Jason and Susan discuss protecting your future with Long-Term Care options.
Susan Sabella is a leading provider of Long-Term Care, insurance in the Pacific Northwest. She works with leading companies such as Genworth Financial, John Hancock, Mutual of Omaha, Transamerica, Life Secure, Lincoln, One America and Minnesota Life. An expert in Long-Term Care, Susan is a registered nurse with a Master’s Degree and has spent over 30 years in health care education. Susan offers private consultations as well as corporate seminars and is a quest speaker on “Your Money” on KVI AM 570 and KGNW AM 820 radio and “Sound Retirement Radio” on KKOL1300 AM. Susan was the number 1 Long Term Care agent in the state of Washington according to the Association for Long Term Care in 2013.
After a sudden illness that left her disabled for over a year, Susan realized firsthand the importance of Long-Term Care planning. She is passionate in her message that Long-Term Care planning needs to start early. Throughout her career, Susan has helped people protect their independence and financial assets from the devastating costs of long-term health care.
Today, 8 million Americans receive some form of Long-Term Care. A nursing home now averages between $75-120 thousand per year. You could rely on your family, or Susan can show you how to maintain your independence and have peace of mind.
If you have any questions, feel free to contact her for a free consultation and quote.
To learn more please sign up for our Long-Term Care webinar scheduled for Wednesday, June 22nd at 1:15pm.
Below is the full transcript:
Announcer: Welcome back, America, to Sound Retirement Radio, where we bring you concepts, ideas, and strategies designed to help you achieve clarity, confidence, and freedom as you prepare for and transition through retirement, and now here is your host, Jason Parker.
Jason: America, welcome back to another round of Sound Retirement Radio. My name is Jason Parker. You’re listening to episode 96. We’re going to be talking about long-term care today. It’s one of those areas where we see a lot of cracks in people’s nest eggs, and so it’s an important component, important thing that we need to be planning for and thinking about. I’ve got a special guest that we’re going to be bringing on the program who is excellent, one of the best, at least in the state of Washington, if not the country, but before we do, I always like to start the morning right by renewing our mind. I’ve got a verse here from Colossians 1, Verse 11: “Be strengthened with all power according to his glorious might so that you may have great endurance and patience.” Great endurance and patience. Boy, that’s something I know that I always could use a little bit more of.
The other thing is, I want to start out with a joke, so that if you’re going to go visit some friends or family or see those beautiful grandkids this morning that you can help put a smile on their face, and I tell you, I really … Next time you tell one of these jokes, just really pay attention to those little faces when you share them, because it’s really fun to see their brain processing and a smile come about, but here it is. A boy asks his father, “Dad, are bugs good to eat?” “That’s disgusting. Don’t talk about things like that over dinner,” the dad replies. After dinner, the father asks, “Now, son, what did you want to ask me?” “Oh, nothing,” the boy says. “There was a bug in your soup, but now it’s gone.” Okay, here we go. Episode 96, long-term care. Susan Sabella is my guest.
Susan has a master’s degree in nursing, and has spent the past 14 years helping people plan, and educating them on how to protect their assets from the ravages of an unexpected long-term care event. Susan was the number 1 long-term care agent in the state of Washington, according to the Association for Long-Term Care in 2013, so folks, when I tell you we’re bringing people on as guests that are experts from around the country, some of the best in the entire country, Susan Sabella, welcome back to another round of Sound Retirement Radio.
Susan: Thank you very much, Jason, for having me. It’s a pleasure to be here.
Jason: I appreciate it, and I want to set the stage here with long-term care, because I don’t want people to ever make an emotional decision about something. I always think it makes good sense to create a plan before you make any decisions about your financial life, so today, Susan, Parker Financial, my company, we help people put together retirement plans all over the country. We work with them remotely via Skype, and one of the things that we always start with is a year-by-year cash flow plan, and when you create a year-by-year cash flow plan as you’re planning for retirement, you’re going to look at a couple things. Number 1, you’re going to look at inflation, you’re going to look at sequence of returns, in terms of market returns. You’re going to look at stress testing against different scenarios, so number 1, what if a spouse dies early? You’re also going to stress test against, what if people live a really long life? I mean, are there enough resources to last?
You’re going to want to take the investment portfolio that you have and kind of tear it apart and just see what are the risks associated with those different investments, but one of the biggest ones that a lot of people miss is, and is this long-term care risk, so we like to just project those numbers. We say, “Okay, assuming that at age 80, you or your wife end up needing long-term care, and these are the projected costs, how is that going to impact your cash flow plan?” That’s a piece that a lot of people haven’t thought about, so that’s why I wanted to have you back on the program to talk about long-term care. Before we get too far into this program, too, I want to remind our listeners that we have a webinar coming up on this issue. You’ve agreed to help teach our community, our listeners, our fan base, about long-term care, and that’s going to be on Wednesday, June 22nd, at 1:15. Susan, with all of that, help our listeners understand what is long-term care and why should they be concerned about it.
