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Create a Long-Term Care Plan -- Without Insurance

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The financial woes of long-term care insurers are escalating. Genworth Financial recently announced “material weakness” in its long-term care unit. Rising medical costs, improved longevity and continued low interest rates are taking a toll on an industry many clients will rely on to take care of them in old age. How will that play out in a couple of decades when clients start cashing in on their expensive long-term care insurance?

Read more: 11 Tips on Long-Term Care as Rates Rise

Amid the problems long-term care insurers face, as well as ongoing cuts to social programs such as Medicaid and a dearth of people available to provide the actual care, planners’ thinking must evolve on how to best help clients meet their future needs. What are some components an advisor should address to help clients create the best plan possible?


According to a study sponsored by the National Institute on Aging, home equity continues to be the most important asset for a majority of older Americans. Naturally, people are reluctant to use the equity in their home to finance their longevity. As clients hit their 80s, maintenance becomes a burden. Friends die, neighborhoods change and social isolation ensues. The joy of living in their home has lessened, yet they do not have the fortitude to move to a healthier environment.

Selling a larger home to buy a smaller home may not have much financial benefit. Grandfathered property tax rates may be lost and real estate transaction costs may be high. More often, a client has difficulty accepting a smaller house for little financial benefit. Better ideas include renting in an area where there is good elder support, moving to a continuing care community or exploring the potential of living with family members.

Many communities support policies that encourage aging in place to help seniors avoid institutional living. Day care, transportation, socialization, recreation and civic engagement are available through a variety of groups in most cities. In addition, the federal government has supported these efforts through improved funding. Planners should learn more about these community resources to help gauge the feasibility of aging in place.


Too often, care of an elderly parent is a default of which child lives closest. Unfortunately, the arrangement is implied but rarely spelled out. A child who ends up being the caretaker may spend countless hours and incur significant expense. Long distance siblings may become Monday morning quarterbacks. Yet most parents feel they must split assets equally in their estate plan, often creating family tension and resentment.

A way to mitigate the situation is to identify potential caretakers and create agreements long before the need arises. Financial planners are in an excellent position to help a family negotiate the best process. By sharing a picture of the true cost in both time and money, parents may be more amenable to creating employment agreements, or changing their estate plan to acknowledge the efforts of caretakers. It’s vital to share these agreements with all family members in advance to avoid surprises or insinuations of manipulation.


Most people spend their life accumulating stuff and that stuff can be expensive to keep. Jewelry, collections and valuables should be insured and protected. Create a plan in advance of how these will be sold or given to family members.

Car ownership and driving is typically a touchy subject. Long before they become a danger to themself or others, discuss a client’s view of when they think they should quit driving, and develop a transportation plan. Also compare the full cost of car ownership with the cost of other modes of transportation. If a client drives less than a couple thousand miles a year, paying someone else to drive may provide cost benefits.


It is well documented that the last year of life tends to be the most expensive medically – sometimes more than all the other years combined. A client may need around-the-clock care, and more costs are incurred for services not covered by insurance.

A problem with approaching the end of life is that we often don’t know it is the end. A significant illness may occur, a client endures, but then another medical event happens. They may end up in and out of hospitals, rehabilitation units and nursing homes.

At some point, a client’s quality of life is not acceptable to them, but conversations about when to transition to comfort care from curative care don’t occur. Doctors are trained to do more and families often dutifully follow whatever road the medical system points them down. The emotional, physical and financial burden to the family and society is significant.

What can be done to stop the cycle? Help your clients become empowered patients by documenting acceptable quality of life measures, and sharing those decisions with medical providers and everyone else who has input on their care. By doing so, the medical system will have a better defined end point of when to move away from aggressive curative care to palliative care.

For example, if a client permanently loses the ability to eat, communicate or use the toilet, would they want to be kept going at all costs? By documenting these lifestyle requirements, the client can be provided peace and comfort instead of the medical merry-go-round in their final months and days. Financial savings is a notable byproduct.

Nothing in life is certain, but helping clients lay out a long-term care plan in advance makes it more likely to be followed. By making this an initiative in your practice, advisors can improve the chance that clients will live their last years in peace and financial security, and also keep clients happy with your service as you age together.

Carolyn McClanahan, a CFP and M.D., is director of financial planning at Life Planning Partners in Jacksonville, Fla.


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