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It can become a major financial and family decision. Hi, I'm Rob West. Most of us hope we'll never need extended care, but wise stewardship means planning for possibilities before they become a crisis. Nathan Senno joins us today to help us understand long-term care, what insurance can and can't do, and how to build a plan that protects both your finances and your family. And then it's on to your calls at 800-525-7000.
This is Faith in Finance, biblical wisdom for your financial decisions. Our guest today is Nathan Sano, president of MasterCare and LTC Consumer. Nathan has spent more than two decades in the insurance industry, helping individuals, families, and financial professionals navigate long-term care planning and find solutions that fit their needs. Nathan, great to have you here today. Thanks, Rob.
It's great to be here. Nathan, when people hear long term care, their minds go straight to the cost of insurance. But I know you say the conversation should actually start with something much broader, and that is a plan.
So why is having a long term care plan the most important first step? Yeah, it's a great question. One of the things that we always say is insurance is how the plan may be covered and paid for, but having a plan is really the first place to start. And First Lady Roselyn Carter said at best that there are really four kinds of people in the world. those who have been caregivers?
Those who are currently caregivers. And those who will be caregivers. And those who will need caregivers. And every one of us faces this risk. And so it's important to have this conversation as a family to say: if this was to happen to me, Who do I want to provide that care?
How does that impact their life? Are they physically able to do that? And most importantly, how is that care going to get paid for? Yes. A lot of people assume Medicare, Medicaid or even traditional health insurance will cover these long term care expenses.
So what do those programs actually pay for? And where are the biggest gaps people need to understand? Yeah, and this is a very, very common misunderstanding.
So people just assume: well, someone pays for this care. I mean, My grandma back in the day needed it, and somebody cared for her, and that was just paid for. But the reality is, Medicare only pays for short-term care. When you've been in a hospital for a short period of time under very specific conditions.
So think rehab: like, you know, I had a stroke and I need to get better, and I go to a rehab facility for a number of weeks, then Medicare will pay for that. Your traditional healthcare plan does not, doesn't cover anything for custodial or healthcare. Medicaid does pay for long-term care, but it requires people to pay down to $2,000 of assets to get that. And then, in many states, great, you've qualified for Medicaid. There's a waiting list to even get into a Medicaid facility.
And so, It's important to understand what does cover and doesn't cover. The other one that is a common misunderstanding for working people is: well, I have long-term care because I have long-term disability, and they get the two confused. And long-term disability obviously replaces your income if you're not able to work, where long-term care pays for the care that you need when you're unable to care for yourself. Yeah, that's a really helpful overview.
So, in light of those gaps then that you just identified, where does long-term care insurance fit into the overall plan? Yeah, insurance is long-term care insurance is just like any insurance. It's a leverage tool that says, okay, I've got this unpredictable risk that I'm facing that I don't want to pay for it myself.
So I'm going to assign that risk to an insurance company for a predictable premium so that if the unlikely catastrophic event happens, I've got that coverage that's there. The great thing is the policies are very, very loose, meaning you're in control of where you want to receive care, who provides that care.
So if you want to receive care at home, which is where most of us would prefer if we're able to, the policies pay the same for that kind of care as it would for facility. Most policies, not all, there's some that include. A family member to pay for them, but most policies pay for professional home care services.
So it has to be somebody that is a professional, a home care agency aide that licensed professional to come in and doesn't pay for your family member. Although, again, there are some policies that do that. The other thing that's really great about long-term care insurance policies are the family caregiver support services. And this is something many people aren't aware of. When a caregiving event happens, and I've gone through it in my own life, it's a very stressful time.
And having those resources available to advise that family is incredibly valuable. Really good.
Well, we're going to continue to unpack this, including the underwriting, the cost, and much more with Nathan Sano from LTCConsumer.com. We'll be right back. FaithFi is grateful for support from One Ascent. One Ascent believes that your values inspire why you invest and how they can inspire how you invest. OneAcent's goal is to provide solutions designed for every need and invest in businesses that bless the people and places God has made.
They want to help investors do well by doing good. To explore a new way of investing that aligns with your values, more information is available at onascent.com slash FaithFi. Rising health insurance rates are pricing millions out of the market, and Christian Healthcare Ministries is here to help. CHM is affordable assurance, allowing believers to share the burden of medical bills together. You get simple, low-cost pricing regardless of health history or location.
