Alzheimers
Don’t Bet The Farm
“Betting the farm” is a phrase that describes going all in on a bet, betting the entire amount you have. Most sane, reasonable people would never do that, or would they?
We adapt to risks our entire lives. We may go to a casino, but rarely bet our house, limiting our wagers to a couple of dollars or rolls of quarters so as not to lose more than we can afford. When we bought our first car we realized the risk of an accident wiping out our future income for many years and purchased auto insurance, even though it was expensive. When we bought a house the bank required homeowners insurance in case of a storm or fire so we paid several hundred dollars a year so we would not lose the $150,000 house. Our health is insured and even our income is insured through Social Security. Once we get to 65 Medicare covers most of our health costs.
But as we age, there comes a point when we may no longer be able to manage on our own. Arthritis, brittle bones, stroke, dementia, or a host of other things unfortunately do happen to us, our friends, and our neighbors. Many of us think we will get the help we need from our children. We forget about all the running two parents do with soccer practice, band camp, school functions, etc. , and the fact they may not live nearby.
For most people, that is when we investigate commercially available help, either in our home or in a facility of some sort. The assisted living facilities popular now are wonderful places, many have pools, hot tubs, and even happy hour once a week. But how many of us can afford to withdraw an additional $3000 to $4000 a month from our retirement savings for very long? Nursing homes cost twice as much as assisted living.
Once care is needed it’s too late to get insurance for it. We have, in effect, bet the farm. There may be no other choice than to pay for the care we absolutely must have. Liquidating assets can be terribly expensive. A farm, duplex, business, land that we aquired long ago has appreciated. Selling it may trigger capital gains taxes and realtor’s fees besides the fact that a forced sale rarely gets the best possible price. Any asset we own that has significantly appreciated is subject to severe shrinkage. And then we spend it down. At $2000 of assets we can apply for government Medicaid to pay the bills, but not before. A spouse at home can keep a little, but that is taken later by the government too. We bet the farm – and lost.
It doesn’t have to be this way. If we planned ahead like we did with the auto, homeowners, and other insurances and investigated long term care (LTC) insurance while we are still in good health and mobile, we could have traded a couple hundred dollars a month to get thousands a month just when needed to pay for the care we need when we can no longer manage on our own.
Which will you do? Hope for the best, plan on help from the children, bet the farm? Or plan ahead while you still can? Call TheLongTermCareGuy.com at (920) 884-3030 or (800) 219-9203 to start investigating. While you still have that option.
When Should I Buy LTC Insurance?
A recent article on Fox News, featuring a financial expert who shall remain nameless, stated that since there is only a 1% chance of needing Long Term Care until after 60, don’t spend a dime on it until then. Perhaps he is not aware of the statistic that 40% of Americans currently receiving LTC services are between 18 and 64.
Statistically that means that the majority of people needing LTC services are over 65, he is correct there. However, to buy LTC insurance you have to be in good health, and by 65 nearly a fourth of us cannot qualify to buy it.
You might suspect that like life insurance, a past heart attack could be a problem. Actually, no, as the next one might kill you and death is the end of a claim. LTC insurers like death, its lingering they are insuring against. Thus they are concerned about strokes (which disable), joint trouble, osteoporosis, Parkinsons, and diabetes.
Diabetes has a strong link to Alzheimer’s disease, if you are diabetic you have a 65% greater chance of developing Alzheimers. In some circles they are calling Alzheimers type 3 diabetes. And that is not even counting the lost toes, feet, eyesight, etc.
Weight is not too big a concern, which should make some of us happy, as the underweight frail are more likely to need help soon than the moderately overweight. Likewise joint replacements are fine, that joint is brand new (once you have completed recovery).
Things on your medical record that are not a problem now, but could lead to problems in later years are also trouble. Some baby boomers, concerned about aging may ask their doctor if their memory is ok. After a quick cognitive assesment you may be told you are fine, not to worry. The problem comes when the doctor makes a note in your medical record that you were concerned about your memory. The insurance companies are not about to take a chance that the doctor simply did not pick up on a very mild cognitive impairment that only you noticed and you are declined for coverage even if no problem ever surfaces in the future.
