Long Term Care Starter Plan

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This is the Truth Network. Welcome to Finishing Well, brought to you by CardinalGuide.com, with certified financial planner Hans Scheil, best-selling author and financial planner, helping families finish well for over 40 years. On Finishing Well, we'll examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Social Security, Medicare, IRAs, long-term care, life insurance, investments, and taxes.

Now let's get started with Finishing Well. Finishing Well is a general discussion and education of the issues facing retirees. CardinalGuide.com, Cardinal Advisors, and Hans Scheil CFP sell insurance. This show does not offer investment products or investment advice. Well, welcome to Finishing Well with certified financial planner Hans Scheil, kind of a fun show today, because I am actually at Morningstar down at the Man Up Conference with Nikita Kolos.

So if you hear some music or something in the background, that's because I'm recording from the conference room floor here. And we got our wonderful financial planner and certified financial expert Hans Scheil with us. And today's show, we're going to talk about a long-term care starter plan. Like, wow, what a cool thing, a long-term care starter plan. And so Hans, as I was thinking about that idea, I thought, wow, you know, what a cool thing that you would have faith that this situation would be covered.

And so a faith starter plan seems to be in order. And as I was thinking about that idea, in my mind, I pictured some Hebrew words, because in Hebrew, words are put in pictures. And so if I could just describe those pictures for you for a minute on what Noah's name would represent. So you might remember Noah, he built an ark. Well, it was really important for God that Noah would comfort his people.

So he gave him a name that means comfort. And that name, if I could take the two letters as pictures, have to do with the seed of faith, is actually the first letter that sounds like an N. And the second letter, which sounds like an H, actually looks like an H in its own way, because it is the idea of the marriage canopy or a marriage hoopah. And so there's a male energy and a female energy kind of with God hovering above that. And so as you got this idea of this plant that is planted in the good soil, you see has faith, that faith seed is going to have faith that someday it will be united with God.

You see how cool is that? And then when you take that backwards, which is how you spell the word grace in Hebrew, you take those exact same two letters, you flip them upside down and you go, so you have the marriage canopy sitting next to the seed of faith. So once we get married to Jesus, then our plant begins to grow and we can bear fruit.

Beautiful. But what's really cool about that when you think about it is Jesus now has faith in you. In other words, you're his favorite. And that's the idea of grace is he has faith in you and it's unmerited favor, essentially.

It's a beautiful, amazing idea. But once we have that faith, you know, then we can begin to bear fruit. And we have children, right?

We don't want to put a burden on them for long-term care. So that's a perfect transition there to take. I thought I was his favorite.

You are, I promise. We all are those of us that have come to Jesus. So we're talking today about really an alternative to what we recommend for most people. And that's the long-term care starter plan or the long-term care starter kit. And this has kind of arisen out of really two groups of people. The group of people that just can't afford, or they're not willing to pay, even if they could afford for full-blown long-term care insurance that's going to cover the risk for a number of years, and it's going to pay out a substantial amount for either home health care or assisted living or nursing home care.

And, you know, we show that to a lot of people. We talk to a lot of people about that, or they're coming to us for financial planning. And some of them just don't have the money, but yet they're still concerned about the problem. Or there's people that do have the money and the resources, but they just ain't doing that big deal, or they're not going to buy one of these hybrids with a substantial portion of their retirement money. And I find that a lot of people kind of easily dismiss this, and they say, oh, well, I'll just, you know, if that happens to me, I'll just deal with it when that happens. Or the people that have money and resources just say, well, I have enough.

If that happens to me, I'll just pay for it myself. And so what we're talking about today is what we end up recommending. And a lot of times, not right at the time where they're rejecting the larger plan, but we're going to come back around and explain this starter plan to them really as an alternative to the larger recommendation. Does that make sense to you?

Absolutely. It's definitely, I love the way you guys said it in your video that this situation can easily crash your retirement plan. And so, you know, this is part of what a good plan does, is looks to, you know, what some of the possibilities are. Well, you know, people, a lot of people that we help, you know, they're on a fixed income. They don't have a lot of assets. Maybe what they do have is in an IRA, and they're wanting to preserve that, and they're living off their Social Security.

