I also hope I never have to use my home owners, auto or health insurance. You won’t hear me complain about paying premiums and not using my coverage.  Nevertheless, some clients do express this concern. They indicate that they will use their savings rather than “risk” paying a premium for something they never use.

The challenge is for this to work clients must save many more times than the cost of the insurance premium — typically at least $250,000 for singles and $500,000 for couples in today’s dollars. And the savings needs to earn 5% compounded annually after taxes to keep pace with increasing costs of care. (Please note these amounts will not likely cover an extended illness such as Alzheimer’s or  24/7 medical care at home.) And then comes the hard part, not spending this money on something else.

If my choices are 1) pay $2200 annually for a $250,000 fund that increases every year or 2) save the $250,000 quickly, be sure that it increases every year and don’t touch it, I’d much rather pay $2200 a year for something that I may never use. That’s much less painful than walking away from $250,000 that I can never spend.

Even if I never use my insurance benefit, I still have the use of my $250,000 savings and the profound comfort of knowing that I can preserve the quality of my life and my family’s standard of living. I won’t wipe them out financially and/or physically paying for and providing my care.

Cynthia DeGeorge holds the CLTC, Certified in Long-Term Care, designation. She is also a Certified Financial Planner, CFP® and one of the few CFPs who specialize exclusively in long-term care expense planning. Realizing the enormous exposure that long-term care expense posed for clients, Cynthia specializes in developing long-term care insurance solutions in the context of her clients’ holistic financial health and lifestyle choices.

I am also known as the frugal one in my circle. I am always looking for a better, less expensive way to get the results I need. I use coupons. I own a nice, reliable, but 13 year old car. I consider what I will order when eating out so as to manage the cost. I shop at Target.  I could go on and on.

My frugal nature is the reason I bought long-term care insurance. Studies say I will more likely than not need care and I don’t want to pay “retail” for this care  because frankly without the insurance I wouldn’t be able to afford the type of care, services  and the lifestyle I hope to experience as I age.

My long-term care insurance premiums works out to be $183 a month. Thirty years from age 48, when studies say I will most likely need care; this $183 a month will buy me a lifetime benefit of $946,506.20. That’s right. Almost one million dollars to pay for a quality lifestyle when I will most need it. Long-term care insurance is the best deal around.

For clients who buy long-term care insurance in their sixties, seventies, and eighties the math is still extremely  compelling with benefits being worth many times the dollar spent on premiums. Just don’t wait to buy it. Long-term care insurance is medically nderwritten. When you are ready to buy, it may be too late.

Cynthia DeGeorge holds the CLTC, Certified in Long-Term Care, designation. She is also a Certified Financial Planner, CFP® and one of the few CFPs who specialize exclusively in long-term care expense planning. Realizing the enormous exposure that long-term care expense posed for clients, Cynthia specializes in developing long-term care insurance solutions in the context of her clients’ holistic financial health and lifestyle choices.

Cynthia DeGeorge, CFP® CLTC 928.445.7060

At age 65 there is a 70% chance that at some point in our lives we will need long-term care. At age 85 there is a 50% chance that we will have Alzheimer’s disease.

For women this is double trouble.  Women not only provide but also receive the majority of long-term care services.

About three-fourths of family caregivers are women. Women have longer life expectancies than men outliving them by an average of five years.  Women are more likely to be single as they age. Half of women over age 75 live alone. When their husbands or partners need long-term care, wives often provide the required hands-on care. These women worry about what will be left of them physically and financially after caregiving. When their partner dies, they must live alone as they continue to age and then need care for themselves. 

Wives and unpaid family caregivers provide care for an average of four to five years, sometimes more. America women now spend more time caring for parents than for children. Some 25% of women caregivers are caring for both parents and children.

The majority of caregiving in this country is provided by women who are in or approaching their fifties and are employed. The actual impact of caregiving is greater than people expect. Employed caregivers essentially have two jobs. Studies indicate that 83% of caregivers contribute financially, 63% have less income, 48% lose a job or miss career opportunities and 12% quit their job. 

