3 Senior Planning Principles Millions Live to Regret Ignoring

If you’re too busy to read [the article] or watch [the video] all of this, then simply internalize these three principles:

1. Decide now if you or your Loved Ones will depend on Medicaid to cover their cost of extended care.
2. Be trigger-happy. Know when major decisions become unavoidable.
3. The most expensive options are free.

There you go. Got it?

The rest conveys critical context.

Medicaid

Expecting Medicaid benefits for long-term care is dicey, at best. If you can’t self-fund or, more wisely, insure for caregiving, then you need to start planning for Medicaid eligibility and the potential for Medicaid Recovery. 

I wonder how many readers stopped reading [or viewers stopped viewing] at the word “planning”? We all know the adage of failing to plan is planning to fail. And Medicaid is a prime example. Even if you’re an excellent planner, Medicaid planning is not a do-it-yourself project. Begin with an elder law attorney who is experienced in Medicaid planning. 

WIN# 14, are you sure you won't need Medicaid? 

Yes or No?

Become Trigger Happy

The first trigger to rejoice is the jump in interest rates. Why? Because insurance companies are able to issue new blocks of business that are more generous than they were when interest rates were near zero. In fact, a lot of the heartburn with traditional long-term care insurance for which premiums rose was because those policies were issued, say, in the nineties, maybe even the eighties, when interest rates were much, much higher. The insurance companies didn't anticipate near-zero interest rates. Understand that the premiums aren't how they pay for everything. They collect those premiums and then they invest those premiums very conservatively, which means a lot of bonds. And when the bonds aren't paying anything, they're not getting much return for their investment. 

So the premiums now have to carry more of the load, so they had to raise their premiums. That was a major contributing factor to rising long-term care policy premiums. With interest rates more like 1990s levels, what they're coming out with is much more generous. And here's where you can lock some of that in. If you go with an asset-based type policy that the premiums cannot be changed, then you're going to lock in that more generous benefit for the life of the policy. If you think interest rates have peaked, and there’s a lot of merit to that thought, then the peak in interest rates is your trigger to get off the dime and look at insurance options right now.

Here are more triggers to be happy that you have decided to define them or deliberately recognize them.  

• What's going to trigger relocating or downsizing? 
• Or when you want your son or daughter to come to the doctor with you? 
• Or when you realize safety is now usurping convenience in your living situation?
• You should relinquish your car keys 
• if you have a power of attorney (if you don’t–that’s a trigger to see an estate planning attorney right away)

Ask your attorney about defining these triggers. 

Another trigger is your first claim if you have long-term care insurance, because that will initiate your elimination period.

Elimination periods are typically 90 days, maybe it's longer. What kind of day is your policy referring to? Service days or calendar days? If it's 90 calendar days, then it's pretty much three months. That doesn't mean you wait three months to file a claim. It just means it's not going to pay until after the insurance company has received three months' worth of eligible invoices. Your uninsured cash flow will need to cover that and more. In the case of a three-month elimination, four or five months of no reimbursements yet because you've got to accumulate more than actually four months worth because they're not going to start paying until the fourth month. Then you have to submit those receipts, which means you paid them promptly, of course.

Then the insurance company might take a month to process it before mailing you a check. You might need to float five months before you get your first check. So you need to have the cash flow to cover that gap. 

But what if your elimination period service days? Some policies define elimination by service days, meaning let's say you're not in a facility. Let's say you're getting home care, which is covered in your policy, probably. But you're getting help three days a week. Three days a week. Well, now it's going to be more than twice 90 calendar days at less than half a week of service days each calendar week. Iit's going to be more like seven months before your elimination period passes. Do you understand that when you buy your policy whoever's going to help you administer your policy better understand that, too? 

WIN number 15, what is just one trigger you have defined for yourself?

Say, for downsizing or relocation or that you know about? Maybe it's in your insurance policy, or maybe it's something you've already been told, just one write down–one trigger that you know something in life is going to change because of it. 

Free is the Most Expensive Option

This may sound so old school, but it's so, so true. You do get what you pay for. There's a reason why professionals are in business in so many fields. Insurance requires premiums, and it takes more premiums to get more benefits. And here's the kicker: If your planning is sound, which means you probably paid for some professional help, the main benefit is not just for you, it's for your Loved Ones. It's for those who will need to step in. 

If you think free is better value, ponder that when the clock is ticking, when it comes to things like being able to qualify for insurance or in a timely fashion to sequentially and strategically reposition assets, free can be a massive waste of time and missed opportunities. 

And free is also value not delivered. You might have free something or other, but guess what? You could pay for that same something and get a lot more value than you're getting for free. If you're listening to the media darlings out there, you know, number one, common sense should be free, okay? Because it's ubiquitous by definition. There's no reason to pay for common sense. But the broadcasted mantras of always and never and ripoff–they're not personalized advice. 

Those “always–never–ripoff” phrases are prognosis without diagnosis, which is malpractice. 

If you think some of those guru declarations might apply to you, bring them to your licensed professional. Same thing for what your friends say around the water cooler. 

Because the number one fear of many people is not dying or public speaking. Their number one fear is being wrong. 

Then there's the cost of hemming and hawing, or just saying, I am going to do it myself because I'm an engineer and I can do anything. Doggone it. Sorry, you can't. But you might think so. I know plenty of things because I was an engineer for 20 years. But there are costs–the lost opportunities and missed eligibility. 

Besides–

Reacting to something so much more expensive than having planned for something. If you're winging it, hurry up and wait, you can lose control. That’s when the stress strains your relationships. You might not get the better care that you would have otherwise had, and in your not-so-clear thinking, you're more vulnerable to bad actors. 

When what you plan for unfolds, you're prepared. You’re calm. And not broke.

WIN number 16, what are you waiting for?

Conclusion:

Ask yourself these questions right now. 

1. Are you sure you won't need Medicaid? Yes or No?
2. What is just one trigger you have defined for yourself?
3. What are you waiting for?

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