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LTC Insurance is Too Expensive!
Lately I have seen clients shown proposals to purchase Long-Term Care insurance with premiums exceeding $10,000 a year for a couple. This is ridiculously expensive for most couples in their fifties, and is probably because the insurance amounts are way too large to be appropriate.
Some insurance agents who “dabble” in LTC insurance products think that everyone needs enough insurance to cover the entire bill. Perhaps they themselves have zero deductible car insurance, which makes no sense either.
If we have a car accident, most of us have some deductible that we will pay before the insurance pays the rest. The larger the deductible, the lower the insurance premium. With most car accidents, our lifestyle does not drastically change, but when LTC is needed, it does.
If one of a couple needs LTC, they are probably not driving anymore. Thus fewer cars, less motorcycles, boats, campers, snowmobiles, ATV’s, etc. will be needed. There will be less trips to Branson, Disney World, cruises, even less going out to dinner when one has a difficult time going anywhere.
Professionals who specialize in LTC planning take these things into consideration. We try to help our clients predict how much of their monthly income is actually required to pay the basic bills, and with less toys and travel – how much of the bill for LTC they can pay out of pocket.
In addition to monthly cash flow, many people can also contribute the interest their savings earn, without touching the principal. Often, the total between available cash flow and monthly interest will cover a significant portion of LTC costs. Only the shortfall needs to come from LTC insurance.
Here is an example for a 65 year old couple. They want to be able to pay for home care and assisted living facility care without using up their life savings. If they do not need to support 2 cars, the extra Corvette “summer car”, the boat, and they understand that when one cannot travel, that expense drops to zero as well, they can pay the majority of the cost of home or assisted living facility care.
Many people plan for just those costs as very few people today need the care of a nursing home, especially if they can afford their home or assisted living care.
In their case it is determined that an additional $2000 a month from LTC insurance will suffice. At age 65 for each, and both in good health, they can purchase that coverage with a 10 year benefit when care is needed, including an automatic 5% compound inflation rider on the monthly benefit for less than $2000 a year each.
With the automatic, built in 5% compound inflation on the benefits payable, by age 85, a 10 year length of claim can give them over $850,000 from the LTC insurance to pay for their care.
Let’s review, at age 65 they purchase LTC insurance that will give them over $850,000 to pay for care over 10 years starting if care is needed at 85, for $1900 a year. Is a premiumk of less than $2000 a year expensive for that?
If you have been shown sky high premiums for LTC insurance, you need to shop around before you buy. Talk to someone who has over 23 years experience in planning for LTC, and can help you size coverage appropriately. Just give us a call at TheLongTermCareGuy.com at (920) 884-3030 or (800) 219-9203 and lets investigate. But don’t wait until your health fails, becasue then it may be too late, for you.
If You Need To Use Your LTC Insurance, I can Help
Most people who purchased LTC insurance hoped they would never need to use it, just like their car insurance, but the time does come for many of us. That is when we are reminded about the elimination period that we chose way back when we purchased it. Call it a deductible if you will, it is the number of days (typically around 3 months) that you must pay for your care out of pocket before the insurance starts covering those bills.
3 months of paying out of pocket can be far more expensive now that it was way back when you purchased this coverage. However, the insurance company does not care how expensive, or inexpensive those days are. This can work towards your advantage, saving you thousands of dollars.
Quite often, the need for care starts with a spouse or other loved one helping you. It may start out with checking in once a day and progress to assistance every day. Only when the burden becomes too great do most people consider contacting their LTC insurance company when they need to move to a facility or need significant help at home.
Once the care is needed, even in small, intermittent amounts, consider contacting the insurance company and filing a claim. Even if family can do it alone, you could bring in a home care helper for the shortest, least expensive visit available. This can help you get through your (xx) day deductible at perhaps $35/day. That is much less expensive than waiting until you move to a LTC facility where the daily charge is much higher and paying it for (xx) days.
For help and advice on this or any other question concerning your LTC insurance or LTC in general, no matter when or from whom purchased, call us, www.TheLongTermCareGuy.com at (920) 884-3030 and let us help you.
