Reverse Mortgages
Have you ever wondered….
Do you have questions about the cost of long term care?
Do you have questions about the cost of long term care?
Are your clients confused about the many options, how to choose coverage, or if it’s necessary for them?
I’m Romeo Raabe LUTCF, LTCP and I’m known as The Long Term Care Guy–in fact, my website is www.TheLongTermCareGuy.com and I work exclusively on Long Term Care (LTC) issues. Some examples include how to get the most from LTC insurance, how to start a claim, what to do if care is needed and there is no insurance—and much more!
I also offer insurance for LTC and have options most financial professionals are not even aware of. For example, this week I put coverage in place for a couple ages 87 and 84 for less than $90/month a piece.
Even if someone is in care – even if already on Medicaid – I may still be able to help. If you or your clients have questions, feel free to call me at (920) 884-3030. I am here to help anyone dealing with or concerned about LTC.
Contact ROMEO RAABE about the cost of long term care!
PS: There can be huge differences in LTC insurance policies—I can help you understand the differences, and probably even set you up with other strategies most other advisors don’t know about!
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.
How Your Home Can Help You Pay For Long-Term Care
Yes, it is possible for your home to help pay for your Long-Term Care (LTC) and possibly help keep you in your home longer. For many seniors, the home equity is their largest asset. Using that asset to help keep you at home versus in a LTC facility can make sense. There are a number of strategies on how this might happen.
First, let’s review the Medicaid rules for paying for LTC. Medicaid is the fall back option for people who cannot pay for LTC themselves. If you are single, you must spend down EVERYTHING you have to $2000, including the sale of the home, auto, IRA’s, cash in life insurance over $1500, pretty much devastating your finances. If married, the spouse at home can retain use of (Medicaid will recover later, so children may not inherit) the house, one vehicle, some savings and income.
Since the house will be subject to estate recovery, where Medicaid takes it after last death preventing your children from inheriting it, why not use it to pay for your care – at home or in a facility. A reverse mortgage can facilitate removing the equity in the house and converting it into a check you can cash. You can then spend the money until it is gone, OR…..
There is a way to convert the cash you removed from the house into an income for life. Typically, this is called a life income annuity, but there is a twist for LTC. When LTC is needed, it is probably true that your life expectancy is less than others of your chronological age. Most annuity companies only take into account your age and gender. There is one that has a different twist that makes it much more beneficial when LTC is needed.
This one takes your [poor] heath and thus shorter than average life expectancy into account. By doing so, it may be possible to get a much larger check each month for life. Since your life expectancy is less than average, you can receive a significantly larger check each month, and use that to either pay for home care and stay in your house, or pay for an assisted living or other LTC facility that might not have been affordable to you otherwise.
This lets you use the home equity, which would otherwise be reclaimed by Medicaid after last death, to pay for the LTC you need, and giving you choices of how and where that care is delivered. Its your home, its your equity, why not use it for your care as you wish?
If you are healthy, planning for LTC needs, and do not have the cash flow to pay the premium for LTC insurance, why not use that home equity to purchase the LTC insurance you do not think you can afford. Once you have the coverage, you can use it to pay for care at home, or in a facility, your choice. Since the alternative is to spend the home equity until you are on Medicaid, and remaining equity going to the state after death, versus your children, it makes sense.
Lastly, if the home is going to go anyway, we here at TheLongTermCareGuy.com have ways to save some of that home equity to pass on to your children (and their spouses) that Medicaid allows. Typically, any gifts given in the past 5 years will disqualify you from receiving Medicaid, but there is a provision that will allow you to protect some for family. We can help you accomplish this.
So, when LTC becomes necessary, and you might think all is lost, there may still be options to be able to pay for care and receive that care where and how you want. It is even possible to protect some assets to pass on the family. Simply call TheLongTermCareGuy.com for help at (920) 884-3030 and schedule a time to learn your options.
Long Term Care In The News
Yesterday’s Wall Street Journal had some interesting statistics on labor growth predicted for the next decade. The article stated that 95% of new jobs would be in the service sector.
Previous articles have noted that the fastest growing service profession is caregiving. Earlier this year the New York Times estimated that by 2020 (four years from now) there will be more people working in caregiving than work in retail.
Where are all those low wage workers going to come from? And speaking of low wages, the minimum wage is increasing, in many locales doubling to $15 per hour. Since most Long Term Care (LTC) is minimum wage labor, what will this do to the cost of such care?
