section 1 - The American College Online Learning Center

manager can even help your clients navigate the labyrinth of Medicare andinsurance bills.i. Planning Point: Make sure the client has a support network of family and friendsto help with incapacity risk. Charitable and religious based organizations can becontacted if extra support is needed.j. Planning Point: If you suspect that the client is having cognitive problems, youshould adapt how you communicate with the client. For example, invite the clientto bring a spouse or a trusted family member to the next meeting, make meetingsshorter but more frequent, and send the client a detailed copy of meeting notes.k. Although incapacity risk as described above does not always meet the legaldefinition of mental incapacity, the client could reach this level. When this is thecase, tools such as trusts, a durable power of attorney, and advanced directiveswill be needed. However, it is important that the client take care of these mattersbefore the legal incapacity begins since legal incapacity status will prohibit theclient from creating these arrangements.4. Health care expense risk is the risk of having inadequate medical insurance. Yourclients should be concerned about needing extensive and/or expensive medical carefor a variety of reasons:a. The client can be affected either by spiraling costs of health care or the need foran inordinate amount of medical care, or both.b. Example: At age 70, Bob may have serious problems with his feet. He will soondiscover that Medicare does not cover visits to a podiatrist. More importantly, overtime, uninsured medicines and treatments may inflate out of control.c. Clients are unable to predict what health care needs will occur and when theywill occur.d. According to Fidelity’s annual Retiree Health Care Costs Estimate, a 65-year-oldcouple who retired in 2011 will need more than $235,000 to cover health carecosts during their retirement. Since Fidelity started the annual estimate in 2002,estimated costs have increased by 6% a year. (The cost does not include possiblelong-term care expenses.)e. Health care risks are compounded by inflationary trends. Inflation on medical carehas often been higher than inflation on goods and services.5. Review of risks associated with aging: (Video: What health care risks do clients face inretirement? Tacchino, Woerheide, Rappaport)a. Clients may end up with costs not covered by insurance.b. Clients may be unable to take care of themselves. This can range from needingsome help to needing 24-hour care.c. Clients face the risk of having to become a caregiver.d. Clients face the risk that care-giving help may not be available.e. Clients face the risk of loss of a driver’s license and their independence.LO 5-2-2: Evaluate the solutions a planner can use to help his client addressthe risks associated with running out of money because of the agingprocess (long-term care risk, frailty risk, and health care expense risk)1. Recommend long-term care insurance. (Video: What is long-term care insurance?Tacchino, Morith, Leisle)a. Long-term care insurance is one of several private financing methods to coverthe cost of long-term care. A long-term care insurance contract gives the client5.15