Protecting Your IncomeLong Term Care, Insurance

& Estate Planning

Is Long-Term Care In Your Future?

The number of people using nursing

facilities, alternative residential care places,

or home care services is projected to

increase from 15 million in 2000 to 27 million

in 2050.

Source: National Center for Health Statistics 2013

Long-Term Care

4http://longtermcare.gov/the-basics/how-much-care-will-you-need/

** U.S. Department of Health and Human Services, 2018. Cost projection is a hypothetical example of mathematical principles and is used for illustrative purposes only. Actual results will vary.

• Average 65-year-old has 70 percent

chance of needing long-term care.*

• Women on average need long-term care

for 3.7 years vs. 2.2 years for men (mix of

in-home care and in-facility).*

Current average cost of a one-year stay in a nursing home (semi-private room): $82,128**

According to the Genworth 2018 Cost of Care study, the

average national costs for care per month:5

4

Adult Day Healthcare

$1,560

In-Home Health Aide

$4,000

Nursing Home Private Room

$8,365*

Nursing Home Semi-Private

Room $7,441

5https://www.genworth.com/aging-and-you/finances/cost-of-care.html

How Much Does Long-Term Care Cost?

*Cost in 20 years at just a 3% inflation rate: $149,535**

Health Care

Source: Employee Benefit Research Institute, 2018

Sixty-five-year-olds who retired in 2018 might need these amounts to cover their health expenses in retirement

Woman

Married couple

Man $148,000

$161,000

$296,000

What Is Long-Term Care?

Ongoing services and support for people who are unable to care for

themselves due to:

Accident

Disability

Prolonged Illness

Aging

Where Can You Receive Care?

Home

Assisted-Living Facility

Adult Day-Care Center

Nursing Home

If You Need Help Someday, What’s Your Greatest Concern?

Ensuring you won’t have to rely on your family?

Staying in your home as long as possible?

Preserving assets for loved ones?

Protecting income for your healthy spouse?

How Will You Pay for Long-Term Care?

Pay out-of-pocket

Rely on government

programs such as

Medicare or Medicaid

Purchase Long-Term

Care insurance

Utilize Home Equity

Reserves

Paying for Long-Term Care - Medicaid

Medicaid is a program of last resort for people with limited assets

You may have to spend down your assets to qualify

Married couple $117,240

Single person $2,000

Medicaid limits where you can receive care

The state may seek reimbursement from your estate for benefits paid to

you

Source: National Clearinghouse for Long-Term

Care Information, March 4, 2013

Long-Term Care InsuranceHow Does It Work?

Reasonably good health

Premium is based on your age, health and the features and benefits you

choose

Pays benefits when a licensed health care professional certifies that you are

cognitively impaired or need help with 2 out of 6 activities of daily living

Eating

Bathing

Dressing

Toileting & Personal Hygiene

Transferring (getting in/out of bed or a chair without assistance)

Maintaining Continence (being able to control bladder or bowl function)

Long-Term Care InsuranceHow Does It Work?

3 Types of Coverage

Traditional “stand alone” LTC policy

Purchase a maximum daily benefit (i.e. $150 per day benefit x 365 days =

$54,750)

Min $125/day benefit protects a home in MA

Determine a contract term (i.e. 3yr, 5 yr or lifetime benefit)

Purchasing a maximum benefit amount (i.e. $54,750 x 5 yr benefit = $273,750 pool of

money)

Can extend the term beyond 5 years (i.e. $100/day utilized can provide 7.5 yrs of

benefit)

COLA Increases – Can purchase 1%,2% or 3% inflation rider to increase benefit

annually

Payments are made annually, semi-annually, quarterly or monthly

Long-Term Care InsuranceHow Does It Work?

3 Types of Coverage

Hybrid - Life Insurance with LTC Rider

Purchase a cash value life insurance policy with a LTC benefit Rider

Annual premium payments

Must qualify medically

The Death benefit can be utilized if a LTC need

Must satisfy 2/6 ADL’s and qualify for LTC benefits

Long-Term Care InsuranceHow Does It Work?