Plus, you can enroll at any time with no contracts. Break free from the huge costs and hidden fees of traditional health insurance. Learn more at faithfy.com/slash CHM. Thanks for joining us today on Faith and Finance. We're talking long-term care today, planning ahead and where insurance might fit in.
My guest today is Nathan Sano, president of MasterCare and LTC Consumer. He's spent more than two decades in the insurance industry, helping individuals, families, and financial professionals navigate long-term care planning and finding solutions to fit their needs. Nathan, before the break, you gave us a good understanding of where the gaps are in terms of covering long-term care needs in that season of life and where insurance might fit in. Let's talk about the cost because that's, of course, a major concern for people.
So, what does long-term care insurance typically cost today, and how can someone structure coverage to fit within their budget? Yeah, it's a great question. A very common question we get. And Long-term care insurance is like any insurance. You can buy a Mercedes coverage, you can buy a Corolla coverage, and everything in between.
But just to give you raw averages, and to give you perspective, we'll deal with probably 10,000 consumers a given year that are interested in looking at long-term care through our company. And last year, the average hybrid life long-term care combination plan was about $6,000 a year per policy. For traditional long-term care insurance, which is what most people are used to over the years, that average policy is about $3,500. But I looked to the data, our smallest policy we wrote last year was $261 a year, the most expensive being $8,800 a year.
So you can kind of see the bookends. And then short-term care, which is long-term care that covers one to two years of coverage, the average policy is about $2,000 a year.
Okay, yeah, that's really helpful. And the data says that if I'm not mistaken, and you would know better, seventy percent of Americans sixty five and older will probably need some form of long-term care. Is that about right? Yeah, the more recent stat that came out that we referenced was by the Department of Health and Human Services that says 52% of us, so one in two, are going to need professional long-term care services for 90 days or more.
So one in two of us are going to need that kind of care. And for women. One in five women are going to need professional long-term care for five years or more.
So it's a big issue, especially for women. Yeah. And if something is going to erode your assets in this season of life, I mean, this has got to be at the top of the list or close to it, right? Absolutely. I mean, I don't care how well you've planned your retirement.
It can leave a hole in a hurry just because. The cost is so unpredictable. For example, in my state of Washington, where I live, the average cost of a long-term care facility, if I was going to go into, is about $11,000, $12,000 a month.
So, that can eat up a serious amount of money and very, very quickly, especially if you're going to need that kind of care for a long period of time. And most people just haven't planned for it, they just haven't thought of it. Yeah. Is there a rule of thumb to say who can self-insure versus those that just know they would need to depend on government services and then kind of who's in that sweet spot to need long-term care insurance? Yeah, you know, when you look at, I would say, under a couple hundred thousand dollars of assets.
You're better off just trying to kind of going your own and you're looking at Medicaid, for example, most likely. On the upper end of income, what's been very interesting, and really over the last couple years, we're seeing much, much wealthier people with significant assets still buying a long-term care policy because they can self-insure. And I would say that break-even might be. Four or five million of assets, but what they're looking at is that hedge to say, okay, well, that policy may cost me $200,000, $300,000, but it's going to give me $1.5 million or a million dollar plus benefit. That's worth the trade-off for me.
So we're seeing a trend where very, very affluent people are still looking at policies just as a risk transfer. Yeah. But everybody else kind of in the middle between 200,000 and 2 million in assets. I mean, this is absolutely something you recommend they look at, right? A hundred percent.
I mean, if you needed care that was going to cost eight, ten thousand dollars a month. 12 months, that's $120,000. Where is that money going to come from in your plan? Have you planned for that? And that's one of the things we talk about: the importance of having a long-term care plan, not just long-term care insurance.
Because maybe you want to self-insure.
Okay, great. What asset is tagged that can be liquid so that if you need to. Pay for your own care. then you've got that asset earmarked, readily available. at your disposal should you need it.
Yeah. Obviously, a common question that comes up is: when is the ideal time to consider buying this kind of insurance, balancing health, eligibility, and age? What are your thoughts? Yeah, so our average buyer is typically a couple age 55, 56, give or take. And what we would tell people is most people.
in their early 50s, 50 to 65. is really kind of that sweet spot. Although we are seeing younger people in their 40s that we rarely ever saw coming into the buying zone, I think because they're seeing the issue with their parents who might be older. The other thing is, when people were in their 70s, we really were, because of health underwriting, Limited on what we could offer.
