I work in the nursing home, i have seen multiple scenarios of ending there either younger in their 60s or 80s and 90s but most of them not expecting to be there. Most lost their homes, money because they didn’t expect to be there either being sick or accidents . I’ve met one person who has a LTC policy that is available for her for 5 years and because of that she didn’t lose her house or left her spouse homeless. It doesn’t matter if you have a healthy genes, it can happen when you least expect it. Because of that if I reach mid 50s or early 60s I’m definitely getting LTC because staying at the nursing home is expensive $$$$ it’s cheaper to live in a nice hotel a month, it’s going to eat your retirement savings and end up filing for Medicaid. Plan you’re retirement well because we don’t want to end up like that. If you think you have no plans of staying at the nursing home but if you need a lot of care and assistance, even staying at home with a caregiver cost a lot of money too. It’s a money draining experience. The best way is to prepare ahead and be smart about the future.
Speak with the therapists. We know in home care that you can be denied payments because you are not disabled...enough. Spouses are protected from losing their home with the Medicaid loopback, but none of us wants to be in a facility that accepts Medicare. The finest care is in private pay facilities for the wealthy. Most of us are socking cash away that we can access w/o anyone's approval. And of course, doing everything we can to improve health while young. It costs nothing to do the best we can to maintain health.
You guys could probably do an entire series on this subject. There's a lot to unpack here. As for premiums, I think they got it figured out now - at least with the large increases. These are no longer indemnification policies. You are buying a fixed amount of dollars for a certain amount of time given a qualifying event. So, even with a policy you may still have risk you are having to accept. Still, I get it. These policies are not cheap since the risk pool is limited. And once you get into one, you feel like you have to sick with it given the dollars sunk into it. Perhaps the answer is partial insurance and partial self-fund with the last backstop being Medicaid. I'm afraid for most in our society, the later will be their plan.
I have a CVWL policy with Guardian with an LTC rider. I preferred this approach since the premium for the rider is not unreasonable, and it's not use it or lose it. I like the peace of mind if I do need assistance, I have some coverage, and it will not break the legacy funds I have set aside for my children.
As a financial adviser specializing in LTC planning, I like to position LTCi (or any hybrid options) as a buffer for your financial assets and income. We don't want to overinsure our clients with insurance but we want to have an insurance option there to lessen the blow and hopefully cover most, if not all the costs. That buys the family time to figure out a long term solution to financing the care should that scenario present itself. And as mentioned in comments and video, using HSAs, retirement assets, and home equity would come next. I know lots of advisers shy away from LTCi because of that reason but as Brian mentioned, you wnt to go with a reputable company and not the cheapest (and to boot, there's only 8 carriers left in CA offering standalone LTCi).
Thoughts on using HSA funds to "self insure" for LTC? Not for premiums, but just reimbursing your LTC expenses from your HSA fund. I noticed that it is a qualified medical expense on IRS publication 502.
Thanks for all you guys do! I am a 25 year old that lives in WA state. Have you heard of the WA state long term care tax that will start at 2022 vs opting out of the tax by purchasing private long term care insurance? I feel like I don't need long term care insurance for a few decades and would love to hear your advice on how to approach this tax vs opting out as a young individual. Thanks!
Although you can plan for something 50 years in advance, the reality is likely that alot will happen for you in the next 10 years for you, that would drastically change your future prospects. Although I don't know your situation to well, I would advise you get a term policy with living benefits, you should be more focused on using insurance as an income replacement over retirement and post retirement planning. I know Transamerica or North American Company both have a pretty good policies. At your age you could get half a million for probably under $30 a month. If you budget appropriately and live under your means, retirement and post retirement is possible well before 60. By the way government tax incentives in general are likely to change throughout your lifetime so don't feel like your missing out. Hope this helps.
