You’ve planned ahead–or have you?

Rome's Whiteboard

So, you’ve given the house (or farm or some other assets) to the children long ago so the government will pay for your long-term care, and you’re feeling proud of yourself for having planned ahead.   But, I have some bad news for you—did you know that almost no assisted living facilities will accept you if you are on Medicaid?  Medicaid payments to facilities don’t cover the cost of providing care, so most assisted living facilities don’t accept Medicaid.  You could go into a nursing home because they’re required to accept Medicaid (since they receive Medicare payments for some services) –but you probably don’t want to go to a nursing home.  Ok, you think– you can move in with your kids.  They have room between classroom space for their kids learning from home, and all the time between their own Zoom meetings to care for you, and don’t mind adding your care to their day. Doesn’t sound likely, does it?

Have you planned ahead for assisted living facilities refusing to accept Medicaid?

This article tells the all too common story of a nursing home being  converted to an assisted living facility – the kind of place you won’t be able to go to if your care is being paid for by Medicaid. Nursing homes across the country have been closing.  When you need care, if you aren’t able to pay for it and only a nursing home will accept you, your helpers (family or paid) may have to look far and wide to find a place that will accept another patient paying for their care with Medicaid.

People who planned ahead can avoid a nursing home!

Being very wealthy, or having insurance to pay for your long-term care allows you to choose in-home care through an agency or the nicest assisted living facility in town—and you aren’t being a burden on your family.  In most cases, I counsel my clients to plan to cover the cost of home care or assisted living, as the great majority of care can be handled there and not a nursing home.   Through this, my clients get appropriate coverage that costs less.   Contact me today for a free, no obligation discussion of what makes sense for you.

Why Medicaid Long Term Care is a Bad Choice

What Can I Do About Long Term Care
Most assisted living facilities don't accept Medicaid

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.

Medicare & Medicaid, What’s The Difference?

Medicare & Medicaid, What’s The Difference?
Medicare & Medicaid, What’s The Difference?

Medicare & Medicaid, What’s The Difference?

I was asked this question at a seminar recently, and thought a good definition of each might be of value.  Medicare is health insurance at age 65.  To qualify you must have paid income and Social Security taxes for at least 40 quarters (10 years).  Medicare pays for doctor and hospital care, fixing us when we are “broken”.

Medicare is not free.  Most of us qualify for part A which covers hospitals and certain other medical costs.   There is a monthly premium for part B which covers doctor bills.  This bill is typically deducted from your Social Security check.  Most people also purchase a private “supplement” to cover deductibles, or a part C called Medicare Advantage which is similar but requires copays at point of care.

Medicaid is a welfare program.  You qualify by being out of money as defined in the program. Most Medicaid dollars go towards long-term care (LTC) costs for elderly who exhausted all their assets due to the high costs of this care.

Medicaid, which is the largest payer of LTC costs in the US, treats single people differently than married couples.  A single person who moves to a LTC facility for care in later life does not need a home, auto, etc.  Thus the single person must spend all assets and savings down to less than $2000 to qualify.

$45/month can be retained for spending money (socks, underwear, toothpaste) and most life insurance must be cashed in as well.  For those aware of the rules, an irrevocable burial trust of up to $15,000 for burial expenses can be established so children are not burdened with that bill.

Married couples are allowed to retain use of the home for the at-home spouse, along with one vehicle, some savings and income.  At the at-home spouse’s death all of these items are recovered against by Medicaid to pay themselves back. Typically nothing is left for heirs.

Medicaid also “looks back” in your financial records at time of application to be sure money or other assets have not been given away.  Any gifts in the past 60 months will be totaled up and a determination made of how long such funds could have paid for your care.  That is how long you will not receive Medicaid once you are down to $2000.  Whoever received those gifts may need to return them.

Medicaid pays LTC service providers much less than the going rate for care.  Thus many providers will not accept Medicaid or prior to allowing your entry may require that you prove the ability to pay out of pocket for at least 2 or 3 years before applying for Medicaid.  The more desirable and expensive the facility, the less likely it will accept Medicaid.

So, how does one avoid becoming impoverished and needing Medicaid?  The answer is simple, have enough income and savings to pay for such care, or purchase insurance that pays LTC costs for you.  You’ve probably had car insurance for most of your life, why not insure for LTC which can be far more expensive than an auto accident?

Many things need to be taken into consideration to choose LTC insurance benefits appropriately.  This is where expert advice can save a lot of money.

Investigate with an expert, call www.TheLongTermCareGuy.com at (920) 884-3030 or (800) 219-9203 to schedule a time to discuss your situation.  We also offer the irrevocable burial trusts to protect some funds for family.

