Long-Term Care Insurance and What is the Real Cost of Self-Insuring?

Financial professionals realize that Medicare doesn’t cover long-term care and that it’s a bad idea to gift assets to qualify for Medicaid or MediCal (in California). The Deficit Reduction Act of 2005 tightened loopholes that allowed people to transfer assets to their children so they can qualify for Medicaid benefits.

Self- insuring for high net worth individuals needs to be addressed. Long-Term care specialists need to provide the proper information so that the clients can make an educated decision about long-term care insurance. It is important to calculate the real cost of self-insuring and communicate it to the client.

It is dangerous to ignore the inflation factor when planning for Long-term care. Let’s look at a married couple in their mid 50’s with $2 million of liquid assets not including their primary residence. At first glance, the couple considers what their liability would be at today’s rate. The average daily rate for a nursing home in California is $210/day. So, now the couple does some quick arithmetic and arrives at an annual cost of $76,660 with a potential 5-year cost of $383,250.00.

They quickly conclude that they can easily afford to self-insure when they compare the 5-year cost of $383,250 to their $2 million liquid net worth. The problem with this is that the couple didn’t come close to the true cost of self-insuring. To do that they would have to do the following:
· Adjust today’s cost of care for inflation
· Consider the potential tax consequences of taking a qualified plan distribution or selling as asset that has appreciated in value to pay the cost of care-out-of-pocket.
· Account for lost investment opportunity on the money that was spent self-insuring during the five years they pay for care.

Now, let’s look at the real cost of care with the couple living another 30 years. This would be the approximate time one of them may need long-term care. Today’s expense of $210 per day could grow to more than $900 per day 30 years from today. Multiplied out over a five-year care event, this would result in an out-of-pocket expense of $1.66 million, which is substantially more than the clients were anticipating.

In addition, if high net worth individuals have a combined state and federal marginal tax bracket of just over 37%, the could incur an additional tax liability of $610,000 if they take large enough distributions from their qualified retirement plans to cover the cost of care. The cumulative distributions could exceed $2.27 million to cover this care event. If the long-term care event was for only one spouse and the second spouse lived on another five years after the first spouse’s death, the second spouse has lost the use of the $2.27 million which was spent caring for the first spouse.

So what is the cost to insure this risk? What is the cost of purchasing a long-term care insurance policy as a hedge against the risk of needing long-term care? If the couple is in good health, they may be able to purchase a State Partnership long-term care insurance policy with a $210 daily benefit, a five-year benefit period and 5% compound inflation protection for a standard rate annual premium of approximately $2200/year per person. The couple would pay a total of $132,000 over 30 years to insure themselves against the $2.27 million in long-term care costs.

To be totally honest and fair, you can even take into account the lost investment opportunity on the premium. Assuming an after-tax rate of return of 4%, they would lose an additional $124,000 of investment return, bringing the true lifetime cost of purchasing long-term care insurance policies to $256,000 when paying for 30 years.

In conclusion, when most high net worth individuals understand the true cost of their choices, they see that long-term care insurance is an extremely cost-effective hedging strategy. It is important for the individual to understand the financial impact a long-term care event brings to brings to their retirement. That is when you see the real value of long-term care insurance.

For more information, consult with a Long-Term Care Specialist who has been trained in Long-Term care Financing and Planning. Visit http://www.LongTermCareInsurancePros.com and request a Free, No Obligation Consultation with Dane Petchul, LTCP, CLTC

Long-Term Care Insurance-What are Your Options?

The aging of America is bringing the topic of Long-Term care to the forefront. There is more in the news about the aging baby boomers and who will be available to provide 78 million seniors with home health care. We are not even talking about room in assisted living or nursing facilities.

The reality of the situation is who is going to pay for long-term care when it is needed. What are your choices and do they fit in with your own long-term care planning?

Medicare

Sometimes Medicare will pay for 20 days at a nursing home for recuperation and rehabilitation after a hospital stay and it picks up part of the cost for an additional 80 days. It does not cover custodial care that you need when you can't bathe, eat, dress or get around with help-or when you need supervision because of Alzheimer's disease or other forms of dementia.

Medicaid or Medi-Cal (in California)

This is a welfare program which is run jointly by the Federal government and the states and is for people with few assets and low income. This program kicks in when a person's assets are $2000 or less. Under a new Federal law, residents that purchase Long-Term Care Partnership plans from private insurers can qualify for Medicaid even if they have assets totaling more that $2000.00.

Savings and Assets (Private Pay)

You can self-insure which means you are responsible to pay for your long-term care if you have the financial means to do so primarily from your existing assets.

The national average daily rate for a private room in a nursing home is $213 or $77,745 annually. The national average, private pay monthly base rate for an individual residing in an assisted living community is $2969. or $35,628 annually.

Long-Term care planning must be put into place to make sure there are funds to cover these costs and still maintain the lifestyle of the spouse not in need of these services.

