Long Term Care Insurance Pay For It Yourself

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Well, welcome to Finishing Well with certified financial planner, Hans Scheil. Today's show is long-term care, pay for it yourself. And that's kind of the concept we're working on, but you know, as I thought about today's show and I saw the video and some of the reasons that we want to talk about this today, I couldn't help, you know, but think of that, you know, when Peter was going to walk on the water, you know, the only way that you can ever walk on water is you got to get out of the boat.

That's for sure. But when he did, he faced all these breakers. The water was rough.

It had been rough against the boat and now it was rough against him. And it's interesting as I studied that word more and more and I looked at it in the Psalms and I looked at it actually even with Jonah, he had some breakers that ran over him too, that quite often God sends what he calls breakers to sort of break down our pride, right? To kind of get our attention to how needy we may really be. Because we think that we're, you know, really self-sufficient in so many ways, but actually apart from you, we can do nothing, right?

Apart from God, we can do nothing according to John 15. And so as I think about the idea of long-term care, the real reality of it is that there's a good possibility if I don't die suddenly in an accident or something, that I'm going to be someday, you know, in a situation that Billy Crystal talked about in City Slickers, you know, babbling to some Jamaican nurse calling her mama. You know, it sounds kind of harsh, but if I really look at it, you know, the Bible's got 66 books of telling me, you know, what the truth is and how desperately I need help. And, you know, the whole idea of long-term care comes along those same lines, right, Hans?

Well, it does. And so we made this, you know, I encourage you to go find the video on YouTube for this show or find it at cardinalguide.com, because we do a video and it runs at the same time the show does. And the reason I'd encourage that is Tom and I went through a shorter version of our personal stories each, is that Tom has a picture of himself during that sitting in a wheelchair with his infant son. And, you know, that's up there to just show this can happen to anybody. And he goes through his period of long-term care and how that affected not only him, but his whole family. And then I went through my story of my large family and my mother and my father. So I'd encourage you to see that story and experience that. And what's really behind the topic today is we're not going to be showing you any long-term care insurance policies or talking about prices or investments or any of that stuff. We're getting right down to the core level. Am I going to buy this long-term care insurance or not?

Am I going to invest in this? And it really, you know, once in a while I'm dealing with somebody that just kind of gets to me. And if somebody gets to me, an incoming prospect or somebody that's looking at doing financial planning with us, and at some point during the conversation we're going to get to the topic of long-term care. And I'm going to point that out to them. And I get this from people that are very well-to-do.

I get this objection quite a bit. Oh, I'm just going to pay for that myself. If it happens to me, I'll just use, you know, one of my millions here or, you know, we'll just sell this big house that we have or whatever. I mean, it's kind of a quick – they don't even get down to the details of it that much, is that I'm well-to-do. They don't really say, but it's like it isn't really going to happen to me. I don't want to deal with it.

So if it does, I'll just pay for it myself. And that gets to me with people that I care about because it's just – it's a simple solution to a very complicated problem. And so this whole video was – this person just kind of got to me and had me reflecting on that. And I – so I was reflecting on the whole idea of paying for it yourself. And this guy kind of got to me a bit. And as I really thought about it and prayed about it, I thought, well, I'm going to do a video and do a radio show where we're just going to address this pay for it yourself.

And it's not only rich people that tell me that. I mean, I get people that are of moderate means that just – that's what they say as well, is that when you use what little I have and I'll just pay the bills, I'm not buying that insurance. And when people are that way, you know, used to I would go toe-to-toe with them and I'd go give them a lot of reasons that they ought to do this. And now I just kind of back off and, you know, go find somebody that is really going to listen to me.

And I really just thought I'm going to make a video and I'm just going to bring out that stop sign or that objection, the pay for it yourself. And we're going to really talk about that. What I would recommend if you're there is that you open yourself up a bit and you just think through and just run with me here. So the first thing I'd like you to do is to see yourself at 85 years old. And the reason I picked 85 is most people when they look – you know, if you're 65 now or 60 or 70 and if you look ahead to 85, I mean, first of all, if you're like me, I'm going to be happy to make it there. And then secondly, I'm going to see myself perhaps in a position of being a bit more vulnerable than I am now.

And so I want you to see yourself there. And I have a few questions for you. Number one, are you still managing your own investments? Are you still dealing with the financial planner? Are you telling them to buy this, sell this, deciding what you're going to invest in, how you're doing the budget? Is that all under your control? And if you're going to say yes, I'm going to challenge you a little bit because most of my clients that are 85 years old have one of their kids or somebody helping them a bit even if maybe they're still doing it. And the ones that are doing it alone are making some mistakes typically.