What to Look for in LTC for 2017?

What to Look for in LTC This Year?
None of this is cast is stone, but some very good things are likely to happen regarding LTC in 2017!

None of this is cast is stone, but some very good things are likely to happen regarding LTC in 2017!

None of this is cast is stone, but some very good things are likely to happen regarding LTC in 2017!

The new administration is likely to make changes that will affect LTC financing.  First of all is the good news that the feds plan several interest rate increases next year.  Insurance companies make their money not off the premiums they collect, but from the billions they must keep on deposit for claims.  They have not been earning s**t lately, but that will change.  For LTCi, this means the end of, or a significant slowdown on pressure to raise rates.  Hey, they’ve been promising 5% compound inflation and only earning 3%, they can’t go on like that.

Many states would like to make changes to how Medicaid (which pays for the majority of LTC) is divied up.  Most Medicaid dollars go toward LTC costs.  By block granting Medicaid to the states and letting them determine how to best use those dollars, a lot of abuse can be stopped.

Right now, your spouse can have $2,000,000 in an IRA or 401k and it is not a countable asset in determining if you get Medicaid for your LTC.  We are giving Medicaid to millionaires – literally!!!  We also let the at home spouse keep the home equity and perhaps, maybe, if we are lucky, recover some of it later.  Does this make sense, let’s give Medicaid to people who have money to pay their bills and then see if they will pay it back if they want to later?  Really?

If the general public realizes they will need to use up their nest egg, and spend the house equity first, before they get government Medicaid, they will line up to buy LTCi – assuming they are still healthy enough to get it.  There will be wailing and gnashing of teeth by those who are no longer eligible to buy such coverage.  Don’t let your clients be among the wailers and gnashers, ask them NOW, how will you pay for care when your health changes.  Or, Would an extra bill of $40,000 to $120,000 every year, be a problem in your retirement?

Things are going to change, you can only kick the can down the road so far before your toe, the can, or the road runs out.

Once interest rates come back up, LTC insurance companies will re-enter the market.  They will have leaner products (remember the lifetime benefits sold years ago?).  They will have products that limit their exposure and increase your clients’ exposure.  Companies are getting killed by dementia and Alzheimer’s as those claims go on for years and years and years…..  Yes, Alzheimer’s does tend to run in families, have you asked your clients about their family history and exposure to this?

I still have LTCi available with a 10 year benefit.  And 5% compound automatic built in inflation on that benefit.  Get some while the getting is good.

Do You Have A Gap In Your Plan?

Hopefully you have planned and saved to have an income you can live on in retirement.  You planned to use Medicare and either a traditional supplement or a Medicare replacement plan (advantage)  to cover health care costs.  Hopefully your other available income can be used for basic living expenses, travel, and some fun.

Would an unexpected bill that comes each month in the amount of $2000 to $8000 a month be a problem for your plan?  For many people, it would.  While only 70% of us will need Long-Term Care in our homes or a facility (HHS), less than 15% have sufficiently planned for this.

Does that mean all is lost when care is needed?  Not necessarily.  There are strategies that can help most anyone deal with the costs of Long-Term Care (LTC).

The least expensive way to deal with this is to purchase LTC insurance while you are still healthy, but this topic is addressing gaps, so let’s assume you did not do that.  The government has two programs which can help, Medicare and Medicaid.

We all get Medicare at age 65, whether we retired early or are holding off until later.  Medicare is health insurance which, while it does not pay for LTC, will pay for a short recovery stay in a nursing home.  Medicare has learned that is it less expensive to have you recover from surgery in a nursing home bed than a hospital bed.

Assuming you are in the hospital as an inpatient for 3 days (two midnights), transfer to a skilled nursing home for recovery purposes, and do some type of recovery care rehab 5 days per week, Medicare can pay for that care for up to 100 days AS LONG AS YOU MAKE PROGRESS EVERY DAY.  This typically does not go past 10-12 days.

Thus Medicare is not a useful payer of LTC services, but Medicaid is.  Medicaid will pay for LTC once you can prove that you are completely impoverished (broke).  Getting to broke is not pleasant.  A single person spends down all assets to $2000 and cashes in life insurance, a married, at-home spouse can keep a house, car and some money which Medicaid will take back after death.  Thus Medicaid will pay for care but you will have nothing left to pass on.

Medicaid also pays providers much less than you or I would pay by writing checks for our care, thus getting in to where you want care can be difficult.

