Sunday, September 24, 2017

FAQs on Long-Term Care

     Realistically speaking, most of us will need some kind of personal care at one time or another. I posted an article on the subject, Is Long-Term Care Insurance for You? that covered many of the basics, brought to us by Jeremy A. Kisner, a financial expert at Surevest Wealth Management in Phoenix, Ariz.

     Kisner is a Certified Financial Planner and Chartered Life Underwriter, with a degree in economics from UC Santa Barbara. He also writes an informative Retirement Blog that covers various aspects of personal finance and retirement issues.

     As Kisner reports, not much has changed on the issue of long-term care. But there are always more details, more questions. So here are the Frequently Asked Questions he sees regarding long-term care:


Q: What is long-term care?

A: Long-term care is both medical and non-medical assistance that hopefully you will never need. However, as you age, at some point you may need help performing the activities of daily living such as bathing, dressing, eating, toileting, transferring. Long-term care is not designed to cure or rehabilitate you. It is just to help you do the things you need to do each day.

Q: What is the probability that I will need long-term care?

A: Approximately 68% of 65-year olds will require some long-term care during their lives. The statistics vary depending on the source, but a rigorous study of the incidence of long-term care, which was cited in Forbes, projected that 58% of men and 79% of women who are currently 65 or older will need LTC services at some point in their lives.

Q: How long do people typically require long-term care services such as home healthcare, assisted living, or nursing home?

A: Some LTC events are brief. Half of them last one year or less. The other half have an average duration of 3.9 years. Many times, the services can be provided by family members. Other times, the need for care is beyond the scope of what friends and family can do for you.

Q: How much does long-term care (e.g., home healthcare, assisted living, or nursing homes) cost?

A: The cost depends on the type of care and where you live. The least expensive type of care is non-medical home care (e.g., bathing, eating, etc.). The national median cost for non-medical home care is around $20 per hour or about $46,432 annually if you need this help 8½ hours a day, 5 days a week. The other end of the cost spectrum is a private room in a nursing home (AKA: skilled nursing facility). The median cost for a private room in a nursing home is $253 per day or $92,378 annually. Look up Long-Term Care Costs in Your State. These costs are typically not included when most people plan budget for healthcare costs in retirement.

Q: Who pays for long-term care services?

A: There are basically three funding options:
  1. Self-fund using your income, savings, and/or liquidating assets to pay for care,
     
  2. Buy private insurance
     
  3. Qualify for Medicaid. Medicaid is a welfare program that is only available after you have spent down your assets and do not have enough income to pay for care. There may also be free or subsidized long-term care coverage for veterans through the VA.

Q: What does long-term care insurance cover?

A: Once upon a time, LTC was thought of as nursing home insurance. Most policies today cover home healthcare, assisted living, memory care communities, and skilled nursing facilities. Some policies also cover hospice care. Most long-term care services required are non-medical and provided in the person’s home.

Q: How do I find the right LTC facility for my loved one?

A: Step 1: Ask friends and family whether they have any suggested facilities.

Step 2: You can use these two tools: the Eldercare locator from the Department of Health and Human Services, and /or Medicare’s online nursing home comparison tool. Medicare’s comparison tool can help you evaluate nursing homes based on quality to see whether there are any blips in health and safety inspections. It also offers insight into how people rate a facility’s staff.

Step 3: There is no substitute for boots on the ground (AKA: the good old-fashioned site visit). While you are there, do not hesitate to ask residents and their families how they like the facility and staff.

Q: Do you recommend LTC insurance?
A: Everyone should have some plan to pay for LTC if the need arises. This is most important for married couples so that one spouse does not use up all the assets and then leave the other spouse destitute. The plan to self-insure (i.e., pay out of pocket) may be appropriate for mid to high net-worth households (typically over $2 million). Another option is to depend on Medicaid, which is not a great plan unless you do not have a lot of assets to protect. Medicaid is a welfare program that is only available after you have spent almost all your assets. The third solution is to buy insurance so you don’t have to spend down your hard-earned savings. The prime target for LTC insurance solutions are couples with $200k - $2 million in investible assets.