Maybe a little work and making it last. And, you know, they discover through working with us that they're not paying much taxes on that Social Security. And, you know, they're looking at long-term care, or, you know, if this happens to them, it's going to put them in a really bad way, because, first of all, they're going to have a short-term need. I mean, you can't just call up the Medicaid office and say, you know, I'm going to pay for my long-term care because I don't have any money. I mean, people that have limited resources, they're going to be paying for this themselves for a while, or the family's going to be stepping in, or something's going to happen. It really creates a crisis for people when they have a stroke, or they have a fall, or just something necessitates that they can't be at home by themselves, yet they're not paying for their long-term care. That they can't be at home by themselves, yet they want to be at home, and they need somebody there with them.

And so, you know, for those people, I generally recommend that they go with one of these short-term care policies, if it's, you know, if it's available in their state, which is available in 39 states, so in North Carolina is one of them, South Carolina, Virginia, areas around where people hear this on the radio. And I generally recommend that they get started with some version of that, and that's what you did yourself, Robbie, for you and Tammy. Yeah, and we are so glad because it did exactly what I described, is it gave Tammy and I both faith, especially Tammy. She was really, really, really concerned because of the burden her mother has been on, you know, her life, and all that has happened as a result of caring for her, that she just, there's no way I'm doing this to my kid.

There's just no way. And so, you know, this is one of those things that, you know, even she started when she was 58, I think, because it was less expensive the younger that you are and the more healthy you are, and so that worked out good for us. It seems like her plan was probably $120 a month, yours was $140, maybe hers was $100, something like that, and it's affordable, and it's not going to break the bank, and I'm sure it's tough to pay both of those premiums every month, but, you know, what that's going to give you if you're all of a sudden in a crisis, because this stuff comes up all of a sudden, even though maybe you could see it coming, you really can't see it coming, and you really can't see it coming, because you're fighting for your independence, and all of a sudden the family's got a crisis, and then boom, your policy doesn't even have an elimination period or a waiting period. It pays from day one for home health care, and it pays from day one in an assisted living facility, okay, and it pays for one year in each of those separately, so, and it pays you a cash payment to you every week, regardless of the amount of money you spent, okay, and in other words, you've got to do three visits where you have to actually pay a home health care agency to come out and do something.

More than likely, you're going to pay somebody seven days a week for a few hours, but to meet the minimum of the policy and get the cash payment, all you've got to do is have three visits a week from a home health care agency for a minimum of an hour, and then they're just going to send you 1,200 bucks, and then you can spend that as you see fit. Yeah, that's awesome. It is.

Every week for 52 weeks. And that's the thing, is that it keeps us from crashing if something like this happens, and the burden, because I like what Tom said in the video as well, that when your children are at the age where you're going to need this care, it tends to be the age where they're really needing to make an income, their kids are going to college, this is no time to bring some kind of tremendous time restraint on them when they've got their families in full bloom, right? Absolutely. I was thinking about this, you know, with my wife, I mean, we've got a pretty substantial policy, and when she went through her troubles with cancer a couple of years ago, I mean, I was just really, really concerned about her, obviously, and then I was concerned about myself, like how in the world am I going to be able to take care of her?

And, you know, we were very fortunate that she was healed, at least for the time being, and really the convalescence was not that big of a deal, and I think I came through for her. But when all this was going on, I was thinking that if this thing goes on and on and on and on, I'm going to need to hire somebody to come in here and think, I have this long-term care policy, so it just, I have a pretty high budget to bring people in there to help, which I really would have needed. You know, I love the idea that you shared on the other plan, which, you know, you can use IRA money and begin to dwindle that down, right?

Oh, sure. I mean, we have all kinds of ways to pay for this stuff, you know, when we can use your assets, or we can use your income, or we can use a combination of the two, we can create an income from IRAs, so just understand that we have not an unlimited, but pretty close to unlimited amount of options and ways to prepare for this thing. Which kind of brings us, I think in the second part of the show, we're going to talk about why the starter plan is a good alternative for people that have sufficient resources that, but they're just not willing to put them forth for long-term care. How the starter plan will really get them on the way to self-insuring themselves, which is, that's what a lot of people end up doing, is really another way of saying, I'm rejecting long-term care insurance, I'm just going to pay for it myself if it happens to me. Yeah, but like you say time and time again, we've talked about on this show that the worst time to want to deal with that is when you're, you know, 80 some odd years old, and now all of a sudden you need that care, you know, like my father, he's not going to want to pay three, you know, and he didn't, right?