Now, some solutions:  There are ways to make your just a part of your money last as long as you do.  A part of your net worth can be converted into life income – taking into account your [much] shorter than average life expectancy when you require care.  If you can leave 2/3 of your estate intact to pass on, it’s generally a good thing.

You can also leave money for family through Medicaid allowed gifting.  Irrevocable burial or burial spaces trusts can be funded for children and their spouses, moving a good chunk of assets to family and will not be counted as a divestment.  Medicaid rules allow this in 49 states.

The important thing to remember is that there are solutions for most any situation that can at least help.  If you would like to learn what you can do to protect some money for spouse or family, contact www.TheLongTermCareGuy.com to learn your options.

Inflation and Long Term Care

I am continuously appalled to find insurance agents offering Long Term Care  (LTC) insurance products that contain no 5% automatic, built in inflation on the amount the policy will pay when care is needed.  LTC insurance is purchased while still healthy enough to obtain it, and may not be used for 30 or more years.

If I tell you what LTC may cost 30 years from now, you may not believe me, so let’s go back and let history tell us about inflation.  30 years ago you could buy a new Ford Mustang coupe LX for $7189.  A first class US postage stamp was 22 cents, and a nursing home cost about $1600 a month.  You probably have some idea of what those cost today.

Most LTC workers are minimum wage employees.  The nurses and administrators are doing paperwork.  Minimum wage is going up by over 100% in several states to $15.00 per hour.  What will this do to the costs of LTC?

The New York Times published an article about a year ago saying that by 2020, more Americans would be employed as caregivers than work in retail.  What happens to wages in any industry when not enough workers apply for the jobs?  That’s right, wages go up.

I am getting bulk mail postcards in the mail, addressed to resident, from assisted living facilities asking if I will come to work, they are desperate for employees.

Now Medicare is making the problem worse.  Medicare has paid for short stays in nursing homes to finish recovering from a 3+ day stay as an inpatient in the hospital.  It is less costly to have you finish recovering in a nursing home, than in a hospital bed.  But the new system will give a capitated sum to the hospital for knee or hip replacements, and if the hospital can send you straight home, bypassing additional recovery in the nursing home, they get to keep more of the money.

Those short term stays were the only cash cow the nursing homes had.  They all employ marketing people to call on the hospitals and ask that recovering patients be sent to their facility.

The nursing homes lose money on the Medicaid reimbursements.  They made up for it by the healthy payments from Medicare for recovery care after a hospitalization.

Their cash cow is gone.

Their labor costs are increasing dramatically.

They cannot find enough workers, raising wages even more.

Americans are passing through age 65 at a rate of 10,000 every day.

Medicaid, which pays for LTC when your funds are completely exhausted down to $2000, does not have enough money to pay for all the baby boomers’ care.  Most boomers do not have enough savings to pay for their own LTC.  How do you plan to pay for the care you need when you are no longer able to take care of yourself anymore?

I bought a LTC insurance policy 15 years ago.  Initially, it would pay $4500/month for my care if needed.  It has the built in, automatic, compound 5% inflation factor on what it will pay for my care.  Today, 15 years later it will pay $9000/month for my care.  Along with my Social security and other income I can pay for my care.  I can go where I want to be cared for.  I can get the services I want and need.  Will you?

Don’t let an insurance agent who is not fully aware of the costs of LTC offer you a policy without the absolutely essential 5% automatic compound inflation benefit included.  Without this feature, it may well be a waste of money before many years have passed and costs continue to increase.

For more information, visit www.TheLongTermCareGuy.com or call us to investigate at (920) 884-3030

Seven Things To Know About LTC Insurance

1. You may not need as much of it as you think

There is usually no need to purchase enough of it to cover the cost of care in the locale where you may use it.  Bear in mind that most income such as Social Security continues until death, as do, pensions, interest income, etc.  Lifestyle will change too, no Branson, MO trip anymore, cruise, camping, and other fun things may not happen when one cannot participate leaving more of your income to put towards the cost of care.

2. 70% of us will need care (2015 Medicare and You, Centers for Medicare and Medicaid Services)

So don’t think it won’t happen to you.  As healthcare in the US improves, things that used to kill us, now only “wing” us, causing more need for care in later life.

3. Women are at significantly increased risk

About 68% of nursing home residents and 72% of assisted living residents are women. (Source: Long-Term Care Services in the United States: 2013 Overview, National Center for Health Statistics) Thus there is even more urgency for women to obtain coverage, and to do so before things like their first bone density test.  Many LTC insurance companies charge women significantly more than men, BUT NOT ALL!

