Tag: LTCI

  • Options for Paying for Long-Term Care

    In life, we always have options. And when it comes to covering the costs of long-term care, it is no different. In this article, I’ll share a few viable strategies you can use to help cover the future costs of care in our Aloha State. It is by no means all-encompassing and exhaustive, but meant to get you thinking on this critically important topic.

    As a financial advisor, I believe more and more American’s understand the need for long-term care insurance (LTCi). And the first line of defense to ensuring quality long-term care is available when you need it is having a LTCi policy. But when it comes to providing long-term care, we are facing serious hurdles and dilemmas. First is the availability of LTCi. Twenty years ago, there were over 100 carriers providing LTCi. In 2020, there are less than 10 quality LTCi carriers. The fact that big players are withdrawing from the LTCi market is opening eyes and shaking things up. At my Honolulu practice, I also routinely see the difficulty of qualifying for LTCi coverage. Carriers have really tightened eligibility standards and constricted their underwriting requirements, especially for women.

    Notwithstanding, individuals who want LTCi coverage certainly have options. And there are LTCi strategies your financial advisor can help you with, from spousal benefit sharing to eliminating “riders” such as inflation protection, which can help keep premiums within your budget. At the same time, one needs to remember the proverbial price of paradise truly is applicable to long-term care costs, as well. On the high end of the long-term (or extended-care) scale, the cost is steep. I have recently heard estimates as high as $1 million to simply enter a coveted long-term care facility on the east side of O‘ahu. Some may say that is exorbitant and overpriced, but it is reality. On the least expensive side, the lowest hourly rate for care is about $26 per hour.

    When it comes to having LTCi options, the onus and responsibility for seeking out alternatives lies squarely on you. I encourage you to take the time to choose an advisor who is adept in this specialized area of planning. An expert well-versed in LTCi can help your family in more ways than one. When I conduct educational seminars on LTCi, my professional advice to participants is to get price quotes from several insurers.

    MUTUAL OF OMAHA
    1600 Kapiolani Blvd., Ste. 1200, Honolulu, HI 96814
    808-942-8133 | garrett.wheeler@mutualofomaha.com
    www.mwheeler.incomeforlifemodel.com
    FREE LTCi Seminar Workshop
    ʻĀina Haina Public Library, 5246 Kalanianaole Highway
    April 28, Tues., 5:30 pm
    May 2, Sat., 10:30 am
    RSVP: 808-377-2456

    In life, we always have options. And when it comes to covering the costs of long-term care, it is no different. In this article, I’ll share a few viable strategies you can use to help cover the future costs of care in our Aloha State. It is by no means all-encompassing and exhaustive, but meant…

  • Do I Need Long-Term Care Insurance?

    If you never experience chronic illness or an accident resulting in extended care, you won’t need long-term care insurance (LTCI). But, if either were to happen to you today, a nursing home in Hawai‘I could cost you $100,000 – $120,000/year and could last up to 3 years. People age 65 and older with Alzheimer’s survive an average of 4 to 8 years after diagnosis. If you have to use money you were earmarking to retire on to pay for care in a facility or at home, where does it leave your family’s financial future? If you don’t have money or run out of money, you will be dependent on children to be your caregivers or plan on an extended stay at a Medicaid eligible care home not of your own choice. Either way, it’s not pretty picture. On the other hand, LTCI transfers the cost of paid care providers from yourself to an insurance company for a fraction of the actual cost and it offers you choices.

    What are my chances of needing some form of LTCI?

    The chances of needing LTCI are high. The Department of Health estimates 7 in 10 people will need some form of LTCI. If it happens to you, odds don’t matter.

    What is the current cost of LTCI in Hawai‘i? What is the projection in 10 – 20 years?

    The current cost of a nursing home stay in Hawai‘i is approximately $100,000 – $120,000 per year. Assuming a 5% annual rise in the cost of care, the cost in 10 years would be $162,800 – $195,500 per year. In 20 years the cost would be $265,300 – $318,400 per year.

    Why are premiums expensive? Can you compare dollar for dollar versus cents on the dollar?

    Assuming an LTCI policy offered to Federal Employees, a 50 year old may be paying an LTCI annual premium of $3,000. For this money, the insurance company promises to pay up to $328,500 towards the cost of care. The choice is simple, $3,000/year to the insurance company or $328,500 out of pocket for the cost of care. If the insured paid premiums for 25 years, the combined cost over time would be $75,000. For this money, the insurance company’s 5% inflation rider would grow the promise to pay up to $1,112,400. Like health insurance, LTCI premiums are subject to increases in the future. However, my experience with LTCI premium increases over the past 25 years is that paying for LTCI is still pennies on the dollar compared to paying for care out-of-pocket.

    Is it realistic today for my kids to take care of me?

