A great discussion on how to pay for long term care.
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Greg McIntyre: Hi, this is Greg McIntyre with McIntyre Elderlaw here with my law partner, Brenton Begley. You say,…
Brenton Begley: But I was gonna have to say that. My name is Brenton Begley. Hello.
Greg McIntyre: you say?
Greg McIntyre: That’s right. JD LLM. And today’s topic is Why is long-term care so expensive? And this is part of a really more controversial series that we’re doing, where we’re talking about the everyday things that we deal with as a state planning and elder attorneys and that our clients deal with and their families. So long-term care costs can be daunting, you know, it can take everything you work for your entire life and save for retirement and cause you to spend that out. Like, water, you know, those mounting expenses, I’d say between nursing home care between 8 and 12,000 a month right now, depending on…
Brenton Begley: Yeah.
Greg McIntyre: which geographic area you’re in, say between Charlotte and Hendersonville or Asheville. Would you agree Brenton?
Brenton Begley: Yeah, absolutely. It’s easily. You know between, I mean, I’ve seen it up towards the 15th thousand dollar a month mark, which I mean, that’s a lot. And, you know, one of the things I think contribute will, how about this? It’s expensive because it can be okay because they can charge that much because of the sheer amount of individuals that will need long-term care at some point in their lives, right? Like it is, it is a necessity and the way the way basic economics works, is that, you know, if one person has the advantage, right? You have a huge need and they have what you need and then they can charge a lot for it. And there is a huge need for long-term care.
Greg McIntyre: So I think there’s two things there, right? You know, 70% of people over 65 right now according to a US Department of Health and Human Services study done in 2005 are going to need some type of long-term care, long-term care being defined as in-home assisted living or nursing home care and…
Brenton Begley: Right.
Greg McIntyre: that’s huge if I told you there was a 70% chance that building that the roof was going to fall in right now. Would you feel comfortable saying where your city Yeah,…
Brenton Begley: Here, I’ll be out of here.
Greg McIntyre: you’re out of there, right? And and wait, you know, see what happens, try to get some shelter, Okay? Right. Try to get to a safe place and the question is number one. Why is it so expensive and then Where’s the safe place? Okay, what is a safe place? So so, you know, I think it’s so expensive, I think you’re right. They’re supplying demand, simple economics of supply and demand. And also There is the business of running a nursing home. I would love to sit down with a nursing home administrator or owner and…
Brenton Begley: Here.
Greg McIntyre: talk to them about that, on camera. I have done that before.
Greg McIntyre: Privately with people who own nursing homes and companies. But, you know, from their standpoint they say, Look, we’re running a business and we’re providing a needed service and we have to keep our place staffed with experienced people, which is hard and…
Brenton Begley: Yeah.
Greg McIntyre: pay them. Well, I mean, we talk about the same thing, we were running a law office and we have to staff. And, you know, we want to make sure that we get great customer service. You have to pay your people, well, which means you have to charge money for your services, right?
Brenton Begley: Yeah, and you really want to feel their, you know, those people out really well. You know, whenever you are hiring somebody to take care of another person, you want to make sure that there’s no red flags that go off. That they’re not someone who could get burnt out easily and want to quit and have high turnover because it’s really not easy job. I mean, when it comes down to, it’s not easy job to provide the type of care that an individual, especially an individual who can’t do most activities daily living. It’s, it’s a hard job for for people. We’ve hired people who’ve worked in facilities before and they have a lot of stories of how difficult the job was for them. And, you know,
Brenton Begley: Those are great people, very empathetic, very caring, but you still get burnout. You still have a hard time emotionally dealing with, you know, you know, the the end of life diseases and things like that can be can be hard thing to deal with for the employees and for the business itself. Because I mean, my God, I can imagine, you know, you have all the state regulations that you have to abide by, you have inspections you probably get sued a lot that sort of thing. So, all of that is calm, you know, contemplated in the process charged to be able to accomplish for that, they have to have in-house attorneys to figure out how to recover things that, you know, or recover. Balances, that haven’t been paid, right? If you’re charging that much, it’s gonna lead to the fact that some people ain’t gonna pay it, right? Maybe the person passed away before the bill could be paid and rely on getting it from the estate. And from the family, maybe the people, you know, who owe the money. Just can’t pay it. Maybe they refuse to pay it that sort of thing.
00:05:00
Brenton Begley: You know, in in you got to maintain a staff of attorneys to represent you if you get sued that sort of thing. So there’s a lot of cost built into just having the business there before you even provide services.
Greg McIntyre: Agreed. So it is a business, they do have to they do have certain costs and I’m sure they have a margin of profit that they would like to make all that equals, you know?
Greg McIntyre: Cost as high as that. You have said, you’ve seen recently a fifteen thousand dollars a month, right? But but, you know, for the regular consumer and that’s right now. What if I might need long-term care, 20, 30 years from now, what will be? Then how I’ll be able to make sure that I can protect my assets, stay in control of them and still pay for something that that there’s a 70% chance likely hood, that might happen to me later in life. And right, so I’ve come up with three things that I’d like you discuss today and back and forth. One is long-term care insurance. So that’s kind of a really pre-planning on the financial side,…
Brenton Begley: Right.
