Suze Orman says to buy Long Term Care Insurance

In her show on Saturday May 14, 2011  Suze Orman  made a series of very positive comments about Long Term Care (LTC) Insurance.  Basically she said you need to buy it if you can afford it! She shared her personal experience with LTC needs from her own family. Her mother doesn’t have it and her care is costing almost $20 K per month and several relatives do have it and their out of pocket costs of LTC are totally covered by the plan. Everyone should know that LTC costs are extremely expensive! Almost no one needs a care plan to cover the costs that Suze is paying for her mothers care.

A licensed professional can help you determine if you need LTC insurance, how much you should buy and what it will cost. Talk to your LTC expert.
I can help

A recent article on MSNBC.com

A recent article appeared on MSNBC.com that I felt everyone needs to  be aware of. Its an important topic and unfortunately only about 10% of the population is covered.

the link is       http://www.msnbc.msn.com/id/40767145/ns/health-aging

The financial risk for surviving spouse and children is devastating!  Many states have the legal right to go after children to recoup the cost of a parents long term care expenses under Medicaid.  Almost half the states offer you a way to protect against this recapture provision in state law. Even if you don’t believe in Ltc insurance perhaps you should take care of it for your kids sake.

The Cost of Alzheimenrs

*Did you know  It costs between $500,000 and $1 million to care for an Alzheimer’s patient in a facility.
* Did you know about the high cost at almost $90,000 per year and rising and scarcity of facilities
Long-term care is a major issue that is going to face all of us eventually. Between our clients and our family members, there is little doubt that we will eventually be touched deeply by the tragedy, the sorrow and the cost of this end-of-life occurrence.
We will watch it affect  lives physically, emotionally and financially. Many of us make our living advising older clients about how to manage their assets and their financial affairs. Most of these clients will one day deal with long-term care and the cost associated with it. When it comes to long-term care, they will need to  be looking to some form of Advisor for the answers to many questions.  What you do to prepare for , will affect the quality of life immensely for any family touched by this horrible disease.
If you have not purchased long-term care insurance for yourself and your spouse, do it NOW!! It does not get cheaper as time goes on.  Many clients have found out that they waited too long to apply and that they are now Medically uninsurable!!  If you have assets to protect get coverage while you are still healthy and insurable.  What can we do to help you?

I recently heard a question from a boomer regarding Long Term Care

A Baby Boomer recently asked me the following question about Long Term Care. “If I have one Million Dollars could I fund my own Long Term Care needs?”

I think that my answer started him thinking and also almost certainly surprised him. He clearly thought he could easily self fund his LTC needs. The answer to his question is only MAYBE he could self fund his Long Term Care (LTC) risk and needs. The answer “Maybe” scared him and the follow up question I asked is what really started him thinking. My first question to him was why in the world would you want to self fund that massive risk?

One of my Ohio clients is currently spending over $8,000 per month or almost $100,000 per year on his wife’s care. Now we are not talking a top facility in downtown Columbus we are talking a suburban facility with a very good reputation that is 50-70 miles away. Now imagine what that facility will cost in ten years time with medical cost inflation over that period. It could cost as much as $200,000 per year.
Why risk a full lifetimes saving on 5 years of care? This particular client is still relatively young and is still in good health so they are still insurable. He could cover a lifetime of LTC expenses for much less than the cost of one years care expense. Remember the average length of care need is between 2-3 years. That is just the average. I have a former neighbor who spent 14 years in a nursing home before she died.
This lady always hoped to be able to go home again so she also kept her home and home maintenance expenses during that 14 year period. There is absolutely no way that woman could have self funded her Long Term Care need and her home expenses with $1 or even $2 Million in assets. Lets also consider whether people who can truly afford to self fund their Long term Care Risk are self funding or are they buying LTC Insurance. The vast majority of those who can afford to self fund LTC are also smart enough to not want to take that MASSIVE risk.

We have several new clients that are currently dealing with Medicaid spend down in order to cover the cost of a spouses cares in a nursing home facility. We are running in a salvage mode trying to save something because they forgot or failed to plan. One of these clients even has a trust set up but the trust was not set up early enough to provide any benefit in their current situation.

