Good Tidbits to Know About LTC Insurance

Long-term care insurance is not my specialty, and while I might be able to sell it, I don’t.  I do recommend that clients integrate it into their financial plans when it makes sense (and it almost always does).  Some good tidbits for you:

1. LTC insurance is designed to protect your assets (your nest egg).  It can help cover the cost of care you receive at home from nurses’ aides, home health aides, and therapists, and can help cover the cost of assisted living facilities and nursing home expenses.
    
2. In CA in 2010, the median annual care cost for a private room in a nursing home was $87,000.  For a semi-private room, about $73,000.  The increase in cost outpaces the inflation rate.
    
3. At least 70% of people over age 65 will require some long-term care services at some point and 40% will need care in a nursing home.
    
4. Elderly women are most likely to utilize the service because they live longer, healthier lives.
    
5. Health insurance and Medicare cover almost none of the cost of nursing homes, assisted-living facilities or in-home care.
    
6. To qualify for Medicaid, people have to pay out of pocket until they are practically destitute (particularly if proper planning hasn’t happened ahead of time).
    
7. Better to obtain insurance when you’re younger and healthier and it’s cheaper.  Not to mention that you’re in a healthier state of mind (not in crisis) and can plan.
    
8. Long-term care insurance can be used to cover the care of someone with Alzheimer’s, an affliction that can last for many years and deplete a family financially.
    
9. LTC premiums can be paid with Heath Savings Account (HSA) monies.
    
10. If you’re self-employed, a portion of your premium may be deductible as health insurance.
     
11. Anyone can pay the premiums on the policy.  Children can pay for LTC insurance to protect against the family vacation home (or any other asset) being sold to meet long-term care costs.
     
12. Remember, your children might be picking your nursing home.  How many choices do you want them to have?

If you need a referral to a long-term care specialist, please let me know.  I can help you figure out whether LTC insurance makes sense in your overall plan.  A specialist can tell you what to look features to look for, what to consider when buying a policy, what riders are worth it, which company to choose, and how much to pay.

Reasons to Use an HSA

While it takes a bit of time to get the hang of how to use the plan, once you understand it, it’s not a big deal.  Complain, consternate, and confabulate all you want about national health care and the lack thereof.  In the meantime, if you’re self-employed, consider an HSA.  Look at these statistics, as provided by my account holder:

• People enrolled in HSA-type plans spend 5% to 10% more on preventive care, have 5% to 10% lower emergency room utilization, experience 10% lower medical costs, and are much more likely to use online health tools.  (Source:  Aetna national survey, April 2010)

• In a study of 2 million members enrolled in HSA-type plans, Cigna found that members used more generic drugs and that medication compliance improved while costs decreased. They also received recommended care at similar or better compliance rates. Members with chronic diseases such as hypertension, joint disease and diabetes experienced between 15% to 27% reduction in medical costs. (Source:  Cigna study, January 2010)

HSA-type plan enrollment has increase 25% from January 2009 to 2010, and most of the enrollment was through employer-sponsored plans.  Why?  Because they’re cheaper for the employer, they give the employees more flexibility (which is seen as a huge benefit), and employees are healthier and at work as a result.

If you want to explore how an HSA might work for you and need a referral, give me a call or send an email. I’m happy to help.

If you’re wondering if your taxes will go up…

Here’s a short list of what expires on January 1, 2011:

1. Personal income taxes will increase:  10% to 15%, 25% to 28%, 28% to 31%, 33% to 36%, and those in the 35% bracket move up to 39.6%.   Remember, that’s just a federal hike. State taxes get put on top of that.
    
2. The “marriage penalty” will start from the first dollar earned.
    
3. The child tax credit drops from $1,000 to $500 per child.  The dependent care and adoption tax credits are reduced.
    
4. The marriage deduction reverts to the single deduction amount.
    
5. The “death tax” returns, with the top tax rate on estates over $1 million going to 55%.
    
6. The capital gains rate increases from 15% to 20%.
    
7. The dividends tax increases from 15% to 36.9% (and another 3.5% increase in 2013 for healthcare reform).
    
8. If you make an early, non-medical withdraws from a Health Savings Account, the tax increases from 10% to 20%.
    
9. Tax benefits for education tuition and fees will not be available.  Tax credits for education will be limited.
    
10. Teachers can no longer deduct classroom expenses.
     
11. Employer-provided educational assistance stops.
     
12. Many families will no longer be able to deduct student loan interest payments.

With Medicare and Social Security in trouble, a war on terror, and an aging population, I can’t see taxes going lower. What does this mean for you?  Maybe it’s time to start looking at saving strategies that allow for tax-free growth and tax-free access.

Suggestions for managing bills and cash-flow

I’m a big believer in keeping as much cash at your disposal as possible and paying government entities on-time, but not early.  No sense in giving someone free use of my money, especially if I might not owe as much as I’m predicting.  How to do this is always the challenge.

First of all, there’s nothing worse than surprises, so eliminate them.  Be in conversation with your accountant at least three times a year (March, June, and December, if not also September) and talk about your income, how much you’re paying in taxes (whether that’s per paycheck or quarterly payments), what your projections are for the year, and what big expenses you may have this year.  That way, if you can adjust your quarterly payments so that they’re more in line with where you will end up at year’s end, the last check is smaller to write.

Second of all, create an account that is devoted to saving up for those “big checks” that happen annually or semi-annually or actually fund them.   Set aside money for property taxes, go ahead and fund your Health Savings Accounts, and your retirement accounts.  Get that money working for you.

Finally, if you’re behind on payments, create a debt repayment schedule and stick to it.  Throw as much money at those debts as you can so you can get in “real time” on your payments.  Sometimes just having a plan will make you feel more in control and capable.