Caregiving is a difficult job. Caregivers emotional and physical health declines. They worry about the recipient’s health and safety. They lose friends and experience depression, anger and guilt along with increased financial hardship. Studies show these stresses make the caregiver sick and reduce life expectancy. Caregivers don’t eat well, sleep well, exercise or keep up with their own medical care.

Women are also at greater risk of needing care themselves. About two-thirds of home care recipients are women and 70% of nursing home residents are women.

Alzheimer’s disease and its impact on women exacerbate the issue of women and long-term care. Alzheimer’s disease is a long illness with an average duration of eight to nine years between diagnosis and death. The duration can be as long as 20 years.  Women are at the center of this disease. They make up two-thirds of the people with Alzheimer’s. Ten million women either have Alzheimer’s disease or are caring for someone with the disease.

Alzheimer’s disease is tragic because of its prevalence and duration. Alzheimer’s disease often requires a secured environment. Patients wander. They get up from bed at night as they no longer have normal wake sleep cycles. Caring for Alzheimer’s patients is a 24-hour job.

When long-term care becomes necessary not only is it a physical and emotional diagnosis. It is also a financial diagnosis. Health insurance and Medicare do not pay for long-term care. Medicaid pays for long-term care once the recipient has become indigent. Medicaid has an institutional focus in most states and the recipient has little control of where care is received. 

The enormous cost of long-term care surprises most people. The U.S. median annual cost for a private room in a skilled nursing facility is $77,745 or $213 per day. But costs for an average facility in Connecticut may be as high as $143,000 a year. The national average hourly rate for a home health aide is $19. The annual cost for a one bedroom assisted living apartment is $39,135. Add to that another $12,000 to $30,000 a year in additional expense for the level of care provided.  

Most clients say they want to stay at home when they receive care. They believe they can swing this with some paid care supplementing a family caregiver. Often this is physically and financially impossible.  With Alzheimer’s disease, the number one reason for today’s long-term care insurance claims, care may be required 24 hours a day. Paying for one-eight hour shift a day, seven days a week, costs an average of $54,000 a year. This leaves two eight-hour shifts a day, seven days week, to be covered.

Facility long-term care expenses are increasing at rates faster than inflation. And due to medical advancements and the high incidence of Alzheimer’s disease, long-term care is likely to be needed for a longer time in the future. 

Women do not prioritize this issue on their own. They should. Developing a plan for long-term care enables women and their partners to control decisions about where, how and from whom they want to receive care. And having a plan for long-term care significantly increases the odds of financial security for women.

Cynthia DeGeorge holds the CLTC, Certified in Long-Term Care, designation. She is also a Certified Financial Planner, CFP® and one of the few CFPs who specialize exclusively in long-term care expense planning. Realizing the enormous exposure that long-term care expense posed for clients, Cynthia specializes in developing long-term care insurance solutions in the context of her clients’ holistic financial health and lifestyle choices.

Cynthia DeGeorge, CFP® CLTC 928.445.7060

In the event we can no longer work we recognize the need to purchase disability insurance to replace some of our lost income. Replacing 66% of lost income is typical.  Meaning if one earns $75,000 a year than he/she may receive up to $49,500 a year, for some number of years, in disability benefits. We tend to postpone purchasing long-term care insurance until our fifties, sixties or beyond. Yet the cost of long-term care and the impact of needing long-term care may far exceed the costs of lost income due to disability.

The national average today for a private room in a nursing home is  $77,745 annually. Home care may be significantly more expensive.  In addition when waiting until our fifties, sixties or beyond to put long-term care coverage in place we pay more for long-term care
insurance. Premiums rise for new policy holders at every birthday. And increasing costs of care require purchasing more insurance to obtain an equal amount of coverage. And at a younger age it becomes more likely to lock-in preferred health discounts.

A legitimate dilemma for working age adults is figuring out how to concurrently pay for life insurance to protect the family, disability insurance, and long-term care insurance all the while saving for college expenses and retirement.  And while we absolutely would not dissuade a working age adult from purchasing disability insurance, adding a permanent life insurance product that builds cash value, pays out in the event of death, or in the event  long-term care is required may provide additional protection and flexibility.  This approach may make more sense than foregoing long-term care insurance completely during working years risking needing long-term care and risking becoming uninsurable in future years.

