When conducting the countless estate planning reviews over my 48 year career I ask each client to share with me their estate planning goals. At the top of almost everyone’s list is the affirmation: “We don’t ever want a long term medical condition to eat away our estate.”
Based on numerous national studies this fear is real and one that keeps us awake at night.

The Facts

Consider these alarming statistics:

• “If you are 65 or older, you have a 72% chance of requiring some type of long term medical care.”
• “8 out of 10 women need Long Term Care.”
• “Forty percent of the patients in a nursing home are under the age of 65.”
• “The national average cost for a nursing home private room in 2018 was $102,696. This is just the average costs, with average accommodations. The average costs for a private room in Alaska is over $29,000 per year! The average cost for a full-time, in home registered nurse is a whopping $152,000 ($416 per day).”
• “Currently Medicaid pays 43% of the overall long term medical expenses. To qualify however, you must ‘spend-down’ your entire ‘nest egg’ – losing your life time of savings. In other words, you must become impoverished before the government will help you.”
• “The number of Americans 65 and older will more than double by 2040 from 40 million today to 81 million.”
• “4.7% of the nation’s Gross Domestic Product (GDP – the value of all goods and services produced in the US) in 1959 was spent for health related expenses. In 2018 that percentage had increased to 17.7%, and it continues to increase every year!”
• “While there is a measly 1 in 1,200 chance that your home will ever be destroyed by a fire, there is a 2 in 3 chance that you will need long term medical care. It is laughable – every homeowner is required to have homeowners insurance and yet only 5% of adults have Long Term Care insurance.”
• 89% of seniors want to age in place – or grow older without having to move from their homes.
• 80% of all retirement funds are passed to beneficiaries, only 20% is used as retirement income.

As is evident by these statistics, the unfortunate reality is that someday the vast majority of us are going to have to tap into money from some source to pay for our long term medical expenses. The question we must ask ourselves is: Where is the money going to come from to take care of us? From our savings, investments, children, Uncle Sam or from a third party source? No matter, there is one thing for certain, unless we prepare ahead of time it will be ripped away from our family’s inheritance.

Myth #1

My family will take care of me.

Time, distance and both spouses working have made it more difficult for many families to provide all the care needed. Even if family members can find the time to provide care giving, it can often take its toll on the care giver. If you were suddenly in need of Long Term Care, imagine the physical, emotional and financial burden it could cause your family. Long Term Care Insurance can help preserve your independence without burdening others.

Myth #2

The government’s health care will take care of me.

Medicare, conventional health insurance, and HMOs generally cover only skilled care. Most long term care is not skilled care, and only covers the first 100 days of skilled care in a nursing home. Disability income insurance does not cover Long Term Care services, and Medicaid has strict limitations which require you become impoverished in order to qualify.

Myth #3

I’ll just pay it myself.

The national average for one year’s stay in a private nursing home is over $110,000. Assisted living costs more than $80,000 and in-home care is over $150,000. Keep in mind these are just the averages. Factor in inflation and taxation to liquidate your assets to pay for the exorbitant Long Term Care costs and it won’t take long to burn through a life’s savings.

Myth #4

It won’t happen to me, besides I’m too young.

If you are a female age 65 or older you have an 80% chance of needing Long Term Care at some point in your life. Males have a 60% chance. But its not just for those 65 and older. In fact, 40% of those in nursing homes are under the age of 65.

Myth #5

I can’t afford long term care insurance and it’s a use it or lose it proposition.

You can transfer assets such as: brokerage accounts, CDs, annuities, IRAs and cash into a Leveraged Care Solution which can provide multiple times their value in Long Term Care protection. These Long Term Care leveraged assets will continue to grow in value and remain in the plus column of your balance sheet. Most importantly with Leverage Care Solution, should you dodge the LTC Bullet, you will leave either a life insurance benefit or an account balance to your beneficiaries.