Investing In Long Term Care, Part II


By Lisa Christiansen

The article I wrote concerning Long Term Care (LTC) generated enough response to have a follow-up. I realize I need to provide two more articles to address numerous questions, the first one going over some of the points I tried to make in the first article in more detail and the final one showing some of the features and options if one considers buying a LTC policy.

… The first thing I would say is that this information is from my friend who is retired from financial planning for 6 years, I feel he is still current enough to offer information that hopefully will benefit you and encourage some of you to consider whether this is something you need to learn more about.

The main point of the first article was to say that I know no one wants to buy something that is expensive when what they want is to enjoy their retirement and maybe spend that same money traveling, on their hobby, etc. I hoped to encourage those of you young enough and with the financial resources to think about purchasing at age 40 or so instead of waiting until you are at age 70 (at which time you may not qualify), even though you don’t think that you would need it until you were at least 70 years old. Two reasons for this are that many more people need the benefits and help at earlier ages (45 or 50) than you would imagine and that the premiums become so expensive if you wait to purchase at say age 65. I have been doing financial planning for about 5 years with the advice of my friend, I had limited knowledge of LTC, when my friend purchased his policy he was 56 years old. His initial thinking was because he was in excellent health he wouldn’t need this for many years, so he would gamble and save paying those premiums for 10 years or so. My mentor in LTC convinced me that it was smart too buy at the earliest age I could afford it because of the huge difference in premiums as we age, and what we thought health care costs would be 10 years in the future (we were both too low), the fact that he thought he would live to at least age 85 and that there was no guarantee for any of us that we wouldn’t need care at age 60 or so.

Let me throw some LTC statistics at you as follows:
1. If you live to age 65, the odds say you will live to age 84.
2. Over 65% of all Americans will need some kind of LTC in their lifetime
3. If a person lives to age 65, there is a 44% chance he/she will wind up in a Nursing Home.
4. For a couple both turning 65, there is a 75% chance that one of them will need LTC.
5. Fifty-nine percent (59%) of the adult population in the United States either is now or expects to become a family caregiver.

The two Common Myths I had to overcome when I was talking to someone about LTC were number one that “my family will take care of me”. The reality is children have other responsibilities; they have limited family resources as to time, finances, skill, and geographic constraints. “My spouse will take care of me”. He/she may think they can do this, but how many times have you seen a wife care for the husband for say 2-3 years and be in as bad a shape as the husband because of the burden placed on her. The second myth is that all else fails, the government will be there as a safety net. Let me assure you the government does not, nor can afford, to take care of our LTC needs. I attempted to point this myth out in my first article. The two options are Medicare and Medicaid. For Medicare to pay Nursing Home costs you must have been hospitalized for 3 days, be in a “Medicare Approved” facility that is “Skilled Care” not” Custodial Care.” Skilled Care accounts for less than 5% of all such facilities. If you meet these hurdles, Medicare will pay 100% for the first 20 days. Days 21 thru 100 they pay everything above your co-pay (I’m sorry I don’t have a current number, the last I have is $114 for 2005.) This says you pay I’m sure its now over $120 per day for 80 days. On day 101, you pay all costs, they pay ZERO. The other option, Medicaid is even worse. It’s done on a state-by-state basis. In Oklahoma, you are required to “spend down” your assets to $2000. There are restrictions going back 5 years as to gifting assets to get to the $2000.figure. There is often a waiting list to get into a facility and you have no control over what facility you are placed in. I know of one family where the Mother was placed over 300 miles from the home of the closest child.

In my opinion, your OPTIONS are as follows:
1. Do Nothing (hope the problem goes away)
2. Be Very Wealthy (self-insure)
3. Be Very Poor (spend down to the poverty level)
4. Purchase LTC Insurance or a Hybrid Plan (Transfer some or all the Risk)

The Pros and Cons of Long-Term Care.

CONS:
1. Too Expensive
2. Crimp my Budget
3. No Return of Premium
4. No long-Term Rate Guarantee

PROS:
1. Maintain Control and Independence
2. Financial Security, Don’t Outlive Your Assets
3. Avoid “Welfare”
4. Not a Burden to Your Spouse and/or Kids
5. Able to Qualify Now
6. Good Policy with an Excellent Company
7. It will Never be Less Expensive than it is Today

My Final article (Investing In Long Term Care, Part III) will hopefully correct anything I have misspoken about or missed covering will cover the different decisions that have to be made concerning the several options that most policies have. If there are questions, I would attempt to answer those after my next article in a week or so. Thanks it’s always good to refresh your memory about something you believe in.

About lisachristiansencompanies

A U T H O R • I N N O V A T O R • E X P E R T Dr. Lisa Christiansen is one of the most sought-after motivational speakers, life coaches, and business consultants worldwide, building an impeccable record of client satisfaction in the process. A best selling author as well, Dr. Lisa Christiansen has written such inspirational titles as My Name Is Lisa; The Two Millimeter Shift; White Sheep, Blue Skies, Green Grass; 101 Great Ways To Enhance Your Career; and others, in which she sheds light on some of the biggest questions of self-empowerment and fulfillment. Among her most recent publications, Dr. Lisa Christiansen contributed to the book 100 Ways to Enhance Your Career, which features wisdom from other well-known figures in the self-help world, including Jack Canfield, John Gray, and Richard Carlson. In 100 Ways to Enhance Your Career, Dr. Lisa Christiansen shares a step-by-step process for increasing job satisfaction, gaining more from one’s career, building wealth, and taking control of one’s destiny. Aside from her numerous books, Dr. Lisa Christiansen hosts a wide variety of seminars and retreats, where she teaches her students the secret to unlocking their inner potential and living their dreams. Some of the popular events held by Dr. Lisa Christiansen include Mastering Your Wealth, Claim Your Future, and Design Your Destiny, all of which feature her intensive coaching and unique strategies of personal transformation. Her website has a wealth of additional information on her conferences, retreats, books, and other endeavors. Join the millions of people who have already revolutionized the quality of their lives. “You already know how to survive global changes in the economy, environment and political arena, now it's time to thrive and prosper at a level beyond what you ever thought was possible,” Christiansen said. “My seminar is about seizing the power within today. Press Summary: Creator of extraordinary lives, Lisa Christiansen has served as an advisor to leaders around the world for the last two decades. A recognized authority on the psychology of leadership, organizational turnaround and peak performance, Lisa has consulted Olympic athletes, world renowned musicians, Fortune 500 CEOs, psychologists, and world-class entertainers. Lisa’s strategies for achieving lasting results and fulfillment are regarded as the platinum standard in the coaching industry. Lisa captured the attention of heads of state and the U.S. Army. Christiansen has impacted the lives of millions of people from 30 countries. Lisa has been honored by Cambridge Society of Who’s Who as one of the Top Business Intellectuals in the World. Lisa has helped millions of people create extraordinary lives globally. Her expertise and guidance has enriched the lives of icons such as pop superstar Kelly Clarkson, Olympian Dara Torres, and superstar Patrick Dempsey.

Posted on September 24, 2011, in Wealth Creation and tagged , , , , , , , , , , , , . Bookmark the permalink. Leave a comment.

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