Q: Can the insurance company increase my long-term care insurance premiums?
A: It depends on the type of policy. Traditional LTC insurance (pool of funds) are “guaranteed renewable,” which means the insurance company may increase premiums, but only on an entire class of policies, not on an individual policy. This used to be rare, but now almost every company has raised rates on in-force business. Hybrid products are classified as “non-cancellable,” which means that the insurance company cannot change the rates.

Q: What are “hybrid LTC products”?

A: The insurance solutions include: traditional LTC insurance, as well as hybrid insurance products. The hybrids include life insurance policies that allow the death benefit to be used to pay for LTC or an annuity with a rider that increases your payments during a qualifying LTC event. There are a couple of obvious advantages to the hybrids. Specifically, the death benefit on the life insurance or account value of the annuity is paid to your beneficiary if you do not use the funds for LTC while you are alive. This is a big difference from traditional LTC insurance, which does not have a cash value or death benefit.

These products become more attractive at older ages for two reasons:
  1.  Inflation protection associated with traditional LTC insurance becomes less important when purchased at older ages.
  2.  Underwriting guidelines are more lenient on the hybrid products than on traditional LTC insurance. The one downside of hybrids is a large single premium is usually required to fund these products.

Q: How do I qualify for Medicaid?
A: You must spend all your non-exempt assets, which includes investment accounts, savings accounts, retirement accounts, and the cash value of any life insurance—down to $2,000 if you are single before Medicaid kicks in. If you’re married, there are spousal impoverish standards that allow the healthy (community) spouse to keep assets up to the “community spouse resource allowance,” which is set by your state—ranging from $24,180 to $120,900 and monthly income “minimum monthly maintenance needs allowance” of $2,030 - $3,022 (as of 2017).

Exempt assets are not counted and include your wedding ring, one car, and your house. However, there are limits on home equity ($560 - $840k) depending on your state, and many states will put a lien on the house to collect retroactively after both spouses have passed or sold the house.

Q: What is the best age to purchase long-term care insurance?

A: The average purchaser of LTC insurance is 57 years old. Naturally, all insurance solutions (traditional LTC insurance, hybrid life insurance and annuities) have a lower annual expense when purchased at younger ages.

Q: Is it difficult to qualify for long-term care insurance?
A: Yes. If you have a hang nail, you will not qualify. Okay, that’s a slight exaggeration, but it has gotten significantly more difficult to quality for traditional LTC Insurance. The insurance company bases its underwriting on your medical history, family health history, current health status, and lifestyle. When you apply, you must be mentally fit and able to perform all activities of daily living, which are defined as bathing, dressing, eating, toileting, continence, and transferring. Life insurance with a LTC rider is easier to qualify for, and annuities with LTC riders are the easiest. In fact, most of the annuity solutions do not have any medical underwriting. Sadly, they also provide the least effective LTC coverage.

Q: What do these LTC insurance terms mean: elimination period, benefit period, and pool of funds?
A: Traditional long-term care works like most types of insurance. There is a deductible, which is known as the “elimination period.” This is the time -- typically 90 days -- when you must pay out of pocket before the insurance kicks in. Once insurance starts, you have a daily or monthly maximum the insurance will cover. For example, you would be required to pay the $50 out of pocket if your cost of care is $250 but your daily max is only $200.

There is also a “benefit period,” which is the number of years the insurance will cover you if your cost of care is equal to or greater than your daily maximum. You can figure out your total “pool of funds” by multiplying your daily maximum x 365 days x the number of years. For example, if your daily max is $200 and your benefit period is 3 years, you would have a pool of $200 x 365 days x 3 years = $219,000. Your benefits would last longer if your care costs less than your daily max. For example, your pool of funds would last 6 years if your care was only $100 a day, even though the stated benefit period was 3 years because you would still have money left in your “pool.” These policies have a host of riders that enable you to customize coverage. This is why it really helps to work with an agent who is well-versed in LTC.

