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Long-term Care Aware

By | 2018, Money Moxie, Newsletter | No Comments

November is Long-term Care awareness month. So, what is Long-term Care insurance (LTCi) and who needs it? LTCi is insurance to help pay for a care facility because a person can’t perform 2 of the 6 activities of daily living: transferring, continence, dressing, toileting, bathing, and eating.

There are many levels of care ranging from independent living to assisted living to a full-blown nursing home. Going into a care facility for independent or assisted living is mostly a personal decision to be closer to peers or to not be a burden on one’s family. When a person gets to the point that their families are unable to care for them because of physical or mental impairment, they go into a nursing home.

The costs of a care facility correspond with the level of care that is needed. In Utah, the average cost of assisted living is about $3,000, with the average cost of a nursing home being $5,500 per month. Secure units for Dementia or Alzheimer’s patients can cost $7,000 to $9,000 per month. A patient with Dementia can expect to pay about $341,000 in their final five years of life.

Another scary statistic is that 52% of people age 65 will have a long-term care need in their lifetime. However, keep in mind that this statistic encompasses any stay in a care facility ranging from a few days to years. Men and women turning age 65 have a 22% and 36% chance respectively of needing more than one year in a nursing home. Whether you will have an LTC need will depend on factors such as age, lifestyle, and family heredity.

To protect from these risks, you can either self-insure by dedicating assets to medical care or by purchasing LTC insurance. If you self-insure, you should designate about $300,000 per person for LTC. If you purchase a traditional LTC policy, the optimal age is between 55 and 60, with costs ranging from $50-$200 per month depending on the level of coverage that you get. If you wait until age 65, those costs will double. By age 70 the costs will be about quadruple that amount. LTCi is also costlier for females. There are many different types of long-term care policies, which are beyond the scope of this article. If you have questions about what benefits to look for, please call one of our Wealth Managers.

Keep in mind, even if you don’t have insurance, there is still a backup plan through Medicaid, which is assistance for low-income people of every age. A common misconception is that Medicare (i.e. health insurance for age 65+) will pay for Long-term Care. Medicare will only pay for the first 100 days in a care facility IF that stay is preceded by a hospital stay of at least three days and the condition for admission is the same.

To receive assistance through Medicaid, you will be required to spend down your assets first. The rules are complicated, but generally speaking a spouse will be allowed to keep $102,000 after all other assets are spent down. If you’re single you can only keep $2,000, which may include selling your home. Once your assets are spent down, Medicaid will cover all other costs in a facility that accepts Medicaid patients.

There is also a 5-year look-back rule that will require you to count as assets anything given away in the last five years. So, you can’t gift away all your assets to family 6 months before you need to go into a care facility and then have Medicaid pick up the tab.

Whether you set aside assets or purchase an insurance policy for Long-term Care costs, make sure you have accounted for medical expenses in your retirement plan. As always, if you have any questions, please call one of our Wealth Managers that can help you navigate the Long-term Care waters.

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Untimely Disasters – How to Protect Your Home

By | 2015, Money Moxie | No Comments

Disasters are going to happen. There have been a number of them this year. Unfortunately, we don’t know when or what will happen next. It might be a forest fire, electrical fire, hurricane, tornado, flood, or earthquake. You can’t protect yourself from every disaster, but there are steps to help you put the odds in your favor.

Start by making a checklist of all the items you feel cannot be replaced. Save this list where it can be located quickly. This will help avoid an important item being left behind as your mind is racing during an emergency.

Examples of items for your list:

  • Home and auto insurance paperwork
  • Automobile titles
  • Healthcare information
  • Passports, marriage and birth certificates
  • Wills and trusts
  • Memorabilia, keepsakes, heirlooms
  • Photos (not already backed up digitally)
  • Statements: banking, mortgage, credit cards
  • Investments and retirement information
  • A few years of tax returns

Many of these are available online. Of the items that are not available digitally, scan them to your computer and save them on your home computer and in your backup location (preferably off site or in a fireproof safe).