Susan: Thank you. Well, I’d like to give an example of what long-term care is, a visual example. When we get out of bed in the morning, we put our feet on the ground, we move about, we go into the bathroom, we use the toilet, we brush our teeth, we hop in the shower, all along we’re thinking about the things we’re going to do that day. We go into the kitchen, we cook our breakfast, and we eat. We did what we consider to be all our activities of daily living. Bathing, dressing, eating, continence, toileting, and transferring, and cognitive ability, thinking about what we’re doing that day. We do all of those things within about 10 or 15 minutes without ever thinking about it. When the day comes when an illness happens and we cannot do those things, that is the day that we’ve had a long-term care event, when we cannot move about and get out of bed, when we cannot cook our meals, when we cannot do our activities of daily living.
That is when we are having a long-term care event, when we need someone else to help us bathe and dress and get our meals for us. That is the day that we are needing long-term care, and we don’t think about that until the day happens. I had a friend of mine call me the other day, a 60-year-old male, and he said, “Susan, can you help me? I’m having a really severe bout of vertigo. I can’t even get out of bed.” He could not do his 2 out of 6 activities. He couldn’t do his activities of daily living, a 60-year-old, healthy male. He needed help to get to the doctor. Of course, it was a temporary thing. Within 2 weeks, he was completely well, but he had a short-term long-term [care 00:06:13] episode, and he said to me afterwards, he said, “It happened so quickly, I couldn’t believe I couldn’t do anything,” and that’s how a long-term care event happens. From one moment to the next, you’re needing care.
Jason: The other thing I think is hard about that is, it’s out of sight for most of us, so once somebody starts needing long-term care, you really don’t see those folks at the grocery store, you don’t see them walking around town, because they’re receiving some kind of care, so it’s all happening behind closed doors, and most of us go through our lives believing that that’s never going to happen to us. How do you help people accept the idea that it could happen?
Susan: Well, we look at some of the risk. We know the U.S. Government says that if we get to age 65, that 70% of the people will need some type of long-term care. Those are actually the statistics, and we know that we’re living longer. We’re living well into our 80s and 90s today because of such good medical care, and that’s great, but if we live long enough, something is going to happen to us where [it could be 00:07:30], going to become ill and have a stroke or Parkinson’s disease or some type of cancer, we’re going to be needing some kind of care, because of a medical diagnosis.
We’re going to live long enough that we’re going to have some kind of mental deterioration, some kind of Alzheimer’s or dementia, or we’re just going to grow old, and our mobility is going to deteriorate, that we’re going to need some kind of help, and because of those reasons, we’re seeing a lot of care being given, and if we just take a look at our aging parents, we can see that we’re going in that direction, so it’s really inevitable if you live a long life, it’s reasonable to believe that you’re going to need some kind of care.
Jason: Reasonable for sure, but I still think that there’s a lot of people just out there that say, “It’s never going to happen to me,” and if it does, Susan, why not just say, “Hey, I’m going to let the government take care of me. I’m going to have Medicare and Medicaid foot the bill”?
Susan: Well, that’s always a possibility. What happens with Medicare, well, let’s address Medicare first. Medicare covers 100 days of long-term care after a 3-day hospitalization, so Medicare is excellent for rehab of a knee replacement, a hip replacement, something like that, but it does not cover for a long-term stay. Medicaid is welfare, and Medicaid you have to do a spend down as a couple. You have to get somewhere in the area of about $40,000 of investments and savings, and as a single person, you have to spend down to somewhere about $2,000, so there are financial constraints that you have to meet before you are eligible for the welfare program, and if you are those folks, then that might be an option for you. If you’re not, if you have assets to protect, then there are other solutions for someone like that.
Jason: What’s the cutoff, from a planning perspective, as you see it? I mean, again, at our firm, we like to do this year-by-year cash flow plan and really see whether or not it’s necessary, but do you kind of have a range of assets where, if somebody’s below a certain amount, they don’t even think about insurance, and if they’re above a certain amount, maybe they don’t think about insurance? Is there a thought there?
Susan: Well, I look at 3 things. I look at assets, and I look at income, and I look at some long-term care that can be a replacement. Certainly, if people are very, very low on income, $100,000 or less, that’s probably not going to be a candidate for long-term care insurance, but if I have someone with maybe $200,000 of investments, but then they have very good, solid income coming from pensions, Social Security, maybe some rental property, and then if I add a little bit of long-term care to that, that could go a long way for their future.
Jason: Well, the other-
Susan: It all depends. Every plan is individual.
Jason: Okay. The other thing I want to ask you about, because we meet with a lot of people today that are military retirees, they’re veterans, and …
Jason: … they have TRICARE For Life, and they say, “Jason, I’m a veteran, and I’m going to let the Veterans Administration take care of me.” What do you say about that?
