E.A.S.E. into Retirement Podcast

with Tom Mosley.  
Do you need long-term care?

Click on the video to watch the podcast. Full transcript is included below.

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Speaker 1:

[inaudible 00:00:01]. Do you need long-term care? Well, the real question is you might need long-term care. Long-term care in case you are not familiar with what it actually is, it’s custodial care. Now, when you get to a point where you have Medicare or how do I kindly say, when you get mature in your age and your driver’s license shows a date that’s a long, long time ago. A lot of times people fall. My mother-in-law fell several times and she broke a shoulder one time. She went to the hospital. You have to stay in the hospital for three days and then Medicare will cover you by putting you in a skilled nursing facility for up to 21 days, and then you can have some extra days in there, different things.

My purpose is not to discuss the skilled nursing aspect of Medicare here, but I want to talk about long-term care. But if you need to go into a nursing home and how would this happen? Sometimes I’ve had clients who’ve had debilitating strokes and they just can’t get around. They can’t get around and they have no one to help them or their spouse can’t help them on a continual basis. So you have to go into the dreaded nursing home. That will not be covered by Medicare because that is what’s called custodial care that’s not covered by Medicare. The skilled nursing, they’ll cover you. They’ve got requirements. Like I said, you got to be in the hospital three days and then they’ll cover you for 21 days and you’ve got an extra 90 days in your lifetime you can use.

But after a period of time, if you just need to be in a facility, in a custodial care facility over a long period of time, that will not be covered by Medicare. So the question is how do you cover it? How do you cover it out of your assets? And you may have heard some horror stories about people who’ve been in that kind of situation. It’s cost them a lot of money because it does cost a lot of money. Now, I’ve actually had a mother that went into a custodial care unit. I’ve had a mother-in-law that went into a custodial care unit, and I remember hearing, comparatively speaking at the times, these astronomical figures as to what it costs. Well, believe me, it costs an arm and a leg, but it doesn’t cost both arms and both legs, but you need to check it out. It does cost a lot of money, but the question is, how are you going to pay for it? Do you have the assets to pay for it?

Well, there’s several ways you can go about paying for it. You may want an actual long-term care policy. This is a policy like a health insurance policy where you have to qualify for it by having maybe a physical. They look into your medical records. If you’ve got anything… Now, think about it, life insurance policy. If you’ve got something that’s going to terminate your life at an earlier stage like a disease or a terminal disease or just a disease that’s just going to wear you down over a period of time, then they won’t give you life insurance because they know your life expectancy is going to be short.

With long-term care insurance, your life expectancy could still be what it is, but you could get to the point where you need custodial care to be in a nursing home because you can’t get around and that would disqualify you as well from long-term care. So it’s something you’re going to have to qualify for. It is very expensive. The most inexpensive forms of long-term care I’ve seen are policies that are available through work. If you work for a large employer, they may add on to all those benefits, long-term care. And you may have always declined it during open enrollment November or whenever it opens for your company, but you might want to consider that at the end of your employment when you’re in your 60s, you’re just about to retire. If the policy, and let me give you a keyword, is portable.

Portable means you can take it with you after you’re gone because those policies are group policies. The price is generally about half as much because you’re spreading the risk the insurance company is over the entire group that’s there. And a lot of the people who are taking out the long-term care are younger. So a plan, you can get one on your own, a straight long-term care policy, or maybe you can take a portable plan from the work where you are right now. So the one thing you can do is actually get a policy. The other thing you can do is there are some indemnity plans. Now, an indemnity plan is not really a long-term care policy, but an indemnity plan covers you for X amount of dollars a day. Say it’s $200 a day, that would be around $6,000 a month, which is right at the lower end of what long-term care costs.

So sometimes people buy an indemnity plan and there are companies who sell that. It’s not a real long-term care policy, but it will pay you X amount of dollars per day up to a certain amount, probably two or three or four years, like the long-term care policies. But you could be covered through an indemnity plan and you can get those with various dates, 30 days to start, 60 days. You cover it for the first 60 days and then it starts. But there are indemnity plans. They look like a long-term care policy, but they’re not really. They just pay you X amount of dollars. They don’t pay the directly to the nursing home. They pay it directly to you. That’s another possibility.

Third possibility is an alternative. There are some annuities. Oh, you said the bad word. Listen to this. There are some annuities that have an income doubler, and that is when you cannot do two of the seven activities of daily living, they will double the payout. So if you’re getting $3,000 a month from an annuity because you’ve turned on that income annuity and it’s got a doubler provision on there, you go into a nursing home for the custodial care, that annuity will act as a long-term care policy and double the payout to $6,000. There are also some life insurance policies that are available that will give you a payout for long-term care. There’s some very good ones that are real specific to that, and there are some generic life insurance policies like indexed universal life that you could use for long-term care coverage as an alternative to the indemnity plans and also to just the straight long-term care policies.

And then the other thing that you can do and don’t ever overlook this one. I encourage people when you’re over 65 to self-insure your dental coverage because you can get a real inexpensive HMO dental coverage and you’re not going to like it because you’re not going to get to talk to a dentist many times and you’ll get your two cleanings every year. But beyond that, you’re pretty much paying for everything yourself. So I encourage people to self-insure their dental. Sometimes you can afford to self-insure your long-term care. Some people actually get to the point where they’ve got a plan with their income taken care of by one or two social securities, a pension, other things like that.

And their assets to the point where they can just carve out a couple of hundred thousand dollars, $150,000 and put it over here in a side pocket I call it and say, if we ever… One of us, or if you’re married, one of us ever goes into the long-term care or if I ever go into the long-term care that’s going to pay for it. It doesn’t kill the whole overall retirement plan, but you’ve designated that money to cover long-term care. So sometimes one of the cheapest ways to cover your long-term care is to self-insure. Why? I hear all kinds of coverage about, there are chances that you’ll be in a nursing home. Yes, in a nursing home. The skilled nursing that we talked about at the beginning of this YouTube, that’s a nursing home consideration.

But the chances that you will actually need custodial care over the past two or three decades has gone down dramatically as people in their trust have included power of attorney and healthcare directives that if I can’t feed myself, I don’t want to be fed forever with a tube in a nursing home because that was something that 40 years ago… I remember I was in the ministry and I would once every week, I would have to go visit the nursing homes and the hospitals and I would see people that hadn’t communicated for years, but they had a tube and they were staying alive and we were all happy that grandma was with us. Well, that doesn’t happen as much anymore. So you might not ever need to use… Watch, a policy or the indemnity plan or even the alternatives.

You might just say, I’m going to put that money away and if I ever need it, we will use it. So a lot of things to consider. This is something that many of the big box brokerage firms don’t talk to you about, because they’re not really holistic planners that take the entire retirement spectrum and the things that could happen to you and consider everything in that whole spectrum. We do, at Mosley Wealth Management. You need to address this, whether you address it with a plan, an indemnity plan, an alternative or self-insured. You need to have your own individualized long-term care plan as to how you are going to address it.

And that way, when the question comes up, do you need long-term care? Then you can say, if I do need long-term care, this is how I’m going to take care of it. If you need to talk to us, email us at info@mosley, M-O-S-L-E-Y wealthmanagement.com. Our phone number is (714) 421-4288. If you like this YouTube, subscribe to what we’re doing. Tell somebody about it. Send it over to somebody who might be considering the need for long-term care because instead of an insurance person just selling you a big, expensive long-term care policy, you’ve got other options that might cost you a lot less money and fit into your overall retirement a lot better.

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