In This Issue:

Long Term Care Statistics & Costs...
This article, of course, cannot answer the title's question fully. But it can provide some food for thought.  Read more...

3 Lessons from Aretha Franklin's Death
According to court documents, legendary singer Aretha Franklin did not have a will when she died, which, as you may be thinking, opened her $80 million estate to numerous complexities and problems. Read more...

Medicare & Medicaid Myths or Realities?
There are a lot of misconceptions about Medicare and Medicaid, and both might turn out to be of great importance to you and your family. Read more...

Long-term Care Statistics for 2018: What to Do About Long Term Care Costs?

This article, of course, cannot answer the title's question fully. But it can provide some food for thought. Morningstar's director of personal finance and author Christine Benz recently shared some important statistics about long-term care, noting, "If there's a single unsolved problem in the retirement plans for many middle- and upper-middle-income adults, it's what to do about long-term care costs later in life."

Not only is the total amount spent on long-term care in the United States increasing (from $30 billion in 2000 to $225 billion in 2015), but also the number of people who will require it is growing.

While high-income, high-net-worth people may be able to self-fund long-term care costs, due to a myriad of factors, most people will rely on Medicaid-provided long-term care.

However, even people with significant financial assets might find themselves facing some tough choices if they are unable to fund a $300,000 (or more) long-term care outlay at the end of their lives.

Among the choices:

  • Purchase traditional long-term care insurance. Initial cost and potential premium hikes are among the most common concerns.
  • Purchase a hybrid long-term care product. Several options linking long-term care coverage with either life or health insurance are currently available. Overall cost and opportunity costs could be concerns, and consulting with a trusted advisor to determine the best course of action is recommended.
  • Forego insurance and use nonportfolio assets, such as a home sale, to cover any long-term care costs.

To help with these decisions, here a few additional statistics you might consider:

  • 52% of people turning age 65 will need some type of long-term care services in their lifetimes.
  • On average, women will require 2.5 years of long-term care, while men will need 1.5 years.
  • 14% of people will require long-term care for more than 5 years.
  • 57.5% of people turning 65 between 2015 and 2019 will spend less than $25,000 on long-term care during their lifetimes.
3 Lessons from Aretha Franklin’s Death

According to court documents, legendary singer Aretha Franklin did not have a will when she died, which, as you may be thinking, opened her $80 million estate to numerous complexities and problems.

When someone dies without a will, the estate is distributed in accordance with estate law. The associated probate process is lengthy and public.

If Franklin, who was reportedly very private during her lifetime, had created an estate plan that included a trust, she could have avoided probate and kept the details of her financial circumstances private.

In addition, by not having a will, her estate became vulnerable to potential challenges or even litigation, which can become very costly to heirs in terms of court costs, legal fees and loss of assets.

Also, because Franklin did not proactively plan her estate, the estate will be subject to unnecessary estate taxation. Although she may not have been able to avoid estate tax entirely, there are steps she could have taken to reduce the amount her estate will have to pay.

LESSON 1: A Will allows you to ensure that your assets will go to the people you want instead of by statute.

LESSON 2: A Trust takes your estate plan another step further. It is a private document you design yourself and, if correctly funded, a Trust avoids court involvement.

In addition, a Trust can minimize stress, reduce taxes, court costs, and attorneys' fees, and can cover a myriad of issues relating to distribution, including young children, disabled beneficiaries, financial problems, marriage issues and dissension.

LESSON 3: Even if you don't have Aretha Franklin's assets, the lessons are the same. Being proactive and creating an estate plan during your life makes life easier for loved ones after your death.

It's also important think long-term when thinking about long-term care, as these final three statistics might indicate:

  • 15.2% of people turning 65 between 2015 and 2019 will spend more than $250,000 on long-term care during their lifetimes.
  • $45,000: median annual cost for assisted-living facility, 2017 ($60,000 in the state of New Hampshire).
  • $85,775: median annual nursing-home cost, 2017 ($120,000.00 in the state of New Hampshire).

Since no one is unable to look into a crystal ball to see what our long term care needs will be in the future, it is important to consult with your financial advisor and your elder law attorney now to discuss these issues and to ensure that your long term care plan is appropriate for your situation.


Medicare & Medicaid Myths Or Realities?

There are a lot of misconceptions about Medicare and Medicaid, and both might turn out to be of great importance to you and your family. Based on data summarized by the National Academy of Elder Law Attorneys (NAELA), some of the top "myths and realities" are:

Myth: Medicare and Medicaid are the same program and they cover most of seniors’ health care costs. Older adults have little to pay out-of-pocket, and thus have little incentive to restrict their use of the health care system.

Reality: While Medicare provides essential coverage for physician, drug and hospital bills, and short-term post-acute coverage of home health care, hospice care, and rehabilitation services, beneficiaries pay a substantial amount out of pocket. Plus, and contrary to popular belief, most nursing home stays do not qualify for Medicare coverage.

Myth: Medicaid is a state program, Medicare is a federal program, and the two programs are not connected in any way.

Reality: Medicare and Medicaid programs are intertwined in many ways, and many people are eligible for both. The Affordable Care Act created various initiatives to better align and integrate care which would lead to savings in both programs.

Myth: Medicaid is a welfare program that primarily serves low-income families.

Reality: While the majority of people enrolled in Medicaid are children and families, most Medicaid spending goes for services provided to people aged 65 and over and people with disabilities.

Recognizing and distinguishing the "myths" from the realities can be important because we may find ourselves facing the need to fund long term care for ourselves or a loved one. If you have questions it is best to seek the help of a qualified elder care attorney.