Currently $3000 a month is the base cost at many assisted living facilities, assuming you really do not need any help. A median cost is $4500 a month and dementia often goes for $6000 a month. Nursing homes often are $10,000 a month. Costs have been increasing at a rate of over 5% per year (the past 8 years of recession excepted). Now with interest rates having risen, inflation will increase, and minimum wage earners will be demanding higher wages.
How many of you can afford to pay for LTC for very long out of your current savings when your health changes? Many people tell me they plan to die in their sleep, a noble hope, but not likely to work out for you. Can your children leave their jobs, children, homes to come care for you? I doubt it.
The baby boomers continue to pass through age 65 at 10,000 a day. Some of them (like myself) have LTC insurance. The facilities want people like me as they lose money on the low Medicaid reimbursement levels. When there are enough people who can pay for their LTC because they purchased LTC insurance (or the few who are rich), the facilities will start declining to accept people on Medicaid.
I don’t want to think about the day when I can no longer properly care for myself either, but I know I will not become a burden on my children and will have ready access to the care I want, in a nice place I can afford. I no longer stay at Motel 6, even if they do leave the light on for me. I have become accustomed to nice surroundings and have little interest in changing. If home care can work, my policy will pay for that too.
You know the day is coming, are you going to investigate what you can do for yourself, or ignore it until it happens? You don’t need a lot of money to get LTC insurance. Since the fall back option is to sell everything, including the house and your life insurance to go on Medicaid, you might use some of that house equity to get coverage so you can stay home if you want, to or stay in a nice place (not your children’s basement).
For more information visit www.TheLongTermCareGuy.com You can email me questions at [email protected]
How To Care For Two Parents at Once Without Going Broke
“The biggest challenge of all is holding onto your patience.”
Reprinted from Money Magazine
For years, Madeleine Smithberg has been at the forefront of American comedy as co-creator of “The Daily Show” and a talent coordinator for “Late Show with David Letterman.”
That sense of humor was especially handy during the last few years. That is because Smithberg had to cope with not one, but two elderly parents in rapid decline.
“It’s heartbreaking,” says Smithberg, 56, who heads a production company in Los Angeles. “And yet it’s invisible, because nobody talks about it.”
“It’s like having toddlers,” says Smithberg, whose father passed away in 2014 after she moved her parents to Los Angeles. “They’re hot, they’re cold, they’re hungry, they ask repetitive questions, and their needs become the most important thing in the world at that second… The biggest challenge of all is holding onto your patience.”
According to a new study by Northwestern Mutual, the childrearing comparison is apt: 59% of Americans feel that taking care of two parents between ages 85 and 90 would be even harder than handling two kids between ages 3 and 5.
Caregivers may also have kids of their own. In that case, it’s not just the “Sandwich Generation” – it’s a Triple-Decker.
The Northwestern Mutual report found that 38% of those surveyed have not planned at all for handling the financial burdens of caring for elderly parents.
The costs can be gigantic: National median costs for an assisted-living facility are now $43,200 annually, according to insurer Genworth Financial in its annual Cost of Care study. A private room in a nursing home? $91,250.
That is more than enough to blow up any financial plan. The following is advice on how to care for your parents without going bankrupt yourself.
Long-Term Care
“Long-term care, long-term care, long-term care.” That’s the simple advice from Smithberg. Her father had taken out coverage for himself and his wife, which she calls “the best thing he ever did.”
Long-term care insurance covers expenses for nursing home or home care if you become incapacitated – most of which is not covered by Medicare. The coverage, like the care, can be extremely expensive, and to be sure, it did not cover all of Smithberg’s parents’ assisted-living costs. But, combined with their own life savings, the policy has meant that she has not yet had to dip into her own savings to pay for their care.
Have the Talk
With the holidays right around the corner, it is one of the few times of year when far-flung families tend to gather in one place. Don’t let the opportunity slip by to discuss your parents’ expectations, should illness arrive. Find out if they have advance directives – documents that spell out what treatment they would and would not want during a life-threatening health crisis. Make sure you establish who has power of attorney, should they need someone to make important decisions.
“It’s the perfect time to have this kind of conversation,” says Kamilah Williams-Kemp, Northwestern Mutual’s vice president of long-term care. Her spouse’s grandmother lived to 102, and her mother-in-law has been diagnosed with Parkinson’s.
