Today's guest blogger is James Hopper with Money Concepts.
No matter what preconceived notions you may have about Long-Term Care policies,
read this post because times have changed and there are fantastic options available.
The confidence levels of Baby Boomers at retirement are becoming increasingly polarized. Boomers are
either struggling to sleep at night, uncertain about having done enough to retire, or overconfident,
thinking pure wealth can overcome health concerns, taxes, and market volatility during retirement. The
three biggest concerns of the first and most common type are having a reliable income stream
throughout retirement, safely guarding the nest egg, and having funds remaining to transfer to future
generations. For the second group, there are tremendous opportunities to protect them from themselves.
As a financial advisor, I coach our clients to have different “buckets” of money. Our clients are typically
well-versed on the risks and costs involved with growing older and declining health. Our clients know that
dementia is on the rise and other things may require little blue pills to do the same. As our industry
continues to evolve with the changing needs of our clients, we finally have a solid tool to handle all three
of the client’s primary concerns in one transaction—Asset-Based Long-Term Care.
Asset-Based Long-Term Care protection is essential to any financial plan. Although we all know that we
are never going to end up needing professional assistance, "Longtermcare.gov" tells us that 70% of
Americans age 65 and older will need some form of LTC in their lifetimes. Sixty-five percent of these will
need some type of home health care and thirty-seven percent will need some form of nursing home care.
Statistically, we are either going to need assistance or we are going to attempt to provide care for
someone else. One of my mentors, Wesley Sykes, RFC® LUTCF®, likes to ask the question, “Who are you
going to depend on to change your Depends?”
Extended care is an income issue, not an asset issue. How can families prepare for a devastating health
event that may cause income needs to grow by fifty percent or more? Many people think cash-flowing an
event like this is reasonable, but there are tremendous opportunities available to prevent families from
spending down assets, selling vacation homes and drastically altering their preferred lifestyles. Also, for
those unable to pay for care out of pocket, to protect against the pitfalls of Medicaid.
Unlike the traditional plans of the past, the premiums are guaranteed, and it is no longer, “use it or lose
it.” If a policyholder is blessed to make it through life without needing to file a claim, the cash value will be
passed on to beneficiaries in the form of a tax-free death benefit. If an event occurs, the cash value will
be used to pay for care first and then a lifetime income rider will pay for remaining care up to the benefit
limit, long after the cash value is depleted. Without preparation, this money and much more would be
spent on an event or there would be longer suffering at home, causing undue stress to loved ones.
As we look for ways to help families protect assets and save taxes, the lifetime income rider has another
tremendous feature. Health Savings Accounts can be used to pay for the rider on LTC plans! As the tax
laws in our country constantly change, who would not want to know how to pay for part of their policy
with pre-tax money?
How do we present a policy to a family that knows it will never be needed? Personal stories are
tremendous sales tools to have in these situations. We all know people who have been forced to care for a
spouse, a parent, a sibling, a child, or other loved ones. How did this impact lives? Were the caregivers
trained? Did the primary caregiver have to change or end employment? Were tough choices made
between providing care or being at home with families? Were loved ones forced to choose between
providing financially for parents or for children? How did this impact the caregiver’s health? How did this
affect relationships with other family members who weren’t contributing a fair share?
Maybe these situations have hurt you and your family. I feel as though I have first-hand experience. I am
an only child, and three times this year, I have had to rush to my Dad’s side because he was heading to
the ER three hours away from my house. There have been many times where I have had to choose to care
for my Dad instead of being home with my family and attending their activities. Also, my Mother passed
fifteen years ago, and I can’t help but think that we could have prolonged and improved her life if we would
have had this type of care available to us.
Knowing there is a protection plan available, how many of these people would have chosen to put loved
ones in jeopardy? When speaking with families, we aren't selling a paid-for room in a nursing home, we
are protecting loved ones from being forced to make tough choices and sacrifices. We are protecting a
healthy spouse from declining rapidly while caring for the love of his/her life. We are protecting the
oldest daughter from having to quit her dream job or close her business to provide care, because
statistically, the oldest daughter is the most likely to step up and make sacrifices.
The key aspect of this family protection has yet to be revealed. As it becomes necessary for a client to
seek assisted care, many insurance providers are offering access to care coordination agencies with all
policies to navigate the entire process and to explain the major benefits of using the complimentary
service. The dedicated personal care manager assigned to each policy owner knows exactly which
benefits are available in every situation.
Many people struggling to perform two or more ADLs continue to live at home with assistance from an
untrained loved one. One of the early benefits of LTC allows loved ones and personal caregivers to get
professional training to learn the safest and best ways to move, clothe, and bathe a loved one who is not
yet ready for assisted living. The account manager can get the personal residence fitted with ramps and
durable medical equipment to help claimants live at home longer and more safely. For families unable to
drop everything and stop working to care for an ailing loved one, adult daycare centers are viable
alternatives. For those caregivers able to sacrifice everything, respite care will pay a trained individual to
stay with a loved one for up to 21 days per year to allow the caregiver time to relax and recuperate with
reduced stress and less guilt.
When transitioning to an assisted living facility or nursing home becomes necessary, the account
manager will provide area-specific recommendations to save families time and energy. If an assisted
living center resident requires a hospital stay, the account manager will hold a bed in the same facility for
up to 21 days. Without this service, there is no guarantee the preferred center will still have availability
when the patient is released from the hospital. Also, the account manager handles all finances in the
account up to the benefit amount, so families never have to see a bill or stress about managing the care
process. These services allow family members to do their one main job: love their family members well!
There is not another product on the market that provides an additional income stream for life in a time of
crisis, protects a portfolio from depletion due to healthcare costs, and may produce a tax-free death
benefit to the next generation. Asset-based LTC policies are the most essential tool available to protect
ourselves from a health-related disaster. As fiduciaries, we have an obligation to protect families by
discussing this opportunity with everyone. When family members discover you recommended this policy
to their loved ones, they will thank you. They will want to work with you too. They will advocate for you.
Isn’t this the goal?
Bio:
James A. Hopper, RFC® is an Associate with WES Financial Planning & Advisory in Indianapolis, IN and
graduated from the Kelley School of Business at Indiana University in Bloomington. He was named the
Crossroads Region of Money Concepts Newcomer of the Year for 2018.
Phone: (317) 439-4320 | E-mail: jhopper@moneyconcepts.com | Website: moneyconcepts.com/jhopper