Long-Term Care with Alecia Barnette

Show Notes In this episode of More Living with Jim Brogan, host Jim Brogan welcomes Alicia Barnett, Senior Vice President of the Care Planning Department at Financial Independence Group, to discuss long-term care planning. With nearly 30 years of experience, Alicia explains what long-term care involves, common misconceptions, and its emotional impact on families. The conversation covers care costs, Medicare and Medicaid limitations, and planning options including asset-based policies. Both emphasize that proactive planning protects not only finances but also family relationships, with Alicia noting that long-term care can tear families apart rather than bring them together. utomatically Transcribed With Podsqueeze Jim Brogan 00:00:02 You're tuned into more Living with Jim Brogan, broadcast live from the Brogan Financial studios at Newstalk 987, where old fashioned values, expert knowledge and genuine understanding come together to give you the retirement straight talk you deserve. Jim's a former National Advisor of the year recipient and a financial educator, and he's here today to talk about how you can live out the best years of your life. Jim and the Brogan financial team have been helping retirees and retirees across the southeast for over 20 years in their pursuit of financial independence. You can reach them during the week at 865862 6800. So sit back, relax and get ready to learn because More living with Jim Brogan starts now. Speaker 2 00:00:45 Hello East Tennessee, welcome to More Living with Jim Brogan, where it's all about living the best years of your life your way as you tune in to Newstalk 987. And today I'm going to talk about something that many families know they should plan for, but often we put it off until we forced. We're forced to deal with it, and that is having a true need for long term care. Speaker 2 00:01:10 What is long term care? What? What qualifies as it? How much can it cost? Who pays for it? And most importantly, how can you prepare now rather than having to make difficult decisions during a crisis today? Joining me is a long time friend of mine, Alicia Barnett. Alicia is senior vice president and care planning department for Financial Independence Group, a national company over in Charlotte, North Carolina. she's actually been into our office to speak with our clients, for client events. And she brings valuable experience and insight into long term care and the options available to individuals and families. Really one of the best I've ever heard talking about the needs and how to how to plan for those needs. Alicia. Good morning. Welcome to More Living. It's great to have you with us again. Alicia Barnett 00:02:02 Good morning Jim. Happy to be here. Speaker 2 00:02:05 Hope everything's going well over in Charlotte. Are you in Charlotte right now? Alicia Barnett 00:02:10 Sure am, yes, sir. Speaker 2 00:02:11 Okay, great. Well, before we dive in, tell our listeners a little about yourself and what led you to kind of focus on and the long term care space? Alicia Barnett 00:02:21 Absolutely, Jim, long term care is a passion of mine. Alicia Barnett 00:02:24 I've been in the industry for 29 years. my dad was in the health insurance business, and I always said I would never follow in his footsteps. But here I am, 29 years later. I have seen, family members, my own personal family members go through unexpected care needs. And it really drove me to want to try to help other people, because most people aren't prepared for the unexpected health care needs and the unexpected long term care event. And it's really been my passion to go out and help clients and financial professionals really figure out how to mitigate the risk when it comes to long term care planning. Speaker 2 00:03:04 You know, it's the landscape to me has changed a lot over the last 25 years, I know. And the reason I'm saying 25 years is that was when my parents were hitting 70. And back then, you know, a lot of people just wanted to avoid it, you know? My father was the same way it was. Well, Jim, I'm not I'm not going to need that. Speaker 2 00:03:26 I think that we it's gotten to the point where we all have been impacted by somebody we know and love, that has been impacted by the need for long term care. So do you deal with that as much as more anymore? As much anymore? Or is it more, you know, how do we everybody understands it's a real risk. And how do we plan for this? Speaker 4 00:03:47 I think a lot of people still think it won't happen to them, even though, certainly they've had experiences. And I think we're hearing more and more about long term care events within our own personal families, especially being in the sandwich generations. As an example, right now, my mom's 82, but I have 19 year old twin boys, so I'm seeing it firsthand with my mother. when you get old enough, you can sometimes become frail and need assistance. And I, you know, I'm in my prime working years. I'm sending my kids off to college and trying to, you know, manage both of those activities. Speaker 4 00:04:24 And I think we're seeing that all across the country. and, of course, 70% of us are going to need some type of care, and 1 in 5 will need care for five or more years. So it's front and center right now. I truly believe people are seeing it, and more and more are trying to plan against that risk and make sure their families don't go through what I've experienced in my lifetime. Speaker 2 00:04:46 Well, in our experience that as well, with both my parents, when my kids were right around, when my oldest child, was in middle school and then when my youngest child got into writers around high school and into college, each of them independently needed long term care. the 1 in 5 that need care for five or more years. I'm going to come back around to that