These policies combine the benefits of life insurance, long-term care coverage and an accumulating cash value into one design.  The premiums paid into the life insurance policy
are credited an interest rate that is tax-deferred and builds up a cash value.  Remaining death benefits not spent on long-term care will be distributed to the beneficiary as an income tax free death benefit. These polices can be started with annual or even monthly premiums and create immediate access to the entire death benefit and long-term care benefits if need be.

These policies are not the best solution for everyone including those who need large amounts of life insurance for only a short period of time, but for many these solutions cover more bases for a manageable premium in the event of a catastrophe.

Cynthia DeGeorge holds the CLTC, Certified in Long-Term Care, designation. She is also a Certified Financial Planner, CFP® and one of the few CFPs who specialize exclusively in long-term care expense planning. Realizing the enormous exposure that long-term care expense posed for clients, Cynthia specializes in developing long-term care insurance solutions in the context of her clients’ holistic financial health and lifestyle choices.

Cynthia DeGeorge, CFP® CLTC 928.445.7060

Cynthia@GurleyLTCI.com

Ms. Gross goes on to refer to the “dirty little secret” of health care in America for the elderly. When Medicare was created life spans were shorter and we did not have the medical technological advances that we have today. Bottom Line: Many of us will live a very long life with little life line for the type of care we actually need as we age.  Do you and your parents have a half million dollars for old age? As Ms. Grossman says, “denial
is powerful, but it doesn’t pay the bills.”

Ms. Gross also comments that this mismatch between what is covered and what is actually useful is the central flaw in Medicare today, a shock to families who have no clue until they are smack in the middle of it.  Why is nobody outside the insular community of long-term care providers even mentioning the difference between acute and chronic care and how
each is paid for (or not.)?

The Federal Government’s attempt to implement a long-term care entitlement
solution, the Community Living Assistance Services and Supports Act, known as
the Class Act, has been removed from the Patient Protection and Affordable Care Act due to its financial unsustainability.  It is extremely unlikely that we will have a government solution or even partial relief for long-term care expenses while Medicaid dollars are being slashed. As a point of clarification, CLASS has been referred to as an “insurance program.” But insurance implies risk management and underwriting. There was no underwriting
in the act which was  just one of the underlying reasons for its financial unsustainability.

Thank you,  Ms. Gross, for letting the cat out of the bag.  A patient with Parkinson’s or someone who has experienced a stroke  does not make the distinction between medical care aimed at curing and care required to help the chronically ill with activities of daily living. Unfortunately this distinction often only becomes clear when suddenly there is no one to pay the bills except for the patient and his or her family.

Long-term care insurance is intended to address this mismatch. It offers policyholders a choice about where and how assistance is received  and a way to pay for the care that
is often required as we age and become frail or experience an accident or develop a chronic illness. Sadly, only seven percent of long-term care expense in our country is paid by private insurance. Primarily because so few Americans have planned for long-term care expense.

*How Medicare Fails the Elderly” the New York Times, Sunday, October 16, 2011 Jane G

Cynthia DeGeorge holds the CLTC, Certified in Long-Term Care, designation. She is also a Certified Financial Planner, CFP® and one of the few CFPs who specialize exclusively in long-term care expense planning. Realizing the enormous exposure that long-term care expense posed for clients, Cynthia specializes in developing long-term care insurance solutions in the context of her clients’ holistic financial health and lifestyle choices.

Cynthia DeGeorge, CFP® CLTC 928.445.7060

Cynthia@GurleyLTCI.com

Visit us at  www.GurleyLTCI.com

Download our FREE report, “Six Facts – MUST KNOWS BEFORE You Buy Long-Term Care Insurance.”