The people said, $200 to come out. Oh yeah, he couldn't even get out of a chair on his own, and he was living alone in a very nice house. I went to see him when he was in that way, and yeah, and he just, he wasn't going to pay the $200, he wasn't going to have them hanging around the house, but I will promise you, if your dad had had long-term care insurance, he would have been all for it, okay? Yeah, I know, I know him, a completely different story, and you know, it's hard to picture ourselves with the hardening of the attitude, you know, nobody thinks I'm going to be that guy, but that's kind of what happens, right?

Oh yeah. Yeah, we got to go to a break, we want to remind you that this show is brought to you by CardinalGuide.com, where you can get Hans' book, The Complete Cardinal Guide to Planning for and Living in Retirement, and that's got the Seven Worries tab, which one of those tabs is long-term care, and the neat thing is there's show notes where Tom has posted just an unbelievable study that really isolates what some of these costs are, it's really a helpful resource, it's all there in the show notes on the Seven Worries tabs at CardinalGuide.com. We'll be back with so much more on our long-term care starter plan when we come back. Hans and I would love to take our show on the road to your church, Sunday school, Christian, or civic room. Here's a chance for you to advance the Kingdom through financial resources by leveraging Hans' expertise in qualified charitable contributions, veterans aid and attendance, IRAs, Social Security, Medicare, and long-term care. Just go to CardinalGuide.com and contact Hans to schedule a live recording of Finishing Well at your church, Sunday school, Christian, or civic group. Contact Hans at CardinalGuide.com.

That's CardinalGuide.com. Welcome back to Finishing Well with certified financial planner, Hans Scheil, and today's show we're talking long-term care starter plan. And so I'm excited to get into some more of these details on that hybrid plan there, Hans. So we're talking about, you know, just when we left is the gentleman or gentlelady, I mean just whoever it is, the couple that is just, they're going to self-insure this. I mean they've just thought through it, they've got a lot of money, and I'm talking about a lot of people, some of my closest personal friends that are just, look, we've got enough money if we need long-term care, we're going to pay for it ourselves.

And this conversation's over, okay? And some of these people, I manage some of their money, and they have their Medicare Supplement Insurance with me, and they, you know, they buy life insurance, and they have all kinds of things where they're taking my advice, but this subject has its own set of circumstances. And I'm going to tell you, my theory on it is that it's an emotional subject.

It's emotional decision-making, and it's conflict avoidance, and it's people that do have a lot of resources, they've accumulated sufficient money, and they're in their 60s, maybe late 50s, early 70s, and they're enjoying the good life, and they just don't want to think about and deal with the fact that 15, 20 years from now, or sooner, that life could take a really odd turn for them, and then they will need somebody taking care of them. And if you've got resources, you want to do this at home. I mean, the pandemic taught us that, is you want to bring Carrie in, and you want to stay right in your home, and that is expensive. And so we talked about it a little bit in the beginning of the show, and even people say, well, so what, it's expensive.

If it happens, we'll just pay for it. Enough of that. And I'm just saying that that movie is not too pretty to sit down and watch, is the 80-some-year-old guy that's sitting there, or 80-some-year-old lady, who now you're going to start talking to them out of some of those millions, 200 bucks at a time, to pay for a home health care agency, and they throw them out of the house. Or even if they go along with it, because it's not you making the decision when you're the 80-some-year-old person, it's your adult children.

The most responsible of them are sitting there, and they're having to make sense of all this. And now they're going to have to go in and take your money and pay for this stuff and make all those decisions. And so if that's the way we're going to go, but at the very least, let's plan it out.

I mean, let's sit down and put together a plan, so when this happens years from now, they'll know what to do. And so what I'm leading up to is, I've gone this way with a lot of people, is they end up buying one of these starter plans, just like you purchased, Ravi. And what it does is it buys them a year's worth of protection for home health care, and a year's worth of protection for a facility.

