When it comes to contemplating our own mortality, most people would prefer to continue whistling by the graveyard. And talking about the health issues we may endure if we live to a ripe old age? Not a pleasant topic of conversation either. Despite that, having these sorts of discussions with your clients is an absolute necessity. What if Jane falls and breaks a hip and can’t recover the way she used to? What if Elizabeth develops Alzheimer’s? What if Charlie lives to 100, but requires a nursing home or round-the-clock at-home care for the last 15 years of his life? One of your key roles as an advisor is to ensure that there's a plan in place to protect your clients' retirement savings from these potentially costly medical expenses.
Here, I've compiled a list of 10 long-term care questions you can ask to help guide your clients through these challenging conversations.
1) Do you have any personal experience with long-term care? Some of your clients likely have a relative or close friend who has needed long-term care. What many clients may not know, however, is the likelihood that they or someone they know will need care. Here are some sobering long-term care statistics you may want to highlight:
Among the population aged 65 and older, 52 percent will require long-term care during their lifetimes.
In 2015, long-term care costs in the U.S. reached a total of $225 billion, a dramatic increase from just $30 billion in 2000.
Most long-term care—83 percent—is provided by unpaid friends and relatives.
2) Are you aware that the cost of long-term care depends on where you live? In 2018, the national median monthly cost for an assisted-living facility was $4,000. For nursing homes, this cost was $7,441 for a semi-private room and $8,365 for a private room. But keep in mind that these are national averages. Average costs are significantly higher in New York, for example. Be sure to help them determine the cost (per day, month, or year) of a nursing home or home health care in their area as they develop a plan to pay for this potential need.
3) Do you have family members who will help take care of you? Many individuals hope to rely on family members in the event of a health care emergency. But what if family is far away or just doesn't have the skills to take care of someone with a disability? Then what?
Sometimes, professional assistance is the only option. In this case, long-term care insurance can provide the funds needed for your clients to receive professional care for however long it’s required.
4) Where will you live when you retire? For many clients, their vision of retirement includes moving to another state or even to another country. But have they calculated what it would cost to receive care in their retirement destination?
5) Would your income stream change if you were to become disabled? Here, help your clients determine if their income would increase, decrease, or remain the same.
6) What is your medical history, including your family's medical background? You'll want to discuss longevity and specific conditions that may run in the family (e.g., Alzheimer's disease, Parkinson's disease, or dementia). It's important to stress that the best time to make the decision regarding long-term care insurance is when clients are young enough and healthy enough to do it.
7) What other assets do you have to help pay for long-term care? Depending on what other assets they have at their disposal, clients may need a policy that would pay for the total cost of long-term care or just one that would pay enough to help co-insure the risk. Other assets may include:
A retirement account
Savings or investments
8) Do you have dependents? If your clients have a disabled spouse, child, or sibling, for example, what would happen to them if your clients were to become disabled?
9) What do you need from a long-term care policy? Features like nursing home care and home health care may be valuable for some, but it's vital that clients do the research on long-term care policies and the companies that sell them. Factors like whether a policy will pay for coverage outside the U.S. and the length of the coverage period (e.g., for as long as needed or a set period of time) should also be discussed.
10) Will Medicare and Medicaid help pay for long-term care? There is much to discuss in terms of what Medicaid and Medicare will and will not cover. Here are just a few key points you may want to cover:
Medicaid eligibility is based on modified adjusted gross income and may require your clients to spend their assets down to extremely low levels before Medicaid will pay the bill.
Medicare may pay a portion of the first 100 days in a nursing home, but nothing after that. Plus, it covers only “skilled” care at home, while most care needed at home is actually “custodial.”
Less Pleasant for the More Pleasant
Although not every client will need long-term care, it's important to have a plan in place for this possibility. Asking these long-term care questions can help you guide your clients in achieving the ultimate peace of mind—the knowledge that their financial stability and wishes for their wealth will not be undone by an unforeseen long-term care event. Yes, it’s more comfortable to keep on whistling by the graveyard—until the day it isn’t. By encouraging your clients to have the less pleasant conversations now, you are helping them secure a more pleasant future.
Editor's Note: This post was originally published in October 2014, but we've updated it to bring you more relevant and timely information.
This material is for educational purposes only and is not intended to provide specific advice.