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WSJ Advice Demonstrates Lack of Insight

November 11, 2012 by Honey Leave a Comment

In the December 4, 2012 issue of the WSJ entitled “Time for Elder Care?”, Kristen Gerencher offered advice for children of elders needing long-term care (LTC), but included only one questionable strategy about how to prevent LTC from bankrupting Mom and Dad (and possibly reduce the kids’ inheritance to $0.00!).

Obviously timed for those family get-togethers during the holidays, the story advises adult sons & daughters to take a good look to see if Mom & Dad are slipping, either mentally or physically, and may need some LTC assistance. If so, Gerencher lists professionals who can help find the right level of assistance.

Grencher suggests that the adult children look into options, ranging from voluntary services such as nutritional programs to more expensive (but unmentioned) alternatives such as moving to an assisted living facility or nursing home.

The reporter notes – correctly – that “Medicare doesn’t cover most LTC costs” and adds that “Medicaid covers them under certain conditions.” But she fails to add that the “conditions” are typically after Mom and Dad have spent their worldly assets (the kids’ inheritance) paying for long-term care and are impoverished. She does add, however, that the kids can consult an elder law attorney to make sure that their parents’ assets are properly sheltered, but then helpfully notes that any clever actions like cash gifts or transfers of assets to junior MUST be made at least five years before the parents apply for Medicaid. Ah, hah, the first reference to planning to avoid financial ruin!!

Sadly for her readers, Gerencher does not even mention long-term care insurance LTCi), which requires frank discussion and careful planning between parents and adult children! With reasonably priced LTCi, Mom & Dad will have the funds to retain their dignity and options to defray the cost of a wide range of LTC, based on their needs. Furthermore, the whole family will be able to gather during the holidays and at other times with peace of mind and a definite plan of action if the kids notice a need for care, which research has shown will happen to about 70% of elders.

Sounds like a plan to me!

Americans Continue to Save Little for Retirement

November 8, 2012 by Honey Leave a Comment

Matthew Drinkwater of the Life Insurance and Market Research Association(LIMRA) recently reported that “two-thirds of middle-income ($40,000-$99,999) American workers are saving less than five percent of their annual income for retirement – with nearly a quarter saving nothing at all.” (Life & Health Advisor, Nov 2, 2012. East Walpole MA 02032: JonHope Publishing Company, Inc.)

He continued, “While current economic conditions are clearly challenging Americans’ ability to save for retirement, savings habits have not changed significantly over the past two decades. Over this period, employer-sponsored retirement plans have continued to transition from defined benefit plans managed by employers to defined contribution plans where workers are fully responsible for their retirement funds.”

These sobering research results clearly underline the necessity of planning for the cost of long-term care (LTC), which two-thirds of Americans over 65 will require in their retirement years. Since average annual costs for care exceed $60,000.00, elders without reasonably priced LTC insurance will face the unpleasant choice of burdening family members with their care or spending what little retirement funds and other savings they have accumulated and then hoping that Medicaid has enough funds to pay for their care in a nursing home.

The best hedge against this sad future is to learn about LTC insurance and take appropriate action TODAY!

The Government Doesn’t Pay For Long-Term Care!

September 17, 2012 by Honey Leave a Comment

I can’t say it any better than William Gaston in the fall edition of Democracy: A Journal of Ideas (818 18th Street, NW Suite 750 Washington, DC 20006): “Medicaid already constitutes the single largest share of state budgets—24 percent, a figure that rises relentlessly year by year. State spending on the program rose by 20 percent in the most recent reporting year and by even more—23 percent—in the previous year. By the end of fiscal year 2013, total Medicaid enrollment for low-income Americans and the dependent elderly will have risen by 12.5 percent in just three years.”

“Because state revenues are growing much more slowly than Medicaid outlays, other priorities are getting squeezed. In many states, for example, public higher education—key not only to future prosperity and competitiveness but also to opportunity and mobility—is reaching a breaking point.”

“I had no idea how long-term care was financed. I soon learned that Medicare paid for at most 100 days of rehabilitation (useless in my mother’s case) and that Medicaid required beneficiaries to “spend down” nearly all their assets. Private long-term care insurance policies were available, I learned, but my parents—along with most Americans who can afford them—had not purchased one.”

Please take heed and plan responsibly, ahead of time, for a possible long-term care need.

At End of Life, Medicare Beneficiaries Spend Thousands Out of Pocket

September 14, 2012 by Honey Leave a Comment

At end of life, Medicare beneficiaries spend thousands out of pocket is the title of an article by Sarah Kliff, published on September 10, 2012, in the Washington Post.

This article reports on a recent study performed by Amy Kelly, a professor at Mt. Sinai School of Medicine.

“As more Baby Boomers retire,” Kelley writes, “A new generation of widows or widowers could face a sharply diminished financial future as they confront their recently-depleted nest egg following the illness and death of a spouse.”

This is because Medicare is among the fastest growing line items in the federal budget, already paying out $500 billion a year in benefits. But Medicare does not pay for all health care expenses.

Dr. Kelly reports that a quarter of Medicare beneficiaries spend all of their wealth paying for medical and long-term care expenses during the last five years of their lives, with the average beneficiary spending $38,688.

My guess is that most of the $38,688 spending average comes from long-term care expenses, not from medical care or treatments. In her report, Dr. Kelly mentions that dementia patients have the highest out-of-pocket expenses. The American Association for Long-Term Care Insurance (AALTCI) concurs and has plenty of statistics proving that the longest lasting, most expensive long-term care insurance claims are from dementia patients. Medicare does a decent (but imperfect) job of paying for acute medical problems and treatments, but Medicare’s biggest shortcoming is in the area of payment for long-term care.

It is tragic to have a long decline after a long, healthy, active life. It is doubly tragic to decline and then see your money fly out the window paying for long-term care expenses. This is rarely what anybody plans to do. However, if you don’t converse about long-term car ahead of time, you are failing to plan. If you fail to plan, you plan to fail.

For Retirees, 70 May Not Be The New 65

September 10, 2012 by Honey Leave a Comment

A recent Wall Street Journal MarketWatch article by Elizabeth O’Brien (August 30, 2012) describes a new study by the Employee Benefit Research Institute (ERBI). The study finds that about a third of today’s households won’t be financially prepared to retire, even if they continue working until age 70.

ERBI’s findings are at odds with a prior study by the Center for Retiree Research at Boston College, which found that 86% of households would be able to retire if they worked until age 70.

According to ERBI’s Jack VanDerhei, the reason for the vast descrepency between both studies is “the Center for Retirement Research analysis didn’t factor in the prohibitively high costs of nursing home care, which typically isn’t fully covered by Medicare and is only covered by Medicaid in some cases. His own methodology included the probability of nursing home expenses and arrived at a less optimistic conclusion.”

Here’s an additional quote from the article: “Many workers don’t even have the luxury of delaying retirement. In EBRI’s 2012 Retirement Confidence Survey, 50% of current retirees reported they left the workforce earlier than planned—because of health concerns for themselves or their spouse, changes at their company or other reasons.”

The bottom line: take heed. Medicare does not pay for long-term care. Long-term care costs can be catastophically high. Medicaid-paid long-term care offers little choice and less dignity. Plan accordingly, now! Reasonably priced long-term care insurance is a sane, empowering, logical investment.

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WSJ Advice Demonstrates Lack of Insight

Americans Continue to Save Little for Retirement

The Government Doesn’t Pay For Long-Term Care!

At End of Life, Medicare Beneficiaries Spend Thousands Out of Pocket

For Retirees, 70 May Not Be The New 65

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