So, when is the best time to investigate LTC insurance? When it is affordable would seem the proper answer. When you have money at the end of the month instead of month at the end of the money is one indicator. It must be affordable now and going forward. However, the longer you wait, the more of a gamble your health becomes and the more the policies will cost (longer life expectancies equal longer lingering at the end). This year many companies are changing to gender specific rates, meaning women (80% of LTC facility residents) will pay 30% to 40% more. Not all companies have adopted this yet, you might beat the increase. Lastly, inflation in costs, as well as in the benefit which increases automatically to match, means each year that passes means a larger and more expensive purchase.
My policy started 12 years ago and will double in what it pays out every 15 years. If I waited 15 years I would buy twice as much, pay more per unit due to my age, and have to worrry about health issues besides the fact that policies are more expensive now due to increased life expectancy. If you are starting to experience health concerns, maybe you should see me before confirming what you suspect might be a problem.
My Premium Is Being Raised, Why and What Can I Do?
A recent Wall Street Journal article details some of the price increases that have occurred on people’s Long Term Care insurance (LTCi) policies. Price increases happen on many things over the years, but let me explain what is happening in this industry.
My LTCi policy has been in force for 12 years now. I have paid in about $18,000 in premiums and if I need 4 years of care starting now, I will collect over $388,000. If I need that same amount of care in 20 years from now I will collect over 1 million dollars (not counting the 5% increase in what they pay me each year while on claim). That’s a pretty good deal. It’s not expensive, sure it is a large premium, but it is actually cheap compared to the cost of care or what it will save me.
This is still a young industry, but one that has evolved quickly. Many of the early policies sold were sold to people they should not have offered them to, and at prices that were too low. They learned. Then the industry realized their assumption that like life insurance, some people would drop their policies over time and never have to pay claims on them was wrong. DUH! The older, and stiffer, and fatter I get, the more I realize I am happy I have this policy.
One of the companies mentioned prominently in the article was in the past my “go to” company for people with diabetes. If you have diabetes you are 65% more likely to develop Alzheimer’s disease. Yes, I sold this company’s policies, but only to diabetics who could not get coverage anywhere else. (They won’t touch a diabetic now anymore – they learned) Get your coverage while young and healthy enough to be able to get it!
This is just one of the reasons to investigate LTCi with an expert in this area, not someone dabbling in it. You wouldn’t go to a dentist for a root canal if he/she mentioned it was the first one and they always wanted to give it a try.
You may have noticed that interest rates are very low today. The insurance industry as a whole is earning only 3.2% on their assets. Yet LTCi policies automatically increase your benefits by 5% compound every year. Insurance companies are going backwards right now. Thankfully they have billions and trillions in reserve, but they are hoping, just like you, that interest rates will rise a bit and take the pressure off. And they are still paying claims every day.
Perhaps one might just let the government pay for their LTC. Good luck with that. How much do they have in reserve? How much is in the Social Security bank account (average benefit about $1100/month)? Is Medicare any better? A nursing home costs $8000 a month or more in Wisconsin, why would you depend on Medicaid, which requires impoverishment, when for just a fraction of your nest egg you can have insurance to let you go where you want when care is needed?
The insurance industry does not have a perfectly clear crystal ball, nobody does. But, it is the best thing we have. It is better than impoverishment and dependence on government welfare by a long shot. If your premium has gone up, call me and let’s see what we can do to mitigate the increase, there are numerous options. I can help you choose which one is best for you.
In the meantime I will continue to pay my premium for my LTCi. I will continue to pay for my car and home insurance even as they go up as well. I am glad I have to protection and choices for where and how I will be cared for. Romeo Raabe, TheLongTermCareGuy.com (920) 884-3030 or (800)-219-9203
Price of Stroke to Double In Next Two Decades
The rising prevalence of stroke in an aging population is likely to more than double the cost of stroke care over the next two decades, the American Heart Association and American Stroke Association warned.
Annual stroke-related medical costs are projected to jump from $71.6 billion in 2012 to $183.1 billion in 2030, according to a statement from the organizations in the August issue of Stroke.
Total annual costs, including the price of lost productivity, were estimated to rise 129% to $240.67 billion by 2030, Bruce Ovbiagele, MD, MSc, of the Medical University of South Carolina in Charleston, and colleagues reported in the statement.
Now I am NOT advocating having one now, while they are cheaper, but how many are financially prepared for not only the medical costs, but also the long term care costs of a stroke?