Q: Are LTC Insurance premiums tax-deductible?

A: Premiums for “qualified” long-term care insurance policies are treated like any other medical expense for tax purposes. You only get a deduction for the amount of total unreimbursed medical expenses (including Medicare premiums) that exceed 10% of your Adjusted Gross Income (AGI). A policy is “qualified” if it was issued after January 1, 1997 and meets certain requirements.

Q: Are LTC benefits taxable?

A: Benefits are tax-free as long as they are less than $360 a day or the cost of care, whichever is greater.

Q: What is the LTC Partnership Program?
A: The Long-Term Care Partnership Program is a Federally-supported initiative that allows individuals who purchase a qualified long-term care insurance policy to protect a portion of their assets from Medicaid spend down.

For example, if you purchase a qualified LTC policy and subsequently collect $300k in benefits, you (or your spouse) would be able to qualify for Medicaid while keeping $300k of additional countable assets. Here's a list of states that participate in the Partnership program.
 

Thursday, September 21, 2017

Tongue-In-Cheek

     Remember Andy Rooney on 60 Minutes? I feel a little like Andy Rooney in this post today, recounting a day-in-the-life of a retired person.

     Yesterday B and I bicycled across four states. Well . . . that's not exactly true. We bicycled from Pennsylvania to New Jersey. Then we crossed a bridge from New Jersey into Pennsylvania, then went back to New Jersey and returned again to Pennsylvania. Back and forth across a state line, four times. We were biking a route along the Delaware river.

     Since we moved into town, and the terrain around here is relatively flat, we've decided to get bicycles. We can ride to the library, the museum, the theater, the restaurants. We have to weave through traffic; but there isn't that much traffic and the cars are going pretty slow. Plus, part of the way around town is on a bike path and the rest is along the side of the road marked off for bicycles.

     Riding a bike is supposed to be good exercise for my old broken down arthritic knee. Maybe I can avoid a knee replacement if I build up the muscles and keep my leg strong and limber.

     After our bike ride I settled down to read my book. I picked up The Caribbean by James Michener a couple of weeks ago. The paperback was a freebie in the lobby of our library. (I love the library; even better than Amazon!) I'd read a couple of Michener's other books, and now with the Caribbean in the news I thought I'd give this one a try.

     It's an interesting tale beginning with the pre-Columbian Arawaks and Caribs. The book, published in 1989, covers in fact and fiction a number of topics, from sugar plantations, slavery and pirates, up to the Rastafarians, Fidel Castro and hurricanes. But it is a long book, weighing in at over 800 pages. I wonder if Michener were writing today, with our fast-paced lives and shortened attention spans, would he be nearly as popular?

     I was sitting there reading, sipping coffee from the mug I bought this summer on Cape Cod, when I suddenly noticed the mug has the date of 1602 on it. Wait a second. 1602? Where did they get that? When did the Pilgrims come over and land on Plymouth Rock anyway?

     So I went to the trusty Internet . . . and sure enough, the Pilgrims landed on Cape Cod in 1620, before sailing on to Plymouth Rock and founding America. So where did they get 1602? Is it a typo? No. Apparently Cape Cod was a landmark for early explorers, perhaps going back to the Norsemen, circa 1000 AD. It was 1602 when English explorer Bartholomew Gosnold sailed by and named this spit of land Cape Cod. Samuel Champlain and Henry Hudson both explored the area over the next couple of years, so by the time the Pilgrims got there, even though it hadn't been settled, it was well-trod territory.

     But wait a second. The Pilgrims didn't found America. And by the way, I read up a little on the Pilgrims. They left England where they were not welcome, went to The Netherlands where they didn't fit in, and finally set off for the New World where they could exercise their religious freedom -- and then deny everyone else religious freedom, which is how Connecticut and Rhode Island were founded, by people cast out by the Puritans.

     We hear about people proudly tracing their heritage back to the Mayflower. If I had an ancestor on the Mayflower I don't know if I'd want to brag about it. Let's face it. They were a bunch of pretty strange dudes.

