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November 30, 2016 9:15 pm
Bruce Gray, founder of GP Financial Services, joins John Stillman to talk about some common misunderstandings that people have about Medicare.
Click the link for more in-depth reading in a recent blog post: https://mrstillmansopus.com/long-term-care/medicare-misunderstandings/
12 "again it is Mr. Stillman's opus joined today by a good road to Bruce Gray who comes to us from Springfield Missouri but spends a lot of his house. But a lot of his time Walnut Creek right outside of the bay area. Or I guess it is the bay area, California right sure so narrow in both places both on the heartland a little time on the West Coast. You've been helping people plan their retirements. Bruce since I believe the Herbert Hoover administration is that I am Herbert.
We went to school actually arose interesting to me but I started in this field. Your Medicare began 1966 and some old. You've been around the block so to speak, but that that is exactly what I wanted to talk with you about is Medicare because you been living in that world for several decades now and so wanted to get your perspective on some things in the Medicare world some little understood facts. You might say about Medicare and I think one of the big misunderstandings that people have about Medicare is you know what exactly is covered as far as skilled nursing and long-term care and all I can stuff for long-term care. Nothing simple enough yeah well mean you have to listen versus sickly folks to the terms that he just you skilled nursing skilled care on a daily basis. And yes, Medicare will cover skilled care on a daily basis, but the minute you are just helped out of banner help to walk or bay.
That's not skilled care folks that's custodial care and that breaks your consecutive skilled days and when that happens. Medicare is done with you. So let's talk about what Medicare does when you go into a skilled nursing facility under federal Medicare, the first hundred the first 20 days, Medicare does not cover all.
In other words, if it's $300 a day in a skilled nursing facility that's what you're going to pay the first 20 days are on you all out of your pocket. Then, beginning with the 21st day to the 100 time Medicare if you are having skilled care and understood.
Listen very closely to this term. You have to have skilled care on a daily basis if their teaching you just speak from the stroke are went to walk or anything of that nature. That's fine and dandy that is skilled care if you rest. One day you are no longer having daily skilled care if you have skilled care today. Rest tomorrow. You could have skilled care. The following day and the rest of have to that that is termed enter immediate care, intermediate care, Medicare does not pay for intermediate care. So basically what to what you should look at under federal Medicare is having precious little skilled nursing or custodial nursing benefits at all and custodial care. By the way folks is the big bugaboo for those who are in a long-term care facility.
The longest cares are typically people who were there from dementia or Alzheimer's and they do not get skilled care there just helped a wall may get in and out of bed, taking her medications.
That is, custodial care, there is not even intermediate skilled care there. You might say will wait a minute if I have a stroke. I'm good what you're good at your cares again daily skilled that if you have speech therapy Monday Wednesdays and Fridays, and Tuesday, Thursday and Saturdays you rest your right back into the intermediate care thing. So the thing that needs to be very very well understood John here. And most people don't get it. Is it must be skilled care on a daily basis. The minute that you miss one day you're done your cut.
It's over. And that is the law of Medicare. Now you might say will that's unfair what is not unfair. Medicare was never designed to be a long-term care plan. It was designed to pay hospital and doctors coverage and help you little bit in between becoming a skilled patient and the custodial patient. That's all that it was designed to do and if you want more coverage on Medicare. What you're basically saying is that dear federal government.
I want more taxes because the money has to come from somewhere and Medicare is already a huge huge program. People are living longer and so is requiring more and more dollars to pay their Medicare benefits.
So Medicare is the greatest by you will ever have in insurance if you were to be 66 years of age and have no Medicare and you had ever traditional major medical coverage with catastrophic coverage on it. State of California. Ben had a business. Therefore, since 1983 I can just hear that your cost to pay your charges to pay those costs in California would badly bend you cost just continue to go up all around the United States. By the way, if you go into the doctor's office. You're gonna see why they become more able to handle more situations they have more advanced equipment. That simply means they make a larger investment in their business and they're not there to be in philanthropic organizations are not there to say hey John it's good to see you and I'm here because I want to care for you and I'm loaded with money and I'm not going to charge you a penny so understand what you're looking at here.
Federal Medicare is a wonderful benefit for hospital and Dr. you do need a Medicare supplement, but if you are concerned about long-term care in any capacity you need to see if you can get a long-term care contract as I make since John yet will having explained that in_the fact that custodial care is not going to be covered in any way shape or form by Medicare I one of the points I'm always trying to drive home the people is that you need some kind of long-term care plan and that doesn't necessarily mean long-term care insurance per se that could be the solution for some, but we need a plan for how we're going to address those expenses you may have a lot of money you could pay for now. What I have started suggesting in my practice started to been doing it for years now is instead of buying traditional long-term care insurance, which is like homeowners insurance or car insurance.
If your home doesn't lose its roof are burned out or have a problem you don't get any back if you don't wreck your car or have it stolen or whatever you don't get car insurance money back and that's the way long-term care was for years now. Today John, as you well know, we have long-term care life insurance plans and we have long-term care annuity plans. Let's just look at the annuity plan for simplicity for minute you can put a lump sum of money into a fixed annuity with a guaranteed growth rate and let's suppose that you put in 200,000, the company that the issues this particular type of coverage will triple your coverage.
They will then make your long-term care coverage for 600,000. If you passed away never used it. Your 200,000+ the growth goes to your heirs. But if you need long-term care protection you would now have 600+ thousand dollars to paint a long-term care facility, and so basically for every dollar that you put in the company as an additional two dollars for long-term care coverage. These types of plan are far, far more popular today than the old long-term care plans because you win-win. If you get sick you win because you have somebody to help you pay the charges but if you stay well. You are your heirs. When because that money still remains in your control.
So there's some wonderful opportunities today for a long-term care opportunities that didn't exist back in 1966 when Medicare began. How often do you do long-term care insurance. Like traditional long-term care insurance as people have known it where you pay a couple thousand year for the premium and you have X amount per day in coverage and what percentage of the time you go that route versus either a life insurance or an annuity solution of far more rarely do we use traditional long-term care because you were kind in your premiums if you take two people in their mid 60s for long-term care you're talking $8000 a year, probably in long-term care premiums. Why because they have to have an of money paid to them in the event that one of them is ill that it will pay these larger long-term care charges. I mean mercy you look at long-term care costs. In 1966 and look at what day it's a whole different picture by the way, Jon. I have had several occasions over my career I've had a husband and wife in a skilled nursing facility. At the same time, most often there in the same room together which is nice because they know each other noted law, but the fact of the matter is that happens don't think it's just an isolated event.
God permitted happens to both of you who you're talking about some spicy meatball letter when you're paying those charges on both of yourself. It is something I tell people it is something that has to be considered. I have a client I talked with not long ago he's worth $8 million were talking about missions. Do I need to have this asset only if you wanted to go into a facility and you're willing to pay the bills for you and your wife yourself. You have the money to do that. Now if you want to protect that money for your children. You should have some type of long-term care coverage because now it becomes protection for your heirs, as well as protection for you makes an awful lot of sense and also the first time that we've ever used a spicy meatball talking about long-term care will have a lot of wonderful Italian club hits they teach me these phrases as you well certainly appreciate your wisdom Bruce. I knew this is right in your wheelhouse and will have you back at some point to talk about the mother things about Medicare and long-term care planning that people need to know, but certainly appreciate was a big guy had to talk with you brother will talk to you soon. Thanks. Attending in this is been Mr. Stillman's office