Consider a Reverse Mortgage
Reverse mortgages allow homeowners aged 62 and above to borrow against their home equity and to receive either a lump sum, a series of monthly checks or a line of credit that can be tapped as needed. The upside of a reverse mortgage? With the bank paying you every month, instead of the other way around, that check can help cover costs for in-home caregivers.
Tom Davison, a financial planner in Columbus, Ohio, is working with a 90-year-old woman whose daughter moved in with her as a caregiver. “A reverse mortgage could help (the daughter) pay her the wages she has given up,” Davison said.
Be sure to have proper documentation that the child is actually employed by the parent. If not, and later Medicaid is needed, Medicaid will count each payment to the child for care as a gift, disqualifying the parent from Medicaid. rraabe
The downside, of course: The family home will eventually become property of the bank.
The proceeds from the reverse mortgage can also be converted to an income for life – but NOT like an ordinary annuity which uses your average life expectancy. When health is not good and life expectancy is less than “average” then a company that takes that poor health, and “shorter than average” life expectancy into account gives a much larger monthly payment. rraabe
Get Help
Your first instinct as a child may be to drop everything and handle all your parents’ needs yourself. But if it comes at the cost of your own career, think about the ripple effects – on your retirement savings, on the needs of your own kids, even on your own sanity.
With Americans extending their lifespan – 76.4 years for men, 81.2 years for women, according to the National Center for Health Statistics – this is a family challenge that won’t be going away anytime soon.
Denver financial planner Kristi Sullivan recommends hiring a case manager to do the heavy lifting.
“For an hourly fee, these people can handle tasks quickly that it might take you hours to do – scheduling doctor’s appointments, handling medical payments and dealing with insurance, helping find a good nursing home or in-home care,” Sullivan says. “Spending this money may seem expensive, but it’s less than putting someone’s career on hold to become a full-time caregiver.”
For more strategies, financing options, or ways to deal with the costs of Long Term Care even if not planned for in advance, contact www.TheLongTermCareGuy.com
Private Industry Has Solutions For Funding Care At Home That ADRC’s Do Not
I attended a dementia hearing recently. Eight Wisconsin legislators were listening to ideas and problems in dealing with dementia in Wisconsin. Many of those testifying spoke of how people will not accept home care because they think they cannot afford it.
People rely on family for help and care because they cannot afford home care. The most common advice these people receive from social workers and ADRC’s is to spend down to impoverishment and end up on Medicaid. In many cases, this means selling the home and moving to a facility with absolutely nothing left at death to pass on. No wonder people are terrified of needing Long Term Care someday.
Private industry has solutions as well, and often times they are completely overlooked. I am not speaking of LTC insurance here, once care is needed it is way too late to be trying to buy insurance. Let me give you an example.
Imagine you are an older American, living in your home (the only real asset you have) with very little money in savings and trying to get by on Social Security. You know you cannot afford to pay $1000 to $2500 a month for home care and so you just try to get along by yourself or with the help of family or friends.
Someone in this position often does not realize they can utilize the one remaining account they still have – Bank of House. A reverse mortgage is not something to go into frivolously, but as a last resort, it can keep you in your home.
You could take out the available money from a reverse mortgage and spend it for care until it is gone, but wouldn’t it be much better if the money lasted as long as you did? There is a way to convert the equity in your home into an income for life – a monthly check to use for home care that continues until the day you die, no matter how long that is.
If you used the proceeds from a reverse mortgage to buy a regular life income annuity, that would probably be a very bad idea. A life income annuity is based on how long the annuity company thinks you will live – based on age and gender. Remember, your health is not the best, you need care, and may not have as long a life span as others of your chronological age who are healthy.
There is one company that takes your poor health, and thus your shorter than average life expectancy into account, and will require far less money in return for that income for life -based on your shorter than average life expectancy – than a regular annuity would. Many times I have been able to convert the equity from the reverse mortgage into enough monthly income to pay for home care and keep people in their homes for the rest of their life.
So, often it comes down to this choice: Sell the house, spend down the money until impoverished, apply for Medicaid, and end up in a LTC facility with nothing left over. Or, take the equity in the home out through a reverse mortgage, and convert it into a life income, paid monthly, for as long as you live. By taking into consideration that your life expectancy is less than other healthy people of your chronological age, you get a bigger income and can pay for the home care you thought you never could afford.