4.  Don’t believe the average cost surveys.

Some areas of the country cost much less than other areas to receive LTC services.  The lowest costs are in West Virginia and Louisiana.  New England and Alaska are among the priciest locales.  Check out the actual bills where you may need care, not just the median cost.

5.  Medicare does not pay for LTC

This gets confusing as Medicare will pay for up to 100 days in a nursing home following 3 days inpatient in a hospital, for the same reason you were hospitalized, and while you are improving (medical care).  It save Medicare money to have you recover in a $300/day nursing home bed than a $3000/day hospital bed.  Most of us who need care, will need more than 100 days, and if we did not spend 3 days inpatient in a hospital, we may receive no Medicare coverage for the nursing home.

6.  I can afford to pay if this happens to me

Really?  Not all care is significant enough to allow deducting it as a medical expense.  If you need $100,000 that you can spend out of your IRA or 401K account, you will need to withdraw approximately $200,000 so that you have $100,000 after the new “rich person” income tax bracket you will be in.  Even if you can afford it, why would you want to when insurance can cost pennies on the dollar to pay the bill versus using up your assets that you may want to leave to family or charity.

7.  It won’t be that long, none of my relatives have needed care for long

20% of people needing LTC will need it for more than 5 years.  If you follow averages of how long people might spend in the nursing home, remember than only about 20% of LTC is provided there.  The majority of care is provided in your own home (no statistics for that) or in assisted living facilities (4 years average stay).  Now add that to the “average” nursing home stay of 2.5 to 2.8 years depending on which survey you read and it might be a while.

For more information, visit www.TheLongTermCareGuy.com

Thanksgiving is Coming, How is Your Family Doing?

Thanksgiving comes around every year about this time.  Families get together, hopefully getting along.  Sometimes it is the one time a year everyone sees how the older members of the family are doing since last year.

For some families, it will be a difficult time when they realize that grandma or grandpa are not as sharp as they used to be.   Perhaps it is difficulty in getting around, or driving, or perhaps it is in confusion that seems to be getting worse and frustrating the person no end.

Well, the family is all together, so let’s discuss what to do.  Perhaps nobody is willing to start the discussion, ignoring the elephant in the room.  Or perhaps someone attempts to make suggestions and is quickly shot down.

Talking about losing independence is never easy.  Help may be offered and declined since “I can do it myself”!  In any case, some family members can see that a problem is evident and wonder what to do about it.

A big part of searching for solutions is learning what options are available.  All sorts of support services exist, to help people in their homes, day care several times a week, or even an assisted living facility.  Many of these have pools or hot tubs, and most now offer happy hour one afternoon a week to help with socialization.  However, who will bring up the topic and risk the wrath of the loved one you all care about?

All of the options can be expensive.  The good news is that only about 15% to 20% of LTC is done in nursing homes now.  Home care and assisted living facilities cost half or less than a traditional nursing home.  However, $1500 to $4500 per month will strain most budgets or put a large dent in the family funds rather quickly.  Perhaps it might be prudent to learn what financing arrangements for LTC services are available.

Medicare does not pay for LTC.  Medicaid will, but only once the person has spent-down to impoverishment and cashed in any life insurance.  There are other, better options available.  LTC insurance, if purchased while still healthy is the least expensive way to address this, but even after the need arises, there are other strategies.  In a worst case, there is still the option to move some money to family without Medicaid penalties.  You simply need to consult an expert in this area and learn what options can work for you.

More information is available at www.TheLongTermCareGuy.com

Who Will Have The Money?

I paraphrase an article in the Tuesday, July 22nd Wall Street Journal here, on spending and entitlements.  The Congressional Budget Office long- term budget outlook released July 15 shows a 40 TRILLION dollar increase in debt over the next 2o years.

The CBO simply stops projecting after 36 years as its models cannot conceive of a functioning economy.  What does this have to do with Long Term Care?  If you are expecting government Medicaid to pay for your LTC, you had better reconsider.

The CBO’s estimates show a typical middle class family’s income tax burden nearly doubling over the next 25 years.  No, this is not a rant on taxes, it is a warning that government spending cannot continue as it is (which is increasing).

Each day, 10,000 baby boomers retire and begin receiving Medicare and often, Social Security benefits as well.  While five workers supported the benefits of each retiree in 1960, only two will by 2030.  We do not have the resources for 77 million retirees in the Medicare system, and it’s Medicaid, not Medicare that pays for LTC when you become impoverished (it does not take long with an assisted living facility at $4000/month and a nursing home at $8500/month and doubling every 15 years).

Who will pay for your care when you can no longer manage on your own?  Can your children afford to retire early and become your caregivers?  Your children may be saving less than you, and you probably did not save enough for your retirement.

