Long Term Care Insurance
Putting Off Long Term Care (LTC) Planning
Are you worrying about putting off long term care planning?
Are you one of the people worrying about putting off long term care planning? Sure, it’s no fun to think about, but it’s actually a fairly simple discussion.
First, some good news: Contrary to what you might think, most people do not need to worry about having to live in a nursing home. These days, the only people who must live in a nursing home are those who have run out of money paying for their care, and then need to apply for a welfare program called Medicaid.
Medicaid pays facilities less than the cost of care.
Because of this, many of the much nicer assisted living facilities won’t accept Medicaid – but federal law says nursing homes have to. So, if you can afford the assisted living facilities or home care, you are in good shape.
Most assisted living for hands-on care costs between $4000 and $6500 per month, while caring for those with dementia (40% of all LTC) can easily cost $8500 per month. Home care typically costs less, so this is the planning number I start with.
Your Social Security and pension income continues for your lifetime. Your savings, including your 401k or IRA, probably earn interest, so we take into account what it can contribute monthly to your available income without using up principal. Only the shortfall between this total income and the anticipated costs of care needs come from some other source. There are two alternatives for this—either you need to spend down your assets or consider LTC insurance.
Remember, your lifestyle will change drastically when care is needed, so expenses like golf, extra vehicles, boats, motorcycles, campers, trips to Branson, cruises, etc. will diminish significantly when care is needed. Thus, more of your income is available for care costs than you might imagine, meaning less insurance is needed.
Then, using your age and health, we can choose the best company for your situation and give you prices. Now it’s your turn to choose – is this worth it or not? It’s your choice.
See, it’s not difficult, but having someone with 26 years of experience guiding you through this can be very helpful in choosing appropriate coverage and keeping costs low.
If you are ready to stop worrying and start investigate solutions, call an expert. I’m Romeo Raabe, and I want to be your Long Term Care Planner– it’s all I do. There is a reason so many financial planners and attorneys send their clients here for good advice. Call me at (920) 884-3030 or check me out online first at www.TheLongTermCareGuy.com You’ll be glad you did. I can help people in almost any situation, even those already in care.
How to Provide Long-Term Care to a Burgeoning Elderly Population
Providing long-term care to a Burgeoning Elderly Population isn’t the problem. We know how to do that. Paying for it is.
Providing long-term care isn’t the problem. We know how to do that. Paying for it is.
So, I’m going to define the long-term care financing problem. Both government and scholars have focused corrective action on symptoms of the problem instead of its causes.
Long-term care for our Burgeoning Elderly Population includes a broad range of social, medical and custodial services that caregivers provide for three months or longer to help disabled people of any age perform activities of daily living such as eating, bathing, and toileting. Our focus is long-term care for the aged.
Let’s briefly restate that the this is a big issue. You know we have an aging baby boom generation. The numbers of beneficiaries already stressing Medicare and Social Security. They’ll overwhelm Medicaid, the dominant long-term care payer, when they start turning 85 in 2031. The U.S. age 85+ population, the cohort with the highest long-term care need, will triple between 2015 and 2050.
After age 65, people have a 70% probability of needing extended care, and a 5% probability that long-term care users will need ten years or more costing hundreds of thousand–even millions–of dollars. That there’s this gap between the number who need care at all and those who need extended care makes it possible to obtain insurance to protect you.
Care is very expensive wherever it is provided.
On average, nursing homes charge $9,500 to $11,000 per month. Assisted Living costs $4,000 to $6,500 per month; dementia care can easily reach $8,500 or more. The U.S. spent $366 billion on facility-based long-term care in 2016. Families and friends provided an additional half-a-trillion dollars’ worth of unpaid care, at huge financial and emotional distress.
Family-provided care is not free. It requires much time off from work, early retirements, declined transfers and promotions, and a surprising amount of out-of-pocket incidentals. Then there is Medicaid, a welfare program that favors nursing homes (just where you do not want to end up) because most assisted living facilities no longer are willing to accept its woefully inadequate reimbursement rates.