because I think that's really worth diving into. But before we do, Alicia, when people hear the word or the term long term care, what exactly does that mean? Speaker 4 00:05:21 Well, usually the first thing people think of as nursing home, but that's not it at all. Speaker 4 00:05:25 It's it's about really needing assistance one day with your activities, a daily living. And that would be things like bathing and dressing and just getting around, transferring and moving one from one place to the other. Eating constant consonants and toileting. So it's really about having someone come in and help us when those things start to disappear, when we actually need care. Speaker 2 00:05:50 We cannot do those functions all on our own. Speaker 4 00:05:54 Oh absolutely not. Speaker 2 00:05:55 So what are some of the most common misconceptions or myth that you see when it comes to long term care? Speaker 4 00:06:02 I think the really the biggest myth or misconception is my family will take care of me. And I've always said this when I talk about long term care, as long term care doesn't bring families together at tears, families apart. And I say this jokingly when I talk about the myth of or misconception of my family will take care of me well. Do they? Do they know that? And again, it's kind of a joke, but. But it's not. Most people think that their family will step in. Speaker 4 00:06:30 And we love our parents, right? So we probably will. But typically it's the oldest child and closest proximity. if you're married, your spouse may take care of you, or maybe they feel obligated to, or their financial situation will dictate it. And you know that's better than anyone. But taking care of the chronically ill can make you chronically ill. So my mother took care of my stepdad for eight months a few years ago, and it nearly put her in the hospital. And of course, now she's not married. My my dad passed away. And if she needs assistance, it's going to be me. I live an hour away. I have an older brother who's ten minutes away, a sister who lives in the mountains, and she's about 4.5 hours away, and a little brother who's around five hours. Well, she got sick. And of course, I went down every day for two weeks to make sure my mom was okay, to make sure, you know, she had food and I could put my arms around her and give her a big hug. Speaker 4 00:07:27 Just, you know, be there for her during that illness. you know, ask me, Jim, how many times my older brother, who lived ten minutes away, went to go help mom? Zero times, you know, and I and I, you know, if he was here, he might throw a water bottle at me. But the truth is, typically one person takes on more more of the, the, the assistance than other. And it causes, it causes strife in the family. Right. You know, again, it doesn't bring families together. It tears families apart. what's what's it going to look like when we're sitting at the dinner table? When I'm actually taking care of mom? There might be some resentment there. It's really all about the family first and and the finances second, if that makes sense. Speaker 2 00:08:09 Well, well. And you just said you're. You know what you said about your brother. You said he'd throw a bottle at you. Well, water bottle. I know you're tongue in cheek, but but it it can tear families apart. Speaker 2 00:08:20 what typically causes someone to need. Like, does this usually happen from a major medical event, or does it usually happen gradually? Speaker 4 00:08:30 I you know, that's a loaded question. I think most of us know that if we live long enough, we might become frail and need care. So yes, you have things like strokes and, you know, medical events that may cause you to need assistance. But really, what we're seeing is we're we're living longer. We're living longer, healthier lives. And what that means is, if we live long enough, Eventually our bodies are going to give out. So it's more of a gradual thing, in my opinion, and in the most part. And certainly we're seeing a lot more cognitive issues. And, you know, in fact, 12, 12.7 million Americans are living with Alzheimer's. So it's all about living long and really becoming frail and needing that assistance. So I would say it's more of a gradual thing, even though sometimes a medical event can cause you to need immediate care. Speaker 2 00:09:21 I agree with that. I mean, that's what I've seen. I saw that with my own parents. What what are the different levels of care? Alicia, you mentioned a lot of people when they hear long term care, they think nursing home. But it's so much more than that. So talk about the different levels of care. Speaker 4 00:09:35 Absolutely. Again, you're right. People immediately think nursing home. But if you know, if it were me, I would want to receive care in my home. That's where 95% of people start receiving care. And then they graduate into things like adult daycare, where, you know, if you're you're a working, caregiver and you need to take mom or dad somewhere, it's almost like daycare for adults. you've got assisted living. You've got, again, nursing home, you've got memory care units. There's a lot of different levels of care, and I truly believe in the future that may change. We don't know what care will look like. But I can tell you, it's not just nursing home, right? We don't. Speaker 4 00:10:14 None of us want to go into a nursing home. We don't volunteer for that. I think more or less people would rather receive care in the home. And I think that's an important thing to be able to know that you can actually do that, and you can be in the comfort of your home and receive care. Speaker 2 00:10:29 Alicia, how do how do family know? I think, you know, I think families, for the most part, have a good understanding of when somebody needs additional care. sometimes I think people are in denial. I think