LTC Partnership 101

"I'll just qualify for Medicaid if I need care" sounds like a safety net until your clients learn what Medicaid actually covers, what it costs them in assets, and what it means for a surviving spouse. Learn how the LTC Partnership program changes the equation.

Most advisors know the basics of long-term care planning, but many overlook one of the most powerful tools available for middle-class clients: the Long-Term Care Partnership program. This episode of the Buddy Study Podcast features LTCi specialist Rhonda Bills walking through Partnership 101, from its legislative origins to the practical asset protection it provides today.

We explore:

• What the LTC Partnership program is and how it creates an agreement between private insurance and state Medicaid
• The legislative timeline from the original four partnership states through the 2005 Deficit Reduction Act
• How Medicaid spend-down rules work for married couples, including the community spouse asset allowance
• Why every dollar of partnership insurance paid equals a dollar of assets protected from Medicaid spend-down
• How partnership-protected assets are also exempt from the Medicaid estate recovery law
• Which clients benefit most from partnership and where it may not be the right fit
• Inflation protection requirements and how they connect to partnership qualification
• Practical approaches for opening long-term care conversations with clients who are not actively seeking coverage

This episode is designed to help advisors:

• Explain the LTC Partnership program with confidence and clarity
• Identify which clients are strong candidates for partnership-qualified policies
• Use Medicaid spend-down realities to frame planning conversations without fear-based language
• Move prospects toward a decision by anchoring on their personal "why"

CHAPTER MARKERS

0:00 Welcome & Episode Overview

2:51 The Origins of the Partnership Program

5:02 The Deficit Reduction Act and Five-Year Look-Back

8:05 Partnership Expanded to All States

9:11 Requirements for Partnership Qualification

10:40 Inflation Protection and Age-Based Rules

12:33 Medicaid 101: What It Covers and What It Doesn't

16:11 Medicaid Spend-Down for Married Couples

22:59 How Partnership Protects Assets Dollar for Dollar

26:11 Medicaid Recovery Law and Partnership Exemption

27:20 Which Clients Benefit Most from Partnership

30:10 Short and Fat vs. Long and Lean Benefit Design

37:17 Moving Prospects Toward a Decision

45:50 Opening the Long-Term Care Conversation

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🔎 About Buddy Study Podcast

The Buddy Study Podcast helps insurance professionals and financial planners master Long-Term Care Insurance through case studies, expert interviews, and carrier product updates. Our goal is to help advisors become more confident, efficient, and knowledgeable when helping clients plan for long-term care.

Transcript

Welcome & Episode Overview

SPEAKER_00 0:00

Hey everyone, welcome to another edition of the Buddy Study Group. And today we are joined by Miss Rhonda by phone. She is such a champion that she is struggling with an internet outage today and still agreed to join us by phone. But she is going to be joining us in talking about a topic that I told you guys a couple of study groups ago, I was going to bring this as its own session because I think it's underrated, underused, undereducated about. And Rhonda is one of the best I know at speaking to people about the long-term care partnership program. If you are leaving partnership products out of your portfolio, you are potentially missing out on opportunities to help a lot of families in a big way, in ways you can't with other types of long-term care insurance. So Rhonda's gonna go through uh partnership 101 and a little bit about the program and maybe a little technical stuff if we have time. So, Rhonda, thank you so much. And you can take it away whenever you're ready. You are on mute though. Uh-oh. Uh, if I can ask you to unmute, will that give you a prompt to unmute yourself? There we go. We're we're gonna find a way, no matter what.

SPEAKER_02 1:21

We're gonna talk today and this this whole day, and I just want to give a preface. So I want everybody to know I'm not totally illiterate here. I'm borderline, but not totally. Got up this morning and no internet, and I'm trying different devices, trying the TV, you know, doing everything. And so I give up, call the cable company and that, yep, there's an outage, it's not so much an outage, but they're working on an upgrade system. I'm texting people because I got a full day of mostly meetings, not so much appointments, but meetings. And so I'm like, okay, but they're like, well, you know, eight to five, who knows when it's gonna work. So I've been doing all this, and then I get on my phone here and I'm looking at the emails. I can't find the link. So Jason sends me the link and it's got unmuted, it's got me muted, but I'm sitting here punching everything. I can't find how to unmute it on my phone. Like, but all this to say, this tells us that we can learn to pivot. We have to have different tools when we have to do what we have to do, and that's kind of what we do with long-term care. We have to have different tools in our toolboxes when we're talking to family members. We may need to pivot and do different things. And whether it's communication, it's email, whether it's Zoom video, phone using your phone. You know, I was trying um, you know, a hotspot on my phone. I mean, whatever it is, we will try different things. And that's kind of what I'm thinking about our messages today. So I love our topic today. It's about partnership. So, what I wanted to do is