I’m not sure quite what I expected at Sunday cocktails, but I didn’t expect it to feel the
same as when my girlfriends and I get together for happy hour. I was wrong. Last week’s hostess, age 94, opened the door, greeted me very warmly, walked me to her fully stocked bar, described the gourmet cheeses in detail, and encouraged me to eat my fill of the very special fat blue cheese olives.   I poured myself a scotch and sat down on the sofa in her beautifully decorated living room. The five of us chatted about the Occupy Wall Street movement and what it might really mean. How sad it was that we would not get to see what else Steve Jobs had in mind. We talked about art and those good cheeses.

Wow. Will I be entertaining and having cocktails with my girlfriends when I am 94? I guess at some level I always thought that when I am in my eighties and nineties I will
be different inside. That I won’t care about the things I care about today. That I will worry about new things. And that life won’t be fun anymore. And I certainly won’t care so much about what is happening in the world.

But this can’t be true. Inside I still feel 25 years old. I imagine I will still feel 25 when
I am 90 too. In my eighties and nineties I will care about where I live, what I eat, having fun and connecting with my friends. I won’t be any different in that regard than I am
today.  I won’t want to live in substandard housing. I will want to be near my friends. And I will want to stay at home if I need long-term care.

As we talked it became clear to me  that these four women shared several things in common:

• Concerned about healthy living from an early age
• Managed their finances over a lifetime. They were willing to live with less in their earlier years so they could have more in their later years
• Worked hard on developing and keeping friends, and
• Planned their aging strategy years ahead. In each case women chose to live in a CCRC with the hope of remaining independent as long as possible.

Long-term care insurance is an important financial consideration when choosing to live in a CCRC. Many CCRC models require private payment for long-term care. And long-term care insurance will allow these residents to receive care in their independent living apartments while living alongside their friends. And if they eventually need more assistance,  long-term care insurance will help pay for a private unit in assisted living ving allowing residents to remain with friends.

What a life at 94! It pays to plan ahead.

Cynthia DeGeorge holds the CLTC, Certified in Long-Term Care, designation. She is also a Certified Financial Planner, CFP® and one of the few CFPs who specialize exclusively in long-term care expense planning. Realizing the enormous exposure that long-term care expense posed for clients, Cynthia specializes in developing long-term care insurance solutions in the context of her clients’ holistic financial health and lifestyle choices.

Cynthia DeGeorge, CFP® CLTC

928.445.7060 Direct

888.468.8056 Fax

Cynthia@GurleyLTCI.com

Visit us at   www.GurleyLTCI.com

Download our FREE report, “Six Facts – MUST
KNOWS BEFORE You Buy Long-Term Care Insurance.”

Yet clients may spend 100% of their assets for long-term care regardless of what the market does.  Will it be the cost of long-term care that wipes us out rather than how our
investments perform?

Does this mean we are focused on the wrong thing? The U.S. Department of Health and Human Services projects that by age 65, 70% of Americans will experience a long-term care event before they die. And most of us will have to pay for this care on our own dime. In today’s dollars, an average long-term care event can easily exceed $250,000 per person and over $500,000 for a couple. And what happens when this event is truly catastrophic and requires paying for care for 10 or 15 years. Long-term care expense may indeed be the biggest fish to fry and the one that eludes most of us. 

I have a friend who smokes. She is not focused on the health implications of smoking but she is very worried about BPA in her food.  I am not discounting that BPA in our food sounds like a very bad thing.  But is it more important than quitting smoking?  BPA can’t be good and I don’t want it in my food, but as long as she smokes . …

Many of us know what it feels like to lose tens of thousands in our investments. Yet
paying for long-term care expense can easily outweigh the impact of investment losses.  We all hope that when our portfolio declines that our investments will eventually regain positive territory. But money spent on long-term care is gone. It’s not coming back. And what happens if we recover from a car accident or a stroke? Our investments may have been wiped out paying for care. The money we expected to provide retirement income may now be gone.

When clients decide to go uninsured for long-term care it is smart to determine which assets will be liquidated to pay for care.  When care is needed, do you plan to cash in your 401K? The cash in your life insurance? Cash in savings bonds? Write a check? And from which account?  Please recognize that liquidating assets may be required in a down market and result in negative tax consequences.

