Affordable Strategies for Extended Care Funding

Advice: It is a responsibility of financial advisors to help their clients understand what a care event looks like for them.

How much of their income will need to be diverted to pay for care? Which assets can be earmarked for liquidation? What are the implications of those assets no longer being available for future income needs? What strategies, including insurance, can help address mitigate the financial consequences?

Can’t get: Awareness of the need to plan may increase as we get older as the impact of aging begins to turn from concept to reality.

The problem is that the older we are, the more difficult it becomes to own insurance protection.

Ultimately, it may not be your budget that limits your options: It may be your health.

Advice: Short-term care plans typically include simplified eligibility requirements.

This means significantly higher application acceptance rates, even when someone is not of optimal health.

The result is people in their 60s, 70s, and 80s may still be able to own meaningful insurance protection.

Missed opportunities for newly Medicare eligibles: The advice given to those approaching age 65 tends to focus on “Medicare advice,” discussing programs such as Medicare Advantage, Medicare supplement, and a Medicare prescription drug plan.

What gets overlooked is this may be their last opportunity to fully plan for their health care needs in retirement.

Insurance solutions may be too expensive or inaccessible due to their health if they put off planning even one more year.

Thus, such advice should not be framed as “Medicare” advice, but as “health care in retirement” advice.

According to a recent Kaiser Family Foundation Survey, the average couple pays close to $6,400 per year for a preferred provider organization (PPO) health plan.

With the transition to a zero-premium Medicare Advantage plan, a couple would pay a Medicare Part B premium of about $4,000 per year.

According to Chris Bodily, vice president of carrier relations at Willis Towers Watson, an insurance marketplace for retirees, “This leaves a monthly difference close to $2,400 which when used smartly can be repurposed to build a comprehensive insurance bundle of end-of-life protections including assistance while aging at home and a final cash benefit to ensure no debts are left for posterity.”

Advice: Imagine advising your newly Medicare-eligible clients that for a cost similar to what they have been paying for health insurance, they may be able to own insurance for medical, prescription, dental, vision, and extended care for about what they were paying for health insurance.

Remove the Blind Spot

Traditional long-term care or hybrid Life/LTC insurance are still great options for those who want, can afford, and can qualify for greater benefit amounts.

For others, a short-term care option is easier to qualify for, can fit into more budgets, and still provides meaningful benefits at a time of crisis for families.

Now is the time to remove this blind spot and offer more affordable and accessible coverage options to your clients.

Tom Beauregard is the founder and CEO of HCG Secure, a Goshen, Connecticut-based company focused on designing extended care programs for middle-income families. Before founding HCG Secure, he spent 15 years at UnitedHealth Group, most recently as the chief innovation officer.

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Matt Dean, CLTC, FLMI, HIA, ACS, is vice president, MarketPlace group, at LTCI Partners, LLC. Earlier, he spent 24 years at USAA.