the bigger issue is the the the person themselves doesn't think they need that. Can you talk a little bit about that challenge? Speaker 4 00:10:50 Oh, absolutely. And sometimes we don't see it until it's almost, you know, too late. And they're beyond, being able to take care of themselves. But most people, you know, when they start needing more than two of those activities of daily living, that's really when someone needs to come in and help. but, you know, people are in denial. Speaker 4 00:11:10 They don't. And they don't want to have to to ask the family to help them because they know it's a burden on them. And the more that the more assistance you need with those activities of daily living, the more likely you are to have to bring someone in to help. And I think sometimes we see that when we go over to visit mom or dad, and maybe they look like they haven't had a shower in a few days, or they're starting to lose a little bit of weight and they're becoming frail. And really, they they just don't want to ask for that assistance. And it's financially a burden as well. So people wait and put that off until the last minute. And if you have a plan in place, certainly you can bring assistance in a lot faster and and and make sure I think it will help people live that longer, healthier life and again, not put that burden on your family. Speaker 2 00:11:57 Absolutely. you know, they're obviously financial considerations here, but anyone who's watched a parent or spouse need care knows that money is really only part of the equation. Speaker 2 00:12:09 And at least you you said to me years ago, and I'll never forget this. You said, you know, it's not just your life that changes forever when you need long term care, it's who else is, unfortunately, someone else's life. If you don't have the right kind of plan, someone else's life is going to change forever. A spouse, a child, whomever that may be. And so when we come back from our break, I want to talk about the impact these decisions can have on the entire family. So stay with us. This is your living with Jim Brogan here on Newstalk 987. Jim Brogan 00:12:44 Welcome back to Newstalk 98, Seven's Brogan Financial Studios, where Jim Brogan is coming to you live with important news and advice to help you achieve your dream retirement. Get ready to learn and live. Here's your host, Jim Brogan. Speaker 2 00:12:59 Welcome back. This is more living here on Newstalk 987 Wookey. I'm Jim Brogan and today we're talking about the impact of health care planning in retirement, especially the potential need for long term care. Speaker 2 00:13:11 And we've got today a longtime friend of mine, Alicia Barnett. She is from Charlotte. She is senior vice president of the care planning department for Financial Independence Group, which is a national insurance marketing organization. Do they do great work all over the country? She's also come in and done client events for our for our clients. And she's just a just as good of an expert as I've ever heard on long term care. And let's before we talk about the impact on families. Alicia, talk about the numbers here. If for 65 year old married couple, how likely is it that someone will need long term care? Speaker 4 00:13:51 Well, Jim, about 70% of people over the age of 65 are going to require some type of care. And as I mentioned before, 1 in 5 will need care for five or more years. Here's a here's a problem though. Everybody thinks they're in that 30%, right. Yeah. So a lot of us are going to need it. And and people are just kind of, in denial, as I like to call it. Speaker 2 00:14:15 Well, and if it's a 50% that one of us is going to need care. That's about a 50 almost a 50% likelihood. We're both going to need care if we're married. Speaker 4 00:14:25 That's right. Yeah, you got it. If we live long enough, we're the chances are we can become frail and we're going to need some type of assistance. Speaker 2 00:14:34 So what do you see families struggle with the most when a loved one needs care, needs assistance. Speaker 4 00:14:43 I think people really struggle with how to fund it, how to pay for that care and how to not involve their family. Because most of us. We love our our parents. So we're going to stop what we're doing and help. And spouses typically, again, will will feel obligated to take care of their their loved one. And if they can't do it, then certainly the family is going to step in. But I have seen so many married couples where one takes care of the other and the caregiver actually predeceased his. Speaker 2 00:15:18 Right. Speaker 4 00:15:19 Predeceased is the spouse. Speaker 4 00:15:21 So it makes it tough. And then the rest of the family is going to step in and help. And that's what really is truly there. Who are impacted by the care need. Speaker 2 00:15:31 How often does a spouse or adult child end up becoming the primary caregiver? And I guess it's primarily I mean, a lot of it is, do you have a plan in place ahead of time? Speaker 4 00:15:41 That's correct. Most of the time, if you don't have a plan in place, more than likely your family is going to step in and help because it is expensive. and people do want to stay in the home so people will stop what they're doing, especially if it's, you know, typically what happens when someone needs care. It's the oldest daughter and closest proximity. and when you need care, you know, your life doesn't end someone else's, does. So often, you know, your oldest daughter will quit her job, move in with you, or maybe you'll move in with her because any decent child would feel obligated to do so. Speaker 4 00:16:17 So it, really, it's the majority of what people do because Medicare and Medicaid, that's another misconception. They're not going to step in and help you. That's really there are a lot of stipulations that go along with