Don’t take advice from your hairdresser or bartender about how to pay for long-term health-care costs, warns Len Hayduchok, president of Dedicated Financial Services in Hamilton, N.J.
Hayduchok is kidding, of course, but he says he has had clients who tried to rely on the advice of their friends, family or acquaintances, most of whom don’t know the rules associated with long-term-care benefits and the government programs that might pay for them. Instead, he says, people should turn to financial advisors—and those advisors should make sure they are up to date on the nuances of paying for long-term care.
Hayduchok is the founder of both Dedicated Financial Services, a financial planning firm, and Dedicated Senior Advisors, an insurance firm, which specialize in planning health-care costs for retirees.
“If you call yourself a financial planner and you don’t address the risk of paying for long-term care for your clients, you are committing malpractice,” Hayduchok says. “Advisors who focus solely on the growth of clients’ portfolios are going to have a hard time explaining where the money is when the portfolio goes to pay for long-term care.”
Hayduchok isn’t the first LTC expert to make this argument. He posits that advisors should be relentless in keeping their skills up to date to deal with long-term-care issues, and consumers need to ask advisors questions to make sure they know how to pay for long-term-care costs.
“A person can do preplanning for long-term care before there is a health problem, or the person can do crisis planning after a problem occurs,” Hayduchok says. “But if you do preplanning you have more options. One of the problems is people don’t want to talk about long-term care while they are healthy.”
He adds that an elder care financial
plan can be a road map for how to pay for home care, assisted living and nursing home costs in the most tax-efficient and cost-
Among the nuances of long-term care is the common misperception that Medicare will pay for it, but Medicare does not cover long-term care. Actually, Medicaid picks up the tab—and only after most of a person’s assets have been exhausted. Medicaid also has a five-year “look back” for assets, so a person cannot give away assets at the last minute and hope to qualify for it.
Medicaid uses a formula to determine how long a person must wait to be eligible for benefits after divesting from his or her last assets.
Many folks aren’t aware of all the available government benefits in this space. For example, veterans who have participated in a war, and their surviving spouses, are often eligible for benefits from the U.S. Department of Veterans Affairs that can pay for long-term care.