Prevention can help, but with more baby boomers passing 65 and 70, plus rising rates of stroke per capita, the problem is expected to increase by 21% by 2030. Stroke related care is already 11% of the Medicare budget and that does not include the years that may be spent in an LTC facility. Annual indirect costs for stroke were estimated to shoot up 68%, from $33.65 billion in 2012 to $56.54 billion in 2030.
While arthritis is the number one cause of home care usage, and Alzheimer’s is the number one cause of facility care, stroke care can often last for many years as well. Medicare rehabilitation care only lasts a short time. Following a three day hospitalization Medicare may pay for continued recovery care in a nursing home for up to 100 days (partial assistance after 20 days). However, care must be for someone making progress as defined by Medicare and often that stops after a week or two at most.
Once you are not making progress your care is no longer health care, covered by Medicare or other health insurance, but long term care. LTC is covered by your savings or LTC insurance. If you wait until retirement age to investigate this insurance, you may find it is too late to qualify for it. Just like health insurance, there is medical underwriting. If your health history indicates the possibility of something that could in the future cause a need for LTC, or a cognitive impairment, you cannot purchase it.
I am often asked what the “proper” age is to buy LTC insurance. It is not a chronological age, but when you have the financial ability and are still healthy enough to be able to purchase it. For many, that is in the 50’s.
Perhaps it might be time for you to investigate LTC insurance for yourself. Please do so with someone qualified to help you choose appropriate benefits. Many financial planners refer their clients to me for that advice. I can be reached at 920 884-3030 or at [email protected] to arrange a meeting.
Alzheimer’s in Now the 6th Leading Cause of Death in America
Per the Alzheimer’s Association, Alzheimer’s Disease is the 6th leading cause of death in America. The rate of deaths due to Alzheimers rose 68% between 2000 and 2010. This is due in large part to longevity increases and better diagnosis.
One in three seniors now dies while suffering from Alzheimers or another form of dementia. Dementia can last for many years requiring significant time in long term care at home and/or a facility. For many diseases the death rate is going down because the federal government funds and invests in research, but we have not seen that same commitment for Alzheimer’s disease.
Dementia, including Alzheimers, takes a toll on families. In 2012, more than 15 million people were caregivers for someone with Alzheimers. The problem starts often decades before the disease is apparent. Once a memory concern is on your medical record it is too late to get long term care insurance. Even a question posed at a regular physical about memory, and discounted by the doctor will be recorded in the medical record and eliminate any hope of purchasing long term care insurance.
Ten thousand baby boomers are turning 65 every day in America, and will for the next 18 years. By age 65, over 10% of us have Alzheimers. By 85, 3/4 of us do. Couple that with our longevity increases due to better medical care and you can see that dementia is becoming an epidemic.
Who will provide care for you when you can no longer live on your own? How many children did you have and where do they live? The Ozzie and Harriet of the 1950’s where the wife stayed home and could easily have parents move in when they needed help is long gone. Assisted living facilities average $3500 a month if not much care is needed, and the cost is much higher for dementia care. Nursing homes cost more than double that and in-home care, if needed on an ongoing daily basis is also expensive.
If you have a $400,000 nest egg for retirement, and plan to live on that, will an extra annual bill of $50,000 to $100,000 be a problem for your strategy? Many people do not even consider the cost of long term care in their retirement plans. The insurance for long term care does not need to be expensive. Most of us have some discretionary spending that would cease if one of a couple needs care. Those dollars can pay part of the bill and perhaps interest on the nest egg can be used as well without tapping and decimating that nest egg. Consider the rest to be provided by a long term care insurance policy – while you are still healthy enough to get one. You may be healthy right now, but you are only one doctor visit away from suddenly being uninsurable at any price.
Investigate long term care insurance with an expert who specializes in this and has access to many policies, not a generalist who says they can do this as well as your car, home, life insurance and also manage your investments. www.TheLongTermCareGuy.com, Romeo Raabe, would be a good place to start if you live in Wisconsin. He can be reached at 800-219-9203 or 920 884-3030.
What is your retirement plan missing?
“The second most important financial priority, especially among older respondents, is saving money to pay health-care costs” from a recent article. This is not surprising, considering that 70% of those surveyed said they expect their medical expenses to increase during retirement. A smaller but not insignificant number of respondents listed a related concern – long term care expenses – as a top-two priority as well.