When people think care is free on Medicaid (welfare), they don’t prepare. Once they find they are not welcomed where they want care delivered, it is too late to qualify for the insurance that can pay for care. Medicaid takes more and more of your tax dollars, provides inadequate reimbursement for care – limiting your options of where you will be cared for, and makes you think you don’t need insurance.
Is the insurance prohibitively expensive as many mistakenly think? Not when it is chosen appropriately. There is no need to purchase enough to cover the entire bill. (An analogyis auto insurance–do you have 100% coverage for your car, or did you choose a deductible?) Once you determine how much of the cost of care you can comfortably pay for yourself, you only need to buy enough LTC insurance to make up the difference.
A 50-year-old can buy coverage that will provide $9000 a month for one year of care ($108,000 total) for a premium of just $214 per year. A 65-year-old can purchase $850,000 of coverage for less than $2000 a year.
If you want choices of where you might receive care, if you do not want to spend your entire nest egg on care, if you want to leave something other than your funeral bill to your family, perhaps you should investigate LTC insurance. But, do it with an expert who knows the costs, how and where care is delivered, and how to choose appropriate coverage.
Romeo Raabe LUTCF, LTCP known as TheLongTermCareGuy.com has been helping people choose appropriate LTC insurance coverage for 26 years. He can be reached at (920) 884-3030.
The Health Care Promises We Cannot Keep
By Judith Graham , Kaiser Health News
December 12, 2019
Navigating Aging focuses on medical issues and advice associated with aging and end-of-life care, helping America’s 45 million seniors and their families navigate the health care system.
It was a promise Matt Perrin wasn’t able to keep. “I’ll never take away your independence,” he’d told his mother, Rosemary, then 71, who lived alone on Cape Cod, Mass., in a much-loved cottage.
That was before Rosemary started calling Perrin and her brother, confused and disoriented, when she was out driving. Her Alzheimer’s disease was progressing. Worried about the potential for a dangerous accident, Perrin took away his mother’s car keys, then got rid of her car. She was furious.
For family caregivers, this is a common, anxiety-provoking dilemma. They’ll promise Mom or Dad that they can stay at home through the end of their lives and never go to assisted living or a nursing home. Or they’ll commit to taking care of a spouse’s needs and not bringing paid help into the home. Or they’ll vow to pursue every possible medical intervention in a medical crisis.
Eventually, though, the unforeseen will arise ― after a devastating stroke or a heart attack, for instance, or a diagnosis of advanced cancer or dementia ― and these promises will be broken.
“My mother-in-law and I got into a disagreement; I don’t remember what it was about. But I remember her saying to me, ‘You promised you would take care of me,’ and making it clear that she felt I’d let her down. And I said, ‘I know, I was wrong ― I can’t do it all,’” she remembered. “I still feel bad about that.”
“No caregiver I know sets out to deceive another person: It’s just that none of us have a crystal ball or can predict what the future will hold,” she said. “And the best we can do isn’t always as much as we thought was possible.” “We have to figure out a way to forgive ourselves.”
*****
Have you made that promise? Have your children? You know what comes next: use liquid money first, then retirement accounts (don’t forget the IRS imposed penalties for certain withdrawals as most LTC is NOT deductible), then sell the family home. Then, .when all the money is spent on care, the loved one eventually needs to go on a welfare program called Medicaid which may only be accepted at welfare nursing homes.
I want a nice assisted living facility with attentive and caring staff, a pool, happy hour, lots of activities and good meals. I want the end of my life to be as comfortable and fun as it can be. I can afford this because 18 years ago I bought a LTC insurance policy.
How will you pay for their care when your health changes? Or will you need to sell assets at fire sale prices because you need the cash, regardless of what the market is like?
