Plan for potential long-term care in your senior years in terms of family and finances

Long-term care is the major uninsured risk most retirees face, and you’re largely on your own covering these costs.

By long-term care, I mean needing help with basic everyday activities as you age, such as bathing, walking, eating, transport to the grocery store and trips to the doctor.

Medicare doesn’t pay for most long-term care charges. Medicaid is the main public program for meeting long-term care expenses, but qualifying for Medicaid essentially requires impoverishment. Ideally, commercial long-term care insurance would step into the breach, considering how uncertain it is what kind of long-term care we’ll need at some point in our elder years. It could be brief with the level of care low or severe and lasting several years.

Yet the market for long-term care insurance has shrunk dramatically, and premiums are too expensive for many families. There are other products to research, including hybrid annuity and life insurance policies with long-term care options.

Nevertheless, most households find they are on their own, dependent on the unpaid care of younger relatives and/or close friends. Since most caregivers work, the price for providing unpaid, informal caregiving to loved ones is substantial. For example, in an article for Health Affairs by Stipica Mudrazija, the assistant professor in the department of health systems and population health at the University of Washington, assessed the work-related opportunity costs of providing care to older family members in 2013. The total opportunity cost of forgone earnings was about $67 billion, a cost that doesn’t include the physical and emotional stresses that disrupt caregivers’ lives.

How should healthy retirees and near-retirees respond?

First, research your options to see what resources are available to you. (You might start with the caregiving chapter in Mark Miller’s “Retirement Reboot”). Second, develop a financial plan, either on your own or working with a professional. Long-term care is part of a much bigger retirement-planning puzzle. The advantage of financial planning is the process will push you toward thinking about managing risks.

Finally, and most importantly, talk to your future potential caregivers about your desires and expectations. Find out what they need and want, too. They will be busy with their careers, and they might have children (your grandchildren) who need their attention as well. Thoughtful conversations carried out through time will let everyone land on reasonable expectations.

Don’t assume. Plan. The effort will pay off for you and your future caregivers if you eventually need help in your elder years.

Chris Farrell is senior economics contributor, “Marketplace”; and a commentator for Minnesota Public Radio.