COLUMBUS, Ohio--(BUSINESS WIRE)--A new Nationwide Financial advisor survey released today found that half of advisors say they have clients asking about giving all their money to their children in order to qualify for government assistance in paying for long term care.
“In many cases proper long term care planning that includes some type of long term care insurance protection will not only better suit clients financially, it will allow them to keep control of their assets, their life and most importantly their dignity.”
According to the Harris Interactive survey of 501 financial advisors, more than two in five (42 percent) also say their clients think of “Medicaid planning” as a way to preserve their children’s inheritance.
“Medicaid should not be a plan, but used in instances where an unexpected and financially devastating illness of one person threatens to impoverish their still healthy spouse,” said John Carter, president of distribution and sales for Nationwide Financial. “Medicaid was never intended to supplement the middle or affluent classes. Medicaid was meant to help care for the poor.”
Currently, 49 percent of Americans who need long term care services depend on Medicaid to pay for their long-term care expenses.1 Most in this program are our nation’s impoverished, including those who eventually exhausted their assets leaving Medicaid as a last resort. However, others purposely gave away their assets to their heirs in order to qualify for the program and avoid paying their own long term care expenses.
While the Deficit Reduction Act of 2005 helped make transferring assets to children much less practical by implementing a five-year, look-back provision, instead of a three-year look back, “Medicaid planning” is becoming a more often used tactic. However, there are many issues seniors should be concerned with when thinking about impoverishing themselves. Including:
- While Medicaid may pay the bill for nursing home care, you may not get to live where you wish. Nursing homes are not required to accept new patients who are on Medicaid.
- Medicaid often uses nursing home care as the only choice. Community based services such as assisted living, home health care or adult day care are not a typical option for those relying on Medicaid.
- Medicaid patients do not get private rooms and if they are unhappy with the facility, they may have limited ability to change situations.
- Consequences for spouse. Your spouse may not have the income needed to maintain his or her lifestyle.
“Many of our advisors tell us the most important aspect to their clients when planning for long term care is maintaining control,” Carter said. “People who resort to repositioning or giving away their money often find they sacrifice control when having to ask for money that used to be theirs. They also give up control when protecting an inheritance for their children outweighs comfort in their final days.”
Advisors say only 15 percent of their clients understand the potential costs of long term care well and over a third (35 percent) say their clients understand the costs “not at all well.” People living to age 65 have a 70 percent chance of needing some type of long term care in their lifetime.2 The average cost per year for a nursing home is projected to be $265,000 by 2030 – and that’s not even for a private room.3
Nationwide Financial launched the Personalized Health Care Assessment program to help advisors estimate their clients’ health care expenses in retirement. The program uses proprietary health risk analysis and up-to-date actuarial cost data such as personal health and lifestyle information, health care costs, actuarial data and medical coverage to provide a meaningful, personalized cost estimate that will help clients plan for medical expenses.
“Instead of guessing, advisors can use this tool to provide a fact-based cost estimate based on their clients’ health risk and lifestyle and build a plan from there,” Carter said.
According to our survey, fewer than a third of advisors (31 percent) agree their clients understand the various long term care options available to them in addition to traditional stand-alone long term care policies.
The most commonly known long term planning choice is the traditional stand-alone long term care policy. While it is very customizable, some clients don’t like the “use it or lose it” nature of these products.
There are also hybrid products available. A long term care rider can be added to the life insurance coverage being purchased. This plan will provide funds for the insured should they need long term care. However, in the event no long term care is ever needed, the insured has a death benefit to leave to heirs.
“As financial professionals, it is our job to help protect our clients’ financial health without sacrificing their dignity,” Carter said. “In many cases proper long term care planning that includes some type of long term care insurance protection will not only better suit clients financially, it will allow them to keep control of their assets, their life and most importantly their dignity.”
Advisors can visit www.nationwidefinancial.com/healthcare to learn more.
The 2012 Financial Advisors and Health Care Costs Study was conducted online within the U.S. by Harris Interactive on behalf of Nationwide between July 18 and July 25, 2012. The respondents comprised a representative sample of 501 financial advisors with at least 50 percent of their clients having $250,000 or more in total investable assets. Results were weighted as needed by firm type. Respondents for this survey were selected from among those who have agreed to participate in Harris Interactive surveys. Because the sample is based on those who were invited to participate in the Harris Interactive online research panel, no estimates of theoretical sampling error can be calculated.
Nationwide Mutual Insurance Company, based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the U.S. and is rated A+ by both A.M. Best and Standard & Poor’s. The company provides customers a full range of insurance and financial services, including auto insurance, motorcycle, boat, homeowners, pet, life insurance, farm, commercial insurance, annuities, mortgages, mutual funds, pensions, long-term savings plans and specialty health services. For more information, visit www.nationwide.com.
Nationwide, Nationwide Financial, the Nationwide framemark, Nationwide YourLife and On Your Side are service marks of Nationwide Mutual Insurance Company.
1 National Clearinghouse for Long-Term Care Information, 2010
2 LTCI’s Revolutionary Evolution, Nov. 1, 2011, Life Insurance Selling
3 Life and Health Advisor, “Don’t Let Your Clients Get Blindsided By Unexpected LTC Costs,” 2010