Contact Romeo Raabe LUTCF, LTCP (920) 884-3030 www.TheLongTermCareGuy.com
Don’t get caught in this long term care trap! Many people are.
Often agents sell policies for a cheaper price because they didn’t include the all-important automatic inflation on benefits. Don’t get caught in this long term care trap!
I am being approached by many people who purchased long-term care (LTC) insurance many years ago. They bought the LTC insurance from their life insurance agent, their financial planner, or their home insurance agent – not a specialist in LTC. These agents knew life or home owners insurance, but often just “dabbled” in long term care sales. Maybe they had just one company’s product to sell. Often, they sold the policies for a cheaper price because they didn’t include the all- important automatic inflation on benefits.
Long term care costs have been increasing more quickly than inflation, doubling almost every 15 years.
For example, a nursing home that charged $4500 a month 18 years ago, now charges over $10,000 a month. Costs may increase even more quickly in the future because labor costs are likely to increase. Since we have nearly full employment, employers may need to offer higher wages to attract the needed workers. We also hear talk about increasing the minimum wage to as much as $15 per hour, so costs could increase even faster.
If you have an older LTC insurance policy that doesn’t include inflation coverage, there still may be something that you can do. If you are considering investigating LTC insurance – do so with an expert. You need an expert who knows the costs, understands inflation and knows what the options are for people with these kinds of policies, so that the expert can help you determine how much of the bills you can pay yourself. That way, you don’t buy too much insurance.
I am an expert in long term care financing. I have been doing nothing but LTC planning and financing for over 25 years. I am happy to review your policy. I can help you if there are problems with your policy. I can help protect some of the money if LTC is needed and you have not prepared in advance. Many of my clients have been referred to me by their financial planner or their attorney. Learn more about me at www.thelongtermcareguy.com.
If you want to investigate how to deal with LTC, call (920) 884-3030. Let’s plan a time to investigate together.
Why Can’t I Spend my Money on Fun?
Often, retired people are afraid to spend money on fun or travel because they fear the catastrophic costs!
A recent Wall Street Journal cartoon featured a gentleman visiting his financial planner. In the cartoon, he asks the planner, “Why can’t I spend some of my money on fun now?”
Often, retired people are afraid to spend money on fun or travel because they fear the catastrophic costs they would face if one of them needs long term care (LTC). This can be a real concern, because the U.S. Department of Health and Human Services says that 70% of people who reach age 65 will need some long-term care. The great majority of us cannot afford it for long if we’re paying out of pocket.
Many people assume the insurance for LTC is prohibitively expensive. This is because they never investigated what the costs actually would be for them. I can tell you with near certainty that you need less of it than you imagine. When you finally need care, your lifestyle will change considerably. If you cannot drive there will be fewer vehicles, boats, toys, and less travel, golf, dining out, and so on. The money spent on fun (which you SHOULD do while healthy) can be redirected towards the costs of LTC.
Most people have some savings. Without touching the principle, you can spend the interest or yield it generates. Add this to the savings from your lifestyle changes, and you may find you can cover a significant portion of the costs of LTC yourself. You will only need to cover the shortfall from some other sources, like insurance, so you do not spend down all your savings and end up on Medicaid.
People investigate LTC insurance for two reasons.
- First, they do not want to go broke.
- Second, many long-term care service providers will not accept Medicaid. Nursing homes generally have to because of federal laws–but a nursing home is usually the last place you want to be. If you have the ability to pay from your cash flow and insurance, it will let you choose where and how you will be cared for. The providers will welcome you with open arms!
If you have not investigated LTC insurance, now is the time, while you are still healthy enough to get it.
It is a logical discussion and it is not appropriate for everyone. But please investigate with someone knowledgeable in planning for LTC. At The Long Term Care Guy, we have been doing only LTC planning for over 25 years. Since nearly all of our business comes to us by referral, we may even may be working with your financial planner or attorney!
Call TheLongTermCareGuy.com at (920) 884-3030 or email us for a time to investigate your situation.