Another question is assuming that you could have assets left at the time of your death ” Isn’t there someone in your family or even a charity you would like to leave a legacy for rather than funding Medicaid or a nursing home?”

Whatever your answers are we can help.

What About Long Term Care Protection

Now  may be a great time to get Long Term Care  (LTC) coverage.  Most investors are now aware that their assets are subject to the whims of the market and are exposed to Massive Downside Market Risk. Not everyone is exposed but most people are.  My retirement clients are protected from downside market risk.

Why is this a good time to think about LTC coverage?  With the 30-50% drop in many investors net assets they now need to be concerned about the major risk of trying to  self fund their  LTC Needs. Investors who a year ago felt they  could easily afford the  risk and expense now find themselves in the uncomfortable position of having a legitimate concern about their ability to Pay. Remember it is essential to fund both their comfortable  retirement and the potential for a multi-million dollar  Long Term Care expense. Historically  when faced with a decision to  buy  LTC insurance those who are wealthy enough to truly be able to self  fund are generally smart enough to realize why the hell should they  self  fund  when  they  can  transfer the risk of the  LTC expense to an insurance carrier for a fraction of the  cost of funding a self pay program. They are the  early adopters of LTC  coverage. Niow for those in the middle that don’t fully understand the risk and are not aware of the unbelievable cost of  LTC need to rethink their ability or even the logic of  self  funding.

Two facts are  certain. Approximately half of the population will have a LTC need during their lifetime!  The cost of care for a couple in their 50′s or 60′s can  easily reach $1 Million or more!  Why not  pass the risk on to an insurance  carrier?  In fact a smart couple in their 40-50′s can  have a policy that is fully paid for by the time they  will retire that could provide an inflation adjustedlifetime of care protection package! In fact if you  start early it can  even be done at  reasonable cost.  Thats pretty smart planning!

Many ways of dealing with the need for Long Term Care (LTC)

There are many options for dealing with  Long Term  Care (LTC) Costs. It can be as simple as paying the expense out of your assets. Notice I said simple but certainly not inexpensive. This is called self funding. It can involve a spend down of virtually all assets until you qualify for  Medicaid. This is a good alternative only for those who have little if any assets to begin with. If you are a veteran or the spouse or widow of a veteran you may be eliggible for assistance. You can  buy Traditional  nursing Home coverage which only reimburses for care provided in a nursing home. This has become a somewhat less popular option as better products have become available. You can buy modern Long Term Care product that will cover Nursing home costs, Assisted Living Care or home care provided bty professionals. You can buy  a cash payment plan that is based on diagnosis and does not depend on  where that  care is provided or needed.  These last two options are becoming the most popular options. Then  there are also what I call asset multiplier plans that increase the value of the assets you have set aside to pay for LTC. In many cases you can triple the value of the money you contribute to these plans. This in effect gives you up to a 66% discount on your cost of  care. That is Real Economic Value.

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Understanding Long Term Care

Over one half of the US population will require Long Term Care (LTC). Why is it that only a little more than ten percent have TC protection? A lot of people think that LTC Protection is very expensive. The facts are it isn’t that expensive especially if you buy it while you are young and  healthy. A forty year old who is smart enough to invest the cost of a nice dinner out per month can provide years worth of LTC protection. One of the largest benefits of starting early is that the premiums are much much lower for a young healthy insured than it will be in 10 to 15 years. The second most important benefit in starting young is that in 10 years or at age 65 it is possible to have a LTC plan that is fully paid up with inflation protectionto help insure that you will have adequate coverage when you need it.

Myths behind the Reasons people don’t buy LTC coverage.

1  I can’t afford it                                                       False         Most people can afford it if they buy it while they are young and healthy.

2  Medicare will pay                                                    False        Medicare does not provide  LTC

3  Medicaid will pay                                                    True         But only after you spend almost all of your assets and your spouses assets.

4  I will self insure                                                      False        Most people can not reasonably self insure the risk of a long LTC need without depleting all of their assets.  The independently wealthy who can actually afford to self insure are smart enough to go ahead and buy LTC protection because they are smart enough to realize self insuring against this risk is not good money management.

