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Health care planning could prove burdensome in Massachusetts

When a Massachusetts resident thinks about long-term care, he or she likely takes Medicare or Medicaid into consideration. Unfortunately, many Americans don't know that Medicare will not pay for nursing home stays or assisted living. The same is true for day-to-day eldercare -- and many families end up depleting their savings in order to cover the costs of this type of care for a loved one prior to his or her death. These facts make it all the more apparent that health care planning for the latter years of life should be an important component of the estate planning process.

Purportedly, financial advisors have pushed the benefits of long-term care insurance for nearly two decades. However, data seems to indicate that the products have not proven profitable for insurers, presumably because of a vast underestimation of how long people would live. This means consumers are now faced with higher prices and meager coverage. Because the cost of healthcare continues to rise, the idea of paying for long-term care is daunting in and of itself.

These factors have all combined to create a stagnant industry. The number of American citizens who have long-term care coverage has remained relatively the same for quite some time. As of now, only about a dozen companies offer meaningful policies -- compared to 100 companies 10 years ago. Premiums have increased almost 30 percent since 2004, and the consumer base for these products has dropped almost 40 percent. However, the real problem is the hardship created for current policyholders; many of these customers have already retired and have been paying for coverage for many years, but now they face massive premium increases.

The thought of long-term health care planning can be overwhelming for Massachusetts residents. However, the numbers seem to indicate that all residents may benefit, at least in some part, from the estate planning process. Because long-term health care planning, and estate planning on the whole, can be intimidating, many people choose to turn to the aid of an experienced legal representative.

Source: marketwatch.com, "Long-term-care insurance sticker shock for retirees," Matthew Heime, July 2, 2013

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