Closing the Gap to Protect the Assets

Four out of ten Americans age 40 and older indicate they will depend on the federal Medicaid program to meet their long-term care needs.

That stat is reported by the Associated Press Public Affairs Research Center which began tracking data regarding popular opinion of how to care for aging Americans in 2013 when its directors recognized the impact of the oncoming silver tsunami – retiring baby boomers.

In its most recent report, the Associated Press labeled dependence on Medicaid alone as a “mistake.” It is a perspective shared by many financial advisers including Aaron Steele, the Owner of Steele Capital Management, based in Olympia WA. Worse yet, Steele said, many people mistakenly believe that their health insurance provides coverage for long-term care.

With most policies, the answer is a firm “no” when it comes to health insurance paying for any form of long-term care, whether that be in an extended care facility, a nursing home, or in-home care which is becoming increasingly popular.

“Most clients are surprised by this,” said Steele. “The need for long-term care may very well be caused by a medical condition, but long-term care means assistance, not curing a medical ailment.”

Of course, a major portion of today’s long-term care demand is attributed to an increase in the need of cognitive care – a trend many demographic forecasters deem as a significant societal challenge poised to grow in to a full-scale epidemic within the next two decades since an estimated 20 percent of Americans will be age 65 or older by 2030.

Making Up Lost Ground

So, what options can one use in younger years to prepare for the financial challenges associated with long-term care?

If one invests in a long-term care policy in their 30s or even early 40s – the monthly premium isn’t nearly as cost-prohibitive as compared to signing a policy contract closer to retirement age. Steele recommends folks view the purchase of long-term care insurance with the same lens applied to securing car or home owner’s insurance. “It is a necessary evil of planning for the future,” he said.

That includes determining the best way to maximize federal government benefits such as Medicaid when determining how to pay for long-term care. Unfortunately, the time to plan is not right before long-term care is needed, Steele explains. But also unfortunately, that is when far too many people take that longer look at what the government offers. This doesn’t work because government programs are asset and income-based in terms of qualification. And determination of eligibility is based on a “five-year look-back” period in which all of the applicants assets – income, home equity of more than $500,000 in most states and other financial assets – are used in the calculation of whether the applicant can receive assistance paying for long-term care. If the participant disposed of financial assets during that “five-year look-back” time period, the participant is penalized. “It takes looking ahead, creating a plan, discussing strategies, and talking with trusted family members regarding protecting assets to be able to work with the current government LTC programs,” Steele said. He knows facing the topic of long-term care needs is just as unpopular as discussing the death of a spouse, but today’s financial services market offers a variety of tools that can make dealing with the topic more palatable.

Life insurance policies with long-term care riders that maintain a death benefit should the insured not need care are a go-to resource. This type of policy meets the needs of covering the costly and intense requirements of long-term care while still leaving the potential of a benefit. Long-term care can be complicated, but Steele’s goal is to simplify the process of determining the depth of each client’s individual and specific need. “Educating clients is the key to getting them in a position in which their risk is mitigated,” Steele said. “Closing the gaps – whether that is between what Medicare or Social Security will pay – to protect their savings from the drain that long-term care can be is the mission that drives this company. If there is a gap there we want to find the resources necessary to mitigate that risk.”

To learn more about Steele Capital Management., visit:

Original article by Amy Armstrong

Disclosure: Steele Capital Management. All rights reserved 2017. Investment advisory services offered through BWM Advisory, LLC (www.BWM.Investments). Independent producer of insurance services offered through Insurance Marketing Organizations and Insurance FMOs ( BWMAdvisory, LLC (BWM) is registered as an Investment Adviser with the SEC and only conducts business in states where it is properly licensed, notice filed or is excluded from notice filing requirements. Registration is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Different types of investments involve higher and lower levels of risk. There is no guarantee that a specific investment or strategy will be suitable or profitable for an investor’s portfolio. There are no assurances that a portfolio will match or exceed any particular benchmark. Any comments regarding guaranteed income streams or similar refer only to fixed insurance and annuity products. They do not refer, in any way to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claims‐paying ability of the issuing company and are not offered by BWM.