Embark on a journey to secure your golden years with wisdom from the Crotchety Old Men. As we age, the fortress safeguarding our retirement savings must be reinforced against the siege of healthcare costs, and long-term care insurance stands as a key battlement. In our candid conversation, we dissect the complexities of this critical insurance product, assessing whether it's a stronghold of security or if alternatives like hybrid Insurance polices may prove to be sturdier shields. Amidst the backdrop of lengthening life expectancies and insurance providers grappling with hefty claims, we consider the changing landscape of long-term care insurance and its future in our retirement planning arsenal.
Embark on a journey to secure your golden years with wisdom from the Crotchety Old Men. As we age, the fortress safeguarding our retirement savings must be reinforced against the siege of healthcare costs, and long-term care insurance stands as a key battlement. In our candid conversation, we dissect the complexities of this critical insurance product, assessing whether it's a stronghold of security or if alternatives like hybrid Insurance polices may prove to be sturdier shields. Amidst the backdrop of lengthening life expectancies and insurance providers grappling with hefty claims, we consider the changing landscape of long-term care insurance and its future in our retirement planning arsenal.
Happy New Year and welcome to another episode of the Crotchety Old man podcast. Joining me in the studio today is all my comrades George Crumley, Paul Clemens. Top of the day to you, gentlemen.
Speaker 2:Top of the day to you. Smitty how you doing.
Speaker 1:Man, I'm great. Hey, we made it to 2024. Looking forward to great things this year, and so everything is lovely over on this side. George, how about yourself?
Speaker 2:Man, I can't complain at all, Smitty, it's just like you say. It was a great, great time to be here and to be able to share some more information, to continue to provide information, education, exposure and opportunity for our audience, Looking forward to a lot of new topics for this year. And hey then let's just jump right on into it.
Speaker 1:Hey, how about it? Let's kick this thing on off.
Speaker 2:Yeah, yeah. So today, smitty, I thought it'd be talk about long term care. You know, we're of that age where you know we may be looking at how we're going to get into those what they call real golden years. And if we, you know, get any type of serious illness or we're not able to do some certain things, you know who's going to take care of us.
Speaker 1:So I thought this would be a good subject to talk about today.
Speaker 1:Yeah, sir, yes sir. Well, you know, I guess. Perhaps maybe we should share with our listeners exactly what is long term care, and, to my understanding, long term care is an insurance product that typically applies to people who are up in age, you know, in their 70s or 80s or what have you, that cannot take care of the basic necessities of life, whether it be at home healthcare aid situation or if they're living in an assisted living situation. It starts, and so it's an insurance that covers the cost that Medicare and I think Medicaid does not cover. Am I close in that area?
Speaker 2:You are correct. You are correct. And I think, just to add on to that, you know why was long care, health care, started in the first place? It was so that people would not erode their retirement savings on nursing home care, and so it was later expanded to in home care. So that's kind of how long term care started, because it went like I said, when we get up in age, you know who's going to take care of us or kids, or you know, you know you can we stay in the house, can we function, you know, in the house by ourselves.
Speaker 2:So those are the kind of things that you have to look at. So I think that's why long term care was invented in the first place or started in the first place by different insurance companies. But I think what we would sprouted to my attention is that over the years, you know, most people don't even look at long term care because they're probably in their 50s I know that's when I initially looked at it myself for me and my wife and but you know when you, when you look at it in your 50s, does that really give you a long ramp up, you know, from an insurance perspective, to to save the type of money that will allow you know benefits to last you until your late 80s and 90 years old, and I think with most insurance companies, that may be what is what the issue is and why they've had to change their focus on providing this particular policy.
Speaker 3:Well, they've had to change their focus because they have found that they were. They were the age. The age factor for people is that they've they've started living longer. And because they've started living longer, the policy was not covering these, these, these issues. So, you know, I'm not sure if the policy, in my opinion, is still good to invest in or not. To tell you the truth, or you know, I was thinking in terms of the HSA, which is your health, your health benefit out of your, your health insurance, where your money is put into a pot so that anything that's out of pocket you can pay for. So so I'm wondering if that's that's going to help out as well.