     And so how do the Pilgrims get all the credit for settling America when, first of all, the Spanish were roaming around the Southwest even before 1600, and we all know it was Jamestown, founded in 1607, that was the first permanent English settlement in America.

     Of course, we've heard of Captain John Smith and Pocahontas, and know the mostly apocryphal story about how she fell in love with him. But Plymouth Rock gets most of the credit. Is it because we re-enact the other mostly apocryphal story of Thanksgiving every year in November? Or is it because the media is concentrated in the Northeast, and so anything that happens in New York and Boston commands more attention than events occurring in coastal Virginia . . . which is, after all, west of the Hudson River?

     By the way, they're taking down statues of Robert E. Lee for being a traitor, and Christopher Columbus for bringing the murderous Europeans to America. So why are they not taking down monuments to the Pilgrims who, after all, were there for the start of the deforestation of our woodlands, the decimation of wildlife, the pollution of lakes and rivers, and the near-extermination of Native Americans?

     And speaking of decimation, as the day ended I sat down to watch another episode of the Ken Burns Vietnam program on PBS. Good show; bad war. What else can be said?

     See what I mean? A little bit of Andy Rooney.

Monday, September 18, 2017

What Me Worry?

     As I mentioned in my last post, I've taken several road trips lately, spending a lot of time behind the wheel of my car, which has given me plenty of time to reflect on what's going on in the world. Instead of focusing on the latest silliness in the news -- whatever Trump tweeted, whoever just got hired or fired, how the political parties are posturing -- I've been trying to focus on what's important in our lives.

     And if we step back -- well, I'm in my car, so I'm only stepping back figuratively speaking -- I think that what should most concern us is what is most likely to kill us, or hurt or maim us.

     With the recent hurricanes, it's hard not to think about global warming and the destruction it will eventually cause. With North Korea in the news, it's hard not to worry about a nuclear holocaust.

A scary sight
     But with that ten-ton semi bearing down on me, hurtling along at 70-some mph, and the aggressive driver weaving in and out of traffic, I realize that the most immediate and deadly danger is something I face every day, right here in front of me on the American roads.

     When you're on the highway, with speeding cars, tailgating trucks, and motorcycles weaving in and out between cars, you realize that the biggest danger we face today -- all of us -- is the high degree of lawlessness on American roads. People routinely drive 10, 15, even 20 mph over the speed limit. A significant portion of drivers tailgate, pass on the right, weave in and out of traffic, fail to use their turn signals. And god only knows how many are doing all this while they're talking on the phone or fiddling with their iPod.

     Haven't you seen the line of six or eight cars in the left-hand lane of the highway, all going 75 mph, and all about 10 feet behind one another? If the slightest thing goes wrong, the result is . . .  well, according to the New York Times there were 40,200 traffic deaths in 2016. After going down for years, due largely to seat belts, airbags and other safety features, traffic deaths are now on the rise again.

     The latest reports say Hurricane Harvey killed 82 people in four days. What we totally ignore is that some 440 people lost their lives on American roads during that same time period. Hurricane Irma killed 26 Americans in three days, while those same three days claimed 325 lives on our highways.

Remember these old signs?
     So what is President Trump doing about this increasing threat to Americans? The same as Obama, Bush, Clinton . . . nothing. What are governors and mayors doing about it? I know in my old hometown there's a project to widen an old parkway and straighten out some of the curves. But still, nobody wants to enforce the speed limit. Traveling 70 mph on a narrow curvy road, where the official speed limit is 55 mph, seems to be within the bounds of acceptable behavior. Nevermind the 40,000 dead, and countless more injured.

     And so the postscript? Actually, drug addiction now takes more American lives than traffic accidents. But I don't worry about drug addiction for myself, because I don't take drugs . . . while I do drive, which is why driving is my number one issue. My kids don't take drugs either (although my niece does and I do worry for her). But my kids also drive. And so whenever I know they're on the road -- my son drove from New York to Baltimore last weekend; my daughter is driving from North Carolina to Brooklyn in a couple of weeks -- there's always that little bit of anxiety lurking in the back of my mind. Are they going to be okay?