For more information visit www.TheLongTermCareGuy.com or call me at (920) 884-3030 or (800) 219-9203
Do You Know Someone Who May Soon Need Help Managing On Their Own?
We all dread the time when we may need some assistance due to not being able to manage on our own anymore. It happens to others, but surely, not us. We are never prepared when a loved one needs help, and then we find out how expensive such care is. There seems to be no one place with all the information we need to formulate a plan.
Many family meetings occur in my office, trying to figure out how the family will care for Mom or Dad. The usual questions include: will the VA provide any assistance? Yes, perhaps, through a program called Aid and Attendance. It is a needs based program (meaning your assets must be somewhat limited) that can be available to veterans and even their spouses to help pay for care.
Medicaid is another possible assistance program. It, however, requires strict impoverishment, spending down to very low asset and income levels and is a last resort. There are things a family can do to protect some assets from this spend-down requirement, and this is often a topic of much interest.
If some funds are available from savings or home equity, there are some little known strategies to produce an income for life that requires far less of these assets than a typical life annuity. When life expectancy is less than “average” for someone’s chronological age, this can seem like a miracle. Being able to pay for the needed care and never running out of money is a very good thing indeed.
If you or someone you care about is going to need some help with day to day activities, and you have no idea where to start looking for help, call us at The Long Term Care Guy. We are Wisconsin specialists based in Green Bay, but can help with questions no matter where you are.
Give us a call at (920) 884-3030 or (800) 219-9203 or send us an email at [email protected]
Medical Tourism For LTC?
It is becoming more acceptable to travel for medical or dental care, both for access and saving money. Many travel to India for heart surgery, Singapore and Thailand are destinations for all sorts of medical care, and my clients who winter in Arizona have most if not all dental work done in Mexico.
But traveling for LTC? It is starting to happen! Central and South America as well as Asia can be very inexpensive places to receive LTC services. The problem is, how do you convince mom or dad to move there? And how often will you be able to visit, especially considering the air fare and possible political unrest? It is, however, being done by some.
Most of us want to be cared for near or in our homes. We want to be near our families, neighbors, church, etc. There are a significant number of adaptive systems designed to make that possible. There are systems that monitor the opening of refrigerator doors, medicine cabinets, bathroom doors, etc. These can develop “normal” patterns and notify a loved one if changes occur, such as not opening the refrigerator for a day or more.
Other adaptive devices for the home can open and close blinds by remote control, lower upper kitchen cabinets to reach items there, and central vacuum ports that open to sweep floor debris directly into. There are even track systems installed in ceilings that can lift and move someone out of bed, to toilet, tub, and finally wheelchair without any human lifting.
Of course paying for such systems is not cheap and a Social Security check probably will not cover the cost. Nor will it cover the cost for in home people providing bathing, dressing, meal preparation, shopping, etc. That is where LTC insurance comes in, if purchased while healthy in preparation for when one is not. Once care is needed, or a medical condition is diagnosed in the doctor’s office and becomes part of the medical record it will be too late to purchase such insurance coverage. Often when one hears the words “I’m writing a prescription for….” it’s too late.
There are some alternative strategies using home equity or savings to stretch available dollars in paying for care, but the LTC insurance is the least expensive way to handle these costs. Are you prepared for a bill that can easily run from $25,000 a year to 4 times that amount? Few of us are. That is why I have LTC insurance. Perhaps you might want to investigate it as well. www.TheLongTermCareGuy.com has lots of useful information.
New Study Details Financial Costs of Caregiving
Numerous studies have underscored the physical and psychological strain of taking care
of an aging, ailing loved one. However, a recent study by Genworth quantifies
the monetary loss that caregiving entails without the benefit of Long Term Care insurance. The new report, titled “Beyond Dollars: A Way Forward” calculated that, on average, families would be able to save nearly $11,000 yearly in out-of-pocket expenses if long term care arrangements were made prior to the loved one actually needing long term care. Moreover, 53% of family members that acted as the primary caregiver have lost income due to their caregiving duties.
The days of Ozzie and Harriet, where the stay at home moms ran the house in a dress and heels ended long ago. They had the time, energy, and space to take care of family members when they could no longer live on their own. Today’s families rarely have the time or space to be full-time caregivers. Many try, but the demands of family, jobs, and living often mean compromises and less than optimal results.