Greg McIntyre: too is a state planning, which we do. And, you know, that’s what we do. All we do is a state planning and elder law and we do that every day and help people plan to protect assets. So I want to cover that, and then there is what we call benefits planning or crisis planning. Where, you know, if you get stuck in a situation, that’s unexpected, you know, you have it set things up with the state planning ahead of time correctly. Then what can you do? Okay. So the first one is that agreeable to you Brenton. Do you think that’s a good list? Is there anything you’d like to add? Okay, I like things in threes,…
Brenton Begley: I think it’s perfect.
Greg McIntyre: they’re easy. So
Greg McIntyre: You know, unless it’s three strikes in your out, right. And that’s what we want to help people avoid. So, so first long-term care insurance, I’ll take that one and,…
Brenton Begley: If?
Greg McIntyre: and then maybe, you know, we can go back and forth and then you can do the the next, okay? So long-term care insurance, you know? I find that my clients who have long-term care insurance. It helps them in a number of ways. Whether they have a traditional long-term care policy, they’re paying monthly for or they have a hybrid policy, like life insurance for the long-term care writer where there’s invested some of retirement funds into that product that they can pull back out. Also have beneficiaries on there, maybe can be shared between husband and wife. And we’ll pay for well, multiply the amount that was put there about three to five times to pay for long term care. I see that, that’s a financial tool, but it also adds income that’s much needed in the time when you need care. Plus, it gives you options not to have to go to assisted living or…
Brenton Begley: Here.
Greg McIntyre: nursing home care if you you are able to stay. Home and the contract is is built into that insurance product.
Greg McIntyre: Such as or so that it will also pay for in-home caregivers. So you can stay in the comfort of your own home. I think that’s a great addition. Another ancillary benefit of that is that a lot of times,…
Brenton Begley: You right?
Greg McIntyre: those policies are designed to last three to five years, okay? Before they’re exhausted. Rarely do we see any more? And I see them every once in a while, the old school contracts where there’s no limit on how much it pays out that it pays out for the rest of your life. Once you start it, usually their cat to say it three to five years, time span. But what that does is it allows you to come back to us and get into that second topic that I want to discuss, which is a statement on the front end. So, you know, if I sit down with someone and we say, We’re gonna activate this long-term care insurance, because there’s the need right now, and my husband needs care. We’re gonna bring caregivers at home and then we’re gonna move our assets into say, a specialized irrevocable, trust caught, a Medicaid asset protection, trust to start a five year, three year or five year. Look back clock, ticking depending on whether they need assisted living or nursing.
Greg McIntyre: There to protect the assets.
Brenton Begley: It.
Greg McIntyre: You know, our oldest daughter. We super trust her and she’s an accountant and she’s gonna be the trustee, so that house is going to be preserved retirement. It’s gonna be preserved there and they’re still going to be the lifetime income beneficiary of assets that make money in that trust. So, I see that. Long-term care insurance is a really good precursor. Not only to activate a financial stream of income to pay for caregivers or to pay for assisted living or nursing home care. But also to allow you to have time have a cushion of time in there to plan to protect assets before you might want to evac activate a benefit like Medicaid to pay for long term care. Those are my thoughts on long-term care insurance and why I love it. When clients have it. What do you think Brenton?
Brenton Begley: Yeah, I would agree with, you know, the benefit of long-term care insurance so also that strategy coupling it with the estate plan. Now even if you don’t have long-term care, insurance doesn’t mean that you can’t utilize the estate plan to number one. Protect assets. Number two potentially qualify for benefits to pay for long-term care in the future. Now, we do that quite a bit for clients. As a pre-planning tool, we, you know, put the things in place to everybody needs like powers of attorney will, right? That if you don’t have, you should but we also make sure that you know, if they do need long-term care in the future which again you have that 70% chance or greater
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Brenton Begley: Then you want to make sure that you can get that paid for even if you don’t have the funds available to pay for it yourself. So what that would be is activating some type of benefit like VA or Medicaid to pay for a long-term care. Now, if you’ve done the planning on the front end, maybe you’ve triggered a look back here. Way, way in the past, right to where you can qualify for that benefit way after that. Three to five year. Look back period, has already ran out. But the thing that a lot of people do and why they look back period has these bad connotations with it? And people when they hear, Oh we need to avoid that. Is that when people you know, they they trigger this look back period, they don’t do it. Strategically, you know, if I have a hundred thousand dollars in my name, I have a couple of annuities. I’ve been life insurance policies, I have a couple pieces of the property and I give one home away to a kid, right? I figured that look back period.