The Origins of the Partnership Program

SPEAKER_02 2:51

just take a little bit of time and take you through the timeline of partnership, where we started, where we're at, and why I feel it's relevant and why it's relevant for some clients, maybe not for all clients, but why I feel it is relevant for some clients. So we're gonna go way back in time, back in the uh probably 80s, under the Woodrow Um Wilson Foundation, they said, hey, we really need to start promoting people to purchase long-term care insurance, private insurance, because they already saw the need way back then about people aging, health care costs rising, and the pressure on Medicare and Medicaid budgets. So they came up with the partnership program. And to me, a partnership is an agreement between two parties. So if you write a policy, the insurance carrier is going to pay you commission. You have a partnership. You have a you get married, you have a partnership with the husband and wife, you have a partnership, better for worse, richer for poor. You have an agreement between two parties. So partnership long-term care is not a whole lot different. There's just the two parties are the state that you purchase the policy in, their Medicaid department, and your private insurance company. So those two parties have a partnership that says, hey, if you, resident of this state, purchase an individual policy, and if you exhaust all of your benefits, we Medicaid will not make you spend all of your assets down to that $2,000 spend down. Now hang on, I'm gonna walk you through this a little bit, but um, just bear with me. And what that did is say, let's for an example, say I bought a policy, it paid me $300,000 worth of long-term care. Long-term care paid $300,000, and I still need care. Instead of spending all my assets and spending down to $2,000, the state would allow me to retain minimally $200,000 in assets. So we originally

The Deficit Reduction Act and Five-Year Look-Back

SPEAKER_02 5:02

had the four states: Connecticut, New York, California, and Indiana. And with that, um, we had those states, but fast forward, we've had this timeline of long-term care. I don't care which administration, every administration has been looking at the need of growing needs of American people, aging, healthcare costs rising, Medicare, Medicaid budgets. So fast forward in 2002, President Clinton signed in the Tax Qualified Act uh bill that said, hey, if you purchase long-term care, we're going to give you guarantee that those benefits are paid out tax-free. And then they started adding some tax deductibility for business owners. Fast forward along the timeline, we had 2005 come in, and that's when things really started shifted. Under uh President Bush, 2005, he signed into law the deficit reduction act, the DRA. If you're not familiar with it, get familiar with it. It's a popular term, you need to know about it. So the deficit reduction act basically said, hey, we got a lot of people out there cheating the system, right? We got, oh, okay, uh, grandma had a stroke. She transfers the farm to her son, and now technically grandma has no more assets, and she's applying for Medicaid because she has no assets, and you and I, the taxpayers, are paying for grandma's care. Meanwhile, the son's sat on the million-dollar farm. So there's a lot of people that are always working in uh the system to see how we can uh win and keep our assets and get qualified for Medicaid. So that was one thing that happened out of the DRA. They said, hey, we're going to create a five-year look back period to see if assets were transferred. And it was no longer from the date of transfer, it was the date that you apply that they're going to look back five years. So they're making it harder to meet that qualification. Another thing that came out of that DRA was we had a lot of people saying, okay, I've got $700,000 in my 401k. You know what? I'll go ahead and annuitize it. And that'll create a set income for my spouse to have income. So technically I'm eligible for Medicaid because my asset's gone. So what they also did out of the DRA is they also created an income means test. Because prior to that, we had an asset means test and a health means test. So now we're going to say, okay, we're not going to just look at did you spend all your assets down to $2,000? We're also going to look at, hey, how much income do you have? And that gets into really nitpicky situations, but we have some states that have income cap states that say if you have um too much income, you're not going to qualify for Medicaid because you have too much income. All right. We can have this discussion all day long, but I'm going to keep trying to move this ball around for you, Jason. But the other thing that came out of that DRDI was partnership. President Bush says, why don't we have all states offering partnership? We've got those four original states. Why would we

Partnership Expanded to All States

SPEAKER_02 8:05

not require all states the ability to offer that partnership? Because it's not costing the government anything. Because remember, they're buying private insurance, and the private insurance is paying first. So now we have all the states. And if you've not wrote a long-term care, which I'm hoping most everybody on here has, but you all know you had to take that eight-hour partnership certification and you have to do your four-hour refresher every what two or three years, depending on your state. So we have partnership. Couple things with partnership is it is traditional policies only. Okay. So if you want your hybrid, your nationwide, your One America, Lincoln, Brighthouse, Securian, you're not going to get a partnership. To get a partnership policy, it must be a traditional policy. The three that come to my mind is your NGL, Mutual Omaha, and Thrivent. Obviously, you can get like New York Life, you know, Mass Mutual, some of those other policies. Now, in order to be partnership, you have to have several things in place. Number one,

Requirements for Partnership Qualification

SPEAKER_02 9:11

you have to be in a state that has approved the partnership law. So just because 2005, President Bush said, hey, we the federal government, we're going to oversee it, but we're still going to give all the states underneath the rights to run their insurance per um, how they feel to run their insurance in their state, they're going to give them that federal approval to say, hey, we're going to go ahead and say, hey, you're going to have partnership. Believe it or not, we have a couple straggler states out there that are not partnership certified. But number one, you have to be in a state that partnership is eligible. Number two, you got to make sure the insurance company's plan meets that state's partnership certification. Number three, you, the agent slash producer, must be partnership certified. So again, you have to take that original eight-hour certification, you have to have your four hours. Then it goes into what does your policy meet in order to qualify to be partnership. Kind of like in 2002, we had tax qualified that said, hey, you had to have two of the six ADLs, you had cognitive impairment, minimal, and you know, 90-day stipulations. To be partnership, it's pretty simple. It has to be a tax qualified product, which means it's comprehensive, got to have home care, community care, facility care. And depending on your age, there's an age-based table. Depending

