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Long Term Care Planning Solutions
Helping Make Sense of It All
Jack Morrone, CPA, CFP®, PFS®
Today’s Agenda
When Is Long Term Care Insurance Right for You?
Most Asked Questions about LTC
• What is LTC?
• Facts and Stats
Which LTC Solution is right for you?
Next Steps
Baby boomers and Long Term Care
Most Current Data Available
3 What to Know About Long-term Care and Medicaid- The Wealth Channel- 2011. 4 The 2011 Sourcebook for Long-term Care Insurance Information – AALTCI 2011, U.S. Census Bureau. 5 What to Know About Long-term Care and Medicaid — The Wealth Channel — 2011.
Let’s Talk –Having the LTC Discussion
… or their financial advisor
Most Current Data Available
73% – Genworth 2011 Financial Reality Check Study 59% Genworth/Age Wave. November 2010. Our Family, Our Future: The Heart of Long Term Care Planning Study 90% – Genworth/Age Wave, Our Family, Our Future, November 2010
Is Long Term Care Insurance Right for
YOU?
Are you:
• Age 40-80?
• Someone who has funds set aside as your “just in case” money?
• Concerned about what could happen to your to your retirement income?
• Concerned about who would take care of you if you needed extended health care?
• Concerned about protecting the amount of money you would like to leave for your
loved ones?
If you answered “yes” to any of the above,
Long Term Care Insurance may be right for you.
What is Long-Term Care (LTC)?
The need for care is created by two impairments…
Physical: A chronic medical condition that compromises the individual’s ability to get through the most basic of daily routines
Cognitive: A measurable decline in intellect that compromises a client’s ability to safely interact with his environment
The operative word is compromise
What Triggers Long Term Care?
Requiring assistance with Activities of Daily Living (ADL’s):
• Bathing
• Dressing
• Eating
• Continence
• Toileting
• Transferring
• Severe cognitive impairment
(mental deterioration)
Long Term Care – Where is care provided?
Assisted Living Facilities provides supervision or assistance with (ADLs); coordination of services
by outside providers; and monitoring of resident activities to help to
ensure their health, safety, and well-being.
Nursing homes
provide the most comprehensive range of services, including
nursing care and 24-hour supervision
Home Care • Unpaid caregiver (family members and friends) • Home Maker Services • A Nurse, Home Care Aide, and/or therapist
National Average Cost–Nursing Home
Most Current Data Available (5) What to Know About Long-term Care and Medicaid — The Wealth Channel — 2011
Average Cost Care – Outside of NH
Most Current Data Available (6) NCPC- National Care Planning Council - October 2012.
Cost of Care – Average
Most Current Data Available
Used the Cost of Care for Washington (1)Based on 5 days per week by 52 weeks (2)Based on 44 hours per week by 52 weeks (3)Represents the compound annual growth rate based on Genworth Cost of Care Survey (4)Based on 12 months of care (5)Based on 365 days of care
Who Covers What
Most Current Data Available
Consider the Odds
Someone turning age 65 today has almost a 70% chance of
needing some type of LTC services and support (3)
(1) AALTCI- The American Association for Long-term Care Insurance Sourcebook 2012 – 2013. (2) http://www.ltctree.com/ltc-basics/the-chances-of-needing-long-term-care.html, 09/19/12. (3) http://longtermcare.gov/the-basics/how-much-care-will-you-need - Administration on Aging
Starting Young – Not Just for Seniors
40% of Americans who need long-term care
are between the age of 18 and 604
Most Current Data Available
The 2012 – 2013 Sourcebook for Long-term Care Insurance Information — AALTCI 2012. 9LTC Partner-Long Term Care Covered, “Choosing the Right Long Term Care Insurance Benefit Period, Oct, 19th, 2011. 8 American Association for Long-term Care Insurance, 2012 LTCi Sourcebook.
4 Life and Health Insurance Foundation for Education, http://www.lifehappens.org/who-needs-long-term-care-insurance; 2012
It’s a woman thing
Most Current Data Available
8 http://www.wiserwomen.org/index.php?id=184, 09/20/12. 9 Completelongtermcare.com, August 2012. 10 Healthcare Costs in Retirement, Feb 2012, Harris Interactive.
The Need for a Plan
Most Current Data Available (7) LifeHealthPRO, “This Isn’t Your Parent’s Retirement,” October 4, 2012.
Your Long-Term Care Experiences
Who?
Where?
How was it paid for?
Who provided the care?
How long did the person need care?
Was the care expected or unexpected?
How did long-term care affect the family?
PLEASE SHARE YOUR STORIES
A Variety of LTC Solutions
Traditional LTC Plan type most are familiar with Most customizable Ongoing premium payments
LTC/life asset based products Return of premium feature Guaranteed premium paid for a guaranteed specified period. Simplified Underwriting
Annuity/LTC Tax Deferred Growth Simplified Underwriting Offers typically 2 to 3 times of LTC benefits Earns a minimum guaranteed interest rate
Life Insurance with LTC Rider LTC concerns with a need for life insurance for financial protection
Traditional LTC – Old Approach vs. New Approach
Policy Options Old Approach
Individual Plans
New Approach
Shared Plans
New Approach
Your Budget
Monthly LTC $6000 $5000 $4500
Benefit Period 5 years each 3 years Shared 2 years
Inflation Protection 5% Compound 3% Compound 3% Compound
Monthly LTC at age 80 $15,161 $8768 $7891
Premiums $17,492 $7207 Approx. $4740
Things for You to Consider:
What do you estimate your cost will be for LTC services?
How much can you afford to contribute to the cost of your care?
How much will you need your policy to pay in benefits each month?
How long can you wait before your policy pays benefits
What annual cost of insurance coverage can YOU afford to pay?
Couple (age 60) Select Non Smoker – State of Washington *
Most Current Data Available
LTCI: Why Not Self Insure?
Most Current Data Available This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing
Source: http://www.guidetolongtermcare.com/selfinsurechart.html
Traditional LTC vs. other LTC Solutions
Life Insurance with LTC Riders (Hybrids)
* Varies based on carriers, state and clients age
Riders are additional guarantee options that are available to an annuity or life insurance contract holder. While some riders are part of an existing contract, many others may carry additional fees, charges and restrictions, and the policy holder should review their contract carefully before purchasing. Guarantees are based on the claims paying ability of the issuing insurance company.
Annuity with LTC Riders
Fixed annuities are long-term investment vehicles designed for retirement purposes. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply.
Fixed annuities are long-term investment vehicles designed for retirement purposes. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply.
In Summary
The likelihood of needing long-term care is significant
The cost of such care can be financially devastating
Not covered by heath insurance
Not covered by Medicare after 100 days
Long-term care coverage is another piece in financial
and retirement considerations
Purchasing LTC insurance coverage may help preserve
financial well-being and provide peace of mind
What’s the Next Step?
DISCLOSURES:
The opinions voiced in this material are for general information only and not intended to provide specific advice or recommendations for any individual. To determine which investment (s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.
Life insurance policies contain exclusions, limitations, reductions of benefits, and terms from keeping them in-force. Your financial professional can provide you with costs and complete details.
[Add one of the disclosures listed in the notes (Tahoma 16) to meet compliance requirements: IAS – IS – Bank/Credit Union - Hybrid.]
Insurance guarantees are based upon the claims paying ability of the issuing company. Securities offered through LPL Financial. Member FINRA/SIPC.