Putting portfolio protection in place for long-term care expenses through insurance may
cost as little as a few basis points of portfolio value but preserve the entire portfolio.  Yet many of us remain more focused on total returns. We know that we are more likely than not to eventually need long-term care. By not insuring for a long-term care event we
may be jeopardizing all of our assets and income.

Cynthia DeGeorge holds the CLTC, Certified in Long-Term Care, designation. She is also a Certified Financial Planner, CFP® and one of the few CFPs who specialize exclusively in long-term care expense planning. Realizing the enormous exposure that long-term care expense posed for clients, Cynthia specializes in developing long-term care insurance solutions in the context of her clients’ holistic financial health and lifestyle choices.

Claire and Elizabeth lived in the same town only about 15 minutes from one another. Claire was fully prepared to care for Elizabeth. In fact, Claire asked Elizabeth to move in with her and her husband. Claire understood and accepted that she would be providing hands-on care and was physically and emotionally able to help with the care Elizabeth
required including bathing, dressing, eating, and toileting.

What Claire and Elizabeth did not understand was the enormity of caregiving. Here is how the 168 hours (24 hours X 7 days = 168 hours) or one week unfolded.  Claire worked full-time outside the home. Elizabeth was diagnosed with Alzheimer’s and required 24-hour supervision. Paid care was required for the 40 hours a week Claire spent at her job plus commuting time. Currently in Arizona the average cost of non-medical home care for 44 hours a week is $44,000 a year which covers 26% of the hours in a week that care is
required.  There are now fewer hours that Claire must provide care, yet 124 hours a week, or on average 18 hours a day, remain for Claire to cover.

At this point Claire is dedicating 100% of her nonworking hours to providing hands-on care.  This level of caregiving challenges the rest of the family and makes it impossible for Claire to accomplish anything else.  She has no time for relationships, self-care or housekeeping. Other family members must do the grocery shopping. Claire has little time to spend with her grandchildren or get a haircut. The situation creates tremendous
stress and Claire has now developed hypertension, anxiety and depression.

It has become clear that additional paid care is necessary. An additional 44 hours a week of paid care is added to the schedule. This now costs an additional, $44,000 a year. Elizabeth is now paying $88,000 a year for home care and her nest egg is deteriorating quickly. Claire realizes that she will need to contribute to the cost of care for Elizabeth or quit her job to be able to substitute for some of the paid care.

The additional paid care relieves things for Claire. Yet she continues as the primary caregiver for 11 hours per day. Unfortunately these are during Claire’s sleeping hours as Elizabeth needs supervision if awake. Claire is  working 44 hours a week, providing the hands-on care for 11 hours a day often during sleeping hours and the family is spending
$88,000  a year for paid care.

Long-term care insurance designed to pay three to five years of home care would have lessened Claire’s financial burden, possibly prevented her own health issues and financial resources would have been available to pay for caregivers trained to work with Alzheimer’s patients .

Kids really do want to take care of aging parents. They just do not realize how challenging it can be until they are in the throes of the caring experience. We have worked with many families where siblings have joined together to pay long-term care insurance premiums for parents. Kids will do what is necessary to provide care for their parents, but at what cost to their own health and wealth?

Cynthia DeGeorge holds the CLTC, Certified in Long-Term Care, designation. She is also a Certified Financial Planner, CFP® and one of the few CFPs who specialize exclusively in long-term care expense planning. Realizing the enormous exposure that long-term care expense posed for clients, Cynthia specializes in developing long-term care insurance solutions in the context of her clients’ holistic financial health and lifestyle choices.

I purchased my long-term care insurance when I was age 48. I wish I had bought at
a younger age. I could have saved a lot of money.  And if I had purchased
my long-term care insurance sooner, I may have qualified for an additional
“preferred health discount.”

Long-term care insurance is often surprisingly affordable.  As little as $149.89* a
month, per spouse, will provide two 45 year olds significant long-term care
insurance protection with a top-rated insurance company.   A “preferred health” discount would further reduce these premiums.  Paying premiums annually discounts these rates even more. Of course policy design, health, age and company will determine the actual premium policy holders pay.