I have a LTC policy that makes sense to me. It has a limited period, 3 years and specified amount per month that would significantly supplement, but not likely completely cover LTC. I believe an insurance actuary can accurately determine a cash flow schedule that makes the policy viable to the insurance company. The previous policies did not make sense financially. You cannot count on a firm that will not make money on what you bought from it. Could I self insure for the same three year pot of money? Yes. I have offloaded that task to the insurance company. The policy is another tool in the toolbox that has many tools. One other benefit that I get from the premiums- they are tax deductible. Contributions to an HSA or other tax deferred account are not deductible once you hit 65.
I got a 10yr premium IUL with LTC and couple other riders. Ive not seen this topic discussed much but not sure if I should look for your asterisk comment in the LTC rider disclosure or the IUL docs too? 🍻
You should get that checked. The concern moreso would be whether or not the iul is likely to lapse around the time you need it (think 80ish years old). If the IULs is funded correctly in the first place (minimum death benefit for the premium you are putting in), that should not be an issue. It also depends on the provider as every company has different percentage payouts based on severity and duration of needs. One of the great things about a LTC rider is that it allows for a better way to insure people as it is 100% likely you will die, but only 2/3 chance you will need LTC. My mom has standalone LTC and her rates go up roughly every 10 years by about 50% with no guarantee of her using it. Hope this helps :)
I actually am part of the underwriting team for the professional liability insurance that is part of this program. Your firm may be paying for your PL, but you would have access to other personal coverages as an AICPA member.
The more I research this the more it seems to be cost prohibitive as you age. I believe the percentages are inflated to scare people into buying something they may never use. Hybrid plans are supposed to be 3 times as expensive. Insurance companies are in business to make money.
Unfortunately the state of WA is forcing it on us. The state will levy a 0.58% income tax for a bad LTC benefit. Luckily we get a one time opportunity to opt out if we buy a private policy. It’s like spending $1 to avoid paying $5. I’m 33 and don’t need LTC insurance.
But LTC insurance will be about $700 a year, vs the $580 you'd pay in the tax. I think you get to opt out as a younger person, but if you're self-employed, you don't have to pay it. Strange tax, considering how little benefit it will give anyone.
@@chezellis LTC insurance is far cheaper and has better coverage. A policy for both my wife and me is about 500 per year. We will pay far more than 580 if we don’t opt out. The state program is also underfunded, according to their own actuary study. The tax will likely increase.
Wealthy people do not have or need LTC insurance. Save specifically for old age when you are young, and don't use that cash. When you drill down into these products, you realize that they aren't easy to understand, and even harder to access when you need it. Develop dementia and need care for 10 years? You will not find an affordable policy that will cover those costs. Continuing Care Communities need to be vetted by a CPA. They might look nice, but they also have problems delivering the care for decades unless they have done a great job investing.
Insurance Agent: "if you buy when you're young you can lock in a low rate that will never go up". Sucker: Pays in for 20 years. 20 years later Insurance Agent: "sorry you're getting older now so we're jacking up your rates". Insurance is one of the only industries that can get away with selling you something and then just not providing that thing. Madoff went to prison for not much more.
Madoff literally ran a Ponzi scheme. The insurance industry employs tens of thousands of actuaries, CPAs, bookkeepers, financial analysts, lawyers, and regulatory bodies. They are not the same, not even close. If any one feels that way, it's likely that is because the agent was terrible at thier recommendations. When it comes to finances, it's fluid because nothing planned in life usually goes as planned. That's why it's important to have an annual checkup with a financial advisor that you know has your best interests in mind.