Inflation Protection and Age-Based Rules

SPEAKER_02 10:40

on your age, it has to have a certain inflation amount. And the concept is pretty simple. We don't want 15, 60 year olds buying a $100 daily benefit with no inflation. Fast forward 20 years. We already know, I don't care which state you're in today, but $100 a day or $3,000 a month is probably half of the cost of care pretty much anywhere you're going to go. So fast forward another 20, 25 years, that's going to be, you know, maybe an eighth of the cost of care when you need care. So they did require that you have inflation protection into those policies if you wanted to meet that asset protection. So what they're saying is you have to have a policy that's going to be not only credible today, but it's got to be substantial and credible at the potential time that you're going to go and claim it in your mid 80s. So they have typically you see 3% compound inflation. I believe it's age 76, that when you turn 76, if you are applying, which good luck. I mean, but 20 years ago when I started doing this, yeah, we were right in late 70s and 80-year-olds, you know. So maybe I didn't have to put that in there. But um today, if you can get somebody 76 applying that has the premium and the health to qualify, go for it. Good for you. But you're not probably chances are high it's not going to happen very often. But long story short, I think the cutoff is at age 76. Um, we don't talk to too many people, traditional policies at age 76, but if they do, um, they're not required to have that 3% compound inflation to meet partnership. Okay. So now let's dive into again the specifics on how partnership works. So with that, I'm going to take you through a little bit of Medicaid 101. Okay.

Medicaid 101: What It Covers and What It Doesn't

SPEAKER_02 12:33

Medicaid, remember, is a for the poor. So it's funded from tax dollars. Don't confuse them with Medicare. Medicare is your health care. So Medicare says the left arm of the government, and Medicaid is the right arm of the government. Two totally different programs, but equally, we're funneling tax dollars through the head because it's going out to both sides of the body. Okay. Either way you look at it, we don't have enough tax dollars to support either one. Medicaid, unfortunately, is the biggest payer of extended nursing home care. It's also relevant to understand that Medicaid only covers nursing facility care. So everybody wants to go to the assisted living. Why? Because those rooms are like condos. You have this huge room, you got a bedroom, you got a bathroom, you got your living room unit. It's like it's like my dad's condo. Okay. You go down, you can have meals, you're able to um ambulate. You get using a walker, a wheelchair, you can get around, you have this wonderful facility. You can order up the menu. If you don't like it, you can order something else. You have all these great activities. They're like hotels. That's where people want to go. But it's relevant to understand that Medicaid does not cover assisted living. Medicaid is paid in a nursing facility. And that typically is when you bring up the conversation of a long-term care or a nursing home, they say, I'm not going because they think in the back of mind they're going to go to the nursing home. That's the one place they don't want to go. So when you're having the conversation and people think, well, I'm not going to buy insurance because I'll just spend my assets and qualify for to go into a nursing home. Well, they need to understand the nursing home is the one place that typically people say, I don't want to go. So make sure you understand Medicaid only covers nursing facility with one little exception. And that exception is most states or all states have what they call a home and community-based waiver program. So if you think about it, it's a lot cheaper to keep somebody in the home than it is to go to a facility and pay that room and board facility bill. So the states allow a certain amount of tax dollars if you are in a situation that you could stay at home. So typically you got to have somebody residing at home. So if I'm single and I'm homebound and I need Medicaid and I need 24-7 needing care, probably not going to be a candidate for that home and community-based waiver program because there's it's, you know, usually I find it's cheaper to go to facility if I need more than eight hours of home care. Because now you're trying to manage three full-time positions providing care at home. It's just cheaper to go to the facility. So there is the home and community-based waiver program. Do you know it's a very small fraction of what Medicaid pays is for that home and community-based waiver program. Even the state of New York, who's been very generous with their home and uh New York or a home and home-based waiver program, even New York is starting to tighten up because a lot of people have been taking advantage of that. So again, any state you're in, Medicaid is a huge budget and expense, and it's a concern. So that being said, most of Medicaid's covered in a nursing facility. Less very small percentage is covered at home care, and none of it is covered in the assisted living. So let's run you through a situation. Let's say you have a husband and wife. I don't