Brenton Begley: Then five years down the road, I might be outside to look back period but I don’t qualify for Medicaid because of the rest of stuff. I have my name, I don’t qualify for VA because the rest stuff I have in my name. So this strategic way to go about doing that is to exempt those assets through something like a Medicaid asset protection. Trust that you’d mentioned, where you have a family member as trustee that you trust, that can make sure the income comes out to you and still benefit from the assets in the trust, but have those exempted from you not counting against you. So you can essentially have your cake. You needed to from a legal standpoint and keep your assets, protect them. Preserve them for the next generation because you work very hard for me. You should and still qualify for a benefit to pay for the long-term care. Even if you can’t afford out of pocket, which you can. And even if you don’t have long-term care insurance and what if you do, have long-term care insurance in it, runs out it hits that maximum, it caps out at that that per day value, right? You still want to be able to qualify for benefit to come in and cover. What you have
Brenton Begley: To pay after that, long-term care insurance policy kicks off. So that’s the importance of the estate planning side when it comes to the high cost of long-term care. So you got number three.
Greg McIntyre: So yeah, so Brenton just really covered number two, which is a state planning. You know, the you know, using irrevocable trust or convertible trust really thinking through your assets as well, as adding foundational pieces, which are super important in case, somebody becomes incompetent incapacitated the general durable power of attorney health care, power of attorney living will will if we do the trust we’re going to ride a, will that goes along with the trust and works with the trust Caught a companion or poor over will? So you know a state planning is important that we look at all the assets, Look at what your goals are and make sure that you are protected, maybe a ladybird date on your home, which instantly protects your residence and keeps it in your name and then passes it to your descendants.
Brenton Begley: If?
Greg McIntyre: For example, your children, if you were to pass. So those are all the things we want to sit down and cover. When we sit down and have an estate plan, we offer free consults to do that. So we offer our time freely to you to do that, and you can take advantage of that by calling the number at the bottom of the screen or going to Mc Elderdoll.com/scheduling. Okay? And the third one would be benefits planning, okay? Or We also call it Medicaid crisis planning. That’s where we’re going to look at a VA benefit or a Medicaid benefit that can come in and cover the cost of long-term care. And also, we have maybe we haven’t protected things in time to be to look back period, or, you know, the family hasn’t done that the person hasn’t done that. So we want to look at saving assets between husband and…
Brenton Begley: If?
Greg McIntyre: wife or between a parent and children.
Brenton Begley: Yeah, a lot of people do is they look at that, you know, window of time in between when someone needs care and actually getting qualified and this crisis period and say, Oh, I have to do the spin down and I hate that term because anytime we, you know, are helping a client through this crisis period. Why we have reframed, what this, you know, the terminology for this is because I’m not spending your money down, I’m not getting ready your money as the attorney telling you what to do. I’m telling you how to preserve an exempt that money. So the money that you have is accountable asset. What you what your goal should be, is to make sure that the assets that you have or exempt for Medicaid purposes, That’s the goal. Not to get rid of the money. So, when you hear that spin down, that’s what the government wants you to do, they want you to pay the facility until you run out of money and then Medicaid can kick on, That’s not the way that we tell our clients to qualify because that is obviously not a good option for them because they’re losing what they worked hard for.
Brenton Begley: So in that Medicaid crisis period, you really want to look at saying, Okay, well, how can I under the rules for Medicaid, which are complicated and you really need an attorney to guys you through those, How can I utilize these to best exempt, the assets that I have and both qualify for long term care which is you know the timing on that is really important because of the Medicaid back pay and all of that too. So again it really requires an attorney to help you navigate through that sort of thing. And you really can’t do that without having those foundational documents powers of attorney in place beforehand. Or if you do them during the time, the person has to be confident. And so all of these things really mesh together. So what is the best way? I guess the biggest question, What is the best way to make sure they if you’re in a crisis situation, you know, you can actually navigate that
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Greg McIntyre: You come and sit down with me or you. So that we plan under the rules. For the benefit dedicator via. To avoid the look back period, even if we’re planning to save assets immediately. And then quickly qualify for the benefit.
Brenton Begley: Here.
Greg McIntyre: That’s what you do. And that’s what we do for clients Brenton. I appreciate you talking about those three things about Why is Medicaid. Why is Long-term care. So expensive. I think there’s reasons for that that we discussed, there’s probably more reasons that you know, but but those are some key reasons and How can you plan to stay in control of assets? Pay for long-term care benefits. And pass those assets down to your kids.
Brenton Begley: If it’s not too late, even if you’re in a crisis situation, there’s still thing can be done.
Greg McIntyre: No a ton of things and we’re very good at that and you know again I’m Greg McIntyre I’m an estate planning an elder law attorney the elder law guy, this is Brenton Begley. Okay Brenton s Begley…
Brenton Begley: The luck.
Greg McIntyre: who is I’m fortunate enough to for him to be my law partner and and practice for with him now for a number of years and I appreciate you listening to the Elder Law Report, guys, we enjoy doing it. We’ll continue to bring you great information and it’s been a good year Brenton. I’m busy trying to wrap up the year.
Brenton Begley: Yes, it has.
Greg McIntyre: I’m just, I’m like grinding right now trying to make sure everything’s done and I’m running out of things to do. So I think we’re doing a good job.
Brenton Begley: Just right here. but,
Greg McIntyre: So All right. See you next week on the Elder Law report.
Estate Planning & Elder Law Attorney
