Planning For Long-Term Care (LTC) And Medicaid Issues

Comparing National Long-Term Care Costs

• Medicaid only pays for shared rooms • 95% of people have no LTC insurance • Over 50% will need LTC insurance

National Average LTC Costs

Home Health Care $61,766

• Alzheimer’s Care • Meal prep/diet monitoring • Light housekeeping • Errands or shopping

Source: CaseScout.com 2021 Survey

In the face of fluctuating home prices along with potential nursing home and long-term care expenses, it is typically better to have equity in cash and in a form that can be controlled instead of relying on uncontrollable factors.

Use small amounts of equity to protect all other assets such as:

• Traditional Monthly LTC Premiums • Lump Sum LTC/Life Insurance • UL Life Insurance With Living Benefit Riders It is critical as reverse mortgage lenders and trusted advisors to your clients that you understand the basics of long term care (LTC) insurance and how it can relate to the equity in seniors homes.

Assisted Living Facility $54,000

• Private apartments • On-site nursing • Help with daily living • Help with medication

Nursing Home Facility

$108,405 Annually (Private) • Full-time in-facility care • Advanced LTC • Help with daily living • Help with medication

Life Insurance

– Hybrid Product

Ability to purchase needed insurance or investment products because of change in cash flow - insurance can multiply the wealth and guarantee the home equity.

• Paying for life insurance policies needed for planning or that are running out • Replace home asset • Estate planning – leave behind larger legacy • Leverage of tax-free payments to heirs*

*This advertisement does not constitute tax and/or financial advice from Fairway. **Source: http://www.nolo.com/legal-encyclopedia/long-term-care-insurance-risksbenefits-30043.html

Planning For Long-Term Care (LTC) And Medicaid Issues*

Long-Term Care & Medicaid

LTC continues to be the greatest threat to your clients’ income, assets, and planned legacy to the next generation PERIOD. • Statistically, less than 5% of your clients have LTC insurance.**

• Unless they are very wealthy, most clients cannot self-insure. So what’s the plan? 1. Clients 2. Kids

3. Government

4. Insurance

HECM & LTC Options

1. Use a growing Line of Credit to fund potential LTC costs at an early setup age of 62, so that the funds will be available to your clients in their 80s and 90s when they are most likely to need LTC. 2. Use additional cash flow from HECM to fund vacations and additional luxuries, so other investments can be used to purchase LTC insurance or a life insurance with LTC rider live in benefits.

3. HECM proceeds may be used to shield home equity and income when there is a spouse who is still in the home while an institutionalized spouse needs to qualify for Medicaid. (Note: Both spouses must be on the reverse mortgage.)

Shield Home Equity*

1. A reverse mortgage loan can potentially be used to protect and shield equity because of two mortgage liens placed on the home after a reverse mortgage is in place even if money is not drawn and only a growing line of credit is put in place.

Use as additional asset when client should not draw from IRAs and other retirement funds because of tax purposes. 2. In extreme bankruptcy and foreclosure situations, a reverse mortgage might protect equity and allow borrowers to convert equity to cash. Some bankruptcy attorneys use a reverse mortgage as part of pre-bankruptcy planning to reduce equity so that the house does not need to be sold.

3. Potentially protect home equity from liens and/or lawsuits.