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|

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 Social Security disability benefits. 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
By |2020-09-29T14:01:07-07:00January 21st, 2016|Health Care, Insurance, Video Blog|

Health Insurance Merry-Go-Round

Blue Cross Blue Shield of Arizona recently contacted nearly 40,000 customers with preferred provider health plans (PPOs) to notify them their plans will no longer be offered in 2016. Consumers who’ve received a cancellation notice will be able to choose from select health maintenance organization (HMO) plans with smaller networks of doctors and hospitals. They will also be able to shop around competing plans during the three-month open enrollment that begins in November.

BCBS is just one of four major health insurance companies in Arizona that will discontinue PPOs next year on the federal Affordable Care Act (ACA) marketplace, according to a recent Arizona Republic articlethe other companies are Aetna, Cigna and Meritus.

The news coMerry Go Roundmes as insurers are trying to stabilize their finances, which have been in turmoil since the passage of ACA or Obamacare. Steady rate increases during the past few years and, more recently, a transition to lower-cost HMO plans have been their strategy so far. And Arizonans are not alone. According to a recent Forbes piece by Grace-Marie Turner, approximately 400,000 Americans have been impacted to date, following failures of state ACA health care cooperatives in New York, Kentucky, Nevada, Iowa, Louisiana and Nebraska.

If you are among those who received a cancellation notice from your provider, be sure to explore your options and find a new plan to fit your needs. The silver lining to this new inconvenience in the health care system is that changing insurance providers has become easier and no longer presents the potential risk of losing coverage. You are already on the merry-go-round, and a new enrollment period will come around again next year if you need to make another change.

Image courtesy of Simon Howden at freedigitalphotos.net
By |2019-08-14T13:59:59-07:00November 2nd, 2015|Current Affairs, Health Care, Insurance|