Where’s The Disconnect
This post, in it’s entirety, is reprinted from a chapter in the book “Surviving Alzheimer’s with Friends, Facebook, and a Really Big Glass of Wine”, written by my very good friend Honey Leveen, a first rate Long-Term Care insurance agent in Houston, TX
“Where’s the Disconnect?” by Honey Leveen, The Queen, by Self-Proclamation, of Long-Term Care Insurance
Insurance disclaimer: The following is based on the author’s personal experiences and opinions.
Much of the legacy we leave may be measured by how honestly we’ve dealt with life’s most painful truths. Often, such truths are the most obvious, yet hardest to see clearly.
I’ve specialized in long-term care insurance (LTCi) since 1990. That’s a long time. I’ve seen a few hundred of my nearly 3,000 clients collect from policies I’ve sold them. This is just the tip of the iceberg, however; many more will need to collect from their LTCi as time goes on.
I see scenarios just like Dayna’s [as described in Surviving Alzheimer’s] play out again and again. For different reasons, when a parent needs LTC, family members who’ve always gotten along well may find themselves at odds with each other. It is exactly as Dayna describes. The absence of sufficient, readily available money to swiftly access long-term care (LTC) aggravates an already highly stressful situation.
People who own LTCi also commonly suffer familial dysfunction similar to Dayna’s. What makes things so different for them is that their LTCi policies pay out significant, meaningful amounts of money when LTC is needed. This is often a huge game changer. LTCi tends to subdue the emotional discord Dayna describes. Relationships don’t suffer as much, and outcomes are better. The money people collect from LTCi provides them with dignity, choices, access, and options they would not have otherwise had.
Sadly, most of us still do not own LTCi. Sadder still, it is too often well-educated people with good incomes and a whole lot to lose who choose to be unprepared for LTC.
Such people come up with what they think are fabulous excuses to avoid discussing what might happen to them at the end of their lives. There seems to be a disconnect between our intellect and our emotions when it comes to LTC planning.
According to www.longtermcare.gov and other reputable sources, at age 65, there’s a 70% chance of needing LTC. These odds go up with each year we age. Visit Genworth’s Cost of Care Calculator (find it in the Resources area of www.honeyleveen.com) to see just how expensive LTC is in your locale.
Most LTC in the US is provided on an unpaid basis, disproportionately by women, who often have to sacrifice their careers, savings, and relationships to provide care.* LTC already costs American families dearly, yet the worst of this crisis is yet to come.
As former First Lady Rosalynn Carter said, “There are only four kinds of people in this world: those who have been caregivers, those who are caregivers, those who will be caregivers, and those who will need caregivers.”
Here are some simple responses to major misconceptions about LTC and LTCi. More complex answers are found on www.honeyleveen.com or by calling me, at no obligation:
LTCi is too expensive. Not true. What may be expensive is needing LTC for anything but a short time and not owning LTCi. Policyholders usually collect back all premiums they’ve paid over the life of their policy in a few short months. Premiums are customized for each person and can be made to fit into almost anyone’s budget. *
The government pays for LTC. The type of LTC the government pays for is not what you would freely choose. *
Medicare covers LTC. No it doesn’t! Medicare covers acute medical problems and a restrictive, conditional amount of home or in-patient rehabilitative care that most people don’t qualify for.*
The LTCi industry is threatened. It’s true that the number of carriers selling LTCi has shrunk; there are valid reasons.* Policyholders are not in danger.* LTCi carriers remain staunchly committed to the market. They realize the LTC crisis and oncoming Senior Tsunami isn’t going away any time soon, and are in it for the long run.*
LTCi only pays for nursing homes. The opposite is true. The great majority of LTCi policies pay comprehensively, for care at home, in adult day care, assisted living, and nursing homes. They enable you to increase the odds you will not need LTC provided in a nursing home.*
Here are some of many silly excuses smart people give me to avoid conversing about LTCi while they’re healthy and can find reasonable premiums:
My wife will take care of me. Really? Your wife will be eager and physically capable of helping you bathe and dress, for example? You don’t mind the thought of her last memories being about the physical, emotional and financial burdens of caring for you?