Susan: Well, the Veterans Administration is dependent upon their disability. They have to have a 50% disability in order to qualify for the VA, and then it is also a financial qualification as well, so they need to understand that there are 2 components to that, but the first is, they do need to be 50% disabled in order to qualify, and then they will be in a VA facility, so they will not be able to receive VA benefits in their home.
Jason: Okay. For our listeners out there, our family, my family, went through a long-term care event recently, and I will tell you that it is, as much information as I know about the planning process, it doesn’t make the emotional decision-making process any easier, and when you’re having to make decisions for somebody else, it gets to be really, really hard. One of the things I did that I think was smart was when my father-in-law was still in good health. We sat down and we had a conversation about what he wanted to have happen at the time that he needed care.
The great thing was, not only did we have the conversation, I actually recorded the audio from that conversation, so when the time came when we were having to make decisions about the best care options for him, and I could go back and I could listen to those meeting notes in his words saying, “Jason, here’s what you should do if I can’t make it on my own,” it just made that emotional strain of feeling like, “Okay, we’re making decisions on somebody else’s behalf,” to saying, “Hey, this is what he wanted. This is what he told us to do. These were his instructions, his words.”
As good as we’d like to believe we remember those things, I really encourage folks, if you have a loved one that maybe they’re getting older and you can have that conversation with them now, you can go out and buy a … Maybe even use your telephone, your iPhone or Android device, to just record and have them tell you what they want to have happen. I think that can really save a lot of headaches in the future, but Susan, what about, one of the things I hear from people all the time is they say, “Jason, I don’t ever want to go to a place like that, and I intend to stay in my own house forever. I’m never going to leave my home. That’s the place … They’re going to take me out of there in a box,” so when it comes to receiving care in your home, what options do people have?
Susan: Well, there are a lot of options to receive care in your home, and actually, long-term care insurance is meant to keep you in your home longer and safer. Right now, about 51% of the people can receive care in their homes. As you mentioned, my background is nursing, and over 30 years ago, I was doing home care, nursing, and there was really very little home care that can be delivered in the home. Today, we can do full-blown home care in the home. We could bring a ventilator, and if you have the funds to be able to do it, you can actually have that type of full care in the home, so home care is very, very possible, but what’s most important is, if you need general care, the cost of care in your home is less expensive than it would be out at assisted living or a nursing home.
If you’re receiving care at home, if you have the funds to support that, if you have 3, 4, $5,000 a month coming in from long-term care, that is going to support the spouse so the spouse is not having to do all of the care, and if the spouse isn’t having to do all of the care him or herself, that’s going to be able to have the ill spouse be able to stay in the home longer and better, because I guarantee you … See, the person that is ill is being taken care of. It’s the spouse that has all the physical, emotional, and financial stress, and if that spouse is having to take care of the ill spouse for months or years, that spouse is going to get worn down or possibly need care him or herself, and when that spouse gets worn down, they both may be, or one may be, going to a facility much sooner than if they had some cash, some income coming in, to be able to keep that ill person home safer and better.
Jason: All right. Folks, you’re listening to episode 96 of Susan Sabella on the program. She is one, in my opinion, she’s one of the top long-term care experts in the entire country, but we know from the numbers that she’s one of the top insurance, long-term care insurance agents, in the state of Washington. Susan, I wanted to ask you some of these off-beat questions, but I hear these types of concerns. Number 1 is, there’s a lot of people, I would say today more than ever, there’s people that just don’t trust insurance companies. Right? There’s just this undercurrent of distrust when it comes to insurance companies, so let’s talk about that for a minute. What are your thoughts? Should people trust an insurance company to actually do what they say they’re going to do?
Susan: Well, I think there’s always been some distrust amongst insurance companies with a certain number of people. I think that’s been ongoing in the industry. I think the issue at hand is, how do you … I hear this term, “I think I’ll self-insure,” because they’re afraid [or 00:17:00] distrust of insurance, but how do you self-insure? That term means you’re just going to use your own assets. There really is no terminology of self-insuring, because insurance is you’re going to spread that risk amongst millions of people. Self-insuring means you’re going to use your own assets to pay for care, and it’s almost virtually impossible to do this unless you’re a very, very wealthy person, because the cost of care could cost a couple, a million dollars or more for long-term care services.
Jason: Well, yeah. I heard a story recently that somebody was receiving, it was costing $13,000 a month to be in a nursing home, and that’s going to put a pretty big chunk in most people’s nest egg.