Speaker 2:No, that wouldn't be, that wouldn't apply here. You know, long term care is specifically for services that will be provided through a like they in home, which is with the nursing care, someone coming in and helping you perform some of the daily functions like bathing and eating. Or if you're put into an actual home, then those services will be provided by, you know, a full, full staff. But as far as your current Medicaid Medicare, those don't cover long term care and I think, here again, that's why insurance companies started selling this. But but you hit the nail on the head when you said, you know, can insurance companies or insurance companies solve it enough to continue to provide this type of coverage based on, you know, right after going through COVID and you got all these baby boomers, you know, reaching the ripe old age and you know they're getting a lot of policies in. So it's, it's, it's a lot to bear. So let me give you an example Last year alone, insurance providers paid more than 13 billion to cover 345,000 long term care claims, according to industry figures.
Speaker 2:So that's a lot of claims and that's a lot of money. So I'm not sure if insurance companies can continue to, you know, to provide that type of service. Because here again, I think what Smitty said at the beginning is a lot of insurance companies, a lot of insurance companies or, when we back up, a lot of people aren't buying these policies. So if a lot of people aren't buying the policies, then that here again doesn't provide a lot of money to, you know, meet the claims, even though the people that have purchased these policies.
Speaker 1:Well, you don't think about it like this. If the average long term care insurance policy for women, I think it pays like 7 years, right, and then for men it's even less than that 2.2 years. But if people start buying these policies at age 50 or 60, that's 10 years, right there. So you got 10 years of premium for two years of benefit. Well, that dog don't hunt anyway.
Speaker 1:So I believe what happens at the insurance company actuaries? They messed up, all right, they bit off more than they could chew. Right, looking in the future, thought those premiums that they collected was going to be sufficient once they invested in them. And you know other things that insurance companies invest in. Now to Georgia's point. Now you have this deluge of claims with all these baby boomers, and so it just rocked the boat, all right. And so moving forward with the generation X, ys and Zs is coming behind the baby boomers. Hey, they ain't buying it. Okay, so they're not buying the policies If you in your 20s, 30s, 40s, even 50s in today's age, you're not thinking about that long term care. So, to that end, I see long term care policies probably have reached their demise. And so what's the alternative?
Speaker 2:Well, you know, before we get into the alternative, you know, and we've kind of talked about what it looks like from the provider perspective. But let's kind of look at it from the consumer perspective and then let's talk about alternatives, because you know, from a consumer perspective, if I bought this policy here, here again, am I going to be able to use it. So here I have an example of the 35 years five brothers paid premiums on long term care insurance for their now 91 year old mother, only to find out that it does not cover in home health care. So here again, the policy doesn't fit. You know the need, so you know this.
Speaker 2:This particular person wants to stay at home. And why do we want to stay at home? Obviously the surroundings, your friends, your familiarity with the, with your own home, as opposed to being put in a home for coverage. But check this out, they paid $4,500 a month in policy premiums. So I mean, even to begin with, that stuff is very, very expensive. That's just. You know. It's a good man I'd be pissed, I'd be more than pissed.
Speaker 1:I'm not for shacking up a dog, going on it after 70. It's time to find you somebody to shoot, find you somebody to stay with you, to roll you over, feed you, brush your teeth or whatever, but 4500 a month, you're going to be. You're a star For talking about some long term care.
Speaker 3:That's freaking. Either that or you'll be eating cat food. Not only that, to your point, gary. Whoever you get with at 70, they better be younger.
Speaker 1:Yeah, well, you know these young women. They ain't too good on that cooking and cleaning thing.
Speaker 3:No, they're not, not at all.
