Seniors today are optimistic about the future, yet 41% of them that are not yet retired plan to rely on Social Security as their primary source of income. This is probably due to the decimated nest eggs as a result of the past 5 years financial crisis.
41% WOW, that means a lot of people who are ignoring the government’s position that Social Security is not to replace other means of support, but only to augment them. Many of these people have no alternative. Long term unemployment, very low interest rates, capital that has evaporated, etc. leaves them more dependent on that Social Security check than they or the government wanted.
Many of these people will not be able to afford LTC insurance. They will need to pin their hopes on Medicaid, a program for the impoverished. It may not take long to end up impoverished with nursing homes often costing to $8500 a month, and assisted living facilities $3500 to $5000 a month. Home care is expensive too.
LTC insurance is the least expensive way to plan for the possibility of needing assistance when people are no longer able to get along on their own anymore. IF one purchases it while still healthy enough to get it, and benefits are chosen appropriately, the premiums are affordable for many – but not all.
For others there are ways to make the best of the situation, if you know what must be done. Medicaid requires one to spend down, and also to cash in life insurance over $1500 worth of death benefit. However, money can be set aside for burial expenses, if done properly, so that the family does not end up taking a collection among themselves in the funeral home at death.
Medicaid generally allows (varies by state) up to $15,000 to be set aside in an irrevocable trust for burial. This is money not tied to any funeral establishment, and is under control of the family. The money can be used for any funeral associated bills at time of death and is far better than children financing this final bill. Nobody wants to leave that legacy to their family. What ever is not spent on final expenses is refunded to the estate of the deceased of the insured, spend as much or as little of it as needed.
If money is divested (given away) in the 5 years prior to needing Medicaid, there will be a penalty period during which Medicaid funds are not available. The irrevocable burial trust is exempt from these penalties. They can be funded even if the person doing so is already receiving care, or in a facility. It is even possible to set aside $15,000 for each of your children (and spouses of) in an irrevocable burial trust as well, if done before the money is all spent on care.
If this is of interest to you or your clients, contact TheLongTermCareGuy.com at (920) 884-3030 or (800) 219-9203 to get this set up. If you sell Medicare Supplements, you already have the clients who will be needing to do this. If you are a consumer worried about this, remember that the ambulance does not stop at my office on its way to the hospital.