    For many, depending on the kids to be caretakers, is not realistic. Studies show that 59% of unpaid caregivers are currently employed, 70% are married, and 62% are women. Long-term caregiving is hard work; there are consequences physically, psychologically, economically and relationally.

    How do I keep my LTCI premiums affordable?

    Interestingly, it is possible to design a plan that is affordable to many people. Making LTCI affordable is made possible by considering plan type (traditional or hybrid), plan design and creative planning for premium funding.

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    Michael W. K. Yee at (808) 952-1222 ext. 1240

    Michael W K Yee, CFP®, CFS®, CRPC®, is a Financial Advisor and CERTIFIED FINANCIAL PLANNER practitioner™ with Ameriprise Financial Services, Inc. in Honolulu, HI. He specializes in fee-based financial planning and asset management strategies and has been in practice for 25 years. To contact him, michael.w.yee@ampf.com, 808.952.1222 ext 1240, 1585 Kapiolani Blvd., Suite 1100 Honolulu, Hawai‘i 96814.
    Advisor is licensed/registered to do business with U.S. residents only in the states of Honolulu, Hawai‘i.
    1 The Money Across Generations IISM study was commissioned by Ameriprise Financial, Inc. and conducted by telephone by GfK in December 2011 among 1,006 affluent baby boomers (those with $100,000 or more in investable assets); 300 parents of baby boomers; and 300 children of baby boomers at least 18 years old. The margin of error is +/- three percentage points for the affluent boomers segment and +/- six percentage points for the parents and children of boomers segments.
    2 United States Department of Labor, Wage and Hour Division, Family and Medical Leave Act http://www.dol.gov/whd/fmla/
    Ameriprise Financial and its representatives do not provide tax or legal advice. Consult with your tax advisor or attorney regarding specific tax issues.
    Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC.
    ©2012 Ameriprise Financial, Inc. All rights reserved.

    If you never experience chronic illness or an accident resulting in extended care, you won’t need long-term care insurance (LTCI). But, if either were to happen to you today, a nursing home in Hawai‘I could cost you $100,000 – $120,000/year and could last up to 3 years. People age 65 and older with Alzheimer’s survive…

  • A Conversation about Long Term Care with Michael Yee

    Generations Magazine interviewed Mike Yee on his expertise on long-term care insurance (LTCI) and to learn more about this important policy and common questions asked.

    GM: I understand you are a national leader in the LTCI industry. Could you elaborate your accomplishment?

    MY: Actually, I happen to be the # 1 LTCI producer for John Hancock in the US for 2010 and 2011, which includes some 51,000 agents nationwide. That was not something I was striving for, as I would give it up any day if it meant that more professionals understood and recommended it. The results were more a reflection of my conviction, knowing what I know now about aging and long-term care.

    GM: Is caregiving a huge problem in Hawai‘i and why? Where do you see these important long-term care issues in the future?

    MY: The number of people needing care in Hawai‘i is staggering now and will grow in the future. There is a difference between being a companion, care manager, and caregiver. Family and friends have personal and financial lives of their own, increasing the demand for private paid homecare, assisted living, and nursing home care services. How to pay for these services is the challenge. There are already concerns about not having enough money from Medicare, Medicaid, and Social Security.

    Currently, there is LTCI, life insurance with LTCI riders, and annuities with LTCI riders. Each with benefits and drawbacks; no “one size fits all.” Hawai‘i will be best served by combining public and private resources and advocating advanced financial planning for LTCI, sooner is better than later. Heading off now could be a win-win for all, better for the senior, better for the caregiver, better for the state, better for all.

    GM: Do you have LTCI and why?

    MY: At age of 54, my wife and I both own LTCI. We bought it at a time when we still have a mortgage, private school tuition, and college costs ahead of us. After a required physical to participate as assistant scoutmaster with the Boy Scouts, my doctor told me that I had high blood pressure and the beginning of diabetes. He gave me an ultimatum, “either lose 25 lbs. in the next 6 months or go on medication. Diabetes and high blood pressure can’t be felt. Left untreated, you can either have a stroke or heart attack.” Affordability and insurability have no correlation. I was smart enough to know it could happen to me; and if it did, I worry more about the ones I love and what would happen to them, than myself.

    For more information, please contact Michael W. K. Yee at (808) 952-1240

    Advisor is licensed/registered to do business with U.S. residents only in the states of Hawaii. Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services may not be available in all jurisdictions or to all clients.© 2010 Ameriprise Financial, Inc. All rights reserved.

    Generations Magazine interviewed Mike Yee on his expertise on long-term care insurance (LTCI) and to learn more about this important policy and common questions asked. GM: I understand you are a national leader in the LTCI industry. Could you elaborate your accomplishment? MY: Actually, I happen to be the # 1 LTCI producer for John…