![A National Challenge⊠Long-Term Care A gap in health insurance exposes a hole in retirement planning... Michael E. Wright, CFP Wright Financial Advisors, LLC [email_address] Registered Representative of and securities offered through OneAmerica Securities, Inc., Advisor.9229 Delegates Row #190, Indianapolis, IN 46240,(317)573-3838, Member FINRA, SIPC, a Registered Investment Advisor. Insurance Representative of American United Life Insurance Company, AUL and other insurance companies.  Wright Financial Advisors is not an affiliate of OneAmerica Securities or AUL and is not a Broker/Dealer or Registered InvestmentAdvisor .](https://image.slidesharecdn.com/wfa-ltc-employeeedworkshop-share-110502222348-phpapp01/85/wfa-ltcemployee-ed-workshopshare-1-320.jpg)
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Long-Term Care Insurance Gap in Retirement Planning
- 1. A National Challenge⊠Long-Term Care A gap in health insurance exposes a hole in retirement planning... Michael E. Wright, CFP Wright Financial Advisors, LLC [email_address] Registered Representative of and securities offered through OneAmerica Securities, Inc., Advisor.9229 Delegates Row #190, Indianapolis, IN 46240,(317)573-3838, Member FINRA, SIPC, a Registered Investment Advisor. Insurance Representative of American United Life Insurance Company, AUL and other insurance companies.  Wright Financial Advisors is not an affiliate of OneAmerica Securities or AUL and is not a Broker/Dealer or Registered InvestmentAdvisor .
- 3. YOU DO!!!! Who needs to learn about Long-Term care?
- 4. What is Retirement Planning?
- 6. Whatâs Missing from your Retirement Plan?
- 14. â A study by the Department of Health and Human Services indicates that people age 65 face at least 50% lifetime risk of needing long-term care.â- 10/2010 Whatâs the Risk?
- 15. Youâre NEVER too young to plan for Long-term care â 40% of the 13 million who need help with basic ADLs are between the ages 18 and 64.â - longtermcare.gov 10/2010
- 18. Places You can Receive Long-Term Care Your home Assisted living Nursing home
- 19. $100,000 a year.â longtermcare.gov 10/2010 and in some places the cost can top $50,000 a year, â Long-term Care costs an average of
- 20. Who pays? 60% 50% 40% 30% 20% 10% 0% Medicaid Self & Family Medicare Private Insurance Other Gov. Program
- 23. Spend Down IN Medicaid 2011 IN.gov Assets Income $1,500 $674 50% Between $21,912 - $109,560 $1,823- $$2,739
- 27. Types of Care LTCi will Pay Your home Assisted living Nursing home
- 35. Solving the problem Closing the HOLE in financial planning⊠Registered Representative of and securities offered through OneAmerica Securities, Inc., Advisor.9229 Delegates Row #190, Indianapolis, IN 46240,(317)573-3838, Member FINRA, SIPC, a Registered Investment Advisor. Insurance Representative of American United Life Insurance Company, AUL and other insurance companies.  Wright Financial Advisors is not an affiliate of OneAmerica Securities or AUL and is not a Broker/Dealer or Registered Investment Advisor.
Hinweis der Redaktion
- For once, would you like to know in advance of something bad happeningâŠthe stock marketâs going to crashâŠyou get out of the market. Your home will get broken into when your on vacation...you put in an alarm system⊠Well this could be your day⊠Iâm going to talk about LTC and there are three reasons we say itâs a national challengeâŠ. As I go through this please ask questions as they come up . The first reason LTC is a national challenge is we are living a long time. QuizâŠ..In 1935 when social security enacted, average life expectancy was? (57)* Whatâs the average life expectancy for women today? (83)* How about men? Actually 78.* Every year adding twelve weeks to our life expectancy. So living longer is only going to continue and that's causing a problem. Second reason - more of a social issue. Kids live all over the country, sometimes all over the world. 25% of Baby Boomers don't even have children to take care of them. Lastly - health insurance/Medicare not designed for us to live into our 80âs or 90âs. Source-CDC âHealth, U.S., 2010 âwith special features on death and dyingâ
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- Who needs to learn about long term care? (rhetorical) It can happen to anyone at any age⊠Itâs all around us⊠Whether it happens to you, a parent friend or other loved one, it will touch everyone at some point, and understanding it will be helpful.
