Get ‘er done … scratch, scratch … get ‘er done … scratch, scratch … get ‘er done … scratch, scratch ….
Sound like a broken record? It should if you’ve been reading our News Briefs and blogs over the years.
Here’s a new twist on risk
The government statistics for years has projected that by the time we reach age 65 that 70% of us will experience a long-term care event in our remaining years. That could be a temporary need perhaps the result of an auto accident or a life-long need related to dementia.
Now consider if you are a couple, that risk increases to 91% that one spouse/partner will need custodial care. Perhaps that’s why some industry pundits now describe long-term care insurance as an expense transfer strategy rather than a risk management strategy.
Why take the risk when you could offset the cost for pennies on the dollar?
Here’s another 70% stat to consider. Seventy percent of children surveyed said they do not want to be caregivers!
Get ‘er done!
Filial responsibility
Do you realize that 27 states have filial responsibility laws? Most are dormant but they are there. What does this mean? Kids could be responsible for their parents’ long-term care expenses.
Do you live in one of these states?
AK, AR, CA, CT, DE, GA, IN, IA, KY, LA, MA, MS, MT, NV, NJ, NC, ND, OH, OR, PA, RI, SD, TN, UT, VT, VA, WV?
PA and ND courts have both ruled children have financial responsibility for parents’ long-term care costs.
Get ‘er done!
What has WA Cares Fund Wrought
If you’ve not been following this insurance market, Washington State has turned the industry upside down with legislation that enacts a payroll tax to fund long-term care benefits.
If you are a WA W2 employee and do not have private long-term care insurance, you can look forward to a 0.58% tax effective in January 2022. It’s unique today and an unusual strategy. But other states are already following suit. Let’s hope that they learn from WA’s experience because it got a lot of things wrong.
Do you live in one of these states?
CA, HI, ME, MI, MN?
These states are working on their own funding solutions for long-term care expenses and how to salvage Medicaid.
It is Medicaid, not Medicare, that funds long-term care. In most states Medicaid is the fastest growing budget line item. And the Baby Boomer tsunami is looming.
Get ‘er done!
Statistics to consider
- Average duration of Alzheimer’s claim is nine years.
- Average duration of Parkinson’s claim is 15 years.
- Average duration of MS claim is 22.5 years.
- Today, 74% of care is received at home.
- Today, 13% of care is received in assisted living communities.
- Today, 13% of care is received in nursing homes.
- Cognitive issues account for 51 cents of every claims dollar.
Other considerations:
- Retirees will experience four bear markets in retirement.
- Long-term care insurance (LTCI) is especially important for older singles.
- LTCI is especially important for those in second marriages.
- Required minimum distribution (RMD) funds are a resource for insurance premiums.
- LTCI is a way to use other people’s money (OPM). Transfer the risk to insurance.
- LTCI is a way to protect step-up basis in transferring wealth.
Get ‘er done!
What we mean by get ‘er done is long-term care expense planning. Start with these three questions:
- If care is needed, where would I want to receive care?
- If care is needed, who would I want to provide care?
- If care is needed, how would I pay for care?
There are only three ways to fund long-term care costs: self-fund, private insurance or qualify for government assistance through Medicaid.
Private insurance is becoming increasingly important as costs increase and states plan their own requirements.
Get ‘er done!