     Don't you have that same anxiety? Aren't you just a bit unsettled when you know your kids are on the road?

     Regardless, the message of this post is: please, slow down and obey the traffic laws, for your own safety as well as the safety of those around you. And let's be more careful of the drugs we use, prescription or otherwise, lest we or our loved ones become victims ourselves.

     And by the way, why can't the researchers at our top universities, big hospitals or major drug companies discover an effective nonaddictive painkiller?

     Anyway, sometimes we forget . . . we live in a dangerous world. So let's not worry about the small stuff, let's try to keep safe.

Friday, September 15, 2017

What's Important?

     I've taken several trips lately, spending a lot of time behind the wheel of my car, which has offered me plenty of time to think about things.

     Given the news, it's hard not to think about the current political turmoil. But the fact is, political turmoil has been with us for our entire history, so what's going on today is nothing out of the ordinary, nothing particularly threatening. Things were much more fractious in the mid-1800s, in the 1930s, even in the 1960s.

    So why do we think we're so divided when we all (or most of us) get along just fine with our neighbors, and local politics is generally boring and run-of-the mill? If you watch the TV news, you are bombarded with controversy, because controversy is what drives ratings. The news loves controversy, encourages controversy, and will manufacture controversy if it doesn't already exist. But most of what's in the news is not important -- political maneuvering, celebrity posturing, sports competitions. The news -- and those who influence the news -- know that if you want to get attention, you start an argument.

How can you argue with that?
     But if we step back -- well, I'm in my car, so I'm only stepping back figuratively speaking -- I think we should focus not on the ephemeral news, but on what's most important. And by my measure, what should most concern us is what is most likely to kill us. Here, by my sights, are two of the threats in our current social climate that are near the top (along with a postscript). I'll save the most deadly issue for next time (with another postscript).

     We've just suffered two major hurricanes. Now we all know there is no direct link between global warming and any particular storm. But come on. It doesn't take a genius to connect the dots.

     My house is 300 feet above sea level, so I won't be directly affected by the rising waters caused by global warming. But the heat waves, crop failures, wildfires and increasingly violent storms might kill my children or grandchildren.

     If you're not sufficiently scared about the problem take a look at The Uninhabitable Earth, which paints a horrifying picture of what is already happening. The piece also confronts some frightening issues of the future, including the possibility that deadly bugs and bacteria trapped in the Arctic ice will be unleashed on humankind as the ice slowly melts.

     This view might be an exaggeration . . . I hope it is! But as I say to climate-change deniers: If the global warmists are wrong, the costs are minimal. All we lose are a few coal mines, and we get cleaner air in the process. But if you deniers are wrong . . . our grandchildren will drown, burn, starve and suffocate to death.

     Don't you think that the news -- and our politicians -- should be more concerned about global warming than they are about who's insulted by Donald Trump's latest tweet, who's riding on the presidential plane . . . or who is coming or going on DWTS?

     The other existential danger that we face has been in the news lately, but the issue now seems to be treated more like business-as-usual. Another incident occurred just yesterday. North Korea. Its leadership is flexing its nuclear muscles, testing atomic bombs, launching missiles over Japan.

     But North Korea is not the only nuclear threat. Remember the arguments over a potentially nuclear Iran? President Obama negotiated a treaty. We can only hope that the Iranians are honoring their part of the agreement, and that President Trump will hold up our end of the bargain.

     There's also Pakistan, another nuclear power. Pakistan is not exactly the most stable country in the world. Then there's the possibility that Islamists or some other rogue group will get their hands on a nuclear weapon and set it off in a major city. Maybe even before global warming will kill us, we will be exterminated in a nuclear holocaust. Of course, we've been living with threat this our whole lives. But just because it hasn't happened doesn't mean it can't happen.