Long-Term Care Insurance

Long-Term Care insurance increases the family's leverage to choose the care it wants and provides peace of mind about getting the care. Not all facilities accept Medicaid patients and those that do may limit the number of spaces available because Medicaid pays at a discounted rate.

Long-Term care insurance pays for home care, assisted living and nursing home care. A policy with options for home health care and assisted living are useful as more people favor staying in their own homes as long as they can.

A Long-Term care Specialist can help design a plan that is specific for your own needs. For some, long-term care insurance may serve as a supplement to other savings and retirement planning.

It is important to add the inflation protection feature especially for younger buyers who may not claim benefits for many years.

Before purchasing a policy, make sure that the premium is affordable even when you retire. It is a bad strategy to purchase a plan and then let it lapse because you cannot afford the premium. It doesn't make sense to purchase long-term care insurance if it is not affordable.

Use the expertise of a Long-Term Care Specialist to simplify the process and help you compare different carriers and the different options available from the carriers as well as design a plan that will be affordable now and through your non-income producing years.

Before you purchase a long-term care policy, consult with Dane Petchul, LTCP, CLTC, a Long-Term Care Specialist. You will receive a free, no obligation quote with the costs and benefits appropriate for you and your family.

Long-Term Care Insurance and Adult Day Care Services

How are adult day care centers related to long-term care insurance? This service is a blessing to those looking for respite care for an aging parent or loved one.

What happens when you are still working, raising teenagers and now you have a parent that just needs help that you cannot provide on a daily basis without putting a tremendous strain on yourself as well as your family and work schedule.

Hooray, here comes the Adult Day Care Centers to the rescue. The services they provide are really fantastic. Of course, it is not free unless the participant qualifies for Medicaid which is about $2000.00 in assets.

Here is where Long-Term Care insurance comes into play. These services are covered by many long-term care insurance policies.

The bottom line is that you will be able to keep your family member at home longer. They will receive help during the day and you can avoid the guilt of placing them in institutional care.

It may be time to consider choosing an adult day program when someone you know appears unable to provide himself or herself with any structure for daily activities, is isolated from others for more than a few hours a day and misses companionship, cannot be safely left alone at home or lives with someone who works outside the home or needs regular time away from home for other reasons.

It is important to check out the Adult Day Care Centers in your area to see exactly what services they offer and if they meet your needs.

The services offered may include supervision, meals and snacks, group and individual activities, formal exercise, inter generational programming, health monitoring, caregiver support ,group nursing services, transportation, therapeutic art activities, therapeutic music programs, therapeutic programming with pets, podiatry, hair care, manicures, health care, medication management, shower/bath, medical evaluation, therapeutic dance activities, specialized diets, horticulture therapy, reminiscence therapy, physical therapy, speech therapy, occupational therapy and massage therapy.

Consult with Dane Petchul, LTCP, CLTC, an independent long-term care insurance specialist before purchasing a policy. With no obligation, a plan will be designed with your specific needs in mind. He will make sure that adult day care services will be provided in the policy. For more information and a free Ebook on long-term care, visit: http://www.longtermcareinsurancepros.com/

Long-Term Care Insurance Helps You Control Your Own Destiny

Many states have a "Own Your Future" campaign as part of a government effort under the auspices of Health and Human Services to promote Americans' need to be more aware of long-term care options.

Medicare does not cover the cost of many long-term care services. The private sector is expected to fill that role. It is important that people need to consider and plan for their long-term care needs.

The U.S. Department of Health and Human Services estimates that 70 percent of Americans who reach 65 or older will need some sort of long-term care services. These services are highly customizable.

Many people when they hear about long-term care or long-term care insurance automatically think about a nursing home. That is no longer true. We have so many choices today. Long-term care insurance gives you the opportunity to receive care how and where you want it. It can be in your own home, in an adult day care facility, assisted living or any number of rehabilitative options.

The point is that long-term care insurance keeps you in control of your own destiny.

To educate yourself, consult with a Long-Term Care Specialist to learn what your options are.

Why You Need to Read and Know About Long-Term Care and Aging

Without sounding too pessimistic, how are you planning on taking care of yourself and spouse if either one or both of you require long-term care? Are you aware of the costs of assisted living, nursing home or even what it costs for a caregiver to come into your home?

According to Met Life Mature Institute report and Genworth, it is wide-ranging but up to $75,000 per year per person. The cost is expected to hit a hundred thousand in the near future.

Do you have the financial means to pay $100,000 per year and still continue to maintain the lifestyle you had planned? What this means is that you will spend all of your assets on your long-term care until you are essentially broke. Then once all of your money and assets are gone, the government will step in.

As Americans are aging and the baby boomers are retiring, there will only be so much government to go around. You already hear about how social security is in trouble, plus medicare and other programs. There is no guarantee that you will benefit from any of the social programs that the government provides.

Do you want to exhaust your savings and leave no inheritance or legacy to the ones you care about? Do you want to be in charge of where you receive care? You have worked your whole life to be independent and in charge of your life.