That won’t happen to me. Really?
My kids will take care of me. Really?
I’ll kill myself.
I can’t afford LTCi. Many people claim LTCi is too expensive, despite the fact that we tailor LTCi premiums to fit into most people’s budgets. Situations like this one happen frequently: an acquaintance tells me she can’t afford LTCi premiums. This person’s mother needed LTC for an extended length of time, at great sacrifice to the family. A week later this person announces she is making a two week trip to Mt. Everest Base Camp/African photo safari/Tahiti or another exotic locale, or is buying a top-of-the-line car/kayak/audio equipment, etc. She has the money to do that but can’t afford LTC premiums. Where’s the disconnect?
Here’s another common scenario: I get incoming calls with Caller ID stating: “METHODIST HOSP RE-HAB”. The caller is the daughter or son of someone who’s just broken their hip or suffered a stroke. They ask me to come sell their parent LTCi. I have the unpleasant task of trying to tactfully explain that their parent is uninsurable. Sometimes the child is incensed by this news. I suggest the child is of ideal age to find reasonably priced LTCi for themselves; this might be a wise idea if they want to assure a similar scenario doesn’t play out when at the end of their lives. The child is normally not interested. The reason is that the family is in the worst kind of turmoil, duress, and dysfunction. They are scurrying around trying to cobble together LTC for their parent, and there isn’t sufficient, readily accessible money to pay for it. This is the scenario Dayna and I urge you to avoid by doing reasonable, responsible LTC planning, now.
What all of my LTCi clients have in common, regardless of their incomes, is the ability to honestly, openly discuss LTC in advance. Most of my clients have had firsthand experiences similar to Dayna’s. They’ve learned from them, and taken action to avoid the consequences of not being prepared for their own long-term care.
If you need to investigate whether LTC insurance is appropriate for you – or not, give www.TheLongTermCareGuy.com a call at (920) 884-3030 and lets see.
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.
“Mind Your Own Business”
“Mind your own business”. How often we have said that to our children or other heirs. That statement does not help those trying to help you when you can no longer handle your affairs on your own.
It is very important that you make the caregivers, or power of attorney aware of what resources you might have.
Case in point: Friends recently lost their elderly mother. She went from sassy, sharp and capable to nursing home and finally to hospice in under 2 months. In this time the eldest son was caring for her and handling her finances, only to find out that mom had a Certificate of Deposit and a small annuity that she had not mentioned. This is now creating problems as he waits for access to these funds to pay the funeral home and other bills related to her care.
If mom had been forthcoming, the son could have been named as a Transfer on Death on the Certificate of Deposit, bypassing probate and making those funds immediately available upon presenting a death certificate. Or mom could have established a Revocable Trust naming the sons as beneficiaries of the estate, thus bypassing the problems and the wait for funds they are facing now.
The annuity has been annuitized, so mom has been getting payments, with a remainder to heirs after her death. It is very possible that mom could have accessed the funds from the annuity in a different manner, and not annuitized it. This may have made it easier for the son to have access to it to now. As it stands, the family will have to wait about a year, receiving small payments, instead of receiving the remainder in a lump sum.
Nobody could have predicted how this would turn out, who needs access to funds, and how. However, by letting the people who will have to take over know where the money is, and how it can be accessed can make things much easier for them. When the probate court does not allow immediate access to funds, family will have to dig into their own pockets, hoping to be reimbursed later.
One more piece that was missing in this non-existent long term care planning: Mom did not put aside any money for a Funeral Trust. This is important as her funeral could have been paid for and the sons would not be in the position of having to jump through hoops and coming up with funds out of their pockets. An irrevocable burial trust pays about the same interest as a CD at your bank, but is immediately accessible to pay the funeral bill completely – even before the death certificate has been produced.
60% of Adults Worry About Paying For Long-Term Care
A recent study claims that 60% of adults worry about how they will pay for Long-Term Care (LTC), and 10% said it was their top concern. While two-thirds of consumers agree that most people need LTC insurance, only 16% own any.