Why Medicaid Long Term Care is a Bad Choice
Most assisted living facilities don’t accept Medicaid, so often Medicaid recipients needing LTC are left with only one choice—a nursing home.
Many people don’t realize that, in addition to traditional health care, Medicaid actually pays for most long-term care (LTC) in the United States. In fact, less than 40% of Medicaid dollars are used to pay for traditional health care. The small portion of Medicaid recipients (just over 20%) whose long-term care services are paid for by Medicaid use over 60% of the Medicaid budget dollars.
Most assisted living facilities don’t accept Medicaid, so often Medicaid recipients needing LTC are left with only one choice—a nursing home. This is because the federal government requires nursing homes to accept Medicaid payments if they want to accept Medicare for the rehab care they provide–and this rehab care is a major source of revenue for many nursing homes.
Wouldn’t you rather receive care, when needed, at home or in an assisted living facility rather than the nursing home? Most people would, but if you cannot afford this care – your only option might be the nursing home.
Many people mistakenly assume LTC insurance is too expensive. It can be, if it’s not chosen appropriately. Do you have a deductible on your car insurance or does it cover every last penny? Mine has a deductible, so that I pay the first part and insurance pays the expensive part.
LTC is similar. Your lifestyle will change when care is needed. You will spend less money on vehicles if you cannot drive, and spend less on golf, travel, toys, and so on. The money freed up by not spending it on these things needs to be taken into account in order to see how much care you can pay for. Then you only need enough insurance to cover the shortfall. If you have a nest egg, and do not want to use it all up, you can always take the interest it generates to help lower the insurance need even more—and never touching the principal.
Think you cannot get LTC insurance because of health? I have solutions for nearly every situation – even some for people already in care.
So, you can ignore this and hope you will not be among the 70% of us who will need care – or you can investigate options to see if this concern can be handled affordably. Your choice!
www.TheLongTermCareGuy.com Romeo Raabe is here to help, even with just advice.
What Can I Do About Long Term Care?
Long term care is very expensive. Few people are prepared for the cost when they determine they need care.
Long term care is very expensive. Few people are prepared for the cost when they determine they need care. Fortunately, there are ways to deal with the bills even if you do not have much money.
Medicaid requires beneficiaries to spend all savings and other assets down to impoverishment before they will pay for care. This includes a requirement that any life insurance with a value over $1,500 be cashed in—some people have life insurance so that there is money to pay for their funeral. If someone needs Medicaid to pay for their care, this insurance will need to be cashed in, leaving no money for final expenses as planned. Medicaid does, however, let you set aside up to $15,000 to pay for final funeral expenses if this is done in an irrevocable burial trust. I set these up for people at no cost.
Medicaid also allows you to set these irrevocable trusts up for the final funeral expenses for each of your children and their spouses in addition to the one set up for you. This allows you to leave funds to family instead of spending it all on the costs of long-term care.
Few people know of these Medicaid rules and then leave nothing but the funeral bill for their children.
You have some savings in the bank, earning very little interest. The irrevocable trusts also earn interest, cost nothing to open, and protect money from the Medicaid “spend down”. No need to spend money to open these, other than the amount you want to place in the trust.
At TheLongTermCareGuy.com, we help people deal with the costs of long-term care. We also offer alternatives to help those planning ahead to pay for long term so they don’t have to spend their assets down to impoverishment. There is no charge to meet and explore options. Call us at (920) 884-3030 to schedule a free consultation.
How to Use Untaxed Dollars to Cover Long Term Care
LTCi premiums are fully deductible on your Wisconsin income taxes, regardless of whether you itemize taxes!
You may have heard that Long Term Care insurance (LTCi) premiums can be tax deductible. But (and there is always a but), there are restrictions.
LTCi premiums are fully deductible on your Wisconsin income taxes, regardless of whether you itemize taxes, how much or how little your taxes are, or whether you have enough other medical deductions.