And they're trying to hold on to something. So that's something for you to think about down the road is you could have a long period of time where you're not going to be as swift at handling the money as you are now. The next thing I want to ask you, are you still paying your own bills? Are you still the one that's sending them a check every month or doing a debit on the bank account and then miscellaneous bills and somebody needs to fix something on the house or fix your car and you have your credit card. Are you still handling all of that yourself or do you have somebody helping you like one of your adult children? And then the next question I really want to ask you is are you willing to spend large dollars on yourself? So when you're saying that if long-term care happens to you, if you need to hire somebody to do some assistance or you need to go into an assisted living, even for a person that's very well-to-do, 10 grand a month, 6 grand a month, 5 grand a month, that's a lot of money to just be shelling out.

And if you're like a lot of 85-year-old well-to-do people that I've dealt with over my career, it's really hard to get you to spend some of your own money on yourself. I know, Robbie, you have a story about this right in your family. Yeah, my dad, who definitely was along the lines of I'm going to pay for it myself.

It really was. But then when the time came, literally he'd fallen, unfortunately. The father would eventually take his life.

It broke his neck and had all other sorts of complications with it. And my daughter was that weekend going into college, and we had to take her and drop her off. And we'd moved in with him. We were taking care of him. And so we were like, Dad, we've got to get somebody for the weekend to take care of you. And we were option A.

There was nobody else. And so we hired somebody. And I forget what it was. I just remember it was really expensive, way more than he thought he should have to pay. But again, he was one of those people. He had plenty of money, and he certainly could have paid for it. But by the end of the second day, he'd fired him.

I'm not going to pay for this, da-da-da. So there he is trying to take care of himself. And he literally couldn't get up out of his chair. And so we had to come back in a hurry.

It was a nightmare. And it was non-negotiable. He was not going to pay that kind of money for somebody to take care of him. He would just essentially not have any care when he desperately needed it. But the onus is a part of the long-term care equation that I've come to understand is this really isn't about me. My long-term care isn't really about me. It's about the poor people that are trying to deal with me. They're trying to figure out how to deal with my money and all that. And your dad was about 85.

He was 87 or 88. But just somewhere in that zone, man, he's typical. I mean, I've just dealt with a lot of these guys over the years because they're adult children who are in their 50s and 60s. And they're coming in and trying to take over or help manage or whatever word you want to call it. And you've got Mr. Big Bucks here who just isn't going to...that's the reason he has a lot of money.

He just isn't going to let go of a nickel even if it's for himself. And I'll also tell you that those that were smart enough to buy long-term care insurance, now they're all for it. Bring those people in.

Let's get that money out of that insurance company. So I want you to think about that issue. And I really just want you to think about cognitive decline because it's a slow thing. It has a lot of denial in it. I experienced that a lot with my mother that it's just, you know, when you're the family, you're around, is she okay?

Yeah, she's really...and then somebody else tells a story about what happened last week. And it's just something real slow over a lot of years. And it's really tough to wrestle some of these responsibilities away from the person that has the disease beyond long-term care insurance, just managing investments, paying the bills, all that kind of stuff. So I just want you to be able to see yourself at 85 and then see what kind of shape you're going to be in when we now prepare and we show you some options to purchase insurance that is going to get at least money out of the problem. You're still going to have lots of problems if you've got the insurance. And it's difficult to deal with. But if you don't have insurance, money is the big issue that you're going to be dealing with instead of the person's care.

It's sad that all that goes on. But this is a good time to pause and remind you that this show is brought to you by CardinalGuide.com. If you go to CardinalGuide.com, you're going to see the seven worries tabs that has to do with the seven worries of retirement. And this one is long-term care. And if you go there, as Hans mentioned, you'll see the video along these lines, along with show notes that line up with everything we're talking about.

And I really like he talked about a really cool story from Tom about his own need for long-term care and certainly Hans's father and his mother. It's all there at CardinalGuide.com, as well as the Contact Hans page and of course Hans's book, The Complete Cardinal Guide to Planning for and Living in Retirement. So it's all there at CardinalGuide.com.

And we'll be right back with a whole lot more on long-term care. Pay it for yourself. Investment Advisory Services offered through Brookstone Capital Management LLC, abbreviated BCM, a registered investment advisor. BCM and Cardinal Advisors are independent of each other.

Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency. Oh, welcome back to Finishing Well with Certified Financial Planner, Hans Scheil. And today's show, we're talking about long-term care, pay for it yourself, sort of in quotation marks, however you want to put that. Anyway, Hans.

Yeah. So we talked in the first part of the show about people that are telling me this all the time, and some people are not real serious about it. They're just trying to test me a little bit and see if they can get by with kind of a, well, we'll just pay for that ourselves.

We looked at that as pretty expensive, and we'll just pay for it myself. And I'm going to challenge that. I'm going to listen to it, and then I'm going to challenge it. But when people are pretty grounded in that, I just back off.

And so what I decided to do is make this video about this and have the radio show where we're just going to talk about the old pay for it yourself. And this is usually quite well off people that actually have the money. So that logically, it makes sense. Okay, I got the money.