- How many people here plan on retiring? How do you do that? (rhetorical) What is retirement planning? (rhetorical)
- You put together a retirement planâŠ. you have a 401K at work? How many if you you participate? Why do you do this? All types of investments. 401Ks, pension plansâŠ. People put away money and invest it on a tax deferred basis. Why are you investing money?
- Taught at a young age, the sooner you put money away, the longer you invest, the greater chance you will accumulate wealth. One of the missing components in retirement planning is how to protect those assets.
- Interesting factsâŠ. Whatâs the first thing you think of when you hear the words âlong-term care? Most people say that⊠but it doesnât need to be that way when people plan. We want people thinking about aging in place, or living in assisted living⊠LTC care is expensive⊠both emotionally and financially. Traditional health insurance and Medicare when you turn 65 donât cover it. Most frighteningâŠ.. The average American that needs long term care loses their entire life's savings in less than eleven months!! *âRetirement savings shortfallsâ- 10/2010 employee benefit research institute Isnât it almost crazy to put money away for 30, 40 years and have it go so quickly? (Rhetorical)
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- Has anyone here lived through a long-term care situation? Who provided care? How much did it cost? Impact on family? Impact on loved ones? There are 5 reasons people choose to purchase long term care coverage. #1 - financial security. Eliminate worry, leave house, assets to kids, #2 - have choices, decide where and who provides care. #3 â some do it for each other (spouses) family #4 - remain independent. Not be a burden to spouse or children. ⊠.Lastly, some people just do it because they love their family. Why buy? Because my wife asked me to or the kids want to make sure we are protected.
- If not offered at work, when would people think about LTC planning? ⊠when it's too late. Must go through medical underwriting and 30% of people get declined. The biggest problem I face in my business You can actually get approved with many common ailments like high blood pressure, Diabetes or Arthritis, but what generally happens with those conditions? Right, they get worseâŠ. Now, I donât know the right time⊠ten years, when your 50, 60?.... but I do know the wrong timeâŠ. when your health worsens or something happens to you.
- What type of health insurance do you have at work? How many of you have read the booklet?? From cover to cover?? Actually three levels of care⊠Skilled care . When you get sick, where do you go? Who takes care of you? That is skilled care⊠it makes you well again. Who pays for that?? Intermediate care . Any idea?? Sprained an ankle?? What type of care?? Who provides that care? Also makes make you well. Who pays?? Custodial care âŠâŠ Ever heard term ADL? (Activities of Daily Living) Things we take for grantedâŠ.putting shoes on, feeding, take a bath, go to the bathroom. LTC = help with ADLâs. Who provides custodial care? Doctors?? (NO) Home health aides, family, and friends. Who do you think pays??
- Long term care pays for third level of care. Does not replace your insurance or duplicate it. In your booklets, you have nursing home coverage. Will cover up to 100 days as long as you are receiving SKILLED CARE and you are making medical progress. Rehab, how many visits do you have?? Hundreds? Limited number, usually between 15 â 20 visits or 60 days. After that, no more. In health booklet under custodial care, what is coverage?? (rhetorical) None, right. Long-term care insurance covers the blue areas. Over 100 days skilled. Rehab for many yearsâŠ. Itâs an extension of health insurance. Questions?
- It happens to young people tooâŠCommon causes for long term care? For young people its typically an accident; auto and motorcycle accidents can happen at any age to anyone. Health conditions can happen at any age too. . As we get older, it tends to be health conditions. Arthritis worse. Diabetes more complicated. Serious conditions like Parkinson's, MS or a stroke can trigger care, but all types of things can cause someone to need long term care.
- Many statistics⊠This is a common statistic, but it doesnât tell the full storyâŠ. If you live to 65, your life expectancy is 80. How many here hope to live to 70? If you make 70, your life expectancy goes to 86. You think youâll make 80? If you make 80, your life expectancy is 91. --Source-CDC âHealth, U.S., 2010 âwith special features on death and dyingâ Know anybody who is 90 years or older? Whatâs their life expectancy??? What would you die from?? (OLD AGE) Haven't had cancer, heart attack or stroke, probably going to become old and frail and die from old age The longer you live, the longer you will live. With long-term care, thatâs a problem. Live to 65, half people will need long term care. Live to 80 thereâs about a 90% chance of needing care.-âlongtermcare.gov 10/2010
- Do you think it could happen to you? When we do enrollment meetings, we're going to get a lot of people in their 20s, 30s, and 40s. When they hear long-term care what do you think theyâre thinking?? Right.... nursing homes This is for old people, not me. Of the 13 million people that need help eating, bathing, dressing, going to the bathroom or moving about, 40 percent are under the age of 64. Not just for seniors. It can happen at any age⊠People think of nursing homes when they hear long-term care, but we try to get them to think about financial planning when their young and its inexpensive. It could happen to you.