I work in the nursing home, i have seen multiple scenarios of ending there either younger in their 60s or 80s and 90s but most of them not expecting to be there. Most lost their homes, money because they didn’t expect to be there either being sick or accidents . I’ve met one person who has a LTC policy that is available for her for 5 years and because of that she didn’t lose her house or left her spouse homeless. It doesn’t matter if you have a healthy genes, it can happen when you least expect it. Because of that if I reach mid 50s or early 60s I’m definitely getting LTC because staying at the nursing home is expensive $$$$ it’s cheaper to live in a nice hotel a month, it’s going to eat your retirement savings and end up filing for Medicaid. Plan you’re retirement well because we don’t want to end up like that. If you think you have no plans of staying at the nursing home but if you need a lot of care and assistance, even staying at home with a caregiver cost a lot of money too. It’s a money draining experience. The best way is to prepare ahead and be smart about the future.
Speak with the therapists. We know in home care that you can be denied payments because you are not disabled...enough. Spouses are protected from losing their home with the Medicaid loopback, but none of us wants to be in a facility that accepts Medicare. The finest care is in private pay facilities for the wealthy. Most of us are socking cash away that we can access w/o anyone's approval. And of course, doing everything we can to improve health while young. It costs nothing to do the best we can to maintain health.
@@Cathy-xi8cb for sure. Good comment.
You guys could probably do an entire series on this subject. There's a lot to unpack here. As for premiums, I think they got it figured out now - at least with the large increases. These are no longer indemnification policies. You are buying a fixed amount of dollars for a certain amount of time given a qualifying event. So, even with a policy you may still have risk you are having to accept. Still, I get it. These policies are not cheap since the risk pool is limited. And once you get into one, you feel like you have to sick with it given the dollars sunk into it. Perhaps the answer is partial insurance and partial self-fund with the last backstop being Medicaid. I'm afraid for most in our society, the later will be their plan.
I have a CVWL policy with Guardian with an LTC rider. I preferred this approach since the premium for the rider is not unreasonable, and it's not use it or lose it. I like the peace of mind if I do need assistance, I have some coverage, and it will not break the legacy funds I have set aside for my children.
What does CVHL mean?
@@leekyciabrown3769 My mistake. Cash Value Whole Life
As a financial adviser specializing in LTC planning, I like to position LTCi (or any hybrid options) as a buffer for your financial assets and income. We don't want to overinsure our clients with insurance but we want to have an insurance option there to lessen the blow and hopefully cover most, if not all the costs.
That buys the family time to figure out a long term solution to financing the care should that scenario present itself. And as mentioned in comments and video, using HSAs, retirement assets, and home equity would come next.
I know lots of advisers shy away from LTCi because of that reason but as Brian mentioned, you wnt to go with a reputable company and not the cheapest (and to boot, there's only 8 carriers left in CA offering standalone LTCi).
Thoughts on using HSA funds to "self insure" for LTC? Not for premiums, but just reimbursing your LTC expenses from your HSA fund. I noticed that it is a qualified medical expense on IRS publication 502.
Thank you. I found you recently and find your videos very informative.
Thanks for all you guys do! I am a 25 year old that lives in WA state. Have you heard of the WA state long term care tax that will start at 2022 vs opting out of the tax by purchasing private long term care insurance? I feel like I don't need long term care insurance for a few decades and would love to hear your advice on how to approach this tax vs opting out as a young individual. Thanks!
Glad to hear their insights too, I'm currently pursuing my own policy as a 30 something in WA...
Although you can plan for something 50 years in advance, the reality is likely that alot will happen for you in the next 10 years for you, that would drastically change your future prospects. Although I don't know your situation to well, I would advise you get a term policy with living benefits, you should be more focused on using insurance as an income replacement over retirement and post retirement planning. I know Transamerica or North American Company both have a pretty good policies. At your age you could get half a million for probably under $30 a month. If you budget appropriately and live under your means, retirement and post retirement is possible well before 60. By the way government tax incentives in general are likely to change throughout your lifetime so don't feel like your missing out. Hope this helps.
I have a LTC policy that makes sense to me. It has a limited period, 3 years and specified amount per month that would significantly supplement, but not likely completely cover LTC. I believe an insurance actuary can accurately determine a cash flow schedule that makes the policy viable to the insurance company.
