Long Term Care Planning: Helping to Protect Your Family Business

If the word “retirement” makes you cringe, you may be one of the many family business owners who can’t imagine ever fully stepping down from your company. Even as you establish a business continuation plan, mentor the next generation, and relinquish some responsibilities, you may picture yourself still involved in some capacity with your business for many years to come.

What do you think of when you hear the words long term care (LTC)? The first image that may come to mind is an older adult who requires constant care, along with various medical treatments and procedures. But, this is not necessarily the reality of LTC for many of us. Far more frequently, it involves services that help an individual cope with a reduced level of functioning for a temporary or indeterminate period of time. This includes a wide range of care options delivered in various settings, including at-home care, an assisted living facility, or a nursing home.

Have you thought about what would happen to your family and your business if you were to need LTC at some point in the future? The majority of people needing LTC are over age 65, but still a fair percentage of current LTC recipients are ages 18 to 64. The need for extended care can come about suddenly, as a result of sustaining an accident or illness, or gradually.

As a business owner, planning is important to help prevent a LTC event from interfering with future plans for your business. For example, a family member or members may need to scale back their responsibilities or even step down from a role in the business in order to provide caregiving. Or, the business and its assets may need to be liquidated to pay the costs of a nursing home or other extended care costs. If you own a family business, you may want to consider taking steps now to help ensure this valuable asset will remain intact for your children, grandchildren, and beyond.

LTC Insurance

LTC insurance can play an important role in the future of a family business. In general, the cost of a policy varies with the daily benefit amount chosen, the maximum benefit amount, and the elimination period (the number of days for which the insured is responsible for his or her own care before benefits begin). LTC insurance policies can be customized to include inflation protection, which helps ensure that policy benefits keep up with the rising cost of health care by increasing the benefit in line with inflation. It’s important to note, however, that adding any riders may involve an additional premium.

What’s covered?

LTC insurance helps cover the following care options:

  1. Skilled nursing care: around-the-clock medical care under a doctor’s supervision, typically provided by registered nurses and/or certified nursing aides in a nursing home;

  2. Assisted living facility: residential facilities that offer social support with several tiers of independent living, including varying levels of assistance with daily activities under the supervision of licensed professionals and qualified staff;

  3. Adult day health services: community social day programs that provide light physical activity and cognitive stimulation among peers in a supervised group setting.

  4. Custodial or at-home care: in-home assistance from a certified home health aide with daily activities, such as meal preparation, bathing, doctor’s visits, housekeeping, etc., to help maintain independence longer.

As a family business owner, you may reduce the financial risk of extended care, have more care options, and relieve the potential burden of caregiving on family members with this type of insurance. A dual strategy of open and honest communication with family members and the guidance of a qualified LTC insurance professional can help protect your business ownership and assets for future generations.

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