Nathan Powers & Co, CPA, 200 Fisher Drive, Avon, CT and 641 Farmington Avenue, Farmington, CT
 
Newsletter

Excerpts from A Financially Secure Future
by Delton L. Chesser, Walter T. Harrison Jr. and Colleen T. Barry

Protecting The Nest Egg

CPAs do clients a disservice if they don't help them take steps to maintain the financial security they worked a life-time to achieve. Here are some facts CPA/financial planners should be aware of when advising clients about their future need for long-term care:

  • Long term care is expensive. Over half of single people who enter a nursing home are impoverished within one year; the same is true for couples within a year after a spouse enters a nursing home.
  • A 65-year-old has a 43% chance of requiring long-term care. One in five Americans over age 50 may need such care in the next month.
  • People age 65 or over who enter a nursing home typically stay two to three years. Annual costs can average $50,000. - or double that in places like San Francisco or New York City.
  • LTC insurance provides the greatest financial security for people with household income between $40,000 and $250,000. Medicaid covers those with less income and the wealthy have less need for insurance than middle-income earners.

    Two things appear certain: The cost of long-term care will continue to rise substantially and federal and state governments will keep tightening eligibility requirements for aid. These facts should spur CPA/financial planners to recommend clients plan for long-term-care needs. As a first step, accountants should identify those clients who can benefit from LTC insurance.

    Long Term-Care Definitions

    Activities of daily living (ADLs) includes eating, bathing, dressing, moving about (mobility), transferring (for instance, from a bed to a chair), using the toilet and maintaining bladder and bowel continence.

    Adult day care includes a personal care, therapy and nursing assistance at a facility during daytime hours

    Benefit period is the length of time the insurance company will pay benefits, ranging from two years to life.

    Custodial care facilities are licensed by the state to care for patients who require someone to assist them with daily activities on a regular, but not necessarily continuous basis.

    Daily benefit ranges from $40 to $300 or more per day, based on expected costs of nursing homes and other long-term-care facilities in the area.

    Elimination period ranges from zero to 365 (or even 730) days. This is the actual period of time when no benefits are payable for long-term-care services. Clients should choose the number of days they can afford to self-insure.

    Home health care is medically necessary care, including nursing services and physical, speech, occupational or respiratory therapy provided at home.

    Hospice care is devoted to pain and symptom control for the terminally ill (life expectancy of less than six months). Care can be provided at the hospital; hospice center or at home.

    Personal care refers to assistance from another person with walking, bathing, eating, and other routine tasks. This care is provided by aides who are not medical professionals but are trained to help with these activities.

    Respite care furnishes personal from a local home health care agency to take a caregiver's place for a short time.

    Skilled nursing care is 24-hour supervised medical care and an alternative to acute care where hospitalization is necessary. Example: observation for complications or worsening of a condition.