that. Speaker 2 00:16:30 Well, and we're going to get to in the last half of the show, we're going to talk about funding this, and we're going to talk about those misconceptions about Medicare and Medicaid as well. what are some of the emotional and practical challenges that come with being a primary caregiver? Speaker 4 00:16:46 Well, we all know it's tough. when you're taking care of whether it's a child or a family, there's a lot of emotional, you know, problems or feelings that come along with that. And if you're taking care of mom or dad, you're watching them deteriorate in front of your eyes, and you have to do things that you never thought you would do. You know, for example, when you have a child, you have to change their diapers. Well, it's kind of a reverse role. Speaker 4 00:17:12 And now maybe you're having to change your adult parent's diaper. It's emotionally traumatizing to watch your loved one go through, not being able to provide their own assistance and having to step in and do that for them. And practically, you know, it's it's tough to be able to, especially if you're in your working years and you've got kids yourself that you're taking care of to really stop what you're doing and go take care of mom or dad, you're going to do it. But what kind of disruption will that cause when Mom or dad actually needs care? And I know as a parent I don't want my child to ever go through that. I want them to be there, to love on me and supervise the care rather than provide the care and hopefully not stop what they're doing. Because depending on what stage of life they're in, they may have kids of their own. So it can really change the dynamics when mom or dad needs care. Speaker 2 00:18:04 What what conversations Alicia should parents be having with their adult children before care is needed, do you think? Speaker 4 00:18:11 I think the most important thing, and I talk about this every time I give a live presentation, is put a written plan of care in place, because it is so difficult to react when something happens and have to really find a place to to put mom or dad or find a caregiver, like really knowing who is going to provide that care. Speaker 4 00:18:33 If you don't want your family to take care of you, you need to tell your family that if you want to go to ABC facility because it's the nicest one in town, they need to know that. They also need to know how you're going to pay for that. Whether you have a plan or not. Which asset are you going to liquidate to pay for that care? It's important to really have that written plan of care. Give that to your family so that they're not reactively doing it. It's almost like your when your house is on fire trying to buy, you know, homeowner's insurance. You don't you can't plan it in the rears. Right? You need to plan ahead and really tell your family what that care is going to look like when you need it otherwise. And I say this jokingly, you know, your kids might take you out back and hose off again. Just kidding. But you know, you really want to know you. You really want to be able to to express your needs. Speaker 4 00:19:25 It's almost like having a long term care living will to be able to share with your family. Speaker 2 00:19:31 That's a great word. You know, we plan for these things before they come up. It's like I talk about on the financial planning, especially on the investment world. Alicia, you know, we know markets are volatile. We know markets have downturns. We have bear markets. We have market corrections. That's one thing I feel certain about with the stock market is it's it's volatile and it's unpredictable. And we plan for the impact of that volatility and and those downturns before they happen. Not while they're happening. what if there's one thing you wish every family understood about long term care before they need it, I mean, you've covered some things already, but if there was one thing, what would it be? Speaker 4 00:20:15 I think the most important thing are the unintended consequences of what a long term care event can do to your family. Again, and I might say this 3 or 4 more times, because I feel like it's so important as long term care doesn't bring families together. Speaker 4 00:20:29 It tears families apart. Long term care solutions are really about keeping the family together. It's about love, you know, first is family and then finances. But I think that's the most important thing, is knowing the concept of what will happen if you actually need care. So I think that's the most important takeaway today, is really knowing what that's going to do to your family and how you can how you can take that risk off the table. Speaker 2 00:20:53 Now, obviously, you know, long term care isn't simply a health care issue. It can quickly become a family issue, which we've talked about and also a financial issue. Alicia, give us an idea of what long term care can cost today, whether it's in-home care, assisted living or a nursing facility. Speaker 4 00:21:13 Gosh, you know, people don't understand really how expensive it is. And that's another common misconception. So I'm glad we're talking about this. People think they can just use their savings. Well, it's very expensive. In fact, if you're listening today I would encourage you to go to Long-Term care.gov. Speaker 4 00:21:32 It's going to talk a little bit about some of the care services that are available. And then there's a cost of care link. And you can research this on your own. you can it'll take you back if you click on the cost of care to a Care Scout Cost of Care survey, which brings up local cost, and you can type in any city or zip code in the country, but nationally right now. Believe it or not, it's running. And these are averages. So obviously we don't want to stay in an average nursing home or home health care services. We want