3 Types of Coverage

Hybrid – Asset-Based LTC

Purchase an annuity with an LTC benefit

Lump-sum purchase payment

Receive 2-3 times multiple of the annuity premium payment for LTC

purposes

Must satisfy 2/6 ADL’s to qualify for LTC benefits

Typically receive a 1-3% compounded return on annuity value

Typically receive a Death benefit of 125% - 200%

Must qualify medically

The Cost of Waiting

No one knows when the need for long-term care

services will arise. It may be smart to buy a policy when

you’re young and in good health (typically around age

60)

The cost is based on your age, so it may never be more

affordable

A change in your health may leave you unable to purchase a

policy at any price

Elder Care Law Attorney

Coordinating an LTC Policy with a well thought out plan can

be the most effective method to protect your retirement

outcome and ultimately your estate

Revocable Living Trust – Assets placed in the trust will bypass

probate cost and delay associated with probate

Does not protect assets from LTC cost and Medicaid spend-down

In Massachusetts you are allowed to keep $2,000 when applying for Medicaid .

Over this amount must spend-down on care.

Community Spouse is allowed to keep 50% of their assets up to $123,600. in

countable assets.

Family Assets, Massachusetts Medicaid Nursing Home Eligibility Information & Rules For 2018 (updated January 21, 2018)

Consult a qualified Elder Care Law attorney for complete legal advice as this is not complete and comprehensive advice and only meant for informational purposes

Long-Term Care Planning Checklist

Explore services and costs in your area

Assess your finances

Talk to your family about your plans

Compare options with the help of a qualified financial professional

Prepare health-care directives and discuss with a qualified Attorney

Estate Planning BasicsAn Overview of the Estate Planning Process

What Is an Estate Plan?

An estate plan is a map

This map reflects the way you

want your personal and

financial affairs to be handled

in case of incapacity

or death

Who Needs an Estate Plan?

Chances are, you do

Not just for the wealthy

Without an estate plan, you

can’t control what happens to

your property if you die or

become incapacitated

An estate plan makes your

wishes clear and helps avoid

family disputes

Proper estate planning can

preserve assets and provide

for loved ones

Especially needed if:

Your spouse isn’t comfortable

with financial matters

You have minor children

Your net worth exceeds the

federal transfer tax exclusion

amount ($11,400,000 in 2019)

or, if less, your state’s

exemption amount

You own property in more than

one state

Financial privacy is a concern

You own a business

Basic Estate Planning Concepts

Planning for Incapacity

Health CareProperty

Management

Planning for Death

Wills and Probate

Tax Basics

Lifetime Gifting

Life Insurance Trusts

Planning for Incapacity —Health-Care Directives

Do Not Resuscitate(DNR) Order

Durable Power ofAttorney for Health Care

(Health-Care Proxy)Living Will

Not all types of health-care directives are effective in all states, so be sure to execute the one(s) that will be effective for you.

Puts your instructions

in writing

Lets you designate an agent to makedecisions on your

behalf

Directs thatresuscitative measures be withheld orwithdrawn

Living TrustDurable Power ofAttorney (DPOA)

Joint Ownership

Joint owner hasthe same accessto property as

you do

Lets you designate an agent to makedecisions on your

behalf

Lets a successortrustee take overmanagement oftrust property

Planning for Incapacity —Property Management Tools

What Happens If You Die

Without an Estate Plan?

Some property passes automatically to a joint owner or to a designated beneficiary (e.g., IRAs, retirement plans, life insurance, trusts)

All other property generally passes according to state intestacy laws

What Happens If You Die Without an

Estate Plan? — Intestacy

Intestacy laws vary from state to state

Typical pattern of distribution divides property between surviving spouse and children

Your actual wishes are irrelevant

Many potential problems

A typical intestate distribution pattern looks like this:

Child

¼Child

¼Wife

½

Husband / Father

Wills & Probate

A will is the cornerstone of an estate plan

Directs how your property will be distributed

Names executor and guardian for minor children

Can accomplish other estate planning goals (e.g., minimizing taxes)

Written, signed by you, and witnessed

Wills & Probate — Avoiding Probate

Can you avoid probate?

Yes, an estate plan can be designed to control which

assets pass through probate, or to avoid probate.

Own property jointly with rights of survivorship

Complete beneficiary designation forms for property

such as IRAs, retirement plans, and life insurance

Use trusts

Make lifetime gifts

Tax Basics

Transfer taxes include:

Federal gift tax — imposed on transfers you make during your life

Federal estate tax — imposed on transfers made upon your death

Federal generation-skipping transfer (GST) tax — imposed on transfers to individuals who are more than one generation below you (e.g., grandchildren) both during your life and upon your death

Transfer taxes imposed on the state level tend to affect smaller estates.

