1. Long-Term Care Options and How to Pay for It
Rick Gow, CSA
Certified Senior Advisor
Wealth Management Advisor
Brought to you by Prestige Healthcare Resources

2. Disclosures
This communication is for information purposes only and should not be regarded as an offer to sell or a solicitation to buy a financial product. Information provided has been prepared from sources believed to be reliable, but is not guaranteed and does not represent all available data necessary for making investment or legal decisions. The commentary of the presenter does not represent the opinion or position of Lara, May & Associates, LLC (“LMA”) or its affiliates. LMA, its affiliates, and the presenter are not responsible for any trading decisions, damages or other losses resulting from, or related to this information, data, analysis or opinions or their use. Reproduction or distribution of this material is prohibited and all rights are reserved. Important consumer information, including LMA’s ADV Brochure and ERISA disclosures, may be found at the footer on The presenter is not a legal or tax professional. LMA is an independent investment advisor regulated by the SEC. Securities and investments sold through Lara, May & Associates, LLC (FINRA/SIPC Member). Certified Senior Advisors (CSAs) have supplemented their individual professional licenses, credentials and education with knowledge about aging and working with seniors. It is recommended that you verify the validity of any professional’s credentials is which you conduct business and be sure you completely understand what those licenses, credentials and education signify. The CSA certification alone does not imply expertise in financial, health or social matters. For more details visit:
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3. Learning Objectives: Long-Term Care Options
To understand the definition of Long-Term Care and how you can plan early for future care.
To understand the importance of advance planning.
To identify the options available for your long-term care & paying for it.
To provide hands-on tools for making plans now.
© 2014 Lara, May & Associates, LLC

4. The Importance of Planning Early
Allows for informed planning of complex issues.
Allows Seniors to maximize self determination and degree of choice.
Avoids difficult consequences of waiting too long.
© 2014 Lara, May & Associates, LLC

5. What is Long-Term Care?
Definition: Care and services for an individual with a chronic health problem, such as:
Assistance in Performing Activities of Daily Living
Bathing and Personal Hygiene
Continence
Dressing
Eating
Toileting
Transferring
Supervision for a Cognitive Impairment to Include:
Home Health Care
Adult Day Care
Assisted Living
Nursing Facility
Other Supportive Services
© 2014 Lara, May & Associates, LLC

6. General Long-Term Care Statistics
Some 70 million men and woman from the Baby Boomer generation, born between , will begin turning 65 at a rate of more than 8,000 per day.
By the end of the year, the nation’s senior population will grow by almost 3 million, to a total of nearly 49 million.
By 2025, the senior population, which was 35 million in 2000, will have more than doubled to 72 million.
© 2014 Lara, May & Associates, LLC

7. “It Will Never Happen to Me”
At least 70% of individuals over age 65 will require some long-term care services at some point.1
Over 40% of Americans currently receiving long-term care are between the ages of 18 and 64.2
Among adult children in the U.S., 73% said they have neither thought about nor planned for the care of their aging parents or relatives.3
1. U.S. Department of Health and Human Services, National Clearinghouse for LTC Information, March 26, 2008
2. Federal General Accounting Office
3. Home Instead Senior Care, White Paper, Seniors and the Information Gap, 2009
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8. Paying for Long-Term Care
How do we meet our current expenses?
What is the lowest level of care that might be needed?
What is the highest level of care that might be needed?
What financial resources do we have now that could pay for this range of care?
What additional resources might we need?
© 2014 Lara, May & Associates, LLC

9. The Costs of Long-Term Care
SERVICES
COSTS
Home Health Aid
$25 Per Hour
Assisted Living Unit
$2,714 Per Month
Nursing Home/Semi-Private Room
$181 Per Day, or
$66,065 Per Year
Nursing Home/Private Room
$205 Per Day, or
$74,825 Per Year
*Source: U.S. Department of Health and Human Services, March 26, 2008
© 2014 Lara, May & Associates, LLC

