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Say Uncle (Sam!): The Federal Government and Your Long-term Care Planning Are you relying on the federal government’s program to cover your living expenses in the event you get disabled? Probably not. Social Security’s Disability Program often requires a long wait for benefits and has stringent qualification requirements. Even if you meet its definition of disability, benefits aren’t payable until the 5th full month after disability begins. In additional, the Q&A area of the official website[1] states “It can take a long time to process an application for disability benefits (three to five months).” The opinion that Social Security Disability can’t be counted on for comprehensive income protection may be the reason that employers sponsor, and often pay for, private disability coverage. Some self-employed people, and even some employees who have coverage at work, choose to purchase private individual disability policies to help replace their income if they become disabled. These plans, combined with possible social security disability program benefits, can provide peace-of-mind in case the unthinkable happens and someone can no longer work. Not to change the subject, but are you relying on the federal government’s program to provide you with a comfortable retirement income? Highly unlikely, since, as the government itself states, Social Security Retirement Income will replace only about 40% of your income if you have average earnings[2], and the “percentage is lower for people in the upper income brackets…” On the same web page, the program notes “You'll need to supplement your benefits with a pension, savings or investments.” Let’s recap: We don’t rely on government programs to provide for a comfortable quality of life if we become disabled, or when we retire. So, why oh why do so many of us do a flip-flop when it comes to long-term care? Ironically, we don’t solely rely on the government for disability protection or for retirement income, but somehow many of us do rely on the government when we become disabled in retirement! As of now, there is no federal government program, financed by payroll deductions like Social Security that provides a long-term care benefit. The only federal program primarily designed to cover long term care, including custodial care, is Medi-Cal. Medi-Cal pays for the kind of care many people least desire (nursing home care), and requires that you spend down your assets to qualify. The Health Care Reform proposal making its way through the Senate includes a groundbreaking provision for a government long-term care program. Premiums would be paid for by workers. One feature of the coverage is designed to provide an average daily benefit of $50 to allow people to bring services into their homes. The proposal making its way through the House of Representatives includes no such new program for a federal long-term care program. From experience with Social Security disability and retirement income benefits, we know that, even if the proposal became law, it’s essential that we review all our options, including supplementing what the law would provide with private insurance and our own nest eggs. Have you ever heard a baby boomer say “I’m not going to worry about long-term care planning. The government will have to come up with a plan to fix the problem, because there are so many of us baby boomers!” I think we all know, the next time you hear a similar statement, there’s only one logical answer: “Plan ahead and review all your options!” Based in Sonoma, CA, Karen Simmons is an insurance agent who specializes in long-term care insurance and represents several leading long-term care companies. Karen is authorized to offer AARP-endorsed products and the CA Partnership for Long Term Care. She can be reached at 707-996-7886 and at karensimmons@comcast.net. [1] http://www.socialsecurity.gov/pubs/10029.html [2] http://www.socialsecurity.gov/r&m6.htm |
| Submitted by: Karen Simmons Published:2009-08-25 |
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(The views expressed are the opinions of the author and do not
necessarily represent the views of CareMinds, Inc. or its employees.)
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