Transfer Tax Basics

2017 2018 2019

Top rate 40% 40% 40%

Gift and estatetax exclusion

amount

$5,490,000 $11,200,000 $11,400,000

GST tax exemption

$5,490,000 $11,200,000 $11,400,000

Lifetime Gifting

Lets you see the recipient enjoying your gift

Lets you minimize transfer taxes by taking advantage of the $15,000 annual gift tax exclusion and other tax deductions

Removes future appreciation of property from your taxable estate

No “step-up” in basis —your basis in the property carries over instead

Trusts

Versatile estate planning tool

Can protect against incapacity, avoid probate,

minimize taxes

Allow professional management of assets

Provide safeguards for minor

children, elderly parents,

other beneficiaries

Can protect assets

from future creditors

Control over property

Trusts — What Is a Trust?

Legal entity that holds

property

Parties to a trust:

grantor, trustee,

beneficiary

Living trusts vs.

testamentary trusts

Revocable trusts vs.

irrevocable trusts

Grantor

Trust Agreement

BeneficiariesHave rights to trust propertyunder terms of trust agreement

Trust Property

TrusteeManages trust property according to trust agreement

Life Insurance

Can provide instant estate

Can provide needed estate liquidity

Life insurance proceeds are included in your estate for federal estate tax purposes unless your estate plan addresses this issue

Key issue is ownership of policy

Conclusion

Have you implemented a plan for

incapacity (health and property)?

Do you have a valid will?

Are transfer taxes a planning

concern for you?

Does your overall estate plan

reflect your current wishes

and circumstances?

Planning for Higher Health Care Costs in

Retirement

35

What Can Cause Your Health Care Budget to Change

in the Future?

Health care costs will likely increase due to:– Higher insurance premiums (inflation)

– Higher utilization with declining health

A change in health status may require:– Expensive prescription drugs (donut hole)

– More services not covered by insurance

Dental

Vision

Hearing

Alternative care

Long-term care

36

Planning for Future Health Care Costs

According to this source . . . You will need to have this much at the start of retirement to pay for futuremedical expenses, not including long-term care

Fidelity $260,000 for couples

Employee Benefit Research Institute $124,000 for men

$140,000 for women

$259,000 for couples

Your own customized analysis ???

37

What Is Medicare?

National health insurance program for people 65+

Administered by the Centers for Medicare and Medicaid Services (CMS), an agency within the Dept. of Health and Human Services

Enrollment through the Social Security Administration (SSA)

Don’t confuse Medicare and SS eligibility

38

Who Is Eligible for Medicare?

Everyone over 65

All U.S. citizens

Legal residents who have lived in the U.S. continuously for at least 5 years

People under 65 who have been receiving Social Security disability benefits for 24+ months

39

Enrolling in Medicare?

If you are not receiving Social Security when you

turn 65:

–Must sign up through Social Security Administration

during a Medicare enrollment period

• Initial enrollment period: If you are not covered by

a group plan at 65

• Special enrollment period: If you are covered by a

group plan at 65

• General enrollment period: If you missed your

initial or special enrollment period40

Enrolling in Medicare?

If you are receiving Social Security when you turn

65:

Medicare Parts A and B are automatic

(can decline if don’t want Part B)

Coverage starts 1st of month turn 65

Parts C, D and “medigap” plans are not automatic;

must choose private insurer and proactively enroll

41

Best Time To Enroll in Medicare

To avoid late-enrollment penalties: Sign up during initial or special enrollment period

To avoid gaps in coverage:Sign up before current coverage ends

For Help with Medicare Decisions:

Call Medicare Back Office at 1-877-385-8083

Give them Brian’s name: Brian Saranovitz

42

What if You Don’t Enroll in Medicare on Time?

• You may pay late-enrollment penalties.

• Your health care expenses may not be covered by

insurance.

• Your private insurance options may be limited.

43

Three Reminders

44

1. Enroll in Medicare on time.

2. Shop carefully for private insurance to go with

Medicare.

3. Plan for higher health care costs in retirement.

4. For Help with Medicare Decisions:

Call Medicare Back Office at 1-877-385-8083

Give them Brian’s name: Brian Saranovitz