The Challenges Of Paying for Long Term Care on Your Own

Sep 11, 2014

By Elder Law Attorney Rick Law. Founding Partner of Law Elder Law – West of Chicago in Aurora, IL

There are many issues that can affect a person’s self-funding options for long-term care. These can include:

• Market conditions – Markets go up and markets go down. In a situation where the market drops and an individual or one spouse in a married couple needs care, there could be pressure to sell assets for the liquidity that is needed to pay for the care. However, any loss in income that results from exposure to the decline in the market may render the family unable to pay for both lifestyle needs, as well as care.  In addition, even if the family does not need to currently invade investment principal to pay for care, they may be compelled to sell assets anyway because they fear that the market may drop even further or fail to recover.
• Liquidity – If the individual or family has most of their assets placed in investments that are hard to liquidate such as real estate or a business, then self-funding the long-term care costs may force them to sell these assets, also at reduced prices.
• Taxes on the sale of assets – When individuals sell assets, they are likely to have to pay capital gains taxes on the gain.
• Lifestyle – The issue of lifestyle should never be underestimated. The income that is generated from an individual’s or a family’s portfolio may be able to support their lifestyle, but will it be able to support both lifestyle and paying for long-term care at the same time,
• Legacy assets – Does the family own inherited property that they intend to pass along to the next generation?

Paying for long-term care out-of-pocket may make this impossible.

In addition to self-insuring out of one’s own assets to pay for care, many feel that their family will take care of them when the need for care arises. Yet as much as family and other loved ones intend to care for their elderly relative or friend, it can turn out to be quite difficult when the time comes. Over the past several years, societal changes have made it more difficult for family members to care for a loved one who is in need of long-term care. The economy has forced many families to split up and move apart.

In addition, many families today have both spouses working. If a family member who needs care moves in, more than likely, one of two things must happen: either one spouse must quit working to take care of their loved one – resulting in lost income – or someone must be hired to give the needed assistance while both spouses work. This also will result in lost income because earned income is now going to pay for the family member’s care.

Although they should not be relied upon as the sole funding source for long-term care, there are several public financing options available to pay for certain types of long-term care services.

There are, however, numerous criteria that a person must meet in order to qualify for financing from these programs. And, even if one qualifies, the benefits received may or may not be sufficient to pay for the entire cost of care that is received.

Too many families needlessly lose everything they have.  Don’t let that be you.  If you need help paying the overwhelming cost of long term care, give our office a call at 800-310-3100.  Your first consultation is absolutely free.  We’ll let you know what steps you need to take, right now, to protect yourself and your family.  Call now, because when you’re out of money, you’re out of options!

Sincerely,

Rick L. Law, Attorney, Estate Planner for Retirees.

Rick was named the #1 Illinois elder law estate planning attorney by Leading Lawyer Magazine. He has been quoted in the Wall Street Journal, AARP Magazine, TheStreet.com, and numerous newspapers and articles. Rick is the lead attorney for Law Elder Law, LLP, focusing in Estate Planning, Guardianship, and Nursing Home Solutions. His goal is to give retirees an informed edge when it comes to dealing with an uncertain future.  Get flexible retirement strategies that work during good times and bad, plus information on how you can save your home and assets from being used to pay for long term care.