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Retirement Planning and
Long Term Care
Building wealth is not the only reason for good financial planning. Protecting the wealth you have already accumulated is also essential to the financial well-being of your family.
One example of how to “protect wealth” is to have an adequate life insurance program. It is morally incumbent upon a wage earner who has a financial responsibility to a family that in the event of his or her death, the family’s finances are protected. For families’ dependent upon two incomes, the need for life insurance may be nearly equal. Life insurance policies with waiver of premium benefit riders will continue to accumulate cash values during a disability.
LONG TERM CARE
An area of great concern to many families is the potential financial drain that a long-term stay of a loved one in a nursing home can have on family finances. The current cost can run from $50 per day to over $200 per day. The period of care may extend for years, as is sometimes the case with Alzheimer’s disease, arthritis or stroke.
The only answer, if you have not accumulated great wealth, is to purchase a long term care plan from a reputable insurance company. Of course, the insured must be healthy at the time of application for coverage and the present age plays an important part in determining the premium. From one company the non-guaranteed annual premium cost for $100 per day coverage ranges from $420 at age 55 to $3,680 at age 84. This illustrates the advantage of early purchase.
Buying this type of insurance is not easy! Two well-known insurance companies have both recently discontinued all of their health products. Another company has increased the premium rates on nursing home policies each year for the previous three years. On the other hand, some very well respected insurance companies recently improved the provisions of their long term care policies. The premium cost is just one aspect, but there are other considerations you should review before making a commitment to this kind of policy.
1. The maze of “limitations” in policy language
2. Policy “exclusions” of coverage
3. Premium rate increase restrictions
These “exclusions,” “conditions,” etc. can be critical to your decision. As in any other type of insurance product, make a thorough investigation before you buy. Your insurance advisor or personal financial planner should be able to explain the details.
While we are on the subject of “protecting wealth” the requirements of who can qualify for Medicaid suggests a cursory review. The answer is, you must be nearly broke - with the exception of the equity in your home.
The requirements of who can qualify for Medicaid suggest a review since everyone is concerned with protecting wealth. The following is admittedly over simplified, but in essence (to qualify for Medicaid), if you are single you must be impoverished. If a person is married, the spouse may keep the family residence, a car and $65,000 in other assets. This amount will vary slightly by state of residence. The $65,000 in assets could not, by any investment available, provide sufficient income to pay for long term care of the spouse if needed later.
Under the present Medicaid “Rules of Eligibility” for married couples, there is not a distinction between joint assets with right of survivorship and those assets that are held individually. Joint assets do, however, generally avoid probate, but that is not much of a savings if they are consumed in order to qualify for Medicaid.
Much has been written about the advantages of joint and survivorship accounts, but Medicaid includes these kinds of funds in determining eligibility! Would it not be a wise financial planning strategy for elderly couples to have his and her assets in respective individual names? By doing so, at least half of their mutually accumulated wealth would be preserved in the event a costly and prolonged illness was to strike. This is essentially the same plan of action wealthy couples employ when structuring marital trust wills. The one advantage a joint and survivorship account admittedly has over an individual registration is that these funds avoid probate. However, if the size of the estate warrants, this can be easily overcome by using a contingency trust.
RESTRICTIONS ON GIFTING
Waiting until an illness starts to gift assets away (such as to children or grandchildren) may not be practical, since Medicaid rules will count everything a person owns — plus that which was previously owned within thirty months of application for benefits.
Therefore, if there are not sufficient assets or income, and if long term care insurance is not available, it may be appropriate to consider the transfer of assets to other family members. The government has recently added severe penalties for any one assisting a person in hiding property or non-disclosure of any transfers that have been made for the purpose of qualifying for various types of aid.
The above is merely a brief overview. Your personal circumstances may dictate a completely different plan of action. Be sure to consult your attorney and personal financial advisor before you change or even modify your financial affairs. Below is more information on why this is the one thing for retirement, you want to take care of BEFORE YOU RETIRE!
Asset Protection - Although as assortment of speakers refers to array of “bulletproof” strategies, to protect valuable assets, the truth is no such program exists.
The best method for protecting assets may lie in a solid wealth management program with a reputable financial planning group.
Long Term Care Myths
The 9 Myths that may be keeping some from planning for long-term care, and ways your loved ones can prepare for the future.
Long Term Care Needs
Long-term care involves a variety of services designed to meet a person's health or personal care needs during a short or long period of time.
Long Term Care Policy
For a retiree, Long Term Care Insurance is the equivalent to disability insurance for someone who is still working.
Long Term Care Planning Ahead
The cost of long-term care has many families concerned about their financial future. Families often find themselves having to spend all of their life savings to pay for extended care for a loved one; federal and state guidelines even allow the state to take homes to recover Medicaid expenditures.
Medicaid rules and regulations have become so complex it’s important to seek advice from a well-qualified firm with the knowledge, experience, and resources to guide you through the process.
The rising cost of health care has become a critical concern in our country. The ability to provide quality service at cost effective prices is a dilemma that has faced many in the government and health care industry alike.
Selecting a Nursing Home
The decision to place an elderly relative in a nursing home is always difficult for a family.
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The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. Some of this material was developed and produced by Advisor Launchpad to provide information on a topic that may be of interest. Advisor Launchpad is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.
Copyright 2017 Feliciano Financial Group
Securities and investment advisory services offered through Lion Street Financial, LLC., member FINRA/SIPC. Fixed and traditional insurance offered through Feliciano Financial Group (FFG). Medicaid planning and consulting offered through Geriatric Care Solutions (GCS). FFG and GCS are not affiliated with Lion Street Financial, LLC.
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DOL ERISA: Effective June 9, 2017, all individuals who provide advice to retirement plans, including Individual Retirement Accounts (IRAs), must abide by the fiduciary standard. What does the fiduciary standard mean? This means that your advisor must put your interests first before their own or that of the firm, make prudent recommendations, charge reasonable compensation and make no misrepresentations to you regarding recommended investments. The recommendations made by your advisor must be based upon your specific investment needs and objectives. The fiduciary standard is applicable to any recommendations that your advisor makes to you, the client, for your retirement account. Please note the firm does have policies and procedures in place to monitor this level of fiduciary responsibility for our clients.
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