Medicaid Spend-Down for Married Couples

SPEAKER_02 16:11

care if it's the first marriage, the second marriage, when you have two people living together, you're sharing household expenses. That's just the way it is. Okay. He's paying this, she's paying that, you know, this one's paying this, this one's paying that. However, you want to look at it, typically you're sharing something. What happens when one spouse needs care? They have a new income concern. It's an income problem. So now all of a sudden they're getting another six, eight, ten, twelve thousand dollars, fourteen, sixteen thousand a year in California a month bill. How are they going to pay for it? Because we typically like to pay our bills out of our income, most people do not have enough income to pay an additional six, eight, ten, twelve, fourteen, sixteen thousand dollar monthly bill. Now remember, if you're a couple, you have two people in one household paying all the bills combined. Now one spouse is gone because majority of the care for Medicaid goes to facilities to a nursing facility. Their income is going to go to pay as much of the bill as possible. Unfortunately, they're not going to have enough income to pay the bill. So now they're going to dip into their resources. And to me, a resource in simple terms is assets. So what is an asset? You got a checking account, you got a savings account, you got a money market, CDs, maybe you got a high yield savings account, you got a 401k, you got a non-qualified account, maybe you've got an annuity that you've been contributing to, but you haven't annuitized it. Maybe you own some stocks, maybe you have a beach home. Anything that you can substantially put your hands on, cash it in, the government, IRS, Medicaid's going to say, hey, you dip in, use your resources first before we ask taxpayers to pay for it. Okay. So what happens here is you've got now a couple that was sharing expenses. One spouse needs care, they're in a facility, their income goes with them to the facility. They don't have enough income to pay the bill. Now they're dipping into the assets. And when you are married, it is combined marital assets. So when you made that vow for better for worse, richer for poor, better for you know, sickness and health, you I sure as heck hope you really did it to mean it, because that's really what's going to happen. It does not matter if I worked and I had an IRA, a Roth, a 401k, if I inherited anything and my better half had what they inherited or what they have in their accounts. It doesn't matter. When your social security numbers are linked, you're better for worse, richer for poorer, sickness and health. So everything goes into one big pot. And the Medicaid will take a snapshot at the day that you apply to look at all of the combined marital assets. Now, first thing they're going to do is they're going to say, we can't take everything away because we have to leave what they call the community spouse. And I think of the community spouse as the healthy spouse, we have to give them something to live off of. So they're going to allow them one home to live in, one automobile to drive. So if both spouses have their own car and one spouse goes to the nursing home, the community spouse only needs one automobile to drive. So they're going to use that automobile, they're going to sell the other one, and they only need one home to live in. They can have half of the combined marital assets up to the state allowable maximum. So we call it, we have a floor and we have a ceiling. The ceiling is this year like $157,000. And of course, I'm not in front of my computer, but it's about $157,000. So what does that mean? Let's say you've got a husband, a wife, or a couple, I should say, and maybe together they have a million dollars in assets, not counting their home. Okay. So we added the 401ks, checking savings, money market, CDs, Roths, whatever it is. We added together, that's a million dollars. The healthy spouse gets a home to live in, one car to drive. Oh, thanks, Diane. 162,660 is this year for 2026. Diane, thanks for having my back. You're awesome. Um, I think maybe 157 was last year, but whatever. So out of that million dollars, because we're gonna take the home out of the equation, the car out of the automobile out of the equation, everything left says a million dollars. Logically, the healthy spouse is gonna say, well, Rhonda said I could have half. Half of a million is $500,000. Well, Rhonda did say you could have half. However, there is a ceiling or a maximum that they will allow you, Medicaid will allow you to have. So that is that $162,600, $600 that Diane just put in there. So of a million dollars, the healthy spouse is going to get to keep $162,600. That means the remaining portion, so a million minus $162 is what $8375, $837,4, something like that. Is that close enough? Um, so that means before Medicaid is going to give you an application to apply, you're going to have to spend down that million dollars, not all the way down to two, but you would spend it down to um 160. You will you take the you would take the 160. So that would take you down to the eight, what'd I say? Eight forty, what did I just say? 838, something like that, 837. You would spend that $800,000 number down to $2,000 before you could apply for Medicaid. Meantime, you got the healthy spouse sweating a bullet because now they're paying 100% of property taxes, insurance, utilities, insurance, you name it, on one income. They don't have two. And the other spouse is chipping away at all the assets, and it could be part of their own assets, and they're only going to get the 162. So now this is where long-term care is relevant and partnership is relevant. Let's say they purchased a private long-term care policy that was partnerships qualified and it paid $300,000