above average, but it's running around $11,000 a month for a private nursing home room right now for assisted living, it's around $6,200 a month. Home health care is around $6,600. And that's just for for home health care. That's around three days on average. home health care services coming in to provide that care. If you want round the clock care right now, Jim, it's costing between 12,000 and $15,000 a month. That's today's dollars. Speaker 4 00:22:33 What is it going to look like in 15, 20, 30 years when you need care? I think that's the important thing. Again, most people don't understand. It's expensive. And if you don't have a plan, your money is your plan. Speaker 2 00:22:47 Well, and the inflation, the cost of living for long term care is increasing at about double the rate of inflation. Right. In the numbers that I've seen it. Speaker 4 00:22:58 It's it's I believe it's on average about 5.2% maybe a little higher for home care. So it is definitely increasing. And I see I think we're going to see those numbers rise because I think we'll have a shortage of caregivers because everyone wants to stay in the home. Right. And if we don't have enough caregivers, that's going to drive those prices up. So we're going to just see that continuously go up. In fact, I looked out you can with that cost of care survey, you can look out 20 years. And this is based off of that in 3%. So this is this is going to be on the low side. Speaker 4 00:23:31 I mean in 20 years we're talking $20,000 a month for nursing home and $12,000 a month for home health care. So that's I think in my opinion that's that's a shortfall. I think we're going to see that way higher. Speaker 2 00:23:45 Yeah, it's going to be 5 to 6% increases. I mean you said 5.2% now. I mean that's almost double the rate of inflation. that's right. And and I know if I remember correctly and you can correct me if I'm wrong, but back when we had, you know, the runaway inflation and we had inflation at over 8%, I believe long term care costs went up 15, 16%. Speaker 4 00:24:06 It sure did. You're exactly right. And I you know again shortage of caregivers is going to drive that number higher. Speaker 2 00:24:12 Absolutely. We're visiting with Alicia Barnett. she is senior vice president in care planning for financial Independence Group out of Charlotte. And we're talking about the impact of planning for health care catastrophe. Later on in life. When we come back, we're going to dive into how do we actually plan for this? Can we self-fund it? do you need a plan that covers 11,000 a month? Probably not. Speaker 2 00:24:41 So I really want to dive into more of how do you actually plan for this? We're also going to have our dollars and cents segment, where I'm going to step up a little bit to the to the higher view of health care planning in general. Health care planning is not an insurer. It is an insurance decision. But it's not just an insurance and a funding decision. It's also an asset manager and a tax planning decision. So stay with us. This is more living here on Newstalk 987 W Cokie. Jim Brogan 00:25:12 Welcome back to Newstalk 98. Seven's Brogan Financial Studios or Jim Brogan is coming to you live with important news and advice to help you achieve your dream retirement. Get ready to learn and live. Here's your host, Jim Brogan. Speaker 2 00:25:27 Welcome back and thank you for tuning in to More Living with Jim Brogan, where it's all about living the best years of your life your way. Today we're talking about the impact of health care catastrophe. One of the best experts I've ever heard in the entire country. Alicia Barnett is our expert. Speaker 2 00:25:42 That is online with us from Charlotte, North Carolina. She's with Financial Independence Group. She's a senior vice president, and she really helps advisors and people all over the country plan for these risks. Before we get back to Alicia, it is time for dollars and cents. Speaker 5 00:26:01 Want to be sure you are getting the most out of your retirement for all the years of your retirement? That's the primary goal of Moore living with Jim Brogan and our dollars and Cents segment, where we provide you with an important financial tip that will help positively impact the quality of your life in retirement. And now. Here's Jim with this week's dollars and cents tip. Speaker 2 00:26:25 How do we fund long term? How do we fund health care in general in retirement? You know, you've probably seen numbers that the average 65 year old, how much will they spend on their health care for the rest of their life? It's over $300,000 now, pushing $350,000. Now, that does not include long term care. So long term care is on top of that. Speaker 2 00:26:51 But how do you fund this? You know, you don't you don't get to on your health care in general. You don't get to to retirement. And they ask you to write a check for $330,000 to fund your health care, and then you have long term care on top of that. It's an asset management and a tax planning decision. So, you know, we need to understand the resources we we use for these things. And in what order do we use them. You know, you you we all have cash and short term cash reserves. You've got taxable investment accounts. And if you sell investments there are investment implications of selling those. There's also tax implications. And then are you taxed as ordinary income or long term capital gains. Because as you know from listening to this program Long term capital gains rates are so much more advantageous than ordinary income. What if most of your money is in retirement accounts? You have to fund with IRA distributions and those distributions are fully taxable. If you have a long term care event and you need 60 or $70,000 a year to help fund your long term care, well, you gotta pay all the income taxes on that money first if it's