10. Eight Levels of Professional Care1 2 3 4
Senior Centers
Adult Care Centers
In-Home Non-Medical Care
In-Home Medical Care 5 6 7 8
Retirement and Independent Living Communities
Assisted Living Communities
Skilled Nursing Homes
Hospice Care
*Source: Home Instead Senior Care, White Paper, Seniors and the Information Gap, 2009
© 2014 Lara, May & Associates, LLC

11. Estimating Costs: Too High or Too Low
Senior Centers
Estimate: $18,000 - $26,000
Actual Cost: Nominal (typically levied as a per-day fee for congregate meals and other activities)
Adult Day Care
Estimate: $22,000 - $26,000
Actual Cost: About $15,250
In-Home Non-Medical Care
Estimate: $28,000 - $29,000
Actual Cost: About $18,000
© 2014 Lara, May & Associates, LLC

12. Estimating Costs: Too High or Too Low
Independent Living
Estimate: $46,000 - $47,000
Actual Cost: Less than $30,000
Assisted Living
Estimate: $47,000 - $49,000
Actual Cost: About $36,000
Skilled Nursing Homes
Estimate: $59,000 - $65,000
Actual Cost: About $78,000
© 2014 Lara, May & Associates, LLC

13. Options for Senior Care
When asked what financial resources would cover the cost of senior care, seniors as well as their adult children cited:
Social Security, Medicare, Personal Savings or Pension Plans
Only 21% of seniors and only 18% of adult children mentioned long-term care insurance.
When asked what sources of information on senior care they had looked into, 54% of seniors and 67% of their adult children said they had not taken advantage of any of the dozens of potential resources
*Home Instead Senior Care, White Paper, Seniors and the Information Gap, 2009
© 2014 Lara, May & Associates, LLC

14. Long-Term Care Insurance
Questions to Ask:
What is the daily benefit?
How long will benefits be paid and is there a maximum lifetime payout?
What kinds of care will the policy cover?
Are there tax implications for receiving benefits?
© 2014 Lara, May & Associates, LLC

15. Long-Term Care Insurance Benefits Paid
43% of Home Care
32.9% of Assisted Living Care
24.1% of Nursing Facility Care
© 2014 Lara, May & Associates, LLC

16. Who Doesn’t Pay for Long-Term Care?
Medical and Health Insurance
Disability Insurance
Medicare or Medicare Supplements
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17. Long-Term Care Funding Options
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18. Traditional Long-Term Care Insurance
Focus: Long-Term care coverage.
Payment: Monthly, semi-annual or annual premiums.
Health Concerns: Stringent medical requirements.
Benefits: Lifetime option for coverage, qualifies for Virginia Partnership Program.
Pros: Very selective coverage for per day costs and other riders.
Cons: Typically “use it or lose it” and could raise your premium rates at any time.
© 2014 Lara, May & Associates, LLC

19. Hybrid LTC with Universal Life
Focus: Long-Term care coverage with Life Insurance Death Benefit (DB).
Payment: Typically single premium.
Health Concerns: Very relaxed medical requirements.
Benefits: LTC coverage up to five times premium, DB two-four times premium and 100% premium money back guarantee.
Pros: Most flexible with LTC, Life Insurance and access to cash if needed.
Cons: High upfront cost (minimum is $25,000).
© 2014 Lara, May & Associates, LLC

20. Hybrid Whole / Variable Life with LTC Insurance
Focus: Life Insurance with Long-Term Care Acceleration Rider.
Payment: Monthly, semi-annual or annual premiums.
Health Concerns: Very stringent medical requirements.
Benefits: LTC coverage is 2% of policy DB per month, not to exceed IRS per diem limit (in 2010 that was $290 per day).
Pros: Best Life Insurance coverage.
Cons: Medical issues could make this extremely costly.
© 2014 Lara, May & Associates, LLC

21. Annuities (GMIB and GWB)
Focus: Retirement income with Long-Term Care Acceleration Rider.
Payment: Typically single premium.
Health Concerns: No medical requirements.
Benefits: LTC coverage is 10% per year of entire income benefit base for life.
Pros: Funds can be used for any type of care, not just LTC, and access to cash if needed.
Cons: Income may not pay all LTC costs, and has a high upfront cost to establish.
© 2014 Lara, May & Associates, LLC