- Ever visited a nursing home? Did you notice the ratio of women to men?? Why??? Why aren't they at home? Why put them in a nursing home? Men get sick first, and 73 percent of care at home is administered by who?? (Women) Women keep men out of nursing homes Donât let husband say he doesnât need this. Its to help wife take care of him. Insurance coverage gives healthy spouses means to provide care. If single, widowed or a bachelor, you need LTCi because you don't have anybody. Different reasons for planning. Couple, does it for each other.
- Do you have disability coverage at work? Short term, long term? Have you read that booklet? DI pretty simple. Canât work, get a check to pay bills. Many don't realize DI ends a couple ways. #1 - if you don't work here anymore, coverage gone. #2 â If you stay at company most DI ends at retirementâŠâŠeven if on claim. If have DI, why have LTC? How different? LTC sends check, but not for regular bills. What do you use it to pay for? RightâŠ.your care. Home health aides, someone for errands, cooking, cleaning, a nurse, whatever âŠ.you can use for assisted living. Main difference â #1 â portable - you keep wherever you go. You leave, it goes with you until you need it. #2 â you keep it until you need it. We have clients in their 90âs..some on claim, many not.
- Three places can get care How many want to stay at home? Anybody want to go to an assisted living facility? Everyone wants to stay at home but no plan. Two problemsâŠ. What do you think are?? #1 - Finding good help. #2 - If you find help, whatâs 2 nd problem??? âŠ..Paying. Cost of home health aid on an hourly basis? (between $15 - $25 per hour depending) âaaltci.org 12/2010 study of ILTCP 10 HRS a day is two hundred bucks a day, very expensive, assuming they show up every day. 2 nd place is assisted living. Ever visited one??? IN 1995 were 6 in MA, now over 200 Nice alternative to nursing homes. How about a nursing home? Donât any of you want to go to a nursing home? Of course not, in fact having long-term care insurance is one way to make sure you never have to. No one chooses nursing homesâŠ. Theyâre closing all over the country because of assisted living, There are the two reasons you would ever go to a nursing home⊠no what they are? #1 youâre just that sickâŠ., or #2 you run out of money which weâll talk more about in a few minutes⊠Think of alternatives. Plan to avoid nursing home. Go to an assisted living, or stay home. Any questions?
- Let's talk cost. Home care is ____ per hour. (told you on previous slide) Any idea what an assisted living facility costs per year? Average is about $3,000 a month so, maybe closer to four. Top end ones can cost more but in this part of country averages between $3,000 - $4,000 a month. What about Nursing homes? My grandmother is spending about $9,000 a month right now. So that's more than hundred grand. Very expensive. Given the cost of nursing homes, where does this money come from?
- Chart shows who pays for nursing homes. Majority of people in nursing homes don't pay themselves⊠On Medicaid, a welfare program. Most will probably be in second column. Use our own assets. Put some money away. Stocks, propertyâŠ.. We're going to be using those resources to pay for our own care. Medicare does pay for some, a little less than 15% of all long-term care. Next, long-term care insurance which is finally starting to show up in the numbers. It's been around 15 - 20 years and people are starting to use their policies versus using their own resources. Any veterans? There can be VA benefits based on service or injuries sustained. Now let me ask a question⊠if you are receiving home care, which columns would you be under?? What about if you were getting care in an assisted living facility?? Most people don't have insurance and are either using their own money or depending on what? Right, MedicaidâŠ.once you are on Medicaid, your options are limited⊠for the most part Medicaid only pays for care in a nursing home.