The key. Once a policy is purchased and so long as premiums are paid, long-term
care insurance protection is locked in.  And this protection begins when
the policy is approved.  Car accidents are the number one reason long-term
care is required during working years. And they happen at any age. Disability
insurance may protect some of your income during your working years, but it
will not pay for the cost of care.

The cost of securing adequate long-term care insurance coverage becomes
increasingly challenging as we age. Yet long-term care premium expense is
insignificant compared with the risk of needing care and the cost of
care.  In the Phoenix area today, the cost of a private room in a nursing
home runs $82,490 annually. Forty-four hours of non-medical home care per week
runs $40,040 annually. Multiply these costs by three to five years and you get
an idea of how the cost of long-term care can devastate a family.

Some clients wait until their fifties, sixties, or even seventies to put their
long-term care insurance protection in place.  The longer one waits the
more expensive it will be over a lifetime. Facility costs for long-term care
have been increasing at 4% to 5% per year for the last five years. As demand
for these services increases rates may rise even faster. And most long-term
care insurance policies include an inflation guard, thus to secure comparable
coverage in succeeding years it also costs more.  Waiting can become very
expensive.

The smartest guy or gal in the room will buy early, lock-in long-term care
protection, save a lot of money, and have long-term coverage in place during his/her
working years, when a long-term care event may be even more catastrophic.

—————————————————————————————————

*Genworth Privileged Choice Flex, $6,000 a month coverage for three years, 90 day elimination period, zero day home care elimination period, 5% compound inflation, partner discount, purchased at age 45

Cynthia DeGeorge holds the CLTC, Certified in Long-Term
Care, designation. She is also a Certified Financial Planner, CFP® and one of
the few CFPs who specialize exclusively in long-term care expense planning.
Realizing the enormous exposure that long-term care expense posed for clients,
Cynthia specializes in developing long-term care insurance solutions in the
context of her clients’ holistic financial health and lifestyle choices.

One of the first questions clients ask us is, “When is the best
time to buy long-term care insurance?” These clients are asking “How old should
I be when I purchase my policy? And, can I wait a few more years to think about
this issue?” In most cases the mathematical “sweet spot” answer is when a
client is in their forties.  Premiums for new policy holders increase dramatically in late fifties and beyond, often doubling every decade. Clients who buy at an earlier age and pay premiums for more years still pay less premiums overall than clients who wait. Premiums rise quickly to those who wait. And younger clients are more likely to qualify for
preferred health discounts. In addition, policies typically include benefits
that increase coverage as the cost of care increases. In this way clients can
essentially purchase less coverage than if they waited.

But all of this mathematical mumbo jumbo misses the broader
message completely. What happens when clients waits for their perceived
mathematic “sweet spot” age and jeopardize their ability to obtain coverage at
all?  Long-term care insurance is medically underwritten. Physician’s records, prescription information and life habits will be evaluated at the time of application. Clients may wait to apply, but their health won’t. Life changes in an instant. We attempt to help clients daily
who are now uninsurable. These clients would pay almost any premium to obtain a
policy that they now can’t get. These clients are truly in a financial panic as
they comprehend that their window to obtain coverage has already closed.

Clients with musco-skeletal conditions, mental health issues, weight
issues, cancer, heart conditions, TIA’s, Parkinson’s, among other conditions
can all be declined for coverage. These clients whom now may pay their care
costs out of pocket would gladly go back and pay premiums in earlier years if
they could. Many of these clients will now be looking at liquidating assets in
a bad market compounded with less than desirable tax consequences.

Let’s also not forget that 41% of those receiving long-term care
are working age adults, often the result of a car accident.  The good news is that many of  these clients will recover. The bad news is that they may be financially wiped
out.

I wish we could grant “do overs.”

In addition to holding the CLTC designation, Cynthia DeGeorge, is also a Certified Financial Planner, CFP®. She is one of the few CFPs who specialize
exclusively in long-term care expense planning. After 20 years as a senior
executive, Cynthia chose financial planning as her second career. Realizing the
enormous exposure that long-term care expense posed for clients, Cynthia
specializes in developing long-term care insurance solutions in the context of
her clients’ holistic financial health and lifestyle choices.