How Partnership Protects Assets Dollar for Dollar

SPEAKER_02 23:00

for care. And after the $300,000 of insurance is gone, let's say that spouse still needs care. Well, obviously the insurance is gone because they paid what they promised, but they still need care. Now partnership comes in and says, wait, you had partnership long-term care. It paid $300,000 for your care. We are going to allow you to retain $300,000 for your care. So in that situation, they had a million. The healthy spouse gets the $162. The unhealthy spouse's portion of the marital assets is that $840. Why can't I keep remembering this? $847, $837 number. Instead of spending all that down to two, they would spend that $837 down to $537 because the law is going to allow them to retain the $300,000 that the private insurance paid up front is $300,000 of assets that is going to be allowed to retain. Okay. Now what I love about the law, several things. A lot of people do not understand Medicaid is treated like a loan. So all these people that think it's so easy out to spend out qualified for Medicaid, they don't understand is if it is a loan, and eventually the loan will be called due. Now, most of the time with couples, when that spouse passes away, there's nothing to recall because they still got to leave the healthy spouse, a home to live in, a car to drive, and the 162. But it's when the second spouse passes away, if there's anything left, or now if the home is sold, the Medicaid loan is now due. And now they will be first in line to get their money back. So it's called the recovery law. And the federal government has implemented all states the right to have the recovery law. In fact, they require that they had the recovery law, or they don't do not receive any federal dollars to go into their state Medicaid budgets. So the partnership not only allows to protect the $300,000, every dollar of insurance is dollar of assets protected. It's also exempt from the recovery law. So now if I had a million dollars and my spouse gets to keep the $162 and I had $300,000, instead of spending my $840,000 down to two, I'd spend it down to $502,000 because my insurance paid the first $300. I spend down, qualify for Medicaid, and let's say the state of Iowa pays another $200,000 for my care before I decease. I pass away. And at the time of my spouse's passing, that loan is not going to be due. It's already forgiven. Because I had partnership long-term care, they're not going to come back and ask for the $300,000 back or the $200,000 that they paid. So every dollar of insurance truly is a dollar of assets protected. Okay.

Medicaid Recovery Law and Partnership Exemption

SPEAKER_02 26:11

Now, what I love about the law too is I don't have to overinsure people. If I have people that have, you know, modest middle class, they only have $500,000. I don't need to be signing them up for, you know, five, six years of benefits and you know, signing them up for a million dollars worth of insurance on day one. I don't need to because the law is going to allow them every dollar of insurance is dollar of assets protected. Another scenario is just because they have, I'm here in Iowa. We got a lot of, you know, five, $10 million farmers sitting here on land, but they don't have very much income. You know, they so it doesn't mean you have to buy five, six million dollars worth of insurance. You buy as much as you want. Most people will say, I don't mind paying some of it. I just don't want to be exposed to pain 100% out of pocket. So you can pick and choose, but every dollar that you choose to have the insurance pay, should they exhaust the insurance, is a dollar of assets that is protected from that Medicaid spend down. Okay. And this is going to create huge peace of mind for that other spouse. Okay.

Which Clients Benefit Most from Partnership

SPEAKER_02 27:20

Now I do think partnership is really great for mostly our middle class and our maybe our lower two on the lower end of that middle class. Because, you know, couples that maybe have less than a million dollars in assets, knowing they've got three, four hundred, five hundred thousand dollars tax-free dollars coming in, they still love their family. They don't want to be a financial burden. They don't want their the spouse or the kids to have to physically take care of them. It's still going to provide great peace of mind uh for them and give them that asset protection piece. And I don't know which parent wouldn't say, hey, if I'm gone, whatever is left over, I kind of like to leave it to my kids. Yeah, maybe they don't feel like they need to leave everything, but sure, they usually want to leave something. And so that's what that partnership does. Even more important, it does for that spouse. So if you have that second person, that partner spouse, and you want to guarantee SMASA protection. So if one spouse is gone, they want to make sure they have some extra assets to help make sure that they can uh maintain their retirement lifestyle. That's to me, that's where I think it's relevant. If you have people that have four or five, six million dollars, they're probably not gonna buy that much insurance. So the partnership may not be so relevant. Excuse me. Likewise, if you have people that only have $50,000 of assets, maybe they're renting an apartment, probably don't need partnership because it's not gonna take them much to spend on qualify for Medicaid. That's maybe when you're looking at those bankers' policies, or maybe you're looking at the short-term care policies to buy them kind of a bridge until they can qualify for Medicaid, but still be a great tool to help their family members because you know, even if they don't have a lot of assets, the reality is they still love their kids. They probably don't want their kids to have to help them, you know, 24-7 being around at the home to help take care of them.

SPEAKER_00 29:14

So that's a great point you make, Rhonda, is that like sometimes we rush to blanket partnership as a you know, something that is a boon to middle class clients across the board, but you really do have to take assets into account at the end of the day, as you do with everybody as general practice. But we do have um a couple of questions if you're interested. Sure.

SPEAKER_02 29:39

And I do not I do not see them, so yeah, no problem.

SPEAKER_00 29:43

Um Natalie had um asked, does that apply if monies were not commingling? Sorry, Natalie, I know some time has passed, but if you want to uh unmute and clarify so that Rhonda can help to answer that for you, um, feel free. Or if she already answered it, let us know. And then Romeo said, Will you cover short and fat versus long and lean for benefits?

