that are most often not covered by typical health insurance policies. While policies can be quite expensive, purchasing long-term care insurance can prove helpful should you require services that are not covered by other health insurance policies.
Paying out-of-pocket
Another option for funding long-term care expenses is paying out-of-pocket. While it may seem like expenses could add up – which is entirely possible that they can – if you have enough saved up, opting to pay for long-term care expenses out-of-pocket can be feasible.
You can utilize various assets to help fund your long-term care expenses, including funds held in savings accounts, retirement accounts (including pensions), stocks, proceeds from selling your home and more.
What Are Some Advantages and Disadvantages to Purchasing Long-Term Care Insurance?
There are both advantages and disadvantages to purchasing long-term care insurance. One primary advantage is that, as referenced above, long-term care insurance policies pay for services that are often not covered by traditional health insurance policies.
On the other hand, a disadvantage can be the cost of long-term care insurance policies. Policies can be quite expensive, and may seem unnecessary if you are not currently requiring a type of care that is only covered with such a policy. However, planning is key, and you do not want to find yourself in a situation where you need long-term care and are financially burdened by the costs.
What Are Some Advantages and Disadvantages to Paying Out-of-Pocket for Long-Term Care?
Paying for long-term care expenses out-of-pocket offers some advantages and disadvantages as well. Some advantages include not having to pay for long-term care insurance and also being able to utilize various assets to fund your long-term care expenses.
The major downside to paying for long-term care expenses out-of-pocket is that doing so can drain available funds that you would like to pass on to your heirs.
So How Do Long-Term Care Expenses End Up Impacting Your Estate Plan?
Long-term care expenses can have a significant impact on your estate plan. As you can tell, paying for long-term care is not cheap, and can really put a drain on your assets. This in turn can reduce the available assets to pass on to your heirs. With careful planning, you can determine the best plan for funding your long-term care expenses.
For any questions regarding the impacts of long-term care expenses on your estate plan, or any of your other estate planning needs, we are here to help. Contact us today to learn more about how we can work with you.
For more information regarding various estate planning and elder law topics, view our resources page, where you will be able to find previous blog articles, newsletters and our informative webinar series.
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