Most people have never investigated LTC insurance and simply “think” it is too expensive. Many insurance agents who dabble in this product feed that myth by suggesting policies that are way too large for the consumer’s needs.
When someone needs LTC services, their lifestyle changes drastically. There may not be as many vehicles in the household when someone can no longer drive. There will be less cruises, trips to Branson, MO, golf, boating, camping, excursions, etc. when these things become difficult. There may even be less dining out.
Thus much of the money that was spent on fun things and travel can be redirected to help pay for needed LTC services. Savings can also help, but not by spending the savings, but rather by using the interest those savings generate to also help pay for services needed. Thus, only the shortfall needs to come from some other source, like LTC insurance.
It is also necessary to consider where you will be living, geographically. LTC costs vary significantly across our nation and this must be taken into consideration. We find that most people are pleasantly surprised that after investigating such insurance with an expert who understands how and where LTC services are delivered, and can choose among many carriers for the best fit based on your age and health, that the coverage is nowhere near as expensive as previously feared.
Let me give you an example: Lets take a 65 year old person who is only now investigating LTC insurance. Assuming decent health (typically blood pressure and cholesterol medications have no effect on pricing) a 65 year old could purchase over $850,000 of coverage for less than $2000 per year premium.
It matters not if this is a male of female, as not all companies charge females 50% to 75% more than males. The coverage suggested here is a 10 year benefit of $70/day, with a 90 day deductible and includes an automatic, built in 5% compound inflation factor on the $70/day benefit that will double that benefit every 15 years. The entire benefit is paid out for each day care is needed, even if in excess of the cost of services. The benefit is good in any setting, home or facility.
$70 per day, plus a Social Security check will often be sufficient to cover care in your own home, adult day care, or care in an assisted living facility. Many people do not choose to purchase a policy large enough to cover the more expensive nursing home, since less and less care is done there anymore.
If the 65 year old pays that premium for 20 years, they will have paid less than $40,000 in income tax deductible premiums. If they need care at age 85, they can collect at a starting rate of $185/day. Over 10 years of collecting they will receive $852,000 in benefits to use in paying for LTC.
Note that the benefit increases by 5% compounded while collecting to keep up with the increasing costs of care. This option is vital and is included in this example.
Less than $40,000 in tax deductible premiums to get over $850,000 tax free later to pay for LTC – is that as expensive as you thought?
If you are going to investigate this, investigate with an expert in LTC financing. At TheLongTermCareGuy.com, we have been doing nothing but the financing of LTC for 23 years now. Give us a call at (920) 884-3030 or (800) 219-9203 and lets discuss your situation.
Sandwich Generation Example
The partner is writing today’s blog: Right from the heart of a long term care dilemma.
Mom and I live 125 miles apart. I work full time, and have adult “step-children” at home, as well as a new “spouse”, AND am the care giver to 83 year old mom: A classic case of “sandwich” generation.
Hindsight is a wonderful tool – it makes us look at what should have been while sorting out the realities of where we are. In hindsight mom should have purchased Long Term Care Insurance 20 years ago. She could have done so when she was still teaching. Mom is of the genre that doesn’t believe in Insurance in general. Unfortunately no one sat with mom to have the discussion of where do you want care, who will help you with care, and how will you pay for your care (and in mom’s case, still leave something to her family as her legacy).
We are at the cross roads of what do we do with mom? I am the in-state sibling. The out of state sibling has washed his hands of mom’s care because this sib is too busy building his career.
Of course as sibling things go, my career seems to be forgotten in this equation: A common issue for women in the sandwich situation.
Mom, at 83 has been quite active, independent, spunky, and generally able to care for herself for over 40 years. First, as a single parent in the 1960’s (when single moms were frowned upon), then as a single parent seeing to it both her children went to college and got masters degrees. And then as a champion ballroom dancer in her 70’s.