     These are two big issues that we can't afford to ignore. I'll bring you the biggest, the deadliest, next time. But meanwhile, here's a postscript. According to The Week magazine, some 32,000 Americans die every year from falls. Guess which age group suffers the most?

     I don't know what the politicians can do about the problem. But there is something we can do. And you know what it is: Install grab bars in the bathroom. Get rid of throw rugs. Install more lighting on stairs and entrances. If the politicians can't keep us safe, at least we can do for ourselves.
   

Monday, September 11, 2017

A Seasonal Change

     The change of seasons brings many things to many people. Unfortunately, September has brought catastrophic hurricanes to both Texas and Florida. Our hearts go out to the people whose lives have been upended by the storms.

     September has brought something very different to my new hometown: the annual arts and crafts festival, which includes the Thompson Bucks County Classic bike race. There was a race for the kids; one for women; one for amateurs and one for professionals. There was also an antique bike race . . . an exercise that is harder than it looks. There are no gears on these bikes, and if you fall down you have a long way to go.

     Meryl Baer of Six Decades and Counting also reflects on the changing of the season. Soon she will transfer potted plants indoors. Mobiles will be taken down and locked away until spring. Outdoor chairs will be stacked in the garage. "The grill should be stored in the garage," she says in Fall Is in the Air. "But too often we forget, leaving it out until biting rain or snow surprises."

Lining up for the race
     Meanwhile, Laura Lee Carter has been searching for freedom for a lot longer than a season or two. Most of us, she points out, don't have a clue about who we really are until we get older. We have made so many compromises to conform to society, family and every other person around us for decades. We know all the rules. They are ingrained into our souls. The Buddhists call this "armoring": the persona we put on each morning in order to interact peacefully with those around us. This is how we keep our Self in check.
 
     But if you're tired of keeping your Self in check, and want some help in finding the courage to break the rules set up by other people, take an honest look at Find Your Own Personal Freedom.

     Sometimes however, even Carter admits, life gets in the way of freedom, as it did for her last week when her husband fell ill. They had to cancel their anniversary trip. But as the saying goes, when one door closes, another door opens. And so as she tells us in Life in a Small Town, she used her unexpected free time to make a new friend, sell some books, and look forward to Octoberfest.

     We all like the freedom of using credit cards and other payment systems to make our lives easier. But these days we have to be careful. On the Survive and Thrive Boomer Guide, Rita R. Robison reports that Equifax, one of the nation’s three major credit reporting agencies, has experienced a data breach that exposed people’s names, Social Security numbers, birth dates, addresses and, in some cases, the driver’s license numbers of 143 million American consumers. Robison then offers tips on what to do about the Equifax breach, to keep ourselves and our families safe as we head back to school, to work, to all the other things we do in the fall.

    Kathy Gottberg also has some great advice for of us, about how we can be free to be ourselves, from a book called Your No Fear Career by Robin Fisher Roffer. Gottberg's post on Smart Living 365 contains nuggets of ideas that will benefit anyone, of any age, who is looking to live boldly instead of turning into a dancing bear.

     She asks: What good does it do to focus on what we can't do, what we did wrong in the past, or what limitations we may have? Instead of being apologetic for our shortcomings, we should accept and even celebrate both our weaknesses and our strengths, for all together they make us the unique individual that we are. She goes on to suggest that if you are hard on yourself, others will be hard on you, whereas if you come from a place of strength and self-confidence, your relationships will be strong. In general, people accept you as much as you accept yourself.

     But, to find out what a dancing bear is, you'll just have to go over to her blog post Living Fearlessly and Refusing to Be a Dancing Bear and find out for yourself.

     Finally, Carol Cassara on Heart, Mind, Soul reminds us in her post Compassion Exercise that the world is crying out for compassion. This is certainly true today in Florida and Texas. It's true every day in Africa and Asia . . . and in our own backyards. Cassara offers a new way to look at people, a way that will help you "Use your voice for kindness, your hands for charity, your mind for truth, and your heart for love."