The Imperative of Long-Term Care Planning
Long-term care is a subject often avoided in conversations and is not an easy conversation to talk about. Imagine the unforeseen circumstances—an accident, illness, or the natural progression of aging—placing you in need of long-term care. How would you cope? If you have to pay for future long-term care expenses and the care costs between $300,000 and $500,000, how would you pay for this?
Understanding Long-Term Care Dynamics
Long-term care encompasses a spectrum of services vital for individuals unable to perform daily activities independently due to chronic illness, disability, or aging. Activities of Daily Living (ADLs) like bathing, dressing, and toileting become challenging, necessitating support. Importantly, the progression of aging can include conditions like dementia and Alzheimer’s, further complicating the care needed.
Despite the misconception, Medicare doesn’t cover long-term care expenses, leaving many vulnerable to financial strains. The affected ADLs often determine how you receive payment for the care you need. The average annual cost of a private room in a nursing home is $115,000, highlighting the significant financial burden.
Financial Prudence and Medicare Realities
The average long-term care claim extends between 2.5 to 3 years and can swiftly deplete savings and assets. Even the affluent may find self-insuring against such costs daunting. Medicare, with its limitations, requires individuals to “spend down” assets for Medicaid eligibility, making proactive planning imperative.
The middle class faces particular vulnerability to the high costs of nursing home care, with about 70% of Americans aged 65 and older needing long-term care at some point in their lives. According to the Centers for Medicare & Medicaid Services, most people don’t realize that Medicare does not cover long-term care, a reality unchanged since Lyndon Johnson was in office.
Planning for the Future
Boettcher Insurance Agency recognizes the necessity of preparing for the unforeseen. Our seasoned team, who has worked on product development teams at Genworth and collaborated closely with AARP, has over 25 years of experience. We offer many solutions depending on each individual’s financial needs and strategies.
Individual long-term care insurance can provide a buffer against the significant costs of nursing home care and long-term care services, ensuring that individuals retain control over their assets while receiving necessary care. There are three ways to plan for long-term care: 1) self-insure, though the majority should have a plan; 2) a traditional or hybrid life insurance solution; 3) Medicaid.
Over the years, long-term care planning has changed and evolved with different types of solutions to provide better benefits. This decision should include a conversation with all family members to talk about future risk and exposure.
The Uncomfortable Conversation and Taking Action
The prospect of long-term care isn’t pleasant, but avoidance won’t make it vanish. By acknowledging the risks and planning proactively, you can secure your financial future and alleviate stress for your loved ones.
Health Savings Account ( HSA) Day and “20 Years of HSAs”
As we celebrate Health Savings Account ( HSA) Day and “20 Years of HSAs” on Oct. 15th this year, Our independent agency wants to continue to educate our clients about how to utilize a HSAs and how they can use this vehicle as a strategy to save money on taxes and future medical expenses costs down the road. A Health Savings Account (HSA) can benefit people of all ages and lifestyles. Right now about 86% of employees say they are interested in their employer offering an HSA and it is our job to continue to educate consumers of these strategic benefits. The HSA contributions limits for 2024 are $4150 for self only coverage and $8300 for family coverage. Those 55 and older can contribute an additional $1000 as a catch up contribution.
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2023 Guide To Hospitals & Care
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Boettcher Insurance Agency 2023 Guide to Hospitals & Care – Chicago Metro Area
St. Charles Chamber 48th Golf Outing
St. Charles Chamber 48th Golf Outing at Prairie Landing and having a good time. Even the rain could not keep our good team down! 🙂 Good times and lots of laugh. Thank you for all the voluntaries that came out to make the event incredible and for the staff at Prairie Landing that went the extra mile for all of us.
Choosing Your Path in Retirement: Navigating the Medicare Advantage and Medigap Landscape
“One of the biggest decisions seniors face is how to approach healthcare in retirement. Nearly half of all seniors (48%) opt for a Medicare Advantage plan, an “all-in-one” plan that covers the full scope of a patient’s needs. 1 Others enroll in Original Medicare, which covers the basics, and supplement their coverage with Medigap plans. Each route has different implications, but given current healthcare trends, which option is the best fit?”