5  I don’t want to buy because I want to stay home-  False        Many modern policies can actually help you to be able to stay at home

Pets in a Long Term Care Setting

Saw an interesting article on  pets in Long Term Care (LTC) facilities. Not just traditional birds, cats or dogs.  They actually had a small Kangaroo hoping around free. You can not keep them off the couch either.  He was actually  wearing a diaper because you can not house break a Kangaroo.  It is easy to housebreak a rabbit.   Many clinical studies have shown that petting an animal actually reduces your stress and blood pressure!

Some nursing homes permit residents to  bring their pets from home when they move in. Others have resident animals that wander the building and grounds as community pets. I think its a great idea. Others bring in therapy dogs for a regular visit. It gives the residents another thing to look forward to.

Long Term Care Coverage What Are My Options?

Many people struggle with Long Term Care funding. About half of the population will need LTC coverage at some point in their life. Even more will be impacted by LTC needs of a spouse or family member. Considering these numbers doesn’t it make sense to plan for LTC funding? Of course the answer is yes! Considering these facts how come less than one person in 4 has LTC coverage in place?  There are many reasons. Some people don’t have the assets to be able to  afford coverage. Some people waited too long to  apply and now cannot buy traditional coverage. Some people live in the State of Denial. I believe it surrounds Washington D.C. which is also known as the Unreality Zone. Pardon the political humor.

For the people without assets in fact they do  have a plan its called  Medicaid Spenddown. Pretty or not that is what it is. Now for the people who waited to long what is their plan?  Most of them believe they have no choice but to self fund. In reality some do have alternatives but they just need to talk to a real expert who can  show them  their options. I may be able to help!

OK now lets look at the people who have assets and determine their options. First please understand that not planning IS NOT AN OPTION. Not planning means that all of your hard earned assets are your LTC funding pool. Is this a smart decision? My answer is NO! To back up  this opinion, lets look at the  rich who could truly afford to  self fund. This means people with $5-10 million in non real estate assets or more. Do the rich self fund?  Most don’t because they know it isn’t a smart use of their assets.  Most purchase some form of plan!

Various options exist. Lets list them.

1. Self Funding out of general assets

2. Traditional Nursing home reimbursement plans (often older more restrictive plans)

3. Newer generation LTC plans offering professional home health  care or Assisted Living benefits in addition to nursing home coverage

4. Cash payment plans based on a diagnosis (covers Nursing home, Assisted  Living, Professional or non professional care givers)

5.  What I call asset multiplier plans ( these use large assets but provide a LTC benefits much  larger than  the invested asset)

6. Medically underwritten asset based products ( you must already have a diagnosed need)

7. Non medically underwritten products with LTC benefit riders

Most  people do not know that many of these options exist. An expert can help you  determine which of these products is right for you or your loved ones.

financial-services@live.com

Results of Long Term Care Survey

The Phoenix Companies of Hartford Conn. have just  published  the  results of a study on the financial concerns among  almost 2,000 high net worth individuals.  Over half describe serious concerns about the  high costs of post  retirement health care costs. What does that mean to  the readers of this blog. I  think it  tells me  that you  share that  very  real concern at  the  same level or at a higher level  than the  survey population.  If I  am right you need  to  find a  solution to  that problem.

17 percent identified the cost of Long Term care as their largest concern.  Almost 45 percent are afraid that  Long Term Care (LTC) costs could wipe out their lifetime earning.  4 percent say that LTC costs are their greastest concern and well over 80 percent said that planning for LTC is one of their greatest concernsRemember  theses are not middle class we are talking  about that are this  scared about  the  costs of LTC this is  the Upper middle  and  the upper class.  If  they are this  concerned how concerned should you be? What  have you  done about it?

The study  group also inddicated  that 29 % have taken care of LTC planning  over  one third have started working on  LTC planning. this leaves over 22 % that have not begun to  plan or  fund  their LTC plan or purchased a LTC policy. Only about 23% already have an individual LTC policy in force.

If you  have significant assets  saved or if you  dont have  significant assets  saved but  do  have a solid pension plan in  place you need to  take care of  LTC Planning.

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