For advisors who haven't considered long-term care insurance for their clients, now might be a good time to take a look.
Over half of wealthy Americans with assets ranging from $500,000 to over $10 million say “providing for my health and wellness” is their primary financial concern, according to a recent survey by PNC Financial Services Group. But, of the 1,500 people surveyed, 69 percent have not purchased long-term care insurance for themselves or their spouse. And almost 40 percent don't have a health care proxy, or a person who can make decisions for them should they become incapacitated.
Health-care planning, including purchasing insurance to protect other assets, has to happen before clients are too old. Unfortunately, as the survey indicates, few clients think that far ahead. “When people come to us with health care cost concerns, they're usually not in good health and they're older,” says Leslie Beck, a CFP with Compass Wealth Management in Maplewood, N.J. “At that point they really have just a couple of options, either paying out of their own pocket by using accumulated assets or they can rely on family or friends to take care of them.”
If they buy long-term care when they're in ill health, they'll pay much higher premiums. And depending on family has gotten more difficult.
In the past, parents were able to compensate kids by transferring assets to them. This way, assets were protected and the parents qualified for Medicare.
But a new law, effective February 2006, requires that anyone who wants to transfer assets to a different name needs to do so five years prior to their eligibility for federal medical assistance. The current time frame is just three years. “The government is clamping down on the time people have to shift assets to other family members,” Beck says.