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LTC client seminar: The impact of long term care on wealth management

LTC client seminar: The impact of long term care on wealth management. The 3 phases of wealth management. Asset accumulation: Real estate Mutual funds Stocks Equity indexed annuities Bonds CDs Fixed annuities Variable annuities Asset distribution: Retirement income

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LTC client seminar: The impact of long term care on wealth management

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  1. LTC client seminar:The impact oflong term care onwealth management

  2. The 3 phasesof wealth management Asset accumulation: Real estate Mutual funds Stocks Equity indexed annuities Bonds CDs Fixed annuities Variable annuities Asset distribution: Retirement income Social Security retirement benefits IRA distributions Estate planning Inheritance Asset protection: Life insurance Auto insurance Disability insurance Homeowners insurance Health insurance Long term care insurance

  3. What is long term care insurance and what does it do? Long term care insurance is not just nursing home insurance! • Nursing facility • Assisted living facility • Home and community based care • Adult day care • Hospice care Long term care is also: • Illness and injury • Disability • Cognitive impairment

  4. Which of these is a concern to you? • Depending on others for care • Being a burden to children or spouse • Preserving independence and avoiding welfare • Leaving a legacy of debt • Maintaining access to quality care • Spending life’s savings on care expenses • Protecting assets and having an estate for your heirs

  5. The facts • Over 50% of all Americans will need long term care in their lifetime. (Americans for LTC Security, August 1999) • For a couple turning 65, there is a 75% chance that one of them will need long term care.(The Wall Street Journal, June 2000) • Family caregivers provide 80% of long term care; institutions such as nursing homes provide only 20%. (ALS Association, 1999)

  6. What is the cost of care? • Costs vary by location • Nursing homes: $44,895 per year, national average (LifePlans, Inc., 2000 National Claimant Study) • Assisted living facilities: $12,000 to $36,000 per year (NCAL/AHCA, Survey of Assisted Living Facilities, 1996) • Home health care aide: $12.00 to $24.00 per hour (Kiplinger’s Retirement Report, Hourly Cost of Home-Care Help, January 2001) • Depending on where you live, long term care can cost anywhere from $40,000 to $100,000 annually and the cost is projected to triple over the next 20 years (Financial Planning, September 2000)

  7. Who will pay? • Medicare? • Medicaid? • Assets? • Your Family? • Transfer the risk?

  8. The facts about Medicare • Medicare’s skilled nursing facility (SNF) benefit does not cover most nursing home care. • Medicare does not cover homemaker services. • Medicare does not pay for home health aides to give personal care unless you are homebound and are also getting skilled care such as nursing or therapy.

  9. The facts about Medicaid • Medicaid is a jointly-funded, Federal-State health insurance program for certain low-income and needy people. • You may have to spend down or use up most of your assets on your health care before Medicaid is able to help. • State laws differ about how much money and assets you can keep and be eligible for Medicaid. • Nursing Facilities only reserve a limited number of beds for Medicaid recipients.

  10. Assets • How does the potential cost of a long term care event affect your wealth management strategy? Significant assets: • Protect your assets Limited assets: • Protect your lifestyle

  11. Is your family physically able to help? Is your family financially able to help? Is your family emotionally able to help? Do you want to put the entire burden on your children? Your family

  12. Transferring the risk Three Major Financial Risks Odds Cost (deductible) Auto accident 1-240 1 $250 - $1,000 Home fire 1-12002 $500 - $1,000 LTC event 1-23 $112,2384 1. Life Association News, 1993. 2. Life Association News, 1993. 3. National Academy of Elder Law Attorneys, 1999. 4. Assumes average nursing home cost of $44,895 per year and average stay of 2.5 years.

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