I'll set it aside. But emotionally, it doesn't make a lot of sense. And the people that end up really paying the price for somebody that's older and not insured is the family. I mean, the spouse if they're living and the adult children really go through it. And we talked about in the first part of the show, seeing yourself at 85 and what life is going to look like. And then all of a sudden, you're faced with needing help and needing care and paying for care, how this is really going to work on the pay for yourself program. So the next topic we're going to talk about is an income tax when you're incurring expenses for long term care. And I don't know if you've ever thought about it, but home health care assisted living nursing home expenses are tax deductible as a medical expense. So if you actually do pay for it yourself, you incur this and you pay out $100,000 in a year for home health care, assisted living, some combination of that, you're going to be able to take that whole $100,000 off your taxes, or there's a piece of it that has a threshold that is tax deductible. Now, what I want to go on to say is the benefits that come out of a long term care insurance policy, they're tax exempt. So if you do have long term care insurance in place, and you collect way more out of your policy than you put in it, all the benefits that come to you are tax exempt. So, you know, you could look at this both ways, you say, Well, you know, now I pay for it myself, and I'll take it off my taxes.

But not so fast here. Because a lot of people I get consulted as people bring me in somebody 85, and they just had a stroke. And they're at home and they came home from the hospital and this, the skilled nursing facility and they, they don't have to stay in there full time anymore. But if they're going to stay at home, they got to have somebody to take care of. And so I'll have the adult children will bring me into the situation. We get power of attorney signs so that the child, the adult child has authority to do the things they need to do.

But we can't force this care on people. And if they go along with it, then they want to pay for it out of their regular money. What I do is the financial planner is I recommend they pay for it out of the IRA first.

So a lot of these people have a big IRA balance still at 85. And, you know, if we're going to use money, let's use something that creates income so that we can take advantage of the tax deduction. Does that make sense to you, Robbie?

Oh, absolutely. You know, like you said, that it just, it's a simpler way to take care of your taxes, if nothing else, that if you're looking forward to that, plus again, it just gets back to the idea to me that you run up against that idea of G, you know, I don't really need this this bad and I don't need this care and, you know, putting that on your family. Well, yeah, so I'm just saying if you're in the situation where you, you know, you're stubborn, and you just say, I'm going to go with the pay for it yourself, you're still going to need your adult kids to be empowered, because you're going to have trouble making decisions at that point to listen to somebody like me, let's pay for it out of the IRA, and it creates an income, and then a corresponding tax deduction. So then the next piece that I have here is which investments are we going to sell? So if you're sitting here at 65, and you're saying, I'll just pay for it myself, I get plenty of money, you probably do. And then are your adult children who are going to be handling this are the ones specifically, are they going to know which investments to sell?

Which investments to keep? And, you know, if I'm an adult child, and I'm going to be get the inheritance at the end of this deal, your money, I'd much rather have you give me regular money than IRA money, because I'd like to receive money that you've already paid the taxes on. And that's why we want to drain the IRA first, when we have a corresponding tax deduction.

So that's a little bit of logic there to throw at you. The next category, quality of care. Now, people that have long term care insurance get better care than the people that are paying for it themselves.

First of all, because people aren't as chintzy, they don't try to hire the next door neighbor or somebody down the road and pay them cash out the back door or whatever. Because when you have long term care insurance, you're going to use an agency, a professional agency, and you're going to get a care plan, and you're going to get everything done. The best care comes from a home health care agency. And the best facilities are found through the professionals of looking. So these long term care insurance companies now have people, they're like travel agents, but they're agents for senior living that are going to actually find and place you, work with your family, and get you in the most appropriate place where you're going to be the happiest. And frankly, their job is not done because my mother was in four different places here in Cary, North Carolina, between the time we brought her here and the end of her life. So you're going to need professionals to help you find and manage care throughout this period of time.

And the best place to get those is from the care coordination people at the insurance company. Absolutely. And that actually becomes a real issue. I mean, it's a gigantic issue for your family.

I can assure you that another one of the things that we really, really struggled with with my father was getting him in a rehab that was actually suitable for him and that he would somewhat accept, man, what we went through. And we didn't have that resource. And believe me, we paid for it.

And at the end of his life, you know, I know he suffered some as a result of not having that help that really we didn't even understand at the time. Oh, yeah. I mean, there's one company we work with. They call it the Care Concierge. And believe me, they work with the adult children. They work with you.

They're wonderful. And there's not a charge for that. Now, the last section that I want to talk about just kind of finishing here is appealing a bit more to logic.

And it's just the whole concept. These people that are telling me, oh, I'll just pay for that myself out of my millions or whatever. I mean, most of these people, they have homeowners insurance on their big house. And if their house burned down, they could just take some of their millions and build another one. Or if they got some liability suit for somebody that got injured on their driveway or something, they could just pay that off. But, you know, they carry homeowners insurance. And they carry car insurance on their European touring sedan.

