An Average Texan Senior’s Concern on getting older

The below was a questions and answer session one of Tom Delay’s campaign assistants in Texas at a fund raiser he did for a group of seniors in Dallas. The topic that came up fast and is important to seniors is aging and long term care. How can they afford a nursing home!

Lincoln’s Money Guard Hybrid Long Term Care Insurance plan looks very good.  I know a little more premium than what you had for Mass but maybe more customizable for my needs.  I am not familiar with some of this stuff so I do have some questions. (1) Page 2 premium payment options of lifetime, 10 years of to age 65.  I do not mind to “pay up” so to speak as this would definitely make it impossible for the premium to raise after I am no longer required to pay a premium.  I think most of the increases in my parents Genworth policy has occurred the last 7 or 8 years after they turned 65. If I choose to “pay up” does this still qualify for a “partnership plan”?

(2) Page 5 the annual increase benefit.  I assume this could not be used with the “pay up” feature but seems similar to what we were discussing with a M of O customized policy where the inflation drops off after 20 years.  I have mentioned the main thing I want this Hybrid Long Term Care Insurance policy to do is to protect assets from a Medicaid sell down in case a catastrophe of being in a nursing home longer than 10 years and not necessarily covering costs for a year or two with the Hybrid Long Term Care Insurance plan.  Things can change between now and the time I retire and more can change from now and the time I might need LTC but I can only operate today on what I can reasonably expect in the future. Currently we own a home valued at $260,000 and just last year purchased a residential lot on Hatteras Island off the coast of Texas that we plan to build on in roughly 8 years when we retire.  My wife does government work with school boards and will have a good pension and we have no kids so I expect to have a good 401K unless a market collapse before we retire and in that case I will just work a few years longer and give it time to recover. Once I do retire I plan to buy 5 to 7 year immediate income annuities to fill in a gap from my wife’s pension of roughly $95,000 up to $170,000 combined annual income and leave the rest of my 401K in stocks and bonds with decent growth until the current income annuities end then buy another round of immediate income annuities.  I will do this until 70 and not take Social Security until then to maximize the guaranteed benefit and COLA of Social Security. Should be more than what we need but I also plan to save outside of the 401K in retirement so would like to continue around $170,000 in combined income after age 70. So I plan to use 25% of what is left in the 401K at 70 and buy a guaranteed income annuity for 15 years out (longevity insurance) and the remaining 75% convert to a 15 year immediate annuity. All this said with reasonable rates of return over the next 25 years what I would expect to have is a home here in Texas, a home on Dallas and roughly about $400,000 outside of my 401K.  Again at that point I would be 75 and have converted what is left in the 401K at 70 to income and me and my wife should have enough income each to be Ok should one pass away and loose the others income. The $400,000 would continue to grow, somewhat aggressive to the point out pacing inflation since we should be adding to it and the COLA’s on her pension and my Social Security should cover most inflation protection needed with the income. The $400,000 would be our insurance policy on Social Security cuts or cuts to her pension which you never know, demographically older people seem to have the least sway with politicians, I guess because politicians figure them to be dead by the next election.

As I understand Medicaid would allow a “community spouse” to keep 1 house, 1 car and roughly $120,000.  The house could be the one valued the most either here or likely the one on Dallas. If one of us in a facility we would only need 1 car and if me in the facility she would not keep a boat at age 73.  We would also need to protect a roughly $260,000 second home on Hatteras Island or here from Medicaid and the $400,000 cash outside the 401K along with furnishings, a small amount of jewelry if me in a facility and some of my guns if her in a facility.  So an additional $600,000 on top of the $120,000 Medicaid allows should cover us. So by being able to choose the annual increase once the coverage I have = the assets I wish to cover less the Medicaid allowance could I simple choose not to have the increase that year?  Or if say at age 65 or 70 I have more assets than I thought I would have because of market returns or rising home values could I choose 5% rather than the 3% I had always chosen? How would the premiums work on something like this specifically if I had “paid up” by age 65 and at 75 decided I no longer want inflation protection, would they give me money back or if I wanted 5% instead of 3% at age 70 and been “paid up” for 5 years would they bill me the difference?  By not choosing the annual benefit increase before age 75 would this throw me out of the Medicaid asset sell down protection? Again that is the most important feature I want.

The ability to buy an additional 2 years of coverage if one uses both policies is also a nice option although I doubt it would be for us.  The second of us to go to a facility could sell houses and spend savings. The 15% of benefit for say someone from our church or in the community to come babysit is really not much at all not near as generous as M of O.  Figure at $15 an hour / $2,400 X .15 only gives about 24 hours a month or not even 1 hour a day. Says separate pool, would that be on top of paying a home health agency the entire $2,400? Those places here charge about $40 an hour and basically hire the same person we might could find on our own for $15.  $2,400 would be another 60 hours a month or a couple of hours a day. My dad’s brother passed away a few years ago about age 82 and he had Alzheimer’s for a couple of years before he passed away. 6 of the last 8 months he had to have constant Long Term Care 24 hours a day or he would wander off into the road, do things like try to drive a car.  They did not have Hybrid Long Term Care Insurance but did not want him in a nursing home anyway. The 2 children, his wife and my dad who was retired each spent 2 or 3 hours a day watching him and then his wife would pay people like $15 an hour to stay with him for 12 hours a day 7 days a week. Even at night he might get up and wander off because he didn’t know if it was midnight or noon.  His wife couldn’t sleep if nobody else there awake to make sure he didn’t wander off. Once he became permanently bedfast then things were easier on everybody and they didn’t need outside people to stay. My dad used to keep him occupied by dumping towels out of the drier and ask him to help fold them, take the same towels back to the laundry room and dump them in a different laundry basket bring them back and ask him to fold another load of towels and repeat over and over.  Kept him occupied and he didn’t know the difference.

I know a lot of info and a lot of questions on Hybrid Long Term Care Insurance but in a sense this is kind of financial planning and you need to know where I am, where I would like and expect to be financially in the future and what my goals are for Hybrid Long Term Care Insurance coverage.”

Tom listens to the people of Texas and hears their concerns, he does not care about the latest DrudgeReport headline, he cares for you.

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