The solution to this is to purchase a Long-Term care insurance policy when you are still healthy and of an age where the premiums are reasonable. A Long-Term care specialist will educate you first and then with your input help design a plan that works for your unique situation.

Before you purchase Long-Term care insurance, contact Long Term Care Insurance Pros for a free, no obligation, comparative quote from the top companies. For immediate assistance, call 877-GO-4-LTCi (464-5824)

Education is Needed for Long-Term Care Insurance

No one likes to think about relying on long-term care. But the reality is that any person could fall victim to a disability or need chronic care because of aging.

New research from Mintel (Chicago), a leading global supplier of consumer, product and media intelligence suggests that many Americans are not prepared for these possibilities.

In a new report, Mintel found that less than 60% of adults are familiar with long-term care insurance. Furthermore, three-quarters (74%) do not currently have any type of long-term care coverage. Almost one in five state they don’t know why they haven’t purchased a long-term care policy or that they “don’t know anything about it.”

Overall Americans are not educated and lack the understanding that the benefits and value long-term care insurance policies offer. Many people either don’t want to confront the issue of aging or they view long-term care insurance as too expensive and unnecessary.

Mintel’s consumer survey found that cost is the primary reason people don’t purchase long-term care insurance. Forty-two percent of survey respondents said they haven’t purchased it because “it is too expensive.” Other common deterrents include the belief they won’t ever need long-term care (17%) or that its costs will be covered by Medicare or Medicaid (15%). Finally, 13% of respondents say they would like to purchase it but they just haven’t gotten around to it yet.

It is important to educate the public about long-term care insurance’s value,” says Dane Petchul, Long-Term Care Specialist. Education is the first step with a client in determining whether Long-Term Care insurance is necessary for their own Long-Term Care plan.

Over two-thirds of the people surveyed who had long-term care insurance purchased policies because they didn’t want to burden others with their care. Another reason given by consumers is the preservation of assets which helps preserve their lifestyle in retirement.

Consumer education can be done from the convenience of one’s own home or office. It can be done over the telephone and internet with web screen-sharing. It is only with education that the consumer can make an informed decision in regards to his Long-Term care plan.

Stop procrastinating and get the Long-Term care information that will save you and your family from the rigors of planning for long-term care well before an event may occur.

Long-Term Care Insurance State Partnership Plans

About two thirds of the states have long-term care insurance partnership programs put in place for their residents. These partnership programs were designed to encourage the purchase of Long-Term Care insurance by state residents so that the states can reduce its liability for paying for long-term care costs in the future. These partnership plans are vital if the current State Medicaid (or MedI-Cal in California) are to remain solvent.

The advantage the partnership policies have to consumers is that the state acts as a safety net for them in case their care exceeds the benefits of their Long-Term care policy, and they are guaranteed that long-term care costs will not be allowed to completely wipe out all of their assets.

The basic premise of the partnership program is that it allows the purchaser of a Long-Term Care insurance policy to shelter an amount of funds equal to the amount the policy pays out in benefits and still qualify for state assistance through Medicaid, as long as he or she has exhausted all of the benefits and still needs care. This ensures that Long-Term Care insurance partnership policyholders will never have to be impoverished to receive state assistance, even if their need for care outlasts the benefits of their Long-Term Care insurance policy.

This is a clear benefit to consumers, because they no longer have to buy policies that contain lifetime benefits to ensure that long-term care costs won’t wipe out their life savings. They can choose a lower benefit period instead, perhaps three to five years, which is very adequate coverage for the vast majority of consumers.

What identifies a policy as being partnership-qualified? There are several qualifications that were outlined in the federal Deficit Reduction Act of 2005, including the need to be federally tax-qualified and to contain the consumer protection provisions of the NAIC LTC Model Act and Model Regulation. The vast majority of policies sold today already have those provisions.However, there is one requirement that contributes more than almost any other to qualifying a Long-Term Care insurance policy for the partnership program. It must have the age-appropriate inflation protection benefit.

These requirements are as follows:

• Those age 60 or younger must have “compound annual inflation protection.”
• Those at least 61 but younger than 76 must have “some level of inflation protection.”
• Those age 76 or older must be offered an inflation protection option, but they are not required to purchase that option.

Why is inflation protection given such prominence in partnership-qualified policies? The answer is that if partnership-qualified policies don't have inflation protection, the purpose of a partnership program may be defeated.

This is because the whole purpose of the partnership program is to help relieve the financial burden of long-term care costs from the state Medicaid or Medi-Cal systems. If a consumer buys a Long-Term Care insurance policy but does not allow it to keep pace with the rising costs of care, the insufficient benefits will be more likely to force the policyholder to turn to Medicaid or Medi-Cal anyway. With very few assets left, the state will have to pick up the rest of the bill for this individual and the original intent of the program is defeated.

Long-Term Care specialists require special state certification to be able to sell the partnership plans. The long-term care specialist works for you, the client, and shows no bias towards one carrier or another. Schedule a consultation to determine which carrier, and what benefits would best satisfy your individual needs.