Short and Fat vs. Long and Lean Benefit Design

SPEAKER_02 30:10

Yeah, so I again it kind of depends on what their situation is. You know, hopefully we did our good job fact-finding. I always like to know do they have pensions? Is it a small pension? Do they have multiple pensions? Are they claiming Social Security at 62? Are they claiming at 65 or 67? Are they going to delay it to 70? So kind of get an idea of their income stream to see um um, you know, what other sources of income they have. And then I always like to ask, are you going to be spending 100% of your income? Are you going to be able to bank some money? Are you taking your RMDs because you only have Social Security and you need to supplement your Social Security? Or are you taking your RMDs because you have to, or you're going to delay them? So that's going to kind of tell us about how much income they have. So typically, my people that have really good pensions, you know, typically are educators or maybe government workers or union workers that may have incomes pretty close to what they were working in retirement. They may need the long and skinny Romeo that says, hey, I just want to guarantee that I've got, you know, a longer duration, but always having some tax-free dollars coming in. However, if you have people maybe have low assets and maybe low income, probably going to need a short and fat, right? Because it may not qualify, take much to qualify for Medicaid. Again, depending on if they're in a CAP state or non-cap state, but some states that have that income means test in place, you know, it may be really hard for those people with pensions to qualify for Medicaid because they have too much income. So again, maybe they want the skinny and long policies, where maybe some people that just have, you know, three, four hundred thousand dollars in assets, but they still want to have some asset protection, maybe we do the short and fat, you know, do you know a good six, eight, ten thousand a month for two years or three years to just get a basic policy. Does that make sense?

SPEAKER_00 32:07

Yeah. Romeo, is that all good with you? Perfect. Um, let's see. I think everything else comes from folks just adding a little bit to the conversation. Diane said with some carriers, they can drop their inflation after age 76 and still maintain partnerships. Uh, this helps when older clients receive rate increases. That's a really, really good point. Um, Romeo says, as spending down, don't forget Irmo, which can triple your Medicare Part B premium. Um, and I think we've covered everyone else in the channel.

SPEAKER_02 32:45

You know, Romeo, I I respect that comment. And I pretty much have that with people every day. Or not even not maybe not every day, but what people don't understand when they think they're going to self-insure is when they take money out of those accounts, and the majority of Americans' wealth is in qualified accounts. Okay. That's why they're having uh RMD requirements. Hey, you've not been paying tax on it. We want our taxes out of it. So when they take money out of that, they have to pay uh taxes, which is going to also create income stream, and that's going to increase on Irma for your Medicare premiums. So often I get um, I've had a couple people call me and say, Hey, how's my part, my Medicare premiums went up so high? And I'm like, what are you talking about? Well, after fact finding, I figured out they're talking about their part B. And I said, Oh, well, did you sell some of your stock? And they said, Well, yeah, my financial planner wanted me to move some of my qualified dollars over to a to a Roth to create tax-free. Well, yeah, so you moved $200,000. Now you got extra income. And guess what? Now your part B premiums go up. And to your point, Romeo, I had this discussion yesterday. I had was working with a pilot, and he told me from day one, he said, um, the hard part's gonna be convincing my wife. Now they both were married, affluent white collar, but no kids, and they have both have nice income streams. And he told me from day one, it's gonna be a hard time convincing my wife. He's a pilot. So I met with him three times. He's on board, and every time he told me, he says, it's gonna be a hard time convincing my wife. I get it, I like it, bump, but it's gonna be a hard time. So he emailed me back and he said, Thank you very much. We looked at it, everything. We're deciding not to do it. So I emailed him back and I said, you know, first of all, thank you for the opportunity. Appreciate it, appreciate your feedback. But I said, I strongly encourage you to have a plan for your disaster. I said, it's not any different than you stepping foot in that cockpit. You have a co-pilot in the event that a disaster happens. And you have a communication tower that you can tap into. When you have a long-term care plan, that's what you're getting. You're getting a co-pilot and you're getting a communicate access to the communication tower. When you don't have a plan, I and I somehow I said, I cannot think of any other plan that you can get everything in one. You can definitely say, I'll dip into my resources and I'll prepare to take pay the taxes. But now you have nothing but medical expenses. You're dipping into your accounts, you're paying taxes because you're taking it out. Now, of all things, you got all these medical expenses, and now your part B premiums are going up, and maybe your part D premiums are going up. You have nothing but medical expenses, and now your premiums are going up because you have medical expenses because you're taking money out to pay taxes. So I said, I don't know any different. I said, I don't know if you're gonna need care or not need care, just like any flight attendant doesn't gonna know if you're gonna have a land, uh, you know, a surprise landing on water or land. But you know what? We go through and we prepare for it. I said, I highly encourage you to prepare for a disaster because right now you two are married, you two are each other's co-pilot. What happens if the co-pilot still needs access to a communication tower? And so that's where having a plan, even if they still love their family, still have kids, they still have somebody that's important to their life, but they don't have a lot of assets, eventually Medicaid is going to be there. And we all have all seen where all the Medicaid, you know, issues. Anyone that's dealing with Medicare, it's harder and harder to call and get through. They're just pushing everybody to do online. And if you can't figure it out, they don't really care. They're, I mean, they're just making it harder and harder for people. And so I think we're going to continue to see that. That's my opinion. I got off track there, didn't we?

SPEAKER_00 36:55

But it's all, it's all good knowledge. Um, so Matt in the chat said, besides starting conversations around long-term care and uncovering needs, what are some practical ways to move prospects more smoothly toward a decision so I can close more consistently without a feeling forced? I predominantly sell life and annuities. And you're really good at this one too. And we've we've had you do

Moving Prospects Toward a Decision

SPEAKER_00 37:17

a couple study groups on on this topic alone.