Speaker 1:I'm old school man, Give me some old lady, we ain't got to do nothing. But you know, sit there and you know breathe on the mirror, fall in the mirror. If you need me to turn you over, I'll roll you over, and if I need you roll me over, roll me over. All right. But heck, the long term care insurance. With all jokes aside, we can see right now, fellas being from a consumer perspective or not. For consumers, specifically, it's just not a good deal. All right, I don't see that being a good deal because right now, you have so many seniors that are already, you know, having challenges financially in some instances because they're taking care of grandkids, or you got some seniors that's still working and so they can't afford any long term care insurance at $4,500 a month, even at $450 a month. That's atrocious, because many of them are paying that for medication. Heck, you got some medicines out here that's costing more than that.
Speaker 3:So that's true, and some of the medicines we're talking about are common everyday medicines for the diabetic or for the person that's suffering from hypertension, and that's that's one thing I wanted to put on the table by me being in the healthcare industry. How does that affect our black communities? You know we're adversely affected 10 times more than any other community in the country, or even in the world, for that matter. So so how does the black community address the coverage issue? And that's a big question. For me, it's an easy one, they don't.
Speaker 2:True, Well, that's just it, you know. You know you have to think about like this I mean, would your kids want you to move in with them when you get, you know, 87 years old and you're able to get around and not able to get around?
Speaker 3:and perform some of the functions, and it also depends on how crotchety we are at that particular time and age.
Speaker 1:And no, george, no hell to the know. I am not looking forward. Or will I be living with my kids?
Speaker 2:No, so what's the alternative?
Speaker 1:I got a woman.
Speaker 2:Okay, so for those that don't have a woman, what's the alternative? Get you a woman? Well, I don't know, smitty, because that woman may have to work every day, so I don't know if that's necessarily the answer.
Speaker 3:Get you a woman. If she's younger, she's gonna have to work anyway.
Speaker 2:Right, that's what it says. She's going to work.
Speaker 3:So if she's, at retirement age yet.
Speaker 2:Right. So if she's working, how's she going to work and take care of you also?
Speaker 1:See, pc still thinking about pimping. I ain't talking about that Getting you a woman or if you're a female, get you a male. You know, when you get age, you're a certain age anyway, one of your spouses deceased or what have y'all you want some companionship, all right, and so if you're trying to stay in your own home I'm going right back to this y'all you want to. I mean, of course, the first thing if you are married, stay married, dog on it. But if you're not, then the other alternative for single people is to find you hook up with somebody, otherwise you're going to be one of them guys. This guy saw a joke on I think it was TikTok or whatever, and it says going to be a lot of guys sitting up in the nursing homes with what one of them? Young nurses, they skinning and grinning at him. But hey, that person, you know you pushing that buzzer and stuff, by the time they come to roll you over, man shucks you dead, and you don't want to be in that situation.
Speaker 1:So there's an alternative. I mean, if you don't have an insurance, I look at it like this you guys have heard of that insurance for for vehicle maintenance. You know, I forgot they come on late night TV and I forgot what it called that. You know you paying to this fund and if you have one of those catastrophic engine problems or something in your car they're going to come fix it. Well, you know, by the time you need that care for that car, you don't put all that money into that policy. And then it comes up there's a clause where we don't cover wheel, wheel alignment or whatever. I see long term care being similar to that. You can't afford it and then a little bit that you can't afford, they're going to find out a reason why it's not applicable to your situation. That's why the insurance companies are probably deciding not to sell it anymore, because it's not profitable, nor is it probable in terms of helping the consumer.
Speaker 3:Now you know, george, you mentioned something about a hybrid insurance where they're combining life insurance with the, the long term care insurance, and I'm wondering how does that become a benefit if the long term health care insurance isn't working in the first place? We'll be right back.
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Speaker 2:Well, I mean, if you've got a hybrid plan and let's kind of talk about that, you know back to you know, what are you actually going to do here? Because I think, even though you guys are talking this, give me a woman, give me a man that's not the reality for a lot, a large number of the population. Because if it was, then there would not be homes with a bunch of folks living in them, with full staff taking care of them every day. And I know because I've visited people that are in these types of care facilities. And also I know that, you know, when my father, late in eighties, you know, had cancer and he needed full time care, me, my brother and my sister had to make the sacrifice of providing that care. Even though we were working every day, we still had to do it. So I hear what you guys are saying, but I don't think that's reality. So, in looking at it in reality perspective, yeah, I mean, what do we do?
