WHY CONSIDER A PLAN?
- Most people believe they will live a long life.
- Most people believe it’s possible they could become frail and need care if they do live a long life.
- Most people understand that needing care could have serious consequences to their family and retirement portfolio.
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- WHAT ARE THE CONSEQUENCES OF A FAILURE TO PLAN?
- Failure to develop a plan for care likely will create consequences:
- To the emotional and physical well-being of your caregivers.
- To your retirement portfolio’s income stream which was never intended to pay for your long-term care AND continue to support your family’s lifestyle.
- Who should your plan protect? Who will be most impacted by your need for care over a period of years?
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- Your family, whether spouse, partner, children or parents?
- Your friends & associates?
- Your church or charitable organizations that depend upon your financial support?
- The nature of long-term care demands your family’s attention because a cognitive impairment or inability to perform the basic activities of daily living is all consuming. Often care is not shared equally by family members for three major reasons:
- Distance from the one needing care.
- Prior work commitments.
- Their own spousal or parental responsibilities.
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- THE GOALS OF A PLAN
- To maintain your independence in the community for as long as possible without risking the emotional and physical well-being of those who will provide your care.
- To preserve your retirement plan so it can execute for the purposes you intended:
- Supporting your lifestyle and keeping continuing commitments to your family and community.
- To make sure your surviving spouse never has to turn to the children for care or financial support.
- Leaving a legacy to those who deserve and/or need it.
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- FUNDING OPTIONS FOR YOUR LONG-TERM CARE PLAN - Where is the income going to come from to pay for care?
- Self-Insure:
- Considerations
- Estimate your retirement income.
- Subtract your estimated lifestyle expenses .
- How much is left?
- Quick Calculator Chart for potential pre-tax retirement income created from a pool of available liquid assets earning a 5% rate of return.
- Challenges:
- Your retirement portfolio is going to pay for care.
- Your portfolio is allocated to generate income to support lifestyle.
- The reallocation of income will likely create serious consequences to your financial plans.
- Will the income generated from your portfolio combined with social security and any pensions support you and your family’s lifestyle, which includes your ability to keep financial commitments?
- Should you need care, will your income stream be sufficient to support both your lifestyle and pay for your care at the same time?
- Markets go up - markets go down. No one knows when they may need care. If care is needed during a market downturn, the family may have to liquidate assets and turn a paper loss into an actual loss.
- Inability to take advantage of the Colorado Long-Term Partnership Plan.
- Long-Term Care Insurance (LTCi).
- Considerations:
- Liquidity insurance.
- Allows your investment portfolio to remain available for your surviving spouse, children, grandchildren and charitable gifts.
- Allows your portfolio to recover from a down cycle.
- Allows your investment portfolio to remain intact.
- Protects your tax plan.
- It doesn’t protect you, it protects your family… it provides income which can be used to pay for the types of care your family will find the most time-consuming, stressful, and perhaps, embarrassing.
- Allows your spouse, children, siblings, or friends to maintain relationship with you supervising your care, not providing care.
- It is an essential tool which protects both your family and retirement portfolio.
- Challenges:
- Are you young enough to qualify for a policy?
- Are you healthy enough to qualify for a policy?
- Is there a policy design available to meet your needs?
- Is the premium affordable?
- Does the policy qualify as a Colorado Partnership Long-Term Care Plan?
- What is the Cost Of Waiting?
- Government Programs-Restrictions and requirements.
- Medicare
- Strict qualifications for care.
- High deductibles.
- Brief benefit periods.
- Medicaid
- Asset and income spend-down requirements.
- Asset and income restrictions for non-custodial spouse.
- 5 year look back-period.
- Pre-nuptial agreements do not protect assets.
- VA Benefits
- Limited benefits for Veterans in general.
- Disability percentage requirements.
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- WAYS TO PURCHASE LONG-TERM CARE INSURANCE
- Individual Plans
- Privately owned and paid.
- Purchased through an Employer-Sponsored plan
- Purchased as a group benefit
- Spousal or Partner Plans
- Privately owned and paid.
- Purchased through an Employer-Sponsored plan
- Purchased as a group benefit
- Family Plans
- Privately owned and paid.
- Purchased through an Employer-Sponsored plan
- Employer-sponsored Multi-Life Plans.
- Privately owned and paid.
- Privately owned and employer-paid.
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RESOURCES
Long-Term Care Myth vs. Reality
“I have enough assets to pay for my long-term care”.
- Assets don’t pay for care, the income from the assets pay for care.
“Long-term care insurance protects my assets”.
- Yes, and more importantly it provides an income stream to maintain your care and your family’s lifestyle.
“Long-term care insurance protects me”.
- No, it protects your family!
“If I need long-term care, it won’t matter, my lifestyle is over. I won’t be able to golf or travel, so I can use the money saved to pay for care”.
- It stopped being your lifestyle the day you got married and had children! They still have a lifestyle and it will have to be maintained. The things you like to do are likely the same things your spouse and children like to do.
“Medicare or my health insurance will pay if I need long-term care”.
-The Balanced Budget Act of 1997 stopped all custodial care reimbursement to Medicare. Health insurance does not pay for any custodial care.
“I’ll use Medicaid, it’s free”.
- Medicaid is not free. To qualify, you will have to gift all your assets-many of which are in qualified funds and low-cost based assets. Doing so will create a large tax liability. In addition, it must be done five years before applying for Medicaid.
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LONG-TERM CARE RESOURCES
Social Security Administration
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Medicare
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U.S. Department of Health & Human Services
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National Hospice & Palliative Care Association
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El Paso Alzheimer’s Association
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National Institute on Aging
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US Government Clearinghouse for Long-Term Care
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Veterans Information- Department of Veterans Affairs
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800-827-1000
Pikes Peak Area Council of Governments, Area Agency on Aging – Pikes Peak Region
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14 S. Chestnut, Colorado Springs, CO 80905
719-471-2096
Out of Colorado Springs area call (888)696-7213
The Area Agency on Aging publishes the ‘Yellow Book’, a comprehensive accumulation of resources for El Paso, Park and Teller Counties Seniors and those who care for Seniors.
Pick up a ‘Yellow Book’ at the Area Agency on Aging office, local libraries, and other senior resource centers.
471-2096
The Eldercare Locator
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A public service of the U.S. Administration on Aging. The Eldercare Locator is your first step for finding local agencies that can help older persons and their families access services like transportation, meals, home-care, and caregiver support services. Call 1-800-677-1116, a toll-free information line which will help you find Eldercare Resources in your local community.
National Family Caregivers Association
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800-896-3650
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