Now there's new long-term care annuities that help a lot more people. be able to get coverage that previous years they just weren't able to get. Yeah. Yeah, that makes sense. I know price increases have to be done on the aggregate, but they have been challenging over the years.
What do people need to understand about the potential for the premiums to increase over time? Yeah, so price increases are an unfortunate black eye on the industry. I mean, my own long-term care policy has gone up. Significantly, as I've owned it over the years. But there's really two things to the benefit.
One, there's some policies now, the life-long-term care hybrids contractually cannot increase, so you can get guaranteed premiums. The other thing is data.
So, a lot of the issues previously were insurance companies that really didn't understand one interest rate assumptions when we had the Great Recession back in 2008, 2009, and the Fed rate went to zero. That impacted a lot of insurance companies. And then, two, the claims data.
Well, now, many years later, we have a much, much better data set to understand. The interest rate environment and also the claims environment.
So, the likelihood of rate increases on policies sold today is very, very small. Yeah, very good. Just a couple of minutes left. I know there's some newer features or options that are available today that have not been available in the past. Do you want to mention a couple of those?
Yeah, a couple things just to know. One, cash is king.
So we're seeing an increase in cash benefits where you qualify for a policy. Here's your money. Use it to pay for a family, a member, friend. It doesn't matter. It's the ultimate flexible freedom at claim time.
That's something that's new. The other thing is policies are moving to a monthly benefit versus a daily benefit. And that sounds small, but it's actually significant, especially in home care when care is only needed two, three days a week. that monthly benefit provides You know, the set benefit for the month, regardless of your daily spend, a daily benefit is just the max per day, and you may cap out on those days of care. Very good.
Last question. For someone listening today and realizing they need to start the planning process, what's the first step? Yeah, let's start with a family conversation.
So, think of it as if you needed this care. How is that care going to be paid for? Who's going to provide that care? Have you talked to them? Are they physically even able to do that?
And in what setting do you want that care to be had? And really start there. And then look at: okay, what kind of insurance coverages do we have? And talk to an independent professional. If there's one thing I would get, the health underwriting is very precise by carriers, and it's important to work with a professional.
Excellent. I couldn't agree more. Nathan, we're going to have you back real soon, but really appreciate your time today. Great information. Thanks, Rob.
It's great to be here. That's Nathan Sano, president of LTC Consumer and MasterCare. To learn more about long-term care planning and explore your options, visit ltcconsumer.com. That's ltcconsumer.com. We'll be back with your questions after this break.
So call right now, 800-525-7000. That's 800-525-7000. Or if you'd prefer to email your question, send it to us at askrob at faithfield.com. Stick around. Money always seems to ask for more.
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We're taking your calls and questions today, 800-525-7000. All right, we're going to head to the phones. Let's head to Illinois. Scott, go ahead. Hi, um.
I'm going to try and speak fast 'cause this is like over ten years in the making. But we are trying to buy a house that we've been renting And the landlord is willing to sell to us for a pretty good price. My biggest question was it was more of a worldly thing that I had on my heart that I wanted to save fifty percent of this house to put down And so we had some medical bills. And we're at about twenty five percent now. And um the Spirit is putting on my heart.
we should buy now. Um And so since we've been writing I'm trying to find out we don't really need a realtor. But we do need something like a lawyer or realtor to do things like the deeds and stuff. And so I really need some advisors. Yeah.
Well, I appreciate that. You know, in terms of where you go from here, I would say, number one, don't deplete your cash reserves. You know, especially after a career change, it's wise to maintain a healthy emergency fund in case your income is less predictable than expected. I would consider the interest rate here, Scott. You know, if you're getting a competitive mortgage rate, it may make sense to put down less than 50% and keep more cash available.
If the rate is high, you know, putting more down could reduce your monthly payment and total interest costs. We're on the higher end of what we've experienced the last 10 or 20 years, but we're probably pretty more typical to what the industry has looked like for the last 50 years or so. And then you always want to look at your whole financial picture. The write-down payment balances affordable monthly payments with maintaining liquidity.
Now, we certainly want to try to pay it off over time, but this idea that you would try to preserve adequate reserves is a big idea. In terms of who you'd want to connect with, you know, in terms of the purchase itself, I think just finding a godly real estate professional would be really important. And then they would work either with an attorney or a title company on the closing. But that real estate professional is really the quarterback for helping you in terms of finding that appropriate home, helping you negotiate and buy, and then dealing with all of the contracts and so forth.