Mobility issues and vision deterioration have now put this spunky, sharp-witted lady in the dilemma of moving to a new community to be closer to her primary care giver; to change doctors, hair salons, fitness trainer, church, restaurants, etc. At 83 this is not an easy task. Moving to a Senior Community 125 miles away is a huge leap for this person who likes the security and continuity of her condo; to say nothing of having to give up her best friend – Kitty Cat. (Author note – Kitty cat will be coming to live in our zoo with existing cat and dog).
Had mom considered Long Term Care Insurance when she had the chance, she would have several more options for where she could get care. As it is, we at the Long Term Care Guy, looked at mom’s financial situation, and because she has been a conservative saver, she can afford a Senior community. BUT if her health and mental acuity decline, she will be faced with another move, to a facility that will take Medicaid.
Being a long distance caregiver is tough: Emotionally draining, physically exhausting and frustrating. Add to that the demands of career and family and the days are not long enough.
So to close, please consider Long Term Care Insurance while you are healthy and able to get it. This will provide you with numerous options for where you will get care, who will give you the care and how the care will be paid for.
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
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.
Discrimination
Yes, it is legal, despite what an article in the USA Today newspaper stated last week. Long-Term Care (LTC) facilities can and do discriminate on whom they allow in.
The problem is that many people do not plan for LTC costs. The insurance that pays for LTC is not cheap, but is actually quite reasonable compared to what it will pay out for your care when needed. The problem is that many people will put more time and effort into finding a way to get onto Medicaid (welfare) than in finding out how they might be able to pay for their care and have choices.
Medicaid is a fall back for people who run out of money paying for their LTC. Unfortunately, it pays less for your care than a person would pay out of pocket, or with insurance. The facilities can actually lose money on this low reimbursement.
Is it possible to lose money on every customer, and make it up on volume?
Of course not! Nobody, including the government will force facilities to accept a loss on every customer and go out of business. Thus the facilities need to keep a mix of those paying for their care to offset the loss on the Medicaid recipients.
A good friend is currently trying to get her mother into a facility in the Midwest. Most of them are asking about her mother’s finances. If she has enough to pay for a number of years, they will accept her. If soon to be on Medicaid, they will not. Others will accept her only if she signs that when she runs out of money and turns to Medicaid, she must leave. How difficult will it be for her to find a facility to accept her then, when they will be losing money on her from day one? It’s good to be charitable, but if you cannot keep your doors open, you will help nobody.
Bear in mind that with the baby boomers turning 65 at a rate of 10,000 a day, the government does not have the funds to handle all the Medicaid LTC either. Medicaid LTC is passing both Social Security AND Medicare as a government expense that is unaffordable.
So, what is the solution to this problem? Have you even investigated LTC insurance for yourself? Why not? Are you hoping that if you don’t talk about it, then perhaps you will never need care? Really? That superstitious?
Most people are surprised to learn that they need less of the insurance than they initially thought. They do not take into account that when one of a couple needs care, there may be no more cruises, trips to Branson, Washington DC, the Florida Keys, etc. No need for 2 (or 3) vehicles if only one can drive, same for the boat, camper, motorcycle. Thus a good portion of spendable income can be redirected towards the cost of care when care is needed.
If you do not want to decimate your life’s savings, you can still use the interest they generate for care, without touching the principal. Then, only the remainder needs to come from LTC insurance.
Many people do not purchase enough insurance to cover a nursing home, since only about 20% of care is done there. If you can afford to cover home care and the wonderful assisted living facilities with a small policy, you have a very good chance of never seeing the inside of a nursing home. Like your homeowners insurance, some of you do not have flood coverage, thinking the risk is too small to insure.
Lastly, the longer you wait to investigate this, the more it will cost. Not just because you get older, but because this insurance has built in inflation to keep up with increasing care costs. Waiting is like saving up to pay cash for your first house. Get it now and inflation will be working for you, causing your policy to automatically get larger every year.
So, wait no more. Give us a call at (920) 884-3030 and schedule a time to do some investigation. You might be pleasantly surprised. The longer you wait, the more likely something will happen, and then you cannot buy it ever again.