This new study emphasizes the cost in dollars that falls on family members who try to do the best they can at caregiving or assisting in caregiving. Long drives, restaurant meals, hotel stays, etc. all add up while limiting one’s time available for gardening, coupon cutting, or other cost saving strategies many would like to employ. Unforseen costs such as paying for yard care while visiting a family member do add up.
So why is it that so few adult children consider paying for long term care insurance for parents? If parents have property, businesses, or other assets that might be used up paying for care, instead of being available for inheritance, it would seem to be prudent for the children, if able, to consider such insurance to be able to keep family assets in the family.
Another strategy is for parents to use an illiquid asset to pay for such insurance to prevent liquidation to pay for care. If a line of credit is arranged for on the home through a reverse mortgage, that line of credit will increase automatically every year, regardless of any changes, up or down, in the value of the home. Those annual increases can be used to pay the premium on long term care insurance, leaving other asset intact as well as providing for care. Thus family can enjoy the remaining years, instead of that time becoming a burden for all.
There are many ways to prepare for the eventuality of needing care at some point in our lives. While some limited last-minute help may be possible, preparing can prevent long term care impoverishment and provide flexibility of care options. Why not find out what can be done in your situation? Call Romeo Raabe at (902) 884-3030 or (800) 219-9203 and learn what you can do.
You Need LTC, But Did Not Buy Insurance – What Can Be Done?
You thought (hoped, actually) that you would never need Long Term Care. If it did happen you figured perhaps your family would take care of you. Neither of those thoughts panned out and now you are facing a very expensive long term bill. What can you do?
Fortunately, there are strategies that can help in this situation. If you have a significant nest egg and are earning a good rate of interest on those investments, perhaps the interest and current income will cover the cost. Bear in mind that when care is needed, there may be less need for multiple vehicles, toys, entertainment, trips to Branson, etc.
If this is not your situation then perhaps there might be a way to make the funds you do have last longer or for life. One way to do this is with a medically underwritten immediate annuity. Typically, when a life income annuity is purchased, a large sum is exchanged for a monthly check that will come until the day you die. The older you are, the less years the annuity company predicts they will be making those payments and the larger the monthly check you receive from a fixed sum submitted. Thus older people (and men due to shorter life expectancies) receive a significantly larger payout from the same sum than a younger person (or female) would.
One annuity company takes health into consideration in their calculations. If you need Long Term Care, you are probably not as healthy as the “average: person of your chronological age. You probably have a much shorter life expectancy as well. By underwriting for health – taking a shorter life expectancy into consideration – this can be a solution to help you pay for Long Term Care and never run out of money. If you have $300,000 of non-qualified assets, and for about half of that I can get you the needed cash flow to pay for your Long Term Care needs for life, then the remainder is left for family. If your needs increase, and an expensive nursing home is necessary, you will be older and in worse health, making a second life income even less expensive than the initial one.
If you have no liquid, non-qualified funds for this strategy, but own a house, then a reverse mortgage may be used to produce the cash for this strategy. Imagine withdrawing cash from “bank of house” and converting those funds into a life income that keeps you at home instead of spending down, selling the home, and ending up on Medicaid in a nursing home.
If you own a life insurance policy, even a term policy, it is possible to sell it on the secondary market and receive a significant cash sum that can also be used to fund your Long Term Care.
If you are spending down to Medicaid impoverishment it is still possible to protect some of your funds. While Medicaid requires life insurance policies over about $1500 of death benefit to be cashed in, you can set aside up to $15,000 (varies by state) in an irrevocable burial trust. This money is not considered a divestment by Medicaid, and is immediately available at death (wire transfer) to pay for final expenses. Life insurance policies can take several weeks to collect on and often the funeral home requires a several thousand dollar deposit on somebody’s credit card. Family is in control and spends as much or as little as desired with the remainder being refunded to the estate of the deceased.
In many locales it is also possible for a parent to fund irrevocable burial trusts for children and spouses of – and still not be a divestment for Medicaid purposes. This can be done while in a Long Term Care facility, it is not too late until the money is all gone.
If you are an agent with elderly clients who may need such advice or assistance or are a consumer looking for solutions to a difficult situation, call me, Romeo Raabe TheLongTermCareGuy.com at (902) 884-3030 or (800) 219-9203 and lets see what can be done.