- Going to talk about Medicare and Medicaid. Ever confuse these programs? Write MedicareâŠ. underline the last four letters⊠CARE Looked at your pay stub recently? Medicare is listedâŠ.. How much do you pay every pay period?? (1.45%) Why? To fund medical care after age 65. Pay 40 quarters - ten years, Medicare becomes health insurance on 65th birthday If you need help at a hospital or a doctor, who pays?? (your health insurance) Who pays after 65? (Medicare) Entitled to it if paid in 40 quarters. Some of us can't get SS until 67. When do we get Medicare?? (65) Hasn't changed. Medicare also pays for a nursing home like health insurance. Remember how long health insurance pay for nursing homes? (100 days) How about Medicare? (right 100 days) One difference. Medicare requires you to go to the hospital first for three days. Know how hard that is?? If you take dad from home to nursing home, how much will Medicare pay? NONE. Once in hospital 3 days, Medicare pays 100 days max.. After that, Medicare is finished. How much did we say a nursing home costs? $9,000??
- Who pays then? (YOU) At $9k per month how long could you pay? A week? A month? A year? Some people can pay ten years but even wealthy people can run out of money. When youâre out of money, who pays then? Write Medicaid, and underline the last three letters. AID - All Investments Depleted. Don't confuse Medicare for Medicaid. NOT ENTITED to Medicaid. You qualify. What age can you get Medicaid? (any age) There are six year olds on Medicaid and people a hundred and four. Taxpayers foot the bill, but you must spend your assets down to poverty levels to qualify. Not a grant or a gift, more like a loan⊠and what do we do with loans? Right, pay them back. When Medicaid pays for care, the state puts a lien on your home to recoup money paid. Canât force you to sell house as long as you or your spouse still lives there, but the house cannot be sold without first satisfying the lien. Understand? Now once you qualify for Medicaid, where will you receive care? RightâŠa nursing home. Generally speaking, Medicaid only pays for care in a nursing home.
- Depends if youâre married or singleâŠ.. Single first Assume widowed and end up going to a nursing home. Spend everything, including house down to $2000. Who pays then? (Medicaid) Not over, because probably has SS, maybe pension. All income is taken except $___ a month. Been through this? What do you think $___ used for? ? Questions about single people? Couples now. Husband goes to nursing homeâŠ.keep two thingsâŠ.. House, and $21,912 to $109,560 Play outâŠ..Husband and wife. Work their whole lives. Husband & wife save 200k each in 401k He goes to a nursing home. She's writes checks for care. Go through his money, then she goes into hers. Writes checks for his care untilâŠ? ($109,560) âŠ.. No more checksâŠ.. Now, who pays? (Medicaid). On Medicaid another two years diesâŠMedicaid paid $150k. He dies two things happen. Wife now what? (Single) Single spend down to? ($2,000) And when that passes away or goes in a Nursing Home, who is line to get their money back?? Right, the state.
- At this point sometimes people are upset. Why government doing this to us? Why doesn't Medicare pay more than 100 days? When they came out with Social Security in the 1935, there were a lot more people working for every retiree. The average life expectancy was 57 and people were eligible for benefits at 65âŠ. Longevity increased and itâs a problem. The longevity issue is only going to get worse.
- One of the most important things âŠtraditional health insurance, Medicare and Medicare supplements do not payâŠ. These programs good but donât pay for care at home, assisted living or nursing home beyond 100 days. What type of payment does assisted living take? ( Only Cash) Home care?? (Only cash) Nursing homes after 100 days? (Only cash). Any less and you're on the welfare program. KEY AGREEMENT Long-term care is not covered by traditional health insurance, Medicare or DI insurance and employees both young and old are at risk.
- Iâm not an attorney or accountant, but I can tell you the intention of the Federal Government is to make people pay for their own care if they have the money⊠Health & Welfare reform was the 1 st major legislation that showed the governments intention Only benefit with tax deductible premiums and tax-free benefits The Deficit Reduction Act of 2005 signed into law by president Bush on Feb. 8 th, imposes the most significant changes in Medicaid coverage of nursing home care in more than a dozen years by tightening eligibility rules. State partnerships were available in a limited number of states until Deficit Reduction passed. Up until then there was a federal moratorium. Now many other states are offering them. Itâs something we will talk more about when we sit down individually. Finally we will have the CLASS Act, a government program offered on a voluntary basis that primarily benefit people who cannot be approved for private insurance.
- Let's talk about how LTCi works. Assume you buy a policy and need care some day. You're going to receive a check from the insurance company. You decide if you would like to stay at home, go to assisted living, or a nursing home. You and your family decide type of care and where you want it. You can go anywhere in state or countryâŠ.with some policies anywhere in the world. If you own a policy, could you go live in assisted living now? It's got housekeeping, meals, etcâŠ. Would policy pay? No, because you haven't triggered it.
