Have a question about Healthcare Planning? Contact us now.
If you are under age 65 and use a high-deductible health insurance plan, are you taking advantage of the triple tax savings benefits of Health Savings Accounts? We’ll educate you on how they are tax-deductible, tax-deferred and tax free to use for health care costs in retirement. And so easy to implement!
Medicare insurance can be confusing – it’s like an alphabet soup when you first get started. But we’ll explain the in’s and out’s of traditional Medicare versus Advantage plans, and why you only have a once-in-a-lifetime ability to enroll in a Medicare Supplement plan without medical underwriting. We also have a dedicated Medicare insurance specialist on staff that can help you sort through your many options for supplement plans, Advantage plans and prescription plans. And we’ll encourage you to review your coverage periodically to be sure it’s giving you the greatest protection.
Because we are independent insurance professionals, we can look across many companies and find the best fit for your needs. And at no cost to you – because the insurance companies pay our insurance specialists directly.
Long term care planning is an integral part of everyone’s retirement plan. In 2018, the cost for home health care or assisted living is over $4,000/month and the cost for a semi-private room in a full skilled facility is over $8,000/month1. And they are rising at a rate of 5.5% per year2, faster than the overall inflation rate. Importantly, these costs are not covered by Medicare.
7 out of 10 retirees will need some sort of long-term care assistance, yet few retirees have a long term care plan. During the average 3 years of time that long-term care is needed3, a retiree could easily spend between $144,000 to $288,000 on long term care health costs. Multiply that by 2 if you’re married, and a couple could have over a half million dollars in health care costs to cover.
Our Healthcare Costs Obstacles page talks about these challenges in more detail, but the good news is that there are effective solutions available to you, and we guide you through this decision-making process if you want to explore other options besides crossing your fingers and hoping nothing bad happens!
One option is to buy traditional long-term care insurance, where you pay an annual premium, much like your homeowner’s policy. These policies provide a daily or monthly dollar benefit amount for a defined period of time, and you can also include an inflation option where the benefit amount increases each year you own the policy. Most policies cover home health care, assisted living, adult day care and full-skilled care. Importantly, the benefits are tax-free.
How long your benefit period is, and how much inflation protection you buy, can be big determinants in the price. A downside is that “if you don’t use it, you lose it” – meaning the premium payments are gone. Much like your auto or homeowner’s policy, you pay the premiums and hope you never need it. Some traditional LTC policies have a Return of Premium feature you can add – for an additional cost. Another downside is that the premiums can increase; they are not guaranteed. Insurance companies have gotten a lot smarter about how to price these policies when they are issued, so we aren’t seeing the same level of premium increases that we did with some of the early LTC policies.
Another option, and a preferred choice among our clients, is to fund an asset-based long-term care insurance policy. This hybrid approach combines a long-term care policy with a life insurance policy. It provides all of the pro’s of the traditional LTC policy, including tax-free benefits, but with a few more:
- It is more investment based, so it can be funded either once as a lump sum, or over 5 to 20 years, or even annually.
- If you choose a multi-year payment plan, the premiums are guaranteed not to increase.
- If you never need it for home health or other long term care costs, it has a tax-free death benefit for your heirs.
- You can cash out of the policy if you change your mind or win the lottery and don’t need it anymore.
You’ve probably guessed that we believe in facing this potentially huge, bankrupting cost head on. There are multiple solutions to this vexing obstacle – it’s just a matter of weighing the pro’s and con’s of each solution and choosing the one that’s right for you and your loved ones. Then it’s mission accomplished: you’ve given your family greater peace of mind with a retirement annuity, and you’ve given yourself permission to spend money on the fun things in retirement – not saving it for the unknown “what-if’s”.