You know, over $100,000 worth of protection, but more importantly, it starts sending out checks from day one, and the old person that said, I'm going to pay for this myself, well, they can throw the beginning bills on the insurance company until they can figure out how they're going to rearrange assets. So that's kind of the point I wanted to bring up. Right. You know, that's the one side of it. But the other side that you're talking about, you've had a whole bunch of people come to you about with the IRA situation. Well, yeah, I mean, once people discover, and they can do this through my videos on YouTube, and they have, because Tom walks them through several different videos, we've gone through actual people that have bought this, and they've taken a substantial part of their IRA, or for some of these people, it's not even a substantial part, where they're taken $200,000, $250,000, we just have one paying for where they've put $350,000 in there because they wanted the lifetime benefit, and they wanted a substantially higher benefit than was there, because they're planning to use it for home health care. So, and they did it with IRA money, because a lot of these people that have resources that are in their mid-60s, and they're looking at this, they're coming to us to plan out distribution of their IRA, to minimize their taxes, to do estate planning and pass things on to the kids, and then we get on this long-term care subject, and they find out that they can just take a chunk of their IRA money and put it toward long-term care, and you know, it's not the purpose of this show is to explain the mechanics of this, but it's just, you just move the money from one place to another place, and the payments are done from other resources anyhow, there's a bunch of internal stuff going on. People love it, and so we've got all kinds of people buying that, and part of that is because we're proposing it to a lot of people, okay, and so I've just talked about the people that, you know, have said no to that, or they can't afford it, or they want to put the resources, and so what we've shown on this YouTube video, and we're talking about today, is going ahead and plugging in a starter plan for them, just so if the crisis happens to them, that they'll have a little bit of time between then and self-funding, you know, and actually paying the bills themselves. The thing is, is that if you've got resources, and you're planning to pay for this yourself, if it happens to you, number one, you're going to want to do that at home, you know, whether you have insurance or not, you're going to want to be cared for at home, at least that's my plan, if there's any way possible to do it. Now, I'm going to tell you that people that are cared for at home are ultimately going to end up in a facility, and if that's me, I want that facility to be a really nice place, okay, and I want it to be a private pay facility, and I want to put that off as long as I possibly can, and so, you know, that's my thinking, and I think the time periods, or the length of time of this where you could possibly be receiving care is from whenever the situation happens to you till the end of your life, and I think that that's lengthening, if anything, it's not shortening.

I mean, I don't know that. In other words, people are living longer and longer and longer as time goes on, and to have a longer period of time when they can't care for themselves, and so what we're doing here is we're just pre-funding that. We're sitting down, looking at the reality of it, and we're setting you up with, you know, with a budget for this, or an insurance plan that's going to pay out. What's nice about the hybrids is if you don't ever use it, then your heirs get the money. You know, they get the life insurance benefit.

Right, right. The thing that might be helpful is actually to tell my father's story to an extent, to understand the timing of it was interesting to me, and right along the lines of what you're saying, his wife died, I think he was 83 maybe at the time, and she had a brain cancer where they had, they had moved into an assisted living facility in order for him to get help taking care of her, and he hated it. I mean, he was obviously thankful for the help to Teresa, and he was grateful for all that, but man, he did not like that place, so when she passed away, he was like, I've got to get out of here, and so he bought a house, a really nice house up by us. He had moved from Georgia, and his thing was he wanted to live in his house, and if I'd know now what I knew, you know, if I knew now, then what I knew now, I would have never allowed him to go to any rehab or any, you know, because where he wanted to be was at home, and he could have lived out.

I mean, there were times he had to be in the hospital after he broke his neck and all that, I get it, but so much of the rehab and stuff should have been done at home, and had he had an understanding of what we're talking about today, you know, the last year of his life, which is all he needed to care for, was the last probably 10 months, and he could have easily covered it with something like that, but it would have been so much better for him had he spent more of that at home, which he could have. Sure, well, and so the whole thing that we do at Cardinal here is we sit down with people, and this isn't the only difficult subject we deal with. I mean, we deal with estate planning and passing things on to the next generation, and we deal with health care, and just all ranges, so we're just helping you arrange your money in such a way that you're going to be able to have a peaceful and enjoyable retirement, not only you, but the rest of your family, because this is a family situation when there's care involved, and your family's going to be giving you care no matter what. It's just you hire the professionals that come in and do the heavy lifting.

Exactly. Well, unfortunately, again, we've run out of time before we ran on the show. We want to remind you that the show is brought to you by CardinalGuide, cardinalguide.com, where there are the seven worries tabs, where you can go listen to the podcast under the Long-Term Care section, or you can go to the Show Notes on the Resources tab, cardinalguide.com, Studies on this Law, and some wonderful stuff from Paul Hahn's book, The Complete Cardinal Guide to Planning for a Living in Retirement. So, again, that's cardinalguide.com.

Thank you, Hahn. We hope you enjoyed Finishing Well, 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 Hahn's bestselling 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 Hahn's book, go to cardinalguide.com. If you have a question, comment, or suggestion for future shows, click on the Finishing Well radio show on the website and send us a word. Once again, that's cardinalguide.com, cardinalguide.com. This is the Truth Network.