The previous policies did not make sense financially. You cannot count on a firm that will not make money on what you bought from it. Could I self insure for the same three year pot of money? Yes. I have offloaded that task to the insurance company. The policy is another tool in the toolbox that has many tools.
One other benefit that I get from the premiums- they are tax deductible. Contributions to an HSA or other tax deferred account are not deductible once you hit 65.
I got a 10yr premium IUL with LTC and couple other riders. Ive not seen this topic discussed much but not sure if I should look for your asterisk comment in the LTC rider disclosure or the IUL docs too? 🍻
You should get that checked. The concern moreso would be whether or not the iul is likely to lapse around the time you need it (think 80ish years old). If the IULs is funded correctly in the first place (minimum death benefit for the premium you are putting in), that should not be an issue. It also depends on the provider as every company has different percentage payouts based on severity and duration of needs. One of the great things about a LTC rider is that it allows for a better way to insure people as it is 100% likely you will die, but only 2/3 chance you will need LTC. My mom has standalone LTC and her rates go up roughly every 10 years by about 50% with no guarantee of her using it. Hope this helps :)
I'm a newer CPA, but I didn't even know the AICPA had member insurance programs.
I actually am part of the underwriting team for the professional liability insurance that is part of this program. Your firm may be paying for your PL, but you would have access to other personal coverages as an AICPA member.
The more I research this the more it seems to be cost prohibitive as you age. I believe the percentages are inflated to scare people into buying something they may never use. Hybrid plans are supposed to be 3 times as expensive. Insurance companies are in business to make money.
*To those reading this - I hope you all have lots of wealth, success, and happiness coming your way soon!!*
Unfortunately the state of WA is forcing it on us. The state will levy a 0.58% income tax for a bad LTC benefit. Luckily we get a one time opportunity to opt out if we buy a private policy. It’s like spending $1 to avoid paying $5. I’m 33 and don’t need LTC insurance.
But LTC insurance will be about $700 a year, vs the $580 you'd pay in the tax. I think you get to opt out as a younger person, but if you're self-employed, you don't have to pay it. Strange tax, considering how little benefit it will give anyone.
@@chezellis LTC insurance is far cheaper and has better coverage. A policy for both my wife and me is about 500 per year. We will pay far more than 580 if we don’t opt out. The state program is also underfunded, according to their own actuary study. The tax will likely increase.
Long term is truly only for a short term. It is not lifetime.
*Love that this channel talks about very practical things that no other finance channel on UA-cam talks about!*
Insurance is only as good as the insurers ability to weasel out of paying. Buy the least amount to cover you.
Wealthy people do not have or need LTC insurance. Save specifically for old age when you are young, and don't use that cash. When you drill down into these products, you realize that they aren't easy to understand, and even harder to access when you need it. Develop dementia and need care for 10 years? You will not find an affordable policy that will cover those costs. Continuing Care Communities need to be vetted by a CPA. They might look nice, but they also have problems delivering the care for decades unless they have done a great job investing.
Insurance companies would not take on the risk if the ROI was not in their favor.
So you just left us hanging
right. I did not get anything out of the podcast.
Insurance Agent: "if you buy when you're young you can lock in a low rate that will never go up". Sucker: Pays in for 20 years. 20 years later Insurance Agent: "sorry you're getting older now so we're jacking up your rates". Insurance is one of the only industries that can get away with selling you something and then just not providing that thing. Madoff went to prison for not much more.
Madoff literally ran a Ponzi scheme. The insurance industry employs tens of thousands of actuaries, CPAs, bookkeepers, financial analysts, lawyers, and regulatory bodies. They are not the same, not even close.
If any one feels that way, it's likely that is because the agent was terrible at thier recommendations. When it comes to finances, it's fluid because nothing planned in life usually goes as planned. That's why it's important to have an annual checkup with a financial advisor that you know has your best interests in mind.
: )