Plan (far) ahead to help parents cover the costs of long-term care
We all want the best for our parents as they age, but many families find themselves unprepared for the financial realities of senior health care. The costs can be significant, and without careful planning, they can deplete even a well-built investment portfolio. Planning proactively will help protect your parents’ financial resources — and your own — while ensuring they receive the high-quality care they deserve.
Start the conversation early
The best time to begin is long before your parents’ health declines. Start by asking them about their own desires and expectations for future care, and what financial preparations they’ve already made. Be sure to involve siblings in the discussion so the whole family is aligned and potential misunderstandings are avoided later on.
Assemble key legal documents
Encourage your parents to establish financial and medical powers of attorney, which authorize a trusted person to make decisions if they become incapacitated. They should also have a living will or advance health care directive, documenting their preferences for medical treatment.
Research long-term care insurance sooner rather than later
One of the most daunting potential expenses for seniors is the cost of an extended stay in a nursing home or assisted living facility. The cost can reach six figures annually, and Medicare offers limited coverage beyond 90 days. Long-term care (LTC) insurance is the best way to guard against these costs, and the premiums may even be tax deductible. However, timing is critical as premiums rise quickly with age, and approval becomes more difficult after 65 or once health issues emerge.
Consider other funding options
Beyond traditional LTC insurance, there are alternative ways to cover long-term care:
- Hybrid life insurance or annuities: Some life insurance policies offer an LTC rider, allowing partial benefits to be used for care expenses. Similarly, some annuities (purchased with a lump sum in exchange for guaranteed income) can increase their payout if long-term care is needed.
- Self-funding: If you’re in a financial position to cover your parents’ health care costs directly, doing so does offer advantages such as freedom from insurance restrictions, and no “unused” premiums if long-term care isn’t needed.
In practice, the best strategy may be a combination of these choices.
As with any complex financial issue, working with experienced professionals can make all the difference. Through a comprehensive and proactive approach, the wealth advisors at Frost can bring together the right team to ensure your long-term care strategy fits seamlessly within your broader picture, helping preserve your family’s security and your parents’ comfort and dignity in the years ahead. Contact Chelsea James at 817.420.5742 or CJames@frostinsurance.com to learn more.
Insurance products are offered through Frost Insurance for solicitation in the state of Texas and are not insured by the FDIC or any other Federal Government Agency; are not a deposit, obligation or guaranteed by Frost Bank; and may lose value.