Speaker 2:I think insurance companies have now come up with a hybrid program. One is they'll sell you an insurance policy and the first 10 years of that policy you'll pay a certain amount which will go towards long term care. So if, but if you don't use it then it will turn into just regular insurance debt, a death benefit which would go to your estate. So that's one way of looking at it. So that provides you with a certain amount of money to use for either in home care or, you know, in a home to provide, you know, living expenses for you, because it's very costly. I mean these, these you say $4,500 a month to pay a premium, but the cost of to live in a facility a care facility, is probably between 45,000, $6,000, $7,000 a month is very expensive. So that hybrid, that type of hybrid plan, is probably an option for some.
Speaker 2:There's another policy, a hybrid policy out here which is through an annuity which I just took out. So basically, once, once I enable the annuity, say, for example, it's paying me $1,000 a month if I'm not able to do any of the five, two of the five functions which would be bathing, dressing, eating, getting back and forth to the toilet, getting in and out of bed, it will pay me two times the amount that I would be getting on a monthly basis. So if it's paying me a thousand, it will now pay me 2000. So those are two examples of hybrid types of programs and obviously the third type would be, you know, self, self savings. You know that would be you basically save a certain amount of money every month yourself while you're in your firm, earning years to provide you know that type of money for care, you know, when you get to that age, yeah, I guess it's like what we say in commercial real estate, like kicking the can down the road.
Speaker 1:All right, you taking money out of your pocket today for a pre concede need tomorrow, and that works if you're working.
Speaker 1:But for seniors, who are already on a fixed income and most cases are not working, I don't know what their alternative would be other than what I described earlier.
Speaker 1:So sounds like what we're really talking about here is for younger people who, while they have the accumulation phase and that's pretty much where they are in an accumulation phase, whether you're saving up for a house, saving up for long-term care or you're saving up for whatever then you have to have that enough time to accumulate those funds. Number two you're going to have to have enough time and hopefully enough acumen to find an investment that's going to yield a high enough interest, whereas that is going to make some sense, meaning that if you're not earning at least seven, eight, maybe 10% per year on those funds, then you're pissing in the wind because inflation is going to eat up every dollar, the dollar cost averaging, and I can go on and on and on with that. That's not. That's going to work against you. So, at the time when you really need to care the most, you're still not going to have enough money.
Speaker 2:You're right, samedi, and as you were talking, I was thinking here going back to commercial real estate, which we talk about on a regular basis. Commercial real estate will pay you 20 to 30 years out in the future, and here again that makes it look like a better investment, because now, if you have commercial insurance I'm sorry, commercial property as well as your other investments that could secure your future for long-term care, so that could be another option.
Speaker 1:Oh, absolutely, then, and not just commercial real estate. And this year, ladies and gentlemen, to our audience out there, we're about to also get in the mindset of business buying businesses, all right, and this is not the episode four, but certainly we're going to talk more about it in 2024, because that's another stream of revenue. All right, there's a lot of baby boomers right now because their children, or what have you, they're ready to retire, okay, they're ready to go ahead and live those golden years, what have you? But either the kids don't want to take over the business, whether it be a funeral home or pawn shop or plumbing, whatever it is, and so now what they would like to do is be able to sell that property or that business, I should say and go on and do something else.
Speaker 1:Well, that business is going to generate revenue, all right, and there's a lot of passive type businesses out there, service businesses out there, but that, along with, like you said, george, your investments and commercial real estate if you own some real estate, if you own some heck a portfolio of houses and they're all paid for, they're generating cash flow. There's your long term health plan. So, in essence, what we're all talking about here is what's been the core theme of this podcast all along is for you to invest your money wisely, whether you're investing in insurance we talked about it on this program before investing in life insurance, whether it's precious metals, whether you're buying property goals, whatever, something that's going to generate a consistent return, whereas that in your elder years that you have, you can make choices or you have some options, because without those options, you're just dependent upon the government and your job, and neither one of those are reliable.