So if I'm being a little bit of a smart aleck, as my grandmother used to call me, you know, I just am. So you got a $75,000 car. And certainly if you wrecked it or it was stolen, you could just replace it out of your money. But yet you pay car insurance. Same thing with the liability umbrella. Same thing with life insurance.

So you're already transferring risk. And I know of a guy that I listened to speaking at an event where the customer himself was asking him about long term care insurance. He is the financial planner. And he said, you know, he said, Mr. whatever prospect, you could buy a small long term care insurance company.

This guy was very rich. And he said, well, I could, but I still want to look into this because I transfer risks in my business. I mean, I just things I buy insurance, and it's really just appealing is if you've got a potential of a half a million dollars, or three quarters of a million dollars or more, if you're a married couple, it could be up in the million or so million two of potential payments that you're going to pay for this quality of care.

That's a risk worth considering insurance. Oh, absolutely. You know, and I can say that both Tammy and I, in fact, you know, when I was getting ready for the show, I find this somewhat humorous. My wife was listening, you know, over hearing me, you know, prepare for it. And she says, Now, don't I need more that because I'll probably live a lot longer after you die.

Don't don't take this too hard. But, you know, that's definitely, you know, part of what couples should be talking about. They absolutely should. Yeah, it is very easy for people that are well to do to take care of this.

I mean, when I turn people around that's there in the no way department. Then when they find out how easy it is to take a lump of either their IRA money, or their other money and just do one of these single premium things. Usually they want to buy that thing immediately. They don't even want to wait for us to finish the financial planning and show.

They want to buy that thing immediately because they just want to quit talking about it. It's too painful to discuss. So I'm very well aware of that. And my point is, is we're going to open the subject up. Let's talk about it. Let's look at your money.

Let's look at what you will do and what you won't do. Get your spouse involved and all of us have a discussion. And let's get some insurance for it.

That's very affordable for people that are well to do. And, you know, then we can quit talking about it and we can just revisit it every few years just from a transactional standpoint. Yeah, absolutely. Well, we want to take this time to remind you that the show is brought to you by CardinalGuide.com. CardinalGuide.com where you're going to find the seven worries tabs, which is wonderful. We don't want you to worry. That's why we have those tabs there so you can finish well.

And if you click on those, they're all designed to help you not to worry. And today's show, we've been talking about long-term care. One of the things that I know is very near and dear, you know, to Hans's heart because what he went through with his own family, it's certainly near and dear to my heart. And I think as the more and more you think about your own family and what they will face as you reach your 85-year-old self, you're going to see why you need to go to that worries tab at CardinalGuide.com. And then look, there's a video, a beautiful video that they did on this exact same subject, Pay Forward to Yourself Long-Term Care, as well as, of course, you know, the contact page so that you can talk to Hans about your, you know, unique financial ideas and financial plan. As he talks about what, you know, what you could do with IRA money to make room for long-term care and all sorts of things that are just absolutely neat strategies that I think you'd appreciate. And of course, Hans's book, The Complete Cardinal Guide to Planning for and Living in Retirement.

It's all there at CardinalGuide.com. Great show, Hans. Thank you and God bless you.

God bless. The opinions expressed by Hans Scheil and guests on this show are their own and do not reflect the opinions of this radio station. All statements and opinions expressed are based upon information considered reliable, although it should not be relied upon as such.

Any statements or opinions are subject to change without notice. Investments involve risk and unless otherwise stated are not guaranteed. Past performance cannot be used as an indicator to determine future results. Any strategies mentioned may not be suitable for everyone. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for you. Before acting on any information mentioned, please consult with a qualified tax or investment advisor to determine if it's suitable for your specific situation.

Finishing Whale is designed to provide accurate and authoritative information with regard to the subject covered. Investment Advisory Services offered through Brookstone Capital Management LLC, abbreviated BCM, a registered investment advisor. BCM and Cardinal Advisors are independent of each other.

Insurance products and services are not offered through BCM but are offered and sold through individually licensed and appointed agents. Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency. We hope you enjoyed Finishing Whale, brought to you by CardinalGuide.com. Visit CardinalGuide.com for free downloads of this show or previous shows on topics such as Social Security, Medicare, IRAs, long-term care, life insurance, investments and taxes, as well as Hans' best-selling book, The Complete Cardinal Guide to Planning for and Living in Retirement, and The Workbook. Once again, for dozens of free resources, past shows, or to get Hans' book, go to CardinalGuide.com. If you have a question, comment, or suggestion for future shows, click on The Finishing Whale Radio Show on the website and send us a word. Once again, that's CardinalGuide.com. CardinalGuide.com. This is the Truth Network.