coming out of an IRA or 401. Speaker 2 00:28:08 You know, do you have insurance? Long term care insurance. How do some of those plans work? Do you have home equity that you can tap? And what are the implications down the road if you tap. If you tap your home equity, if you eventually end up needing to qualify for Medicaid, what are the impacts to your estate? Do you have HSA funds? Because HSA funds can be tax free if they are used for qualified long term care expenses. So the order that we fund this is very it's enormously important. You know, pulling an extra 100,000 from an IRA to pay for care could create a huge taxable distribution, which could eventually then affect your Medicare premiums and change the tax picture for the surviving spouse. And when we retire, we don't you know, we don't have to write a check all at once. Medicare is and Medicare supplements are going to cover many of our basic health care needs. And then we need a plan for long term care. So it's really built into our income planning. Speaker 2 00:29:14 It can be built into our income planning prior to retirement, which we're going to talk about with Alicia here in a bit. But we can fund our use our income planning prior to retirement to fund this risk. So long term care isn't just an insurance decision, it's an asset management and a tax planning decision. Speaker 5 00:29:36 That's our dollars and cents segment for this week. You can find this week's dollars and Cents segment and others by visiting Brogan financial.com. Speaker 2 00:29:49 Do please check us out at Brogan financial.com. We've got a wealth of resources. If you click on the resources tab you can find out about our upcoming classes you can follow. You can listen to our radio show. You can follow our e-newsletter that we put out every other week. And then we do a lot of blogs and posts to help you make informed and prudent decisions that can positively impact the quality of your life. I do want to mention my first class of the fall is coming up this Tuesday night income Planning and retirement. It is a one night class, one two hour session, that is. Speaker 2 00:30:24 I'm going to talk as much as I can in two hours about all the major things you need to understand about income planning and retirement, which I believe is the most overlooked area in retirement planning. Today, how do you Social security election? How do you fund your income? We don't retire on on assets. We retire on income. What are the tax ramifications? There's just so many decisions to be made in those plans and that's through. We do this class through Pella City State Community College. It is Tuesday, August 25th at the Palace Happy State Hardin Valley Campus. To find out more information you can go to confidence with retirement.com. That's confidence with retirement com and you can find out more about the class. And you can click to register directly with Penn State. The course fee at Pella City is $39. I believe they offer a discount for the spouse, so hopefully if you're listening today, you can both attend. Today we're visiting with Alicia Barnett on More Living, and we're talking about the impact of health care catastrophe, specifically in long term care. Speaker 2 00:31:29 And, Alicia, one assumption. Let's talk about funding this one assumption. You've talked about the costs very, very high. 11,000 a month for nursing home. I believe you said close to 6000 a month for assisted living. Is that right? Speaker 4 00:31:44 Yes, sir. About 6200 a month. Speaker 2 00:31:47 One assumption we hear frequently is Medicare will take care of me. How much does Medicare actually cover when it comes to long term care? Speaker 4 00:31:56 That's a great question. And it's certainly one of the biggest misconceptions when it comes to long term care. So Medicare has a ton of stipulations that go along with it. You actually have to be hospitalized for three days. You have to be rehabilitating or getting better. And it typically covers up to 100 days of skilled care. So it's really short term care, not long term care. Speaker 2 00:32:21 Yeah. And you mentioned it has to be skilled care. And many people that are that need long term care. It's really more custodial care right. I mean, can you talk about the differences in skilled care versus custodial care? Speaker 4 00:32:32 Absolutely. Speaker 4 00:32:33 So this is skilled care is going to, you know, require primarily you to use a rehabilitation facility or an assisted living, something like that. Whereas custodial care is more about home care and helping you with those activities of daily living, it's again, it's more for that longevity need and not that shorter term care. And we certainly again, we want to receive that care in the home and Medicaid. Medicare is typically going to cover just skilled care in a home. Sometimes they'll come in and help you, but it's really designed for that short term need. Not that long term care need. Speaker 2 00:33:07 And Alicia, what about Medicaid? How is Medicaid different? What should families understand about qualifying for Medicaid? Speaker 4 00:33:15 Absolutely. So Medicaid is certainly a great program for those that need it. But again, there are a ton of stipulations that go along with both Medicare and Medicaid. Medicaid is means tested. You have to spend down your hard earned assets. And it's different state. By state, your income needs have to be very low. Speaker 4 00:33:35 So around $2,000 a month that's or $2,000. So that's not a, you know, a lot of assets and income to be able to really pay for your own care. And it's when the government steps in to pay for it. And it's typically going to only be in a facility. Most states don't pay for care in the home. And you literally have to, again, spend down those hard earned assets. There's lookback periods about giving your money