22. Self Insured Focus: Retirement and general living expenses.
Payment: Health concerns and benefits (N/A).
Pros: Funds can be used for any type of care, not just LTC.
Cons: May not last through your LTC needs, and may not allow for inheritance.
© 2014 Lara, May & Associates, LLC

23. Medicare vs. Medicaid: What is the Difference?
Government insurance program.
Government assistance program.
Age based.
Needs based.
Federally administered.
State administered.
Does not pay for long-term nursing home care.
Pays for long-term nursing home care.
© 2014 Lara, May & Associates, LLC

24. What is Medicaid?
Formed in 1965, Medical coverage typically for low-income citizens and other individuals in need.
Eligibility is Based on:
Medical Needs
Income and Assets
Payments are made directly to providers.
Can cover long-term care.
© 2014 Lara, May & Associates, LLC

25. Medicaid Focus: Long-Term care coverage for those in need.
Payment: Asset and resource driven (must spend down assets).
Health Concerns: None. Must have met requirements for coverage. Typically need a Doctor’s approval.
Benefits: Medicaid is for Federal
and State approved care only.
© 2014 Lara, May & Associates, LLC

26. Medicaid
Pros: If you can not afford care, then minimum care will be provided.
Exempt Assets: House (if you or your spouse live in it), car, prepaid funeral trust, life insurance (<$1,500 cash value), personal property (wedding rings, art, furniture), inaccessible assets (real estate partnerships, certain savings bonds $20k), Medicaid annuities for community spouse.
Cons: Minimum care will be provided. Typically all assets must be spent first (anything with your name on it).
© 2014 Lara, May & Associates, LLC

27. Medicaid Planning for Long-Term Care
When researching facilities, you should ask:
Is Medicaid accepted?
Is there a waiting list?
Do you need to pay privately first?
How often are Medicaid beds available?
What happens when resources are depleted?
© 2014 Lara, May & Associates, LLC

28. Veterans Benefits Medical benefits package. Health care insurance.
Service connected disability income.
VA pension.
Aid and attendance benefit.
Housebound benefit.
Death pension.
Dependency and indemnity compensation.
Burial and final expenses.
© 2014 Lara, May & Associates, LLC

29. Veterans Benefits for Long-Term Care
VA Aid and Attendance Pension benefits for Veterans and surviving spouses.
Eligibility Based on:
Military Service
Medical Needs
Income and Assets
1/3 of all persons over 65 may qualify for these benefits.
© 2014 Lara, May & Associates, LLC

30. Reverse Mortgages A home is the largest asset for most seniors.
Helps those 62 and over convert equity in a home into income.
Advantages: It is an FHA governed program. Social Security benefits are not affected. No income is required to qualify, no monthly payments and money received is tax-free. Family may retain home.
Cautions: Eligibility for Medicaid may be affected. Closing costs and service fees can vary. Must pay back loan if in an assisted living or nursing home for over a year.
© 2014 Lara, May & Associates, LLC

31. Life Settlements and Viaticals
A life insurance policy owner sells a policy for a lump sum. This amount is usually less than the death benefit, but more than the cash surrender value.
Some Considerations:
Why am I doing this?
Do I still need life insurance protection?
Does my State have a list of providers?
Is this the best option for my situation?
© 2014 Lara, May & Associates, LLC

32. Steps for Putting Plans in Place
Gather all existing account documents for: checking, savings, brokerage, 401k, 403b, IRA, Roth IRA, annuities, real estate, automobiles, boats, other personal property.
Gather all policy documents for: life insurance, long-term care insurance, disability insurance, health insurance, to include Medicare plans and supplements.
Determine which legal documents need to be updated or created, such as beneficiary designations or old and out of State created legal documents.
Do it yourself with self-help books or on-line.
Find assistance from senior serving professionals such as: Elder Law Attorneys, Financial Advisors and Daily Money Managers.
© 2014 Lara, May & Associates, LLC

33. Thank You
Questions?
Feel free to contact me to discuss these options further.
Rick Gow, CSA
Certified Senior Advisor
Wealth Management Advisor
Lara, May & Associates, LLC
Phone:
© 2014 Lara, May & Associates, LLC