Why You Should Consider Long Term Care Insurance in Your Retirement Planning

If you haven’t already done so, now is an excellent time to consider adding long term care insurance to your retirement portfolio. Because uninsured long term care expenses can pose a significant risk to the assets you’ve worked a lifetime to accumulate, long term care insurance should be considered as part of a complete financial plan.
As former Senator told the United States Senate Special Committee on Aging, “Although the need for health insurance to cover a patient’s medical expenses in case of catastrophic illness is widely recognized, few people are insured against the costs of providing long term support services for that same person. This lack of insurance coverage jeopardizes the financial security of families and diminishes the economic security of the country.”
The likelihood that you may need long term care is significant.  Some 70% of Americans who reach the age of 70 can expect to utilize some type of long-term care during the remainder of their lives.  And while long term care includes a broad range of services, from in-home care to nursing home care, each comes at a cost.  Those costs could be substantial, and could have a significant adverse effect on your retirement portfolio.
Why? Most forms of health insurance focus on medical expenses, not the custodial care and nonmedical expenses associated with long term care. Medicare only covers nursing home care after a related three-day inpatient hospital stay and even then for only 20 days before a daily co-payment is assessed and Medicare only covers a total of 100 days.

Medicaid doesn’t kick in until one has spent down a significant portion of their assets (spend-down to $2,000*).  Therefore, if either you or your spouse needs long term care, you may have to pay for that care out of your accumulated assets … unless you have long term care insurance.

genworth-nursing-cost-2016The average cost of a private room in a nursing home met or exceeded $80,000 annually.  If one partner needs such care, the cost could quickly and substantially erode the assets acquired over a lifetime.
Let’s use a hypothetical couple living off the interest of $500,000 of invested assets to illustrate how serious an impact long term care expenses could have.

For the sake of this discussion, assume the couples’ investments are earning approximately eight percent annually, generating about $40,000 per year in income.  Let’s also presume this couple needs all of this income to support them while they’re living together in their home.
Based on an $80,000 annual cost for nursing home care, it may appear that this couple has enough for a little more than six years of care. However, that basic calculation does not consider the living expenses of the spouse who remains in the community.  

If this couple is using all of their investment income to provide for their living expenses, they will soon need to start withdrawing from the principle for a portion of those living expenses as well as for the long term care expenses of the partner who needs care.
In circumstances like these, it’s easy to see how the assets accumulated over a lifetime could soon be completely exhausted.
Long term care insurance can help provide the funds to pay for the care you may need, while simultaneously protecting the assets you’ve worked a lifetime to accumulate. Long term care insurance may also help preserve financial independence, choice, and dignity, and those can be priceless.
It’s never too early to consider insurance because your health can change at any time, meaning you may be uninsurable and end up paying out-of-pocket.

The Partnership Asset Protection program is available in most states. This will protect your home and assets to the limit as was paid by a qualified policy.

Some people have too many assets to benefit from the Partnership. They may prefer an annuity or life insurance with a long term care rider. You can use an existing whole/universal life policy or existing annuity to fund a new policy with long term care coverage. The Pension Protection Act allows this transfer without having to pay capital gains.

Feel free to contact us for more information or for an updated quote.

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.* States can differ on spend-down.




Most Americans Incorrectly Believe Health Insurance or Medicare Pays For Long Term Care

More than half of Americans, 55%, incorrectly believe health insurance or Medicare will pay for long term care, the assistance with daily living that some people need because of illness or injury.

People who are sick or injured may need help with activities of daily living such as bathing, dressing, preparing food, and so forth that they would normally do for themselves.

A recent online survey asked adults how they would pay for assistance with activities of daily living if they are unable to take care of themselves for an extended period of time. More than half, 55%, said they would use Medicare or health insurance. But Medicare and health insurance, although they cover some of the medical costs, do not pay for long term assistance with daily living. See “Who Pays for Care”

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Medicare covers these costs for a maximum of 100 days (or until you stop improving). Medicaid will pay for these costs only when the individual’s assets are down to around $2,000 or $3,000 – depending on the state of residence – and Medicaid will recover the costs from the estate after death. This is often done with a lien on the Medicaid recipient’s primary residence.  How long will your savings/investments last if paying $75,000 a year per person for care?

The survey involved 2,065 U.S. adults age 18 and older. People over age 55 were more likely to say they would pay for long term care needs with health insurance and/or Medicare. People ages 18-54 were more likely to say they would borrow money from family and friends or use a credit card or loan. Long term care costs are estimated to be $70,000 a year or more, most of which will not be covered by health insurance or Medicare.

The U.S. Government Accounting Office and The Wall St. Journal report that 72% of Americans will need long term care at some time, either part-time assistance at home or full-time care in a facility. But people need to be educated about the costs of care and how to pay for it. Long term care insurance will relieve some of the burden. Many states now have available a Partnership insurance policy that protects assets by exempting the policyowner from Medicaid spend-down. Read more about The Partnership.

