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Creating the Plan for Long-Term Care
Strategies to Help You Live
The Way You Want to Live
Get the age demographic right…
Target market for this discussion are those in their 50’s through mid 60’s…
They are beginning to see their friends get sick or even die. Many are taking care of their parents
And it begins to sink in they will be taking great financial responsibilities into retirement
3
The financial demographic…
Follow the obligations (lifestyle)
The larger the financial commitments, the greater the consequences are to those he loves IF …
Hint: Who are your best buyers of life and disability insurance? These are the people you want to talk to:
Your best clients
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Understanding the profession ofUnderstanding the profession ofestate planningestate planning
allows the professional to…allows the professional to…
Ask the right questionsAsk the right questions
which leads to…which leads to…
The opportunity of creating a plan forThe opportunity of creating a plan for
succession and tax avoidancesuccession and tax avoidance
which leads to…which leads to…
Protecting that plan with life insurance.Protecting that plan with life insurance.
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Understanding the profession ofUnderstanding the profession offinancial & retirement planningfinancial & retirement planning
allows the professional to…allows the professional to…
Ask the right questionsAsk the right questions
which leads to…which leads to…
The opportunity of creating a financial/The opportunity of creating a financial/
retirement planretirement plan
which leads to…which leads to…
The sale of appropriate investmentsThe sale of appropriate investments
which leads to…which leads to…
Protecting that plan with life insurance.Protecting that plan with life insurance.
66
Ask the right questionsAsk the right questions
which leads to…which leads to…
The opportunity of creating a plan forThe opportunity of creating a plan for
long-term carelong-term care
which leads to…which leads to…
Protecting that plan with long-termProtecting that plan with long-term
care insurance.care insurance.
Understanding the profession ofUnderstanding the profession oflong-term carelong-term care
allows the professional to…allows the professional to…
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New definition …
Long-term care is not a place …
… it’s an event
“Functional disability”
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“Functional disability” Physical
Activities of Daily Living (ADLs) Bathing, dressing, transferring, eating,
toileting, continence “Stand-by” help with 2
OR Mental
Cognitive Impairment Alzheimer’s, dementia, stroke, head
injury Requiring supervision
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Long-term care is a continuum of care, housing and services people and their families may need because of a chronic illness. It’s assistance with so called activities of daily living (explain) or supervision caused by severe cognitive impairment. The goal is, whenever possible, to have the individual remain within the universe that he/she has created.
Why is Long-Term Carea Problem?
We are living longer!
Key question
What consequences will providing care for an extended period of time
have on your clients family’s emotional, physical and financial
well-being?
Consequences to families…
Stress of care giving hikes older adult mortality rates.
Caregiver can become as chronically ill as the patient.
Caregivers suffer from stress related illnesses.
Long-term care tends to tear families apart because the responsibilities of providing care is not shared equally.
What’s your plan to protect
your clients family?
The plan is to stay in the community for as long as
possible without devastating the
family’s emotional, physical and
financial wellbeing
The goal…
Is similar to life or disability insurance planning…..
To place the family back where they were financially, prior to the event happening
Plan for
Long Term Care
Your Spouse
Long Term Care Insurance
Medicare/VA Medicaid
Your children and/or extended
family
Your Income & Assets
What is your plan?
The plan depends on the family…
Single individuals
Married with no children
Married with children
Second marriages
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Alone in Illness: Alone in Illness: Seeking a steady arm to lean Seeking a steady arm to lean
onon 27% of households are comprised of single 27% of households are comprised of single
people.people. Most are worried about becoming a burden Most are worried about becoming a burden
to their siblings and friends. But few had a to their siblings and friends. But few had a plan.plan.
Many are concerned they might not have Many are concerned they might not have the income or assets to pay for their care.the income or assets to pay for their care.
Hospitals and home care agencies often Hospitals and home care agencies often dealt with patients friends on an extended dealt with patients friends on an extended basis.basis.
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““People living alone are among the People living alone are among the most difficult cases. Anyone who is most difficult cases. Anyone who is sick or disabled needs someone to sick or disabled needs someone to quarterback their care, but people quarterback their care, but people who live alone cannot end up being who live alone cannot end up being their own quarterbacks at a their own quarterbacks at a particularly vulnerable time.”particularly vulnerable time.”
James Bentley, Senior VPJames Bentley, Senior VP
American Hospital American Hospital AssociationAssociation
2020
Single: no spouse or childrenSingle: no spouse or children
Staying at home is a limited option because there is Staying at home is a limited option because there is no infrastructure to support it. It may be possible at no infrastructure to support it. It may be possible at the beginning of the illness if the individual works the beginning of the illness if the individual works closely with his local home care agency.closely with his local home care agency.
A CCRC makes more sense because the A CCRC makes more sense because the environment allows maximum flexibility.environment allows maximum flexibility.
Assisted living is more limited because he may not Assisted living is more limited because he may not be able to make the decision if he has a cognitive be able to make the decision if he has a cognitive impairment. Dementia is also problematical; he may impairment. Dementia is also problematical; he may contest the decision made by someone else, or the contest the decision made by someone else, or the facility may not take him. facility may not take him.
Plan of care…
Home Care
Assisted living
CCRC
QB
2323
Married: no childrenMarried: no children
Home care is viable, but the client should consider Home care is viable, but the client should consider how he will be supported without children to assist how he will be supported without children to assist the healthy spouse.the healthy spouse.
A CCRC makes more sense because the A CCRC makes more sense because the environment allows maximum flexibility; the environment allows maximum flexibility; the couple can move in while they are both healthy. couple can move in while they are both healthy. Some facilities may allow both to move in even if Some facilities may allow both to move in even if one is impaired.one is impaired.