Susan: Yes, absolutely, so there are some things that you could guard against, making sure that you have a good policy, make sure that you’re buying from a reputable, A-rated company that they’ve been around for a long period of time, and that they pay claims, so those are some of the things that you want to look at to, certainly, cut down the risk, and make sure that you’ve been working with an agent that’s been around for a while, and has a good reputation, so these are the types of things that you want to do, and when you get your policy, I really encourage my clients to read that document. It’s a legal document, but it is readable. Do go ahead and read the document so that you know that what the agent told you is accurate.
Jason: As you look out into the financial landscape today, some of our listeners may not know this, but some of the insurance companies, when you look at their share price, at least, on the stock, if they’re publicly traded, they are under a lot of pressure recently. We’ve been seeing people that are, been getting rate increases on policies that they have held in the past, so getting back to this idea of picking a strong company to insure this risk, because if they’re strong today doesn’t necessarily mean they’re going to be strong tomorrow. How do you make sure your, if you decide you want insurance, how are you going to make sure you’re going with a good company?
Susan: Well, you … Lets talk about, let’s break this down, and let’s talk about rate increases first. There’s been a lot of news about long-term care and rate increases out there, and what we’re hearing is really basically one side of the story on rate increases. There have been rate increases, there have been high rate increases with all the long-term care carriers, and I myself got a rate increase on my policy, and what the story is, they’re only telling you half of it, and the best way, the shortest way to tell the story is, let’s say grandma got a rate increase and they’re saying she got a 70% increase on her $1,000 policy, and now her policy went up from $1,000 to $1,700.
They say, “Wow, she got a 70% increase,” but nobody ever told the rest of the story that her policy is worth full coverage if she should need care, and so yes, it went up from $1,000 to $1,700, but if she should go into care tomorrow, all of her coverage is paid for, so that’s the other half of it, is that still … Is that policy still very worthwhile, even though she got a 70% increase, and the answer is yes. Now, the industry, and this might be the best time to buy long-term care insurance today, because the industry has addressed some of those concerns about premium increases. People, even though they understand premium increases, they may still say, “I want a policy that doesn’t have a premium increase,” so that, now they have come out with new policies where there are no premium increases, so if you’re one of those people that want to stay away from premium increases, you could choose to purchase a policy that has a guaranteed no-premium increase.
Jason: Okay. Folks, I want to remind you you’re listening to episode 96. We’ve got Susan Sabella on the program. We archive all of these programs for you online at Sound Retirement Planning, and I want to remind you that you will make better decisions as you’re transitioning into and through retirement by getting more education, we’ve got a webinar coming up for you on this topic of long-term care. We’re going to be talking about different ways and things you can be thinking about as you’re planning for long-term care, and some of the, especially on policy design, so please join us for that webinar on, it’s going to be June 22nd, 1:15. When you sign up for the webinar, even if you can’t be there for the live event, we’ll send you a link to the replay afterwards as long as I remember to hit the record button.
Susan, kind of off another one of these questions, but science and technology in medicine are getting better all the time, and we’ve got this genetic testing that’s being done now that can help doctors predict who’s going to need different services, and so I guess the question is, with all the science getting better all the time, is there going to come a point in the future when insurance companies are going to know, they’re going to be able to underwrite so well that they’re going to say, “Hey, there’s no way you’re getting insurance because we know that you’re going to end up with Alzheimer’s at some future point”?
Susan: Yes, I think we’re already seeing that coming. I just had a client call me the other day that has a history of Alzheimer’s in her family, and she and her daughter were going to go get some genetic testing done, and she’s in the process of looking at a couple of different long-term care policies, and she called me to see if that would make a difference once it was in her medical records, and I said, “Yes, absolutely,” so you should secure your long-term care policy now, and once you have your long-term care policy in place, then you can go and do your genetic testing, and it doesn’t matter what the results are, so yes, this is going to definitely make an impact once you know the results of that genetic testing.
Jason: All right, and Susan, with that last question we’re out of time, but I’ll remind our listeners we’re going to dig into this a lot deeper on our upcoming webinar. I want to encourage everybody out there to join us, if you can. Susan, thank you for being a guest today on Sound Retirement Radio.
Susan: Thank you, Jason, for having me. It’s been my pleasure, and I look forward to helping anyone that I can.
Announcer: Information and opinions expressed here are believed to be accurate and complete.
Jason: Thanks, Susan.
Announcer: For general information only, and should not be construed as specific…
Susan: Bye bye.
Announcer: … tax, legal, or financial advice for any individual, and does not constitute a solicitation for any securities or insurance products. Please consult with your financial professional before taking action on anything discussed in this program. Parker Financial, its representatives, or its affiliates, have no liability for investment decisions or other actions taken or made by you based on the information provided in this program. All insurance-related discussions are subject to the claims-paying ability of the company. Investing involves risk. Jason Parker is the President of Parker Financial, an independent, fee-based wealth management firm located at 9057 Washington Avenue Northwest, Silverdale, Washington. For additional information, call 1-800-514-5046, or visit us online at soundretirementplanning.com.