Health Care

Explore Long-Term Care Options

Mike McCann, CFP, AIFThe common U.S. life expectancy is 87 years. When you live into your 70s and beyond, the likelihood that you’ll need long-term care is considerable. Of course, much younger people can require these services, too, as a result of accidents or illnesses. About 30 percent of new long-term care insurance claims begins by age 80, and another 25 percent between ages 81 and 85, according to industry data for 2018. It’s important to explore long-term care options sooner rather than later.

Long-term care expenses average from $4,000 to $8,000 per month, depending on the level of care.

Yet, private health insurance policies, Medicare supplemental plans and group/employer plans generally do not cover long-term care costs. Medicare benefits are limited to 100 days and offered only after a hospitalization or injury. The Veterans Administration typically only covers long-term care for those with service-related disabilities.

Long-term care insurance pays for care when you become unable to care for yourself due to a disability or chronic condition; 99 percent of policies cover nursing home, assisted living and home health care. Annual premiums average $2,800. That said, different companies offer different rates and discounts, so premiums can vary by as much as 60 to 90 percent.

Our health changes, especially as we grow older. So it’s smart to look into care options well before reaching retirement age. This is especially true if you have a family history of chronic disease or disability.

There are many options for funding long-term care, and it’s important to gather as much information as possible to find the best one for you. Here are some examples:

  • Health Savings Accounts (HSAs) allow you to put money aside tax-free for medical costs, including long-term care insurance premiums.
  • Specialty or hybrid products like Life/LTC policies and LTC Annuities are becoming more common.
  • Pensions or Social Security benefits can help, depending upon the amount of money you receive and the care you need.
  • Retirement and other investment savings, if significant, may provide for your long-term care needs.
  • A home equity credit line, reverse mortgage or outright home sale can help fund care.
  • When all options have been exhausted and your income/assets have been depleted, Medicaid programs will cover nursing home care (but not assisted living care).

Before making any decisions, talk with your financial advisor. He or she can help you explore long-term care options and find the best financial solution for you and your family.

Sources: U.S. Department of Health and Human Services (longtermcare.acl.gov), American Assoc. for Long-Term Care Insurance (aaltci.org), Stanford Institute for Economic Policy Research, Morningstar.com Center for Insurance Policy and Research, Genworth.com
By |2019-10-15T12:14:27-07:00May 27th, 2019|Health Care, Insurance|

Trust Basics and Benefits

Larriva-WEBA living trust is a common estate planning tool that helps express your wishes for your estate while you are alive, as well as when you pass away. One benefit a trust provides is that it is not subject to probate (public records), and thus provides you with some privacy. This aspect can also help minimize costs if there are real estate assets held in multiple states; each state would require a probate filing, adding filing charges and attorney fees to your costs.

Trusts are also helpful in preserving rights to assets for blended families. If you want to assure that your children receive an inheritance, you may wish to craft your trust document to specifically leave a portion of the estate to them. Otherwise, there is nothing to stop your current spouse from receiving 100 percent of the assets and changing his or her plans after you have died.

The main components of a trust consist of the grantor (creator), the trustee to manage the trust, and the named beneficiaries who are entitled to the income and/or assets. You also need to name successor beneficiaries (if you and/or your spouse die), successor trustees to continue to make competent decisions, and any freedoms or restrictions you want afforded. One example is delayed distribution of principal to younger beneficiaries. What could happen if your beneficiary inherits $250,000 or more at age 19? It may be wise to set up the trust to parcel out the funds (e.g. 25 percent at age 23, 25 percent at age 28, and the final 50 percent at age 35), so they can learn the skills to manage significant wealth.

Important last steps are to fund your trust by changing the title of your taxable assets, such as your bank account, real estate, brokerage accounts and mutual funds. Not properly funding a trust is a common estate planning mistake. You can also create a pour-over will, which allows the executor to place any assets into the trust that were accidentally left out.

Finally, it is important to communicate your plan to your loved ones. They will appreciate your diligence, and it can greatly simplify an already difficult time in their lives.

By |2019-08-14T13:59:57-07:00July 22nd, 2016|Estate Planning, Health Care|

Plan Ahead for Long-Term Medical Care

One in nine people age 65 and older has Alzheimer’s disease. It is the only disease among the top 10 causes of death in America that cannot be prevented, cured or even slowed. Preparing for long-term medical care is an important part of your financial planning process. After an Alzheimer’s diagnosis (or other serious illness), your options may be more limited.

Alzheimer’s takes a devastating toll – not only on those with the disease, but on entire families. A recent Alzheimer’s Association study revealed that many care contributors had to cut back on basic necessities — such as food and medical care — for themselves and their families.

“The devastating emotional and physical effects of caring for a person with Alzheimer’s disease has been well studied,” said the Alzheimer’s Association’s Beth Kallmyer. “However, this new report shows, for the first time, the enormous personal financial sacrifices that millions of care contributors must make every day. These sacrifices jeopardize the financial security of individuals and families, as well as their access to basic needs and health care.”

Many survey respondents had misconceptions about what expenses Medicare and Medicaid cover, leaving them unprepared to handle the tremendous costs associated with the disease. The survey found 13 percent sold personal belongings, such as a car, to help pay for costs related to dementia. Nearly half tapped into savings or retirement funds, and 11 percent cut back on spending for their children’s education.

Long-term care insurance can help preserve your income and investments, while ensuring you and your loved ones will not have to sacrifice quality care or basic life necessities in the event of a long-term illness.

Social Security Disability Benefits

If you are unable to work because of a medical condition and expect that condition to last a year or more, you may want to consider applying for Social Security disability benefits.  Our 2-minute video provides a brief overview.

The information contained in the video was sourced from an article by Carrie Schwab-Pomerantz, CFP®, Senior Vice President, Schwab Community Services. For more information on who qualifies for social security benefits and how to apply, click here to read the full article.

The official Social Security Administration website has in-depth information. Click here to access the government site.

Select photos in video courtesy of Felixco Inc, David Castillo Dominici, nongpimmy, alexisdc, stockdevil, nuttakit, and stock images at freedigitalphotos.net