Assisted living also makes sense because the Assisted living also makes sense because the healthy spouse can make decisions. Both can move healthy spouse can make decisions. Both can move in allowing the healthy spouse to continuing in allowing the healthy spouse to continuing providing care within an infrastructure of support. providing care within an infrastructure of support.
Plan of care…
Home Care
Assisted living
CCRC
QB
2626
Children Married:Children Married: This is the best scenario for remaining in the This is the best scenario for remaining in the
community, because there is a spouse and probably at community, because there is a spouse and probably at least one child and perhaps more to assist. The least one child and perhaps more to assist. The assistance from the caregivers is enhanced with LTCi assistance from the caregivers is enhanced with LTCi because the policy pays for both formal and informal because the policy pays for both formal and informal care (depending on the benefits) to support their care (depending on the benefits) to support their efforts. The role of the children would therefore be efforts. The role of the children would therefore be reduced to emotional support rather than hands on.reduced to emotional support rather than hands on.
A CCRC makes sense because the environment allows A CCRC makes sense because the environment allows maximum flexibility; the couple can move in while they maximum flexibility; the couple can move in while they are both healthy. Some facilities may allows both to are both healthy. Some facilities may allows both to move in even if one is impaired.move in even if one is impaired.
Assisted living also makes sense because the healthy Assisted living also makes sense because the healthy spouse can make decisions. Both can move in allowing spouse can make decisions. Both can move in allowing the healthy spouse to continuing providing care within the healthy spouse to continuing providing care within an infrastructure of support.an infrastructure of support.
Questions to ask if the client has children…
Where do your children live? Where do they work ? Who is likely to provide the care? How do the children get along?
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Second marriage: childrenSecond marriage: children
It is likely the couple will wish to stay home when one of It is likely the couple will wish to stay home when one of them gets sick. Consideration must be given to how the them gets sick. Consideration must be given to how the children of the sick spouse will interact with the children of the sick spouse will interact with the caregiver spouse. This should be discussed well in caregiver spouse. This should be discussed well in advance and the children informed.advance and the children informed.
It is possible to remain at home unless family dynamics It is possible to remain at home unless family dynamics are difficult. Otherwise a CCRC makes sense if the couple are difficult. Otherwise a CCRC makes sense if the couple agree the house is too big and want to move into a agree the house is too big and want to move into a community with this type of structure (independent community with this type of structure (independent living, assisted living and a skilled nursing home).living, assisted living and a skilled nursing home).
Assisted living facility may make sense as well because Assisted living facility may make sense as well because there is a healthy spouse to make decisions. LTCi works there is a healthy spouse to make decisions. LTCi works perfectly because the children of the well spouse will perfectly because the children of the well spouse will wonder who is paying the cost. wonder who is paying the cost.
Plan of care…
Home Care
Assisted living
CCRC
QB
How to fund the plan of care?
$20 per hour x 8 hours = $ 160 per day
$20 per hour x 10 hours = $ 200 per day
$20 per hour x 12 hours = $ 240 per day
$20 per hour x 24 hours = $ 480 per day
Projected Costof Home Health Care
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
8 hour shift @$20/hour x365
days
10 hour shift @$20/hour x 365
days
12 hour shift @$20 /hour x 365
days
Today's Annual Cost
Year 2040 Annual Cost with 5% inflationcompounding
What Pays for Long-Term Care?
MONEY
Qualified
Non-Qualified
“I can self insure”
The cost of liquidating qualified funds to pay for care.
The loss of investment opportunity on funds liquidated to pay for care.
Assets that are difficult to convert without severe tax or market liability.
Preservation of principal.
People have continuing commitments…
. . .lifestyle of surviving spouse
. . .care for children or grandchildren
. . .protection of legacy assets
. . .to their place of worship
What happens if they need care?
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$1,000,000 = $ 40,000
$1,500,000 = $ 60,000
$2,000,000 = $ 80,000
$3,000,000 = $120,000
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What percentage of that
income do you think is
committed to lifestyle?
110%110%
3939
““Would you like to pay for your Would you like to pay for your care with income and principal care with income and principal
or interest?”or interest?”
“Take the loss you can afford.”
$3,000,000$180,000
$120,000
$5,000
“I can’t assure you that if you need care over a period of years, the income stream will be sufficient to support your lifestyle and pay for care at the same time.”
Unintended invasion of principal
What have you allocated from your clients retirementincome and portfolio
to pay for their extended care plan?
Long-Term Care Insurance
Home care benefits Assisted Living Facilities Reimbursement, Indemnity or Cash Limited pay options (10 Pay) Care Co-ordination Shared Care Plus
BENEFITS will pay for
How to fund the plan of care?
$20 per hour x 8 hours = $ 160 per day
$20 per hour x 10 hours = $ 200 per day
$20 per hour x 12 hours = $ 240 per day
Long-term care insurance
Provides income to be used to pay for care your family will find most time consuming and stressful.
Provides income that allows your spouse to maintain her relationship with you and supervise your care.
Provides income that allows your children to maintain their relationship with you and supervise your care
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Life insurance
Disability income
Annuities
LTCi
Guarantees income
Guarantees income
Guarantees income
Guarantees income
Which
preserves lifestyle
Which preserves lifestyle
Which preserves lifestyle
Which preserves lifestyle
Long-Term Care Insuranceallows your clients retirement plan
to execute for the purposewhich it was intended:
RETIREMENT
Our clients goal is to live a life of significance…
Do they want to leave a legacy of dependency after living a full and significant life?
Do they want to cause financial and emotional stress to the families that they have spent their lives building and loving?
Planning for care… 3 Choices
Make a bet (avoid & hope)
Have a plan with an allocation of income and assets (unintended invasion of principal)
Have a plan with a transfer of risk
What’s your plan to protect your clients
retirement income/portfolio and family?