away. So some people are under the assumption that you can just give your money to your kids, and then the government's going to come in and take care of you, and they're going to be the hero. Well, it's very difficult to qualify for Medicaid, and you have to give up your hard earned, hard earned assets and really, you lose control, and then you lose the ability to receive the care and a place that would be more comfortable, like your home and allow you to to really have the best care that you could receive. And if you're married, you could often, oftentimes leave your spouse impoverished. Speaker 4 00:34:31 So again, a great program that for those that need it. But it certainly you don't want to be destitute to be able to qualify. And and nobody wants to volunteer to go into a medicaid facility. Speaker 2 00:34:42 Yeah. And I'll just piggyback on, you know, people gifting assets away. there's a five year look back on that that would disqualify you. But then in addition to that, there are gift tax, ramifications. It doesn't necessarily mean you'd have to pay a tax, but you're supposed to file a return when you gift more than, certain limits of money to other people. You know, adding your child's name on your house as an example is considered a gift. And, you know, that's half the value of the house. You know, if it's you and your child and there are gift ramifications and you're supposed to file a return. And many people don't know that, it also could could expose you to creditors if your child got in a car accident and got sued. So, you know, I'm not a big fan of that. Speaker 2 00:35:27 I'm certainly not an attorney, but you got to be very, very careful with that. you know, when it comes to Medicaid planning, there are attorneys in here in the Knoxville area that do that. one of the problems with positioning assets to qualify for Medicaid real very quickly, more quickly, is, number one, you lose control of where you receive care, as Alicia said. and then the rules are changing. So you might spend literally over $10,000 on a medicaid planning type thing, and then in 3 or 4 years, it may not be good anymore because the laws keep changing, because let's let's face it, Medicaid in Tennessee is TennCare. TennCare is not rife with cash. So the rules keep changing the goalposts. Keep moving. I want to get to our last break and we really come back. talk about how to plan for care. Do you need insurance? Do you need insurance that would pay 11,000 a month in a nursing home? I mean, the answer's probably no for most people listening. Speaker 2 00:36:29 So let's really dive into how we can actually plan for this. This is more living with Jim Brogan here on Newstalk 987. Jim Brogan 00:36:38 Welcome back to Newstalk 98, Seven's Brogan Financial Studios, where Jim Brogan is coming to you live with important news and advice to help you achieve your dream retirement. Get ready to learn and live. Here's your host, Jim Brogan. Speaker 2 00:36:53 Welcome back. This is Moore living here on Newstalk 987 Wookey. We're with you every Saturday night at 10 a.m. and again from 3 to 4 p.m.. You can also stream our shows, at WLKY's website. You can also podcast all of our shows at Apple Podcast and Spotify. You can also stream our shows, on on my website. We'll have today show up. Probably Tuesday afternoon is usually when we get those up. I do have my first college class for those, you know, for through adult education and outreach at Pillar City State. If you're retired or getting close to retirement, this is a one night class. Income planning and retirement. It's on Tuesday, August 25th, 630 to 8:30 p.m. it's at Pella City State Hardin Valley. Speaker 2 00:37:42 To get more information, go to. Confidence with retirement. Today we're visiting with Alicia Barnett. We're talking about the impact of health care catastrophe. And Alicia. you know, some people may choose to self-fund their care, and that is a strategy that can work. It's understanding the costs associated with it. But what should someone consider before deciding? I have enough money? I'll just pay for it. Speaker 4 00:38:09 Well, I think that most people don't understand that. you can you can basically put an umbrella policy over your money. Self-funding is fine. But again, as I mentioned earlier, having a written plan of care is great, and knowing which asset you could liquidate first, is certainly a conversation you need to have with your family. But the government has allowed certain life insurance or annuity contracts to be accessed while alive. Tax free for expenses associated with needing care. And by using this option, you're just taking an asset or income, and you're repositioning that into a specific policy that's designed to provide a stream of money to pay for those long term care expenses. Speaker 4 00:38:50 And that'll help you avoid pulling out money directly out of other investments. And it's going to help cover some or all of extended care needs. So you're really it's a better way to sell fun. And people understand tax free and they understand pennies on the dollar leverage. And I think that's important when you're looking at self-funding. Because again, if you don't have a plan, your money is your plan solution. Long term care solutions are just a better way to self-fund. Speaker 2 00:39:18 I love your, you said an umbrella, and I think that's a great word because, you know, most people, at least most people that I work with. Alicia, I'm not as concerned financially about a two year or three year need. It's that five or more, five years or more need, which, as you said, is 1 in 5 people need care for more than five years. And I think, you know, typically if you're in a facility, if you're if you need care after four years, it's probably some sort of dimension in the care. Speaker 2 00:39:49 The average is