Disability and Long Term Care

Income and asset protection are important components of a sound retirement strategy. Effective disability and long-term care planning, both pre- and post- retirement, is a critical part of a successful financial plan, helping to ensure stability, growth, and protection of income and assets for the long term.

Long-term care is usually defined as a chronic condition for which an individual requires assistance with his or her usual activities of daily living (ADLs). ADLs are commonly defined as eating, dressing, bathing, toileting, maintaining continence, and transferring from bed to chair. When an individual needs physical assistance or verbal reminders to perform his or her ADLs, they are generally classified as needing long-term care, whether they need the assistance occasionally or full-time.

Diagnostic, therapeutic, preventive, and rehabilitative services all have their place in a comprehensive long-term care program. The primary focus of long-term care, however, is on the personal care and support that will preserve an individual’s lifestyle, daily independence, and dignity.

It can be difficult to plan for long-term care needs because there are multiple factors influencing the decision-making process, including:

• Ambivalence about long-term living arrangements as physical capabilities decline.
• Inability or unwillingness of family members to provide periodic or ongoing support when the time comes.
• Misinformation about long-term care options or services available through health programs, Medicare, etc.
• Difficulty in juggling financial and family priorities when planning for long-term care.

The financial implications of a disability, chronic disease, or other debilitating condition are often underestimated. Along with health care costs in general, these costs are expected to grow exponentially in the coming years. As most health insurance will not pay for the majority of costs associated with an extended period of illness or injury, long-term care insurance offers a solution with tax-free benefits that are aimed at protecting valuable assets that would otherwise be severely reduced or lost entirely.