We are going to be on our own for our LTC.  I bought LTC insurance for myself years ago, when the policies were less expensive, and the insurance companies accepted people that today are often declined.  They learned that diabetes leads to cognitive impairment, and heart disease can lead to strokes.  Both of these afflictions can require years of care.

Some of the LTC insurance companies have had rate increases, due to accepting people they have now learned to avoid.  Some still plan to raise rates regularly, and I avoid those companies.  As an independent agent, I am able to pick and chose the best deal for each client, and I work long and hard to find the best deals.

Some LTC insurance companies do not offer their products in every state, but residents of those states can come to Wisconsin to purchase them from me and they are good anywhere in the USA.  It may well be worth a $250 plane ticket to get a good deal and save $1200 a year on premiums.  If your agent has only one choice, ask why.  If a car dealer had only one car on his lot, would that be the appropriate one for you?

If you are still healthy enough to qualify for an LTC insurance policy, you best start investigating, now!  Get while the getting is still good.  They are actually very inexpensive, when one person of a couple can recoup 30 years of premiums paid by two people in less than one year on claim.  I will be well taken care of, who will take care of you?

More information is available at www.TheLongTermCareGuy.com 

What We Don’t Know About Long Term Care – Is A Lot

Americans over 40 — in other words, us — are dangerously unaware of our likely need for long-term care when we age and woefully ignorant about the costs, according to a new poll of adults in midlife and beyond.

 
The telephone survey of 1,019 boomers over age 40 was conducted by the Associated Press-NORC Center for Public Affairs Research and financed by the non-profit SCAN Foundation, which supports research and other initiatives on aging and health care. It found that many older Americans had barely begun to think about their long-term care needs, nevermind put aside money to cover them. For example, nearly 31 percent of respondents said getting older was something they’d rather not think about.

Following are other highlights from the poll, along with advice available on Next Avenue to help you avoid falling short when the time comes.

Only 16 percent of those surveyed said they had done a great deal of planning for their long-term living assistance needs; two-thirds admitted they’d barely started preparing. Looking deeper, only 8 percent of respondents between age 40 and 54 — and just 30 percent of those over 65 — said they’d begun long-term care planning. In addition, just 47 percent said they had created an advance directive (or living will) to designate someone to make decisions for them in the event that they can’t. 


The survey found that even many of us who have been caregivers for our own parents have taken no steps to prepare for the day our children may need to look after us. Fifty-three percent of people responding to the survey said they had provided care for a family member or close friend, yet only 24 percent said they thought it was very likely that they’d ever require ongoing living assistance themselves.

And while 77 percent said they were confident their spouse or partner would help them as they aged, if need be, only 46 percent said they were sure they could count on their children. Maybe that hesitancy reflects the fact that nearly 60 percent of respondents had not talked to loved ones about the possibility. That’s surprising, considering 95 percent who had been family caregivers say the role was fulfilling and 72 percent say it was stressful.

Almost half of respondents – 48 percent – said they thought “just about everyone” will need ongoing living assistance at some point, even if they never become seriously ill. The federal government estimates that 70 percent of American adults will require long-term care at some point after age 65, on average for at least three years. 

In the survey, 58 percent of people over 40 guessed that living in a nursing home cost less than $6,000 a month, but nursing homes actually average $6,700 per month nationwide. Respondents’ estimates of assisted-living facility and home health aide costs were more encouraging: Only 31 percent underestimated the average monthly cost of the former ($3,000 to $4,000) and 14 percent underestimated the average monthly cost of the latter ($1,000 to $2,000).

Still, when it comes to long-term care savings, many of us have not faced reality. Only 33 percent of those surveyed said they doubted they’d have the financial resources to cover their care needs as they age, which makes sense when you consider that only about a third of respondents said they’d begun setting money aside. As for the rest of us, it’s time to take financial action.

Our knowledge of what’s covered by Medicare and Medicaid is also fairly remedial. For example, 44 percent thought Medicare, the national health insurance program for seniors, paid for care by home health aides; 37 percent thought the program covered nursing home fees. But Medicare does not cover nursing home costs and it covers home aides only in certain cases. As for Medicaid, the federal program for Americans with low or no income, only 39 percent of respondents thought they might ever need to rely on it to cover long-term living costs. The reality is that Medicaid pays the bulk of the nation’s long-term care costs, usually after people have spent their retirement savings. However, there is zero chance that Medicaid will have the funds to pay for the baby boomer’s LTC needs as they begin requesting assistance.  For more information visit www.TheLongTermCareGuy.com