Studies confirm that nearly everyone will face at least a temporary disability sometime during their lifetime. One-third of Americans will face a disability lasting at least 90 days before they reach age 65.

In any given year, it is more than 3 times more likely that you will become disabled than die. No one likes to think about the possibility of their own disability or the disability of a loved one.  The best thing you can do for yourself and your loved ones is to be prepared. The number of people requiring long-term home health care exceeded 1 million in 2000 (the most recent year this information is available). The average length of service was 312 days. The national average length of stay in a nursing home is 892 days and over half of the residents stay at least one year.

Nursing home costs continue to rise. The average daily rate for a private room in a nursing home is $75,190 annually and the average daily rate for a semi-private room in a nursing home is $66,795 annually. A recent Harvard University study indicates that 69% of single people and 34% of married couples would exhaust their assets after 13 weeks (i.e., 91) days in a nursing home!
As the Harvard University study demonstrates, if you, your spouse, or family member needs long- term care, the cost could easily deplete and/or extinguish the family’s hard-earned assets. Alternatively, you could pay for long-term care completely or in part through long-term care insurance.

Most long-term care insurance plans let you choose the amount of the coverage you want, as well as how and where you can use your benefits. A comprehensive plan includes benefits for all levels of care, custodial to skilled. You can receive care in a variety of settings, including your home, assisted living facilities, adult day care centers or hospice facilities.

The government only pays for long-term costs in extremely limited circumstances and only after most of your assets have been spent, typically only for skilled care and only for a short duration.

It is a good idea to make sure your estate plan covers disability. When you become disabled, you’re often unable to make personal and/or financial decisions. If you cannot make these decisions, someone must have the legal authority to do so. Otherwise, the family must apply to the court for appointment of a guardian for either the client’s person or property, or both.
At a minimum, you need broad powers of attorney that will allow agents to handle all of your property upon disability, as well as the appointment of a decision-maker for health care decisions (the name of the legal document varies by state, but all accomplish the same thing). Alternatively, a fully funded revocable trust can ensure that the client’s person and property will be cared for as you desire, pursuant to the highest duty under the law – that of a trustee.

An estate plan that has a revocable trust as its foundation not only helps ensure that you will be cared for as you desire, but it can ensure consistent asset management through the continued use of your existing financial advisers.

Under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), absent a written authorization from the patient, a health care provider or health care clearinghouse cannot disclose medical information to anyone other than the patient or the person appointed under state law to make health care decisions for the patient. The penalty for failure to comply with these rules is severe: civil penalties plus a criminal fine of $50,000 and up to one year of imprisonment per occurrence, and worse if the disclosure involves the intent to use the information for commercial advantage, personal gain, or malicious harm.

These HIPAA rules became effective only recently. As a result, doctors, hospitals and other health care providers now refuse to release any information absent a release from the patient. For Example, hospital staff will go so far as to refuse to disclose whether one’s spouse or parent has been admitted to the hospital. The inability to receive information about a loved one could become very troubling when the information concerns treatment as part of long-term care.

The above discussion outlines the minimum planning you should consider in preparation for a possible disability. It is imperative that you work with you and your team of professional advisers to ensure that, in light of your unique goals and objectives, their planning addresses all aspects of a potential disability.