Big Boost to HSA, HDHP Limits in 2024 Given by the IRS
What are Health Savings Accounts (HSAs)
Health savings accounts (HSAs) are a special tax-advantaged account that helps you save money for the future medical and health-related expenses – tax free.
How HSAs Work
Withdrawals from HSAs to pay qualified medical expenses are tax free.
HSAs offer a triple tax benefit:
- HSA contributions are pretax. That is, you are not taxed on any of your contributions to an HSA-up to the annual limit.
- HSAs grow tax-deferred. As long as the money stays in your HSA, you generally pay no income tax, dividend tax, capital gains tax.
The combination of tax advantages means that HSA owners who take full advantage of their health savings accounts routinely save thousands each year in taxes and healthcare expenses.
Learn More: Learn More
Do you know how to utilize an HSA as a strategy to pay for future expenses? Hello, yes you can use your HSA funds to pay for your part B premiums.
As we are headed into tax season, I wanted to remind people to try to put away money into their HSAs for the past year 2022, and take advantage of the key tax savings. If you are new to having an HSA for 2023 now is a great time to start planning for your future. According to Fidelity, the average American will pay $300,000 to $350,000 once they turn 65 in future Medicare premiums and expenses. It’s also important to know that once you turn 65 once you’re enrolled in Medicare, you can’t contribute to a Health Savings Account. Right now is the perfect time for consumers to learn how to utilize an HSA to their advantage to help pay for future Medicare expenses which eventually can be very costly. You can use an HSA to pay for future B premiums and you still have access to HSA funds you have accumulated over the years to also pay for the future long-term, or a costly implant and or a crown that needs to be replaced as an example. You can also use your HSA to pay for Medicare Advantage premiums, and related plan costs, copays, coinsurance, and deductibles.
Key Question: Can I pay Medicare Part B premiums from HSA? The answer is yes. A lot of people do not pay their part B premiums and usually, most people reimburse themselves for the expense. Most likely, your part B premium will be taken out of your social security check. Then, you’ll reimburse yourself for the Medicare Part B premium free.
In addition, if your spouse is on Medicare your might be able to use your HSA to pay for their Medicare premiums. However, you must be 65 or older. Fidelity continues to be a great resource to set up an HSA and Optum Financial is a market leader in HSAs as well. As long as you the HSA account owner are age 65 and older, you can reimburse your spouse’s Medicare premiums income tax-free.
Please note that unfortunately, you cannot pay for Medicare supplement premiums using HSA funds. However, higher-income families that pay higher Part B premiums and IRMAA (income-related monthly adjustment amount) can use their HSA funds to pay for the additional costs of higher part B premiums and IRMAA. The higher beneficiary’s MAGI (Modified Adjusted Gross Income) the higher the IRMAA.
HSA Contributions-For 2022 individuals can put away $3,650 and families can save $7300. In 2023, individuals are at $3850 and $7,750 for families with the $1,000 catch-up contribution over the age of 55 which is another great way to take advantage of these contributions. Happy February!
When Should You Buy Life Insurance?
Life Insurance is a financial product that provides a lump sum cash payment, also known as the death benefit, when the insured passes away. The purpose of life insurance is to provide a financial benefit to dependents upon the premature death of an insured individual. Buying life insurance can protect your spouse and children from the financial hardships that could result if something happened to you. It provides financial security, helps to pay off debts, helps to pay living expenses, and helps to pay any medical or final expenses.
The Younger the Better
When it comes to financial planning, it is common knowledge that the earlier you prepare, the better off you will be in the long term. This same concept goes hand and hand with deciding when to buy life insurance. This is because, at a younger age you’ll qualify for lower premiums. In contrast, as you get older you could develop health problems that make insurance more expensive or even disqualify you from purchasing a plan.
While paying off mortgages, car loans, and student debt is crucial to maintain financial well-being at a young age, it is extremely important to plan for your family’s future. Missing out on buying life insurance at a young age can have the same economic impact as deciding to postpone saving for retirement.
When to Purchase Term Life Insurance
Term life insurance is a low-cost way of providing maximum coverage for your family. Protection is provided for a limited number of years. The insurance expires without value if the insured lives beyond the policy period, usually 5 to 30 years. Unlike other forms of life insurance, term life doesn’t have a savings or investment component. Without these aspects, companies can offer substantial death benefits at lower rates. This option is often attractive to individuals who have temporary financial needs to cover, as they can afford much more life insurance at a reasonable cost.
When to Purchase Universal Life Insurance
Universal life insurance is characterized by great flexibility. Policyholders can determine the amount and frequency of premium payments (i.e., the more you pay, the less time you will need to pay). Your premiums cover the insurance part, as well as the savings or investment element and the expense part. Universal Life policies are designed to last the insured’s entire lifetime, building cash value over that time.
Universal Life is generally purchased by individuals who want to achieve a death benefit that lasts your whole life for the least amount of premium. Universal Life policies can also be great for individuals who have maxed out their investments and want more money without going into a higher tax bracket. With careful planning, a universal policy can be a great financial tool for individuals seeking long-term protection and potential growth opportunities.
When to Purchase Whole Life Insurance
Whole life insurance provides permanent protection for the whole of life, from the date of policy issue to the date of the insured’s death, provided that premiums are paid. Premiums are set at the time of policy issue and remain level for the policy’s life. Unlike term insurance, whole life combines insurance protection and savings or cash value which builds over time. Cash value build-up may provide a source for living benefits, for example, helping pay off a mortgage, or a child’s education, or cash surrender value if the policy is ever canceled. If held long enough, what you accumulate may be able to supplement retirement income. However, the money needs time to grow, which is why an early start is essential.
Long-Term Care & Hybrid Insurance
Long Term Care is the type of care received either at home or in a facility, when someone needs assistance with activities of daily living, such as bathing and dressing due to an accident, an illness or advancing age. With national median cost of a nursing home being over $4000 per month, having to pay long-term care costs can quickly drain your life savings. It is particularly important to consider protecting yourself against this demanding expense with long-term care insurance.
Hybrid life insurance products provide long-term care coverage if there is a need, or a death benefit if the policy isn’t used to pay for care. While Medicare will pay for temporary stays in nursing facilities for therapy and rehabilitation, it will not pay for long-term care which requires assistance in the daily living activities listed below.
- Bathing
- Dressing
- Eating
- Using the toilet
- Transferring (to or from a bed)
- Caring for incontinence
Long-term care insurance can be used to pay for assistance if the policyholder can’t perform two of the six activities listed above. Many long-term care policies will also cover modifications to your house to make it easier to receive care at home. The amount of coverage a policy can provide will depend on the benefit period and the benefit amount you choose. For example, a long-term care policy with a $4000 monthly benefit and a three-year benefit period, would have a maximum benefit of $144,000.
The Bottom Line
The longer you wait to buy life insurance, the more expensive it will get. Unfortunately, the longer you wait, there’s a higher chance of worsening health which could disqualify you for some forms of life insurance at that point. When you should get life insurance ultimately depends on your personal and financial situation. Ultimately, life insurance will be less expensive when you are young. If your financial situation is not the best, a term life policy can offer a financial ladder for your loved ones. On the other hand, a permanent life insurance policy can offer a cash value component that can grow substantially over time.
Let us Help you
Finding the right life insurance products can be challenging in today’s insurance environment. As independent agents, we are free to choose the best carrier for your insurance needs. We do not work for an insurance company; we work for you, our client. At Boettcher Insurance, we have access to many of the top 100 life insurance providers including top Fortune 500 companies. We are more than happy to review your current benefits and place your account with the company that will provide you with the coverage and benefits you want.
Boettcher Insurance Agency offers free, comparative quotes on life insurance policies from multiple insurance carriers so you can get the best possible rate.
Want to see how much we can save you? Just request a quote to find out.
Written by McKay Moravick
Medicare Part B Premium Jumps Dramatically for 2022 | Kiplinger
Rising health care costs and the approval of Aduhelm, a new expensive Alzheimer’s drug, were partly to blame for increases in the Part B premium and deductible.
Health Savings Accounts: An underutilized tool for long-term financial wellness | BenefitsPRO
To help boost that longer-term growth potential, most HSA administrators will allow HSA members to allocate contributions to mutual funds or a brokerage account once their balance reaches a certain threshold.
There’s more: HSAs are owned by the individual and are portable for the employee from employer to employer. And, in the event of the HSA member’s death, the balance is payable to a beneficiary.