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Dying at Home

Most people (70%) want to die at home, in a familiar place surrounded by loved ones. However, only about 25% do. Nearly 50% of Americans die in a hospital, and another 20% die in a nursing home or long-term care facility.

The trend is for more people to die at home, with a 29.5 percent increase from 2000 to 2014, according to the Centers for Disease Control and Prevention. During the same time period, the percentage of deaths in hospitals, nursing homes and long-term care facilities has dropped.

Seven out of ten Americans die from chronic disease, and more than 90 million Americans are living with at least one chronic disease. The Centers for Disease Control (2007) listed the ten leading causes of death in America (in order):
heart disease
chronic lower respiratory disease
7. diabetes
kidney disease and sepsis.

Almost a third of Americans see ten or more physicians in the last six months of their life. And almost 30% of Medicare’s budget each year is spent on patients who are in the last 12 months of their lives.

According to LongTermCare.gov about 70% of Americans over age 65 will require long-term care. If a person has an extended illness requiring long-term care, long-term care insurance will help cover those expenses whether in a hospital or at home. Studies show that those with long-term care insurance stay at home longer because the insurance provides more money for care. This includes extra money for home modifications like a wheel-chair ramp, a medical alert system and a stair lift.


It is often the lack of money that prevents people from staying at home when they need care. Who pays for long-term care? In some cases they will spend all their savings and now are forced to rely on Medicaid (welfare health care). With a Partnership asset-protection insurance policy you will be exempt from the Medicaid spend-down requirement, the exemption is based on the total benefits your policy has paid out for care.

More than 80% of patients with chronic diseases say they want to avoid being in a hospital or intensive care unit when they are dying. While dying at home is usually preferred by the patient, it can be difficult for the caregiver. Hospice services can help.

Hospice care is for those in the last six months of their lives. More than 88% of hospice patients are Medicare beneficiaries.

Traditionally, for a patient to qualify for Medicare-supported hospice, a doctor must certify that the patient has: a home, a diagnosis of six months or less to live, a full-time caregiver, and a willingness to give up curative care and receive only palliative care.

In 2016 the Medicare Care Choices Model began offering some patients “concurrent care”: the choice of continuing curative care while starting palliative care and hospice care. An evaluation of concurrent hospice in non-elderly patients showed this plan improves quality of life and reduces costs.

The Medicare hospice benefit emphasizes home care, with almost 60% of patients receiving their care at home as of 2014. Medicare coverage is limited, additional care would be paid for out-of-pocket. Do you really want to spend-down your hard-earned savings and investments leaving open the option that Medicaid will require your estate to repay Medicaid for your care costs? There are 30 states with a filial responsibility law that could require your family to reimburse Medicaid.

Home care is much less expensive. Inpatient hospice services are used when the patient’s pain and symptoms must be closely monitored in order to be controlled, when medical intervention is required to control pain or symptoms, or when the family needs a rest from the stress of care giving.

A hospice team arranges for doctors, nursing care, medical equipment like wheelchairs and walkers, medical supplies, prescription drugs, hospice aide and homemaker services, physical and occupational therapy, speech-language pathology services, social workers, dietary counseling, grief and loss counseling for the patient and family, short-term inpatient care, and short-term respite care.

After evaluation by a doctor, a patient can enroll in hospice care for two 90-day benefit periods, followed by an unlimited number of 60-day benefit extensions. A patient can decide to stop hospice care at any time.

A recently proposed bill, The Patient Choice and Quality Care Act of 2017 (H.R. 2797), aims to give patients and families living with advanced and life-limiting illnesses the information and services they need.

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Hillary Clinton meets home care workers

Democratic presidential candidate Hillary Clinton says the country should update the Medicare benefits package to encourage more use of home care, and to reduce the need for nursing home care.

The workers themselves told Clinton that they work long hours for low pay, with meager benefits, and often struggle to make payments on the cars they need to get to clients, or even to pay for bus fare to reach their clients.

Read Rest of Story Here

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Baby Boomers in Denial About Retirement Costs?

Millions of Baby Boomers are unprepared for the medical and personal care they may to need in retirement – and ignoring the problem can have catastrophic consequences.

Although Medicare is an important health insurance benefit, it doesn’t come close to paying for most seniors’ medical costs – and contrary to popular assumptions, it doesn’t pay for long term care services that may be needed.

Even with Medicare paying for some of their health care, a couple turning 65 today will pay an average of $220,000 in out-of-pocket medical costs (including premiums, co-pays, and deductibles) before they die, according to a new study. And two-thirds of those 65 and older will need long term care at some point, costing an average of $50,000 per person. That means a typical couple should save $300,000 to pay for their care in old age.

Some of us will pay less than the average, but some of us will pay much more. An average male over 65 will need a little less than two years of long term care services over his lifetime; the average woman needs about three years of assistance. One study found that one-third of those 65 and older will need no assistance at all, but one in five will need five years or more of long term care. Many financial advisors recommend long term care insurance as a way to avoid depleting family resources.

With and Without LTC Insurance