So I would probably ask at your local church. You certainly could call a certified kingdom advisor and ask for a referral, but we don't have CKs in the realtor field.
So there wouldn't be any direct contacts you could make through FaithFi. You would have to ask for a referral. But I think that person that is familiar with your area, preferably shares your values, who's got good experience, could be invaluable in this process of just determining. Determining what house to buy, what you can afford, where, and then ultimately, how much to put down. I hope that helps.
It sounds like you're headed in the right direction here, Scott. And if we can help further, don't hesitate to reach out. Thanks for being on the program, sir. Let's go to Indianapolis. Matthew, go ahead.
Yeah, thanks Rob. Uh my question is I'm thirty nine years old. Um I have about $100,000 in an ESOP account. that's going to be paid out next year in twenty twenty seven. My wife and I have about $60,000 in debt.
The question is: do I? Is it wise to pay off the debt with that ESOP money that's being paid out or roll that into my four hundred one K? Yeah. And um what type of debt do you have? The sixty thousand?
Um it's um a couple of credit cards and um some tax debt.
Okay. And do you are you still accumulating the credit card debt? Yeah. Okay, was that like a single event, or was that just gradual lifestyle spending beyond your means? Where did that come from?
Yeah, it was uh prior to our marriage and then um just spending on some things that we probably didn't need to prior to marriage and then also some marriage debt too when we had our uh wedding.
Okay. Yeah. Yeah, I mean the priority order there would be, I would say, is the IRS debt first, especially if you're accruing penalties and interest, then the high interest credit card debt. Especially if it's double-digit interest, and then maintain an adequate emergency fund so you don't ever go back there. And then, if there's money left over, then that would be where you would look at perhaps rolling the eligible portion into your 401k or another qualified retirement account.
But I would confirm that, in fact, that is eligible for a rollover. I suspect you've already done that, given that you mentioned that option. You also do want to know the tax consequences.
So, you're just going to want to probably talk to your plan administrator or your CPA before making decisions, especially on anything you're pulling out.
So, that doesn't catch you by surprise. But, you know, ultimately, getting the IRS paid back and then getting that credit card debt eliminated.
Now, if you can fund the credit card debt on a relatively short period of time out of current cash flow, I'd love to hang on to as much of this retirement account as possible for your future, especially because it's in a tax-deferred environment and it's not easy to get money in there. But that IRS debt seems like something, unless you're on a payment plan and you're making good progress, that would often come first for me.
So, that's my pecking order. I think some of the things to consider there as you're thinking about it. Big idea, you know, we want to get out of debt quickly. And as long as you've got a plan to do that, I'd like to preserve as much of this as we can. But anything that's considering to accrue high-interest.
Trist, let's wipe it out. Thanks for your call. Let's quickly go to Texas. We'll finish with Lucy. Go ahead.
Thank you for taking my call. I'm updating my will now that I live in Texas, and I'm wondering if it is God willing for me to just give my children. you know, a percentage of the funds that the Lord has gathered for me. rather than splitting it three ways for them, because I would like to give it to also to three nonprofit organizations that I'm supporting now. Yeah.
Well, first of all, I don't think there's a right or wrong decision here, Lucy. You are the steward. And so I would pray about and ask the Lord for wisdom. As a part of that, I would ask the question: what is the worst thing that can happen when I leave the money to the kids? And here's the idea: whatever their life trajectory is, the money is likely going to accelerate that.
Now, that may be a good thing. They may be on their own, doing great, financially mature, spiritually healthy, and that's great. If any of them or all of them are not that way, just consider what impact the money may have have because what's most important is their spiritual direction and pursuit of the Lord. But at the end of the day, if you decide to give a percentage to each of them and you've got some ministries on your heart that you want to fund through your estate plan, that's great. There's nothing that says you have to leave all the money to the kids.
In fact, I think each person should really prayfully consider that in terms of what they ultimately decide. Hey, I want to send you a copy of a book that I think will be helpful for you. It's called Splitting Airs. It's going to be our gift to you. Stay on the line.
We'll send it out to you, Lucy. You read that. I think it'll help in some of these decisions. God bless you. Big thanks to my team today, Jim, Devin, and Sandy.
We'll see you next time. Bye-bye. Faith in Finance is provided by FaithFy and listeners like you. I don't know.