what, closer to 7 or 8 years. Is that right? Speaker 4 00:39:53 It's 8.2 and I think that number is going up. Those are old numbers. I think it's more we're probably going to see about ten years on average in the next few. Speaker 2 00:40:02 My dad was institutionalized for 11.5 years with vascular dementia. So I certainly have felt that myself. and, you know, and that doesn't mean if you're listening, that doesn't mean for those listening that you need care to cover the entire stay. You have income, you have an income plan for your retirement and all those things. So you have some resources that can go to it. That's why I like the term umbrella. And you mentioned Alicia. You know, there are annuities, life insurance that can help plan for this, with IRS code. that means we have an asset that can then be used for long term care. Now, how is that different than actually having traditional long term care insurance? Speaker 4 00:40:45 So I like to use the analogy owning your contract versus renting it. Speaker 4 00:40:50 So most of you listeners probably have heard of traditional long term care. Again, I like to use renting versus owning traditional long term care insurances like renting. It's the cheapest way to buy the most amount of long term care coverage. However, those rates can go up. I've seen, you know, in the 29 years I've been in the business, I've seen them go up anywhere from 15% to over to 300%. So, you've got the, you know, the rate increases, then if you die and don't use it, there's no death benefit and there's no exit strategy. These other alternatives, which I like to call asset based long term care. They're a little unique because if you live in a care, you have that tax efficient leverage. But if you die and don't need long term care, there's a death benefit associated with that. And I think people love being able to say, well, hey, I put my money into this vehicle, but if I die and don't use it, somebody is going to get something. Speaker 4 00:41:45 And there's always an exit strategy with those. So again, you're owning your policy versus renting it. Listen I don't care which solution you have. The best solution is the one that's in place. But I think more people are going to gravitate towards these newer types of policies that are written on those life insurance or annuity policy contracts. Speaker 2 00:42:06 Yeah, the ownership is a big thing. you know, it's like owning a house versus a renting house. If I rent a house for ten years and then move, I don't own anything. but then also the the the inability to control how much the policy is going to cost in the future if you have one of these insurance based contracts with annuities or life insurance that Alisha is talking about. Many times you're guaranteed to never have that. You know your cost. If you have, life insurance is guaranteed to never go up. Now, that may depend on your plan. And I do want to mention, if you know, if you have an old policy that's traditional policy, you probably don't need to get rid of that. Speaker 2 00:42:43 You just need to incorporate that into your overall planning. And, you know, you probably need to manage the premium increases as those come along. Alicia, the long term care insurance has changed quite a bit over the years. When does somebody let's back up 30,000 foot view. When should somebody what age should somebody start really looking at a long term care plan, whether that's some mix of insurance and self-funding or whatever somebody's going to look at. Speaker 4 00:43:17 Liz and Jim, you've never been younger and healthier than you are today. So I would encourage people to to start looking earlier. You can get long term care coverage on any chassis. Typically from ages 30 to age 85. Obviously, the younger you are, you're going to be healthier and it's going to be less expensive. So you hear people out saying, oh, you should get it at age 60. Well, that's that's not entirely true in my opinion, because, even if you can't afford a full, you know, comprehensive plan, a Cadillac, you can at least put something in force and you're guaranteeing that insurance because we don't know what can happen. Speaker 4 00:43:54 Five, ten, 15 years, our health can change. So you're locking in those rates when you're younger, when it's less expensive, and you have coverage that's going to cover some of that cost. And then if you're younger and you buy a policy, you can layer on more in the future. But I would encourage you to start looking at it earlier rather than later, because as we age, we do begin having health issues, and that can cause the cost to go up. And it can limit the amount of coverage and the amount of solutions that are available out there. Speaker 2 00:44:24 Absolutely. And I'll just add one of the great things about some of these asset base plans is you can fund it by the time you're retired, and then once you're retired, you don't have to worry about funding. It is completely funded at that point. Alicia, thank you so much. Time for being with us today. if you have more questions about long term care and how to plan for this risk, it is one of the core benefits that we plan for because it should be a core part of your financial plan. Speaker 2 00:44:48 And we do that at Brogan Financial. Thanks for tuning in this week. You've been listening to More Living with Jim Brogan right here on Newstalk 987. Speaker 6 00:44:56 Watch the views expressed by Jim Brogan and his guests are not that of Cumulus Media. Any discussion of financial, legal and tax planning strategies is not intended to be individualized advice and is general in nature. Always consult with your advisor for advice specific to your needs. This program's content does not represent a recommendation of any particular security strategy or investment by Jim Brogan or Brogan Financial, Incorporated.