Fortunately we have Medicare to cover the bulk of our medical costs, and part D to help with drug costs. Even with the Medicare supplements or Medicare Advantage plans most retirees have, the costs are quite well controlled.
The cost that sinks most retirement plans is the extra bill each year for between $42,000 and $96,000 for long term care services. These bills are not covered by Medicare, your supplement, or advantage plan.
Many people simply hope it won’t happen to them. Personally I feel the same way about an auto accident, but I do carry auto insurance. I also carry long term care insurance so that my nest egg does not get used up in a year or two paying for my care when my health changes. In many cases the interest on just a portion of your retirement assets can purchase LTC insurance (if you are still healthy enough to purchase it) and save the rest of the principal for fun things we would like to do in retirement.
So, why don’t most retirees have LTC insurance? Many think the government pays for long term care. They are correct in that Medicaid, a welfare program, will pay for LTC costs once you have spent down to impoverishment – how fun is that? Most people who pay out of pocket use money they had hoped to leave for heirs.
Consider this, take a portion of the retirement savings and have the interest sent to you annually to pay the premium on LTC insurance. How much will it cost? First of all, are you healthy enough to be able to purchase it? A past heart attack may not be a problem, but a sore shoulder or pending knee replacement can disqualify you. Ditto for osteoporosis, diabetes, steroid usage, or memory concerns. You can be totally healthy until your next physical when a diagnosis suddenly becomes part of your medical history and LTC insurance is not available at any cost.
Most people do not need as much insurance for this as they might initially suspect. When one of a couple needs care, there may be less vacation travel, less toys, less vehicles, and some of the dollars spent on fun can be redirected to the cost of care before LTC insurance amounts are decided on. There are also many differnt companies offering such coverage, often with very different prices. A specialist in this area can be very helpful in helping you choose appropriate coverage.
Lastly, do not forget to include an inflation protection option. $100 daily benefit today might be sufficient, but in 25 years it might be as useless as 29 cents at a gasoline pump to fill a gallon can.
Alzheimer’s is The 6th Leading Cause of Death in U.S.
More than 5 million Americans are living with the disease and that number only continues to grow. It is also the only cause of death among the top 10 without a way to prevent, cure, or even slow its progress.
The Alzheimer’s Association would like your donation to fund research, contribute at www.ALZ.org However, be prepared to keep plenty of funds available to pay for care when a family member needs to pay for long term care due to Alzheimer’s or any of hundreds of other causes. Today FOX News claimed $130,000 to $150,000 (in today’s dollars) for custodial care only in the state of Massachusetts. Costs are a bit less in Wisconsin, but that is still a lot of money to keep liquid, per person, for care.
The interest on the amount just one person would need to set aside for care, could fund LTC insurance for two people, and never spend that lump sum. Keep your money, let the interest pay for LTC insurance. Sounds simple enough, right?
Unfortunately most of us simply hope. Hope it won’t happen to us. Hope the government will pay for it (have you been watching the news about how deep in debt the government is?). Hope our kids will take care of us. Hope springs eternal, but it won’t pay a bill that can easily exceed $50,000 to $90,000 a year and go on for many years. Who has that kind of money?
Insurance companies, that’s who. You can get in on their paying the bill for you, for pennies on the dollar. Think about your homeowners insurance – you pay a couple hundred dollars a year and they promise to rebuild your house if damaged by fire or tornado. How many houses have been damaged in your neighborhood in the past 20 years? That’s why its cheap. According to the US Department of Health and Human Services, 70% of us will need Long Term Care. That’s why LTC insurance is more expensive than your homeowners insurance.
If it is chosen properly, most people are surprised that is is much less than they thought. That’s where I come in, I only work with the financing of Long Term Care. Sometimes I look like a social worker, but that is becasue I know what happens when someone needs care. How the lifestyle changes and many of the expenditures for fun things decrease dramatically. Thus money now spent on fun things, travel, fishing, golf, etc., can be redirected to paying for LTC and less insurance may be needed.
So, what if care is already needed. I have solutions for that as well. Not all of them will solve every problem, but even when already in care I can protect some of the savings for family.
You can worry, you can ignore, you can hope, or you can investigate what you can do to help yourself. The sooner you do that the less expensive the solutions are. Call Romeo Raabe at 920 884-3030 or email him at www.TheLongTermCareGuy.com and start asking what you can do to protect yourself.