SPEAKER_02 37:21

Yeah. Um, Matt, I'd like to say I close them all and I don't. Would love to say that. Um, you know, I just again ask them, you know, what sparked their interest. Why are they looking into long-term care? And usually they'll tell me, Oh, I'm either dealing with the parents and I don't want my kids to have to go through what I am. And I write that down. So when I start to get pushback, I go back to their why. Kind of like, you know, other people say, What's your why? What's your why? Why did you pick up the phone? Well, I don't want to be a kids, I a burden to my kids. I don't want my kids to have to do this. So make sure that we keep their why, their focus. And then as you walk through your presentation of, you know, what is however you do your presentation, but what is long-term care? How does it work? You know, have some checkpoints with them. Um, you know, have you can you think of any other product out there? Can you think of any other plan design that can do meet your needs and do all of this for simply paying a premium? You know, if it's tax, if they're self-employed, you know, don't forget to talk about the tax deductibility. Um, and then, you know, talk about how, you know, today your health is good, but often I meet with people and they have health issues now, they want it and can't get it. Um, you know, long-term care is also opposite of like long-term disability. If they have a long-term disability product, you know, find out if they do have a long-term disability. Why did they purchase it? Well, I have a long-term disability product because if I'm disabled and can't work, I still know that I have to pay my um pay my property taxes, my insurance, I have to pay all those things. So um I have to make sure um that I have enough income to pay for all those uh other situations. Long-term care is not that any different. Now you're retired, your income may be the same, but you have a whole new set of expenses. So you still need that income. If they do have annuities, Matt, ask them the question of why did you purchase an annuity? Why? You wanted to make sure that you had enough income to sustain you, your spouse, the both of you. Well, what happens? What can derail an annuity plan? If I have an extra eight, $10,000, $12,000 monthly bill, that can derail it. So maybe just taking some time to um ask some of those questions up front as to what plans they have in place and why did they have those in place, and helping them to know this is one more area that can derail all every long-term care event is the one thing that can derail everything else, right? Except for life insurance. Except life insurance, if you have a cash value, now you could, and by the way, Medicaid is going to require you if you have cash value life insurance, they are gonna require you to derail your life insurance. They're gonna require you to take that cash out. So, in some ways, if unless you have term, um, even life insurance, a long-term care bank can derail uh every other plan that you have in place.

SPEAKER_00 40:24

That's perfectly said, and yeah, I think the one takeaway I've always gotten from you in sessions you've done on that topic is figure out their why, write it down, and especially if they start to disappear on you, go back to that why, right? Remember, you told me you wanted to do this because, and we haven't solved that problem yet. So I've always taken that as great advice from you. I just want to quickly share two resources from uh our good friend and mentor, Phyllis Shelton. I'm gonna put a link in the chat, and I'm also going to share this page. I know we got to get Rhonda out of here in a couple minutes. But Phyllis has this wonderful tool, what your state lets you keep. So by state, um, thanks to Phyllis, you can see asset allowance for yourself, your spouse's minimum asset allowance, your personal monthly needs allowance, and your spouse's minimum monthly income allowance by state, all in one place to refer to as a nice cheat sheet. And Phyllis has always kind of been my um sort of go-to resource on things partnership when needed to look up. And she also has on this same website, her website, if you go under laws and regulations, the partnership for long-term care. I mean, if you want more on this topic, you got it. Phyllis is very, very detail-oriented. She will not rest until something that is left out is no longer left out. Um, this is very, very all-encompassing, a really good read. And, you know, she gives the easy formula for any other states. If you want information on a specific state that you can drill down into, just Google the name of state and partnership for long-term care, and you're going to find the page that is similar to the New York partnership state and the other partnership states uh that she has listed here. So a lot of the regulations are going to be state by state, but we've got some good folks in this community that can really help you stay up to date and get the right cheat sheets. So give those a look. Um let's see. Matt said, also, most of my clients haven't really had a long-term care conversation before, so they're not actively looking for long-term care solutions or planning for it yet. In that situation, what would you recommend is the best way to approach or position it for them? You know, I would say personally, um, just because they haven't sat down and had a long-term care conversation with somebody doesn't mean they haven't experienced it. You know, they hear the word long-term care on its face and they may say, I don't know what that means, um, when all the while they experienced a close family member that was either in a facility or receiving care at home for a loved one. So it could just be in how it's phrased and introduced, and introducing that as a risk to a financial plan and kind of putting it in terms that they can relate to can be helpful. But Rhonda, I don't know if you have uh anything else you want to add.

