Planning for Disability - the Good, the Bad and the Necessary

No one likes to think about the possibility of their own disability or the disability of a loved one. However, we should all plan for at least a temporary disability. One in three Americans will face at least a 90-day disability before reaching age 65 and up to 44% of Americans will face a disability of up to 4.7 years. On the whole, Americans are up to 3.5 times more likely to become disabled than to die in any given year.

Unfortunately, for many Americans the disability will not be short-lived. According to the 2000 National Home and Hospice Care Survey, conducted by the Centers for Disease Control's National Center for Health Statistics, over 1.3 million Americans received long term home health care services during 2000. Three-fourths of these patients received skilled care, the highest level of in-home care, and 51% needed help with at least one "activity of daily living" (such as eating, bathing, getting dressed, or the kind of care needed for a severe cognitive impairment like Alzheimer's disease). The average length of service was 312 days, and 70% of in-home patients were 65 years of age or older.

According to the National Nursing Home Survey 2004 Overview, the national average length of stay for nursing home residents is 835 days, with over 56% of nursing home residents staying at least one year. Significantly, only 19% are discharged in less than three months.

The Alzheimer's Factor

Alzheimer's is growing at an alarming rate while causes of death from prostate cancer, breast cancer, heart disease and HIV are declining. In 2010 the Alzheimer's Association published a report titled, “Alzheimer's Disease Facts and Figures” that explored different types of dementia, causes and risk factors, and the cost involved in providing health care, among other areas. In this report were some eye-opening statistics:

  • One in eight people aged 65 and older (13%) have Alzheimer's disease.

  • Every 70 seconds, someone in America develops Alzheimer's.

  • An estimated 5.1 million Americans aged 65 and older have Alzheimer’s disease. By 2030 that number is expected to reach 7.7 million, and by 2050, between 11 million and 16 million - unless medical breakthroughs identify ways to prevent or more effectively treat the disease.

Long-Term Care Costs Can Be Staggering

Not only will many individuals and families face prolonged long-term care, but they will also be paying more for that care. In 2010 the monthly base rate for assisted living was over $3,000; today it is $3,600. The daily rate for a private room in a nursing home was $229, or $83,585 annually. Today it is $275 or $100,375 annually. Nursing home costs will consume many Americans’ assets. A recent Harvard University study indicates that 69% of single people and 34% of married couples would exhaust their assets after 13 weeks in a nursing home! If a parent, spouse, or other family member needs long term care, the cost could easily deplete and/or extinguish the family's hard-earned assets. Long-term care insurance plans can offset some of this cost, but unfortunately, some older Americans will either be medically ineligible for long term care insurance or unable to afford the premiums.

All Planning Should Thoroughly Address Disability

When a person becomes disabled, he or she is often unable to make personal and/or financial decisions. If the disabled person cannot make these decisions, someone must have the legal authority to do so. Otherwise, the family must apply to the court for appointment of a guardian over the person or property, or both. Those who are old enough to remember the public guardianship proceedings for Groucho Marx recognize the need to avoid a guardianship proceeding if at all possible.

At a minimum, seniors need broad powers of attorney that will allow agents to handle all of their property upon disability, as well as the appointment of a decision-maker for health care decisions (the name of the legal document varies by state, but all accomplish the same thing). Alternatively, a revocable trust with assets aligned properly can ensure that the disabled person and property will be cared for as desired, pursuant to the highest duty under the law - that of a trustee.

The above discussion outlines the minimum planning clients should consider in preparation for a possible disability. It is imperative that clients work with a team of professional advisors (legal, medical and financial) to ensure that, in light of their unique goals and objectives, their planning addresses all aspects of a potential disability.

If you live in the Chattanooga area, there are some upcoming opportunities to learn more about preparing for possible disability. Thursday, October 1, is Senior Day at the Chattanooga Zoo. Admission on that day only is FREE for all seniors. There will also be several vendors who will be available to answer questions about long-term care insurance, Medicare, elder law, and more.

If you can't make it to the zoo, there are 3 FREE workshops scheduled: Wednesday, October 7, at 10 am; Thursday, October 8, at 2 pm; Saturday, October 10, at 10 am. All workshops will be held at Southern Heritage National Bank, 2120 Northgate Park, Suite 100, Chattanooga, Tennessee 37415.

Disability planning is one area where we can give each and every person and family we work with great comfort in knowing that if the day comes for themselves or a loved one, they will be prepared. Please contact us at (423) 648-9829 or schedule an appointment if you have any questions or would like to discuss any information in this article further.

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