Prescribing a plan for long-term care: Why physicians need to prepare for the future

As a physician, you spend your career caring for others. You are focused on healing your patients and helping them to live their best lives. But it’s important to remember that one day, you too may need help with your own long-term care. You may be at a higher risk of developing a disability or chronic illness due to the nature of your job. Long hours, high stress, and exposure to infectious disease can take a toll on your physical and mental health. It is crucial to plan for the possibility of needing long-term care in the event of a disability or chronic illness.

Long-term care refers to the services and support that someone may need when they are no longer able to perform basic activities of daily living, such as bathing, dressing, and eating. This can occur due to an illness, injury, or the natural aging process. This type of care can be provided in a variety of settings, including nursing homes, assisted living facilities, and in-home care.

It’s important to note that planning for long-term care is not a one-time event. Your needs may change over time, so it is essential to review your plan regularly and make updates as needed. Additionally, it is essential to educate yourself on the different types of long-term care available, the associated costs, and the options for financing care.

Long-term care is an issue that affects everyone, regardless of their occupation or income level. As a physician, you have the knowledge and expertise to help your patients make informed decisions about their long-term care needs. Don’t forget to apply that same level of care and attention to your own long-term-care planning.

So how can physicians plan for long-term care? Here are some of the options you have:

Purchase Long-Term Care Insurance

Traditional long-term care insurance is an excellent, although sometimes costly, option to planning for your long-term care needs. Traditional long-term care insurance policies provide a daily benefit for care that is paid directly to the skilled care provider. These policies can have important riders such as cost of living adjustments (COLA) and inflation protection riders that increase your benefit over time. However, a major downside of traditional long-term care insurance is that the insurance company has the right to increase your premium at any time, and if you never require care, you may wind up paying a large amount of money for a benefit you never receive.

Purchase Life Insurance with a Long-Term Care Rider

A newer option that has become available to those concerned about meeting their long-term care needs is life insurance with a long-term care or chronic illness rider. These hybrid policies have a fixed premium that the insurance company cannot raise. Once the insured qualifies for care, they will begin to receive a portion of the death benefit periodically to provide for their care costs. These policies provide the insured with indemnity because they are guaranteed to receive the benefit amount either through care, at death, or between a combination of the two. However, because the benefit amount of these policies does not increase over time, the benefit amount may not be enough to cover the full cost of care by the time care is needed.

Invest Your Money Wisely

While insurance is a great solution to provide for care, it is not the only solution. Investing your money wisely over time to grow your wealth can be just as good of a solution as purchasing an insurance policy. Investing in high quality mutual funds, ETFs or stocks to grow your net worth will allow for more of a financial cushion in the future. Using your own investments to self-insure eliminates the risk of paying for a costly policy that you may never use. If choosing to self-insure, it is important to review your investments and financial plan regularly to make sure that if you require care, you will be able to cover the costs out-of-pocket.

Create an Estate Plan

Estate planning is a crucial part of the financial planning process. Creating an estate plan will not only ensure that all of your assets are received by your desired beneficiaries upon your passing, but also that your wishes are met while you are living. An estate plan includes important documents like a durable power of attorney and health care proxy to provide instructions regarding who can make decisions and how decisions will be made on your behalf if you cannot make those decisions yourself. This includes decisions relating to your finances and care. Setting up a Trust to provide instructions for your care is a great way to guarantee that your wishes are met.

Maximize Your Health Savings Account

A Health Savings Account (HSA) is a tax-advantaged way to accumulate funds for your future medical expenses. Contributions to an HSA are made pre-tax, and as long as the funds are used for expenses related to your health, there is no tax due. These funds can be used in the future if care is ever needed, or if no care is needed, the funds can be used for other healthcare expenses. A downside of this strategy is that with the rising cost of care and also contribution limits on health savings accounts, it may be difficult to save enough to fully fund your care in the future.

In conclusion, planning for long-term care is an essential part of ensuring your future health and financial security. As a physician, you are in a unique position to understand the importance of planning and tot take action to ensure that you receive the care you need. By evaluating your needs, consider your options, creating a financial plan, reviewing your estate plan, and communicating your wishes, you can prepare for the future with confidence and peace of mind.

Andrew Goodman, CFP®, CLU® is a Financial Planner at Wall Street Alliance Group. Securities are offered through Securities America, Inc., member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Wall Street Alliance Group and Securities America are separate companies. You should continue to rely on confirmations and statements received from the custodian(s) of your assets. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation.