By David T. Phillips - October 18, 2017

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Life never goes according to plan. If we had a magic wand, we’d all peacefully die in our sleep on our 93rd birthday after living an invigorating life. That way we’d never have to be a burden on our children or spend a fortune during the last few years of our lives in an assisted living facility or a nursing home.

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According to poll after poll, the biggest fear most Americans have is that our health will fail, we’ll get stuck in a costly Long-Term Care facility, run out of money, and die destitute and alone. In fact, today more than ever, as baby boomers deal with their own probable longevity and the care of their parents and loved ones, the topic of providing for their own care has catapulted to the top of the list of concerns.

 

You don’t need to panic, but you do need to know the hard truths about the Long-Term Care crisis.

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According to the Health Insurance Association of America, roughly 72% of Americans over age 65 will require some form of long-term care and 30% will require nursing home care.

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At a national average annual cost of $90,000 for a nursing home, $70,000 for home care and $43,000 for an assisted living facility, a lengthy illness could financially wipe you out.

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Are you prepared to take the chance that your assets will endure the potential costs of a long term illness or an accident? Have you taken any steps to shield your investments from the ruthless tentacles of a long term medical event?

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Another fact to consider is that with the lack of adequate funds we limit our options. The main reason why 80% of those who receive Long-Term Care services do so at the hands of unpaid family members is because there isn’t another option.

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Caregiving involves lifting, bathing and toileting which can take an emotional and physical toll. It’s no wonder that a spouse caring for their disabled spouse is 6 times more likely to suffer from anxiety or depression. Not to mention the time it takes away from one’s normal daily activities, such as work, being with other family members, vacations and basic alone time.

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So what is the answer, the federal and state governments elder care fund? Not hardly.

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Discover How $10,000 Can Increase to $100,000!

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For the last three decades, other than self-funding, the only way to finance potential Long-Term Care expenses was to buy a standalone LTC insurance policy.

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That is Until Now!

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Thanks to the Pension Protection Act of 2006 there is now a better option.

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And in my brand new special report, Today’s New Long-Term Care Solutions I reveal a little-known option that allows you to reposition your self-funded dollars into a new type of leveraged account that can cover your Long Term Care.

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Click here to download your copy now

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To qualify for even the lowest form of care from Medicare we have to entirely spend down all of our assets to the point we become totally flat broke. Worse still, our surviving spouse gets a double whammy. If your life savings are spent caring for one spouse, the surviving spouse will need to depend on family, Medicaid and welfare for their care and basic living expenses. As harsh as it may sound, that option gets old fast.

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Most of us are living this reality in some fashion or another as our spouse, parents, siblings and friends experience a long term care event. They deserve our loving care, but in most cases we are their only option. Do we want to paint ourselves and our children into the same corner?

So what are our options?

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Solution:

In reality, other than doing absolutely nothing and pray that the LTC bomb misses you, there are three options:

Option 1: Purchase traditional Long-Term Care Insurance.

Option 2: Be rich enough to pay for everything or self fund.

Option 3: Reposition some of your assets into a Leveraged Care Solution.

Option 1: Buying Long-Term Care Insurance
The premise behind stand alone traditional Long-Term Care Insurance is like any other insurance. In exchange for annual premium payment, an insurance company promises to pay a pre-specified amount in Long-Term Care benefits.

However, stand alone LTC insurance is losing market share in a big way. In fact, in 2000, 700,000 policies were sold, in 2015 only 100,000.

Why the decline? The reasons are simple: Long-Term Care insurance premiums have skyrocketed, qualifying isn’t easy, 90% of Long-Term Care insurers have abandoned the business and it is a “use it or lose it” contract.

Just like fire insurance; if your house doesn’t burn down…you don’t get paid. Likewise, if you’re lucky enough to make it through life without needing Long-Term Care, all those thousands of dollars in premium you paid, will be for nothing.

Option 2: Be Rich Enough to Pay For Everything Yourself (Self Fund)
If you have sufficient assets, you can always self-fund your Long-Term Care costs. In short, pay for everything out of your own pocket. The appeal of self-funding is that you don’t have to pay premiums to any insurance company and you only pay for services that you need.

As we all know, however, Long-Term Care expenses can add up fast and can easily gobble up over $100,000 a year, based on today’s dollar. Tomorrow, we know for certain that care cost will escalate to unprecedented numbers in the future.

That is why most people who choose to self-fund their Long-Term Care needs either mentally or physically set up a separate Long-Term Care fund. This money should be invested in safe money vehicles, be totally liquid, and not be subject to stock market risk. The money needs to be readily available.

The problem with readily available, it also means low yielding. And in today’s extremely low interest rate environment, that means you’ll be lucky to make 1%.

Of course, self-funding requires that you set aside a sufficient amount of money — generally several hundred thousands of dollars — to cover expenses, if everything goes according to Plan A.

Remember, however, should you self fund, the money you set aside will ONLY be worth what it is worth when being used for long-term medical care. In other words, $100,000 is $100,000.

Option 3: The New Solution of Leveraged Care
For the last three decades — other than self funding, as pointed out earlier, the only way to finance potential Long-Term Care expenses was to purchase a standalone Long-Term Care Insurance policy. THAT IS UNTIL NOW!

Thanks to the Pension Protection Act of 2006, there is now a better option; an option we call The Leveraged Care Solution (LCS). Others refer to it as The Asset Based Care Strategy.

Section 844 of the Pension Protection Act of 2006 permits you to reposition your self-funded dollars that you intend to use for Long-Term Care into a new type of account via an insurance company that magnifies those dollars, depending on your age, up to 10 times, should you trigger a Long-Term Care event.

That’s right; $100,000 of cash can increase up to $1 million that can be used to pay for your Long-Term Care expenses!

Because the funds you reposition into the Leveraged Care Solution are still an asset on your balance sheet, it is as if you transferred those dollars from your left pocket to your right pocket. The funds are still in your pocket if you need to access them, but if you leave them in your pocket and experience a Long-Term Care event, they are guaranteed to multiply many times their value.

That is leverage. Using pennies today to create dollars tomorrow.

Moreover, should you have the good fortune of dodging the Long-Term Care bullet, either your account balance or an expanded tax-free life insurance benefit will be transferred to your beneficiaries at your passing.

To trigger the care benefit payout, a professional care giver simply verifies that you are either cognitively impaired or you cannot perform 2 of the 6 Activities of Daily Living (ADLs) without assistance. The 6 Activities of Daily Living include: eating, bathing, dressing, toileting, transferring, maintaining continence.

Cognitive impairment essentially means you have medical documentation of dementia or Alzheimer’s.

When the care benefit is triggered, the insurance company you have chosen will begin paying out an income tax free monthly benefit from your Long-Term Care benefit pool of multiplied funds.

The monthly check is distributed from the pool based on the number of months you selected up front, 50 months to 90 months. Depending on the plan you choose, the care benefit payout is either a reimbursement of expenses or a cash indemnity (where no receipts are required).

Since Medicare will cover the first 90 days of a care event, most LCS monthly benefit payouts begin after a 90 day waiting period.

Within the Leveraged Care Solutions world there are three different options to choose from. The correct option for you is determined by your personal circumstances.

On the onset it is important to remember that with Leveraged Care Solutions you are simply repositioning an asset, usually a low yielding, unproductive asset. Furthermore, LCS weren’t created to make you rich, they exist to prevent you from becoming poor!

From a wealth management perspective, because of the significant leverage created, even the wealthy should include a Leveraged Care Solution in their portfolio. Why pay for care out of your pocket and the pocket of your heirs, when an insurance company will pay for it with leveraged dollars?