If your home is destroyed, the insurance company will want a list of damaged items. The best way to do this is with pictures or video. Start with the exterior of the home and yard. Then move through each room, closet, and storage area. Label the pictures or videos and save them to your computer (and your backup). Remember to update as necessary.

This might be a good time to check with your insurance to make certain you have proper coverage to rebuild or repair your home in the event of a disaster. Go through scenarios that concern you to confirm you are covered. (Many policies do not cover floods or earthquakes.)

As we have seen, disasters can happen anytime, anywhere, and to anyone. Take time to be prepared should disaster regrettably strike.

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Open Enrollment

By | 2015, Money Moxie | No Comments

For most employees fall is the season to enroll in many of the benefits offered by their company. It is a good time to review your options and make sure you are taking advantage of the benefits available to you. Here are the most common open enrollment benefits:

• Participation in 401(k), 403(b), or other company-sponsored retirement plans

• Health insurance plan selection

• Planned spending account contributions (Cafeteria plan)

• Beginning or increasing group life and disability income benefits

Don’t let this opportunity pass you by. If you miss the open enrollment period, you may not be eligible to enroll or make changes for another year.

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Top Concern for Small Business Owners: Rising Health Insurance Costs

By | 2013, Money Moxie, Newsletter | No Comments

A recent study by the National Federation of Independent Business ranked “Cost of Health Insurance” the number one concern for small business owners.1 This comes as no surprise as there has been much uncertainty over the impact of the Affordable Care Act, AKA “ObamaCare.”

The Wall Street Journal reports that “while ObamaCare won’t take full effect until 2014, health insurance premiums in the individual market are already rising, and not just because of routine increases in medical costs. Insurers are adjusting premiums now in anticipation of the guaranteed-issue and community-rating mandates starting next year.”2 The largest impact will be for individual coverage, where health care costs in Utah are expected to increase somewhere between 65% and 100%.3 Small employers are also expected to feel a disparate impact. Large employers will be impacted the least.

Whether you supply health insurance for your small business employees or you get alone with individual coverage, you can expect premiums to increase.

While understanding that costs will most likely increase, we also need to remember that one of the benefits of ObamaCare is that many small business owners, employees, and individuals can gain access to healthcare where they didn’t have access before.

For small business owners, there are specific rules governing how your business will be impacted next year based on the number of employees you have. For example, if you have less than 25 employees, you may actually qualify for a tax credit if you contribute 50 percent or more toward employee health insurance. Employers with 25-50 employees will have access to SHOP, the Small Business Health Options Program,
where employers can go to find coverage from a selection of providers in the marketplace. Open enrollment begins October 1, 2013.

It isn’t until you have 50 full-time equivalent employees or more that you may be subject to an “employer shared responsibility payment” beginning in 2014. It is important to understand how all of these rules may impact you. For greater detail please visit SBA.gov and IRS.gov and search for the Affordable Care Act.

So, what should you be doing as a small business owner? First, make sure you understand all of the changes and how they will impact you going forward. Then, if you feel like the cost of your insurance is increasing dramatically, shop around. Smedley Financial Services has access to individual and small business health insurance plans. We can give you a second opinion to see if you can save money or if there is a different type of plan that is more suited to your business structure.

There are so many changes happening in health care that it is hard to keep up. However, with a little research and some expert advice you can remove some of the uncertainty in your life.

1. “Uncertainty Dominates Top 5 Small Business Concerns,” National Federation of Independent Business, http://www.nfib.com/research-foundation/priorities.
2. Merrill Mathews and Mark E. Litow, “ObamaCare’s Health Insurance Sticker Shock,” Wall Street Journal, January 13, 2013.
3. Merrill Mathews and Mark E. Litow, “ObamaCare’s Health Insurance Sticker Shock,” Wall Street Journal, January 13, 2013.

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