SPEAKER_02 43:38

Yeah, along along the same lines, you know, it just kind of goes back to, you know, hey, you're really, you know, always try to give people compliments so we can keep that open communication tool going there. But say, you know, hey, you're doing really well, preparing for retirement. You know, these are things that's really important to you, whatever it is that you want to do in retirement. Have you thought about what an extended care event would be? And if they're like, well, what is that? know well did you know you know the majority of people do need care at some point in their time that's you will need it but if you do need it what are your wishes who do you want to provide your care well i don't want my kids to do it i want my spouse to do it do you know how much it costs where's that income we have not mapped out into this retirement plan that we're working so diligently to get you to we haven't accounted for anything for extended care and um you know we're looking at you know 60 to 120 000 a year depending on what part of the state is where are you going to get those dollars because we've not allocated those dollars so that's why we need to have that discussion and I will prepare you a lot of times um those people it's probably going to be more than one you know maybe two or three times before it really hit sinks in and if you don't have a story for that client you know use one from your other clients you know hey I'm dealing with somebody right now another client their parents had to place them in an assisted living facility and it's costing them you know $8,000 a month and you know luckily they had a policy or maybe they didn't have a policy they're using their social security income and and they're depleting the assets you know what yeah use to kind of bring them in but just basically put them into the situation is if something happens to you how is this going to affect the people that you love most in your circle love that and I do need to sign off so sorry yeah yeah no go ahead Rhonda thank you so much for being a being a trooper and uh giving us a really really information dense presentation uh I think it's a great topic and you always nail it so thank you so much for everything today.

SPEAKER_01 45:40

See ya bye yeah and Rhonda Jason do you mind if I share something yeah go ahead is relevant to this conversation yeah so

Opening the Long-Term Care Conversation

SPEAKER_01 45:50

and it's it's kind of um in response to um Matt's question but I feel like everyone can benefit I feel like well I know that there's really an epidemic of silence going on where conversations are not happening. And one thing you know when we approach an older person, a parent or whoever and we just address that um long-term care or Medicare or whatever it is, they feel a little bit insecure they feel on the spot and they're going to be defensive. But one way to also approach it is to just say this is some planning I'm doing for myself. And it made me wonder what are your plans and that really I feel is a conversation opener where people are much more um receptive to sharing um even saying well you know I haven't thought about that or whatever it is but it's you know it's it's an it's a door opener. And I'll just share that a month ago I got a phone call on a Sunday from a friend of my sister's who said um I need to talk with you. I heard that you um are an expert in long-term care insurance. I have a situation in my family and I would benefit that I think it would benefit from talking to you. And I talked to her on a Sunday and what I found out was that this friend who I know has parents in another state who had a Genworth policy that they'd had for 20 years. The father went into the hospital for a fall and that's when the friend found out that the lung the Genworth policy had been canceled the previous year. I actually I said I don't know if this is possible but I can call Genworth with you and find out if there's any possible way to resurrect this policy if there was any cognitive decline like something they declined the the wife not the friend the wife declined my offer to do that. They said well we feel that we've done well in the market and so we can just pay if we need care and all this other stuff. And my friend of course you know is horrified because she knows that this is going to be she's going to need to be more involved than she probably would have been if the policy was in place regardless of whether there's money needed or or not and so ironically the next day I was talking to a different a friend of mine who's a financial advisor and he said he was visiting his father in Florida who was talking about canceling his homeowner's insurance. He said he never needed it and whatever the case is and I just thought this is crazy. And it's and I said to all my friend thank God your father shared that with you so that you could intervene. And I feel like if we just have more conversations with our families our clients and find ways to bring these topics up in a um you know non-confrontational way you know I feel like we'll all be better off.

SPEAKER_00 49:05

100% thank you for sharing that and uh yeah I agree a lot of this does come from silence right people just not even having these conversations within their family hey what's our what's what's your role going to be or what's our plan as a family going to be if one of us needs extended care. I think that's um definitely where a lot of people should start because uh a lot of families have not had that conversation with each other and there's a lot of assumed roles that people will be playing that they're not necessarily comfortable with just like in your story. And I think what Romeo and Diane had to add was great, you know Diane just ask them what's your plan for extended care needs presume everyone has a plan because everyone does and even if it's a bad plan, you know everybody has uh a plan. You know the default one just isn't necessarily that good. So I think starting kind of with those questions or starting with a story or both can really help to just open the door. I mean are they going to be swept off their feet and get a solution in place the day of no but you have to open that door before you can go anywhere. And uh you know even inspiring somebody to have a conversation with their family who doesn't do business with you but ends up better off for it. I mean that's why all of us on this call really do this uh at the end of the day besides making a living for ourselves so yeah thank you everybody for for chipping in on those and uh and yeah if you choose not to decide you still have made a choice that's a that's a rush song isn't it yes it's uh it's a really good line um all right well that aside I really appreciate everybody being here today I hope we can all appreciate Miss Ronda um being a credit to the force and getting on uh her cell phone with no internet to do that presentation I hope you all um picked up at least one thing that you can bring into your conversations and uh yeah I I think we may be canceling next week's study group sorry to disappoint uh get out in front of it um we'll try to work on something but a large amount of our team including Rhonda is actually going to be at Medicarians next week so if you're going uh give us a shout otherwise uh we will see you in two weeks or on Thursday if you're on the Thursday study groups thank you everyone thank you