Speaker 2:Yes, a passive income stream.
Speaker 1:Yes, sir.
Speaker 2:I mean that's what it is. That's what it is. I mean, we have to prepare for the future and, like we kind of make a joke out of it, but somebody's going to have to take care of us when we get old. We plan on living for a long time at some point, whether it's a two, three, four year period. If it's a year period, whatever, we're going to need some assistance, and how it's paid for is something we have to prepare for at some time in our life.
Speaker 3:Yeah, true that, true that.
Speaker 2:It's interesting because, I mean, people think of that and they're preparing for everything else and that slips by the wayside, and that's probably why these insurance policies were rolled out in the first place. But, as we talked earlier, they're not there, unsustainable because of just the numbers, pure numbers.
Speaker 1:You know, gentlemen, disability can be far more expensive than death. Heck. You only die once, okay, and then you up out of here, okay, and when you check out, so does your money go with you? All right, unless you have done some of the things that we talk about on our podcast. Well, with these, look at this disability I mean anybody can come just disabled with a blink of an eye.
Speaker 1:Where are you going to leave that long term care? So long term care does not necessarily mean that you're 80 or 90 years old. There's people all day long having car accidents that need long term care because they're no longer able. I see a lot of younger folks because they don't take care of themselves now having strokes and stuff. They need long term care because some of them are so incapacitated that even can't walk, can't talk, can't brush their teeth, can't feed themselves, all of those things, george, that you name. There's some people as younger than us suffering from those right now. That's in those homes. No provision for long term care and sooner or later, whether it's Medicaid or Medicare, they're gonna be put out.
Speaker 2:Well, that's a subject for a different day. But that Medicare no, I was at Medicaid which one is the hospital? I think it's Medicaid for the hospital, I think. So. I mean there, that's only gonna pay if you reach a certain income level. So that's a different story for a different day, but that's a different. That's another challenge that people may not think about, because they may think that one of those Will, you know, help them through these time, but if your income is at a certain level, it's not gonna kick in.
Speaker 1:So and you know with George, add to that if your assets Because, as my understanding is that Medicaid looks at your net worth what are your assets? Your income may be zero, but if you're sitting on a ton of money or equity in a house or you're sitting on some fancy cars and stuff, well, they look at that is that you have some assets. So your net worth is gonna be a little higher than that threshold. So in order to qualify for Medicaid, you almost got to be dead least dead broke, that's right.
Speaker 3:Not only that, but they take your. If you, if you have, if you qualify for long-term care, they'll take your assets. You'll have to sell a house and, and you know, you have to liquidate assets, because At that point you're a war to the state. Mm-hmm.
Speaker 2:That's in. That's like I said, that's the podcast for another day. But then you have to look at what it's gonna do for your spouse, if you still have a spouse, if you're in that situation, you know, how does that work for them? So those are a lot of things that you have to think about and I think we've kind of, you know, cover and hopefully enlighten our audience as to, you know, some other additional things that they may need to look at as they plan for their future. You know, and that's what we're all about here on the crotch, you know, man is talking, given information and educating the audience as to what's out there, what you got to look out for and in what you need to prepare for to live a full life, a happy life and a quality of life. So, hey, you guys have done it again, put out some great information. So who's gonna carry us out of here with some good old words of wisdom?
Speaker 3:I think I've got one that Really fits for the discussion that we've had today, and it goes something like this how far you go in life depends on your being tender with the young, compassionate with the agent, sympathetic with the striving and Tolerant of the weak and strong, because someday in your life you will have been all of them.
Speaker 2:That's right, all right. And, as we always say, on the crotch you know, man podcast. If you didn't know, no, now you know peace, peace oh.