Federal income tax rules are a bit more complicated. First, you must itemize your income taxes. Second, there is an age-based cap on the amount of premium dollars that can be used toward the deduction. Third, that amount, along with any other medical deductions you have, must exceed 7.5% of your adjusted gross income before you can start deducting it. This takes all the fun out of it for many people.
But now there is another way to use untaxed dollars to pay for LTCi. Even though Congress authorized this three years ago, most annuity companies have not yet changed their accounting to allow this.
Let’s say that you put some money into a deferred annuity some years back. Let’s say you deposited $50,000 and over the years it has grown to $100,000. Any money you withdraw from this annuity will be considered to be interest, and thus entirely taxable.
Instead, you can initiate a direct transfer from this annuity to pay the premium on your LTCi. The IRS will consider the amount withdrawn to be proportional between principal and deferred interest. In the example above, the existing annuity is 50% principal and 50% untaxed interest, so that half of the premium would be paid with dollars that are not taxable.
Right now, this strategy works when the annuity and the LTCi are with the same company. However, the company I use most for LTCi (because it offers the best benefits for the price) has a fixed interest annuity paying 3%– a decent fixed interest rate today. If your LTCi policy is with this company, you would be able to make a direct transfer from whatever annuity you may currently own into this one, and then have your LTCi premium paid automatically with a combination of principal and untaxed interest.
All this can happen automatically. You would receive a letter each year stating your premium has been paid; meanwhile, you smile at the use of untaxed dollars to accomplish this. If you deposit enough into the annuity to generate interest equal to or greater than the LTCi premium, you will always retain the amount of the initial deposit in the annuity.
When your health changes and care is needed, how easy will it be to suddenly turn on an additional cash flow of $50,000 to over $100,000 a year? If the idea of using untaxed dollars earned in interest, to pay a bill and give you freedom to choose who will care for you and how is important to you, call www.TheLongTermCareGuy.com at (920) 884-3030 to investigate.
“How to Deal with Long Term Care Financially” Seminar Scheduled for March 19
Seminar Presenter: Romeo Raabe, Owner of the Long Term Care Guy
FREE LTC Seminar on March 19 @ 1:00 pm – 2:00 pm
When: Tuesday, March 19
Where: Allouez Village Hall, 1900 Libal Street
Topic: How to Deal with Long Term Care Financially
Presenter: Romeo Raabe, Owner of the Long Term Care Guy
What will you learn?
The thought of paying for long-term care can be daunting, but there are ways to help cover the costs. Romeo will discuss government programs, paying out-of-pocket, how to make that “pocket” last longer, long-term care insurance, and ways to protect some money from the Medicaid spend down.
Register:
Online: http://allouez.recdesk.com
By Phone: 920.448.2804
In person: Allouez Village Hall, 1900 Libal Street
Happy Holidays – How is Grandma?
How is Grandma? Are bills piling up unpaid? Is hygiene slipping? Are they not eating as well as they should, or is the house unkempt?
While your family was together at Thanksgiving, was there evidence that older family members are not taking care of themselves as well as they could be or used to?
Perhaps your loved one is not driving as much as before, or perhaps should not be driving at all. Are bills piling up unpaid? Is hygiene slipping? Are they not eating as well as they should, or is the house unkempt?
It is never easy to meet with siblings and parents to talk about how and where they will be helped with future living arrangements. Then you check into costs at senior living facilities and wonder how can this possibly work.
Hello! My name is Romeo Raabe, and I am a long-term care (LTC) planner at www.TheLongTermCareGuy.com. I help families learn how to convert homes into income to pay for LTC facilities.
I help families navigate the federal Medicaid programs that can pay for LTC. I even have ways to help protect the money for family, rather than all going toward LTC costs.
If this discussion has started, or is about to, call me at (920) 884-3030 and let’s schedule a time to visit and see if I can help you and yours. It’s never too late and you don’t know what you don’t know.