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July 09, 2021 at 02:16 PM
What You Need to Know
- The threat of a financial catastrophe is real.
- Depending on the Medicare skilled care benefit is not a good solution.
- Underwriting for the asset-based products has become more flexible.
What’s one of the quickest ways your clients can blow through their retirement nest egg? Long-term care, and with a 70% likelihood of needing some level of extended care, is a predominant retirement risk that should be addressed in every conversation.
Medicare: No
Many people believe that Medicare will assist with long-term care needs. However, the reality is that Medicare may only cover the first 20 days without any expenses incurred. For the remaining days from 21 through 100, there is only a daily co-pay of $185. Starting day 101, all expenses fall to the individual.
To add to this predicament, you must qualify for skilled care, not intermediate or custodial care. About 95% of long-term care and short-term care provided is custodial or intermediate care.
In the interest of simplicity, this description of the eligibility rules is just scratching the surface, and there is much more to this matter. There are many further layers of details in the full descriptions of the qualification rules and coverage limitations.
The point here is to at least address the topic of long-term care, to best serve your clients. Costs of care are continuing to rise, and today it can average anywhere from $4,500 to $13,000 per month, depending on the location and level of care needed.
Imagine adding a withdrawal rate to compensate for these expenses per individual. How long would your clients’ assets last?
The Tools
Fortunately, today, there are solutions to help our clients achieve some level of coverage should the need for care arise. Today’s most popular and financially beneficial strategies include using asset-based solutions, such as annuities and life insurance.
Roy Snarr, LACP, is the owner and manager of 