- There are two ways to trigger benefitsâŠ. Remember ADLâs? Six of them. âŠbathing, dressing, feeding, toileting, continence and transferring. Anybody know what transferring is? How about toileting or continence? Out these activities which do you think most frequently triggers a claim? (bathing and dressing) When you trigger where can you get care? (where you choose). Home, assisted living or a nursing home. 2nd trigger independent of the ADLs. Forgetfulness. Doesn't have to be Alzheimer's. Could be memory problems from trauma, stroke or depression. When doctor says canât be left alone because of short term or long term memory, policy pays. Assisted living has separate Alzheimer's wings just for people with memory impairment. Memory problem doesnât have to mean nursing home.
- Letâs talk a little about how LTC policies workâŠ. When need the care, don't pay anymore. Premiums stop. If you buy a policy, how many years would pay for the coverage? Could be 6 weeksâŠ..could be 60 years. Pay until you need itâŠ. then stop and the policy starts paying you.
- When you buy policy, you lock in age. I bought my policy when I was ___. Been paying the same rate every year since. Only way premium can go up is if the insurance commissioner allows carrier to raise it. If they raise rates canât increase just on you. Must raise for every policyholder in state. Let's say pay premium for 20 years. Now I'm __ and they raise rates 20%. It's 20% of the rate I paid that when I was ___ because I locked in that age. Some companies have never raised rates and those are the ones we deal with.
- Whenâs the right time to buy this protectionâŠ. assume a 40 year old buys a policy and pays their premium until they need care at age 80⊠If that same person waits to purchase coverage until theyâre 60 and they pay their premium until theyâre age 80, do you think they pay more or less?? Considering overall net costs? More⊠Premiums are based on your age when coverage is purchased and the lifetime cost of long-term care insurance is always more the longer you wait to buy. What else happens when people wait? Medical conditions get worse and accidents can happen at any age. Nobody knows when their good health will change suddenly. People who wait run the risk of not being able to qualify when they apply.
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- (IF EMPLOYER PAID) Iâd like everyone to take the Benefit Option Sheet(s) out of your packages. If youâre married and we had the information, we included one for your spouse too. (IF VOLUNTARY) Probably wondering how much this coverage costs? If you fill this form out and hand it to me on your way out, I will give you a sheet like this for you and your spouse. BOS have 4 options. If you look at option #1, in the upper left corner you will see the benefit amount is $50 per day, and going down it shows the benefit period is for __ years and there is no inflation protection. Review HC percentage, EP, TQ, Indemnity STRESS importance of Simplified Underwriting. ONLY AVAIL. ONCE DURING INITIAL ENROLLMENT Now if you skip down to Total Benefit Value you can see it says $54,750. DOES ANYONE KNOW HOW WE GET THAT NUMBER? Right, its $50 per day x 365 days x 3 years. We call this the Pool of Moneyâ. Now when you look down below the pool of money, you see what it will be worth when you 50, 60, 70 and 80,,, when you are more likely to need it. The important thing to note is the Pool of Money does not grow in option #1 because there is no inflation protection. Now go back up to the monthly cost to you and your employer. DEPENDING ON THE CASE- - You can see the cost of option one is paid 100% by you company. Now as we move over to the right, each plan gets a little richer. Option #2 is exactly the same as #1 except is does have compound inflation protection⊠look what happens to the value of your pool as you get older. And you can see what it would cost out of your pocket. As you can see, (review options 3 and 4) Now these are only 4 standard plan designsâŠwhen we meet one-on-one we can customize a plan that is exactly right for you.
- Hopefully I demystified long-term care, Medicare/Medicaid and explained the limitations of these programs. This isn't something you should look at in your sixties but maybe looking at it at a younger age when you can save money and have the best chance of getting approved for coverage. Long term care insurance is not nursing home coverage only. It will pay for that but really the goal is to help pay for alternatives, to keep you out of that nursing home for as long as possible. I can't tell whether you're ever going to need this coverage but I think I've got you thinking about the possibility of what would happen if you did. Long term care is expensive, and when an insurance plan is designed properly, it can be very cost effective.
- Long-Term Care insurance closes the hole in the financial planning process. HOLD UP RESPONSE FORM If you are interested in learning more about long-term care insurance, please fill out the response form and hand it in. REMEMBER Simplified underwriting is available only once during the initial enrollment period.