Join us for episode 3 of Industry Insights, a new video series where we discuss the latest from the elder law community!
In this installment, we interview our LTCI Advisor, Tom Budenz, CMPTM, CLTC, to evaluate the use of Long Term Care Insurance as part of an asset protection strategy. Tom provides details about when it’s appropriate to recommend LTCI, how to use it most effectively, and common mistakes to avoid when working with LTCI policies. He also explains his role in working with attorneys to develop client-specific strategies.
Amy: Hi, I’m Amy Beacham, Communications Director at Krause Financial Services. I would like to welcome everyone to today’s episode of our newest series, Industry Insights. In this series, we discuss changes that occur in the elder law space and explore topics that are relevant to you as an elder law attorney. Working with elder law and estate planning attorneys across the country and consulting on hundreds of crisis planning cases each month, we see trends that affect the elder care space, and we want to share some of those insights with you. Today’s guest on the show is Tom Budenz. Tom works with our attorney clients to help them implement Long-Term Care Insurance strategies for their clients who are concerned with the cost of care down the road. Welcome, Tom.
Tom: Good to be here.
Amy: So, you’ve joined our office pretty recently. Can you tell us a little bit about what you were doing before joining our office? I understand you were working in the investment and the LTCI industries?
Tom: Yeah, you bet. So, I first started out working with a pretty large insurance company where long-term care, disability, life insurance was our main focus. And then, fairly recently after that, I transitioned into working with a wealth management firm to where I took on the role as the insurance specialist as well as helping them with financial plans and retirement income strategies.
Amy: Okay, great. So, you are our LTCI Advisor. Can you tell us a little bit about what your role entails?
Tom: Yeah, my role is pretty simple. It’s just to help educate our attorneys and their clients on what the best strategies are for long-term care.
Amy: So, why should attorneys look to incorporate LTCI into their asset planning strategies?
Tom: Sure. Well, I think it’s important to realize that there really are only three payor sources of long-term care. There’s the government, which is, of course, Medicare and Medicaid; privately paying; and then, the third is Long-Term Care Insurance. And to truly help your clients is to truly give them the best recommendations and to really educate them. I think it’s important to at least be aware of all the strategies that are out there because long-term care is really the only option you can use to leverage your money when it comes to Long-Term Care Insurance.
Amy: So, when is recommending LTCI to your client appropriate?
Tom: Sure. Well, I think there are a few scenarios to look for, assuming that they have sufficient assets and they’re reasonably healthy. The first scenario that comes to mind is if you have a married couple and they like to keep their assets separate, we all know in the future if one of them has a long-term care event, that their assets will essentially be looked at as one. So, really, it’s to maintain that Long-Term Care Insurance is a very, very important tool to help make sure that what stays his is his and hers is hers the way they would like it. Another really important time you should be looking at Long-Term Care Insurance is when you’re doing estate planning and maybe you’re funding an irrevocable trust, a big concern is getting through that five-year lookback. So, that’s one of the more exciting strategies that we have here is we have a very unique long-term care strategy that can actually help fund those five-year lookbacks at a very, very low cost to your client. And really, the last one is oftentimes in crisis planning, there’s a community spouse that’s left, unfortunately, all alone at home. And assuming that they’re young enough and healthy enough, and we can get policies as high as age 86, you can actually get a very, very meaningful policy for someone. And that’s really going to help them out in a few ways. Of course, it’s going to help protect their assets from a nursing home bill. But really, it’s going to help keep them safe at home. When people know that they have a Long-Term Care Insurance policy, they’re more likely to use it and not likely hang on until the last second before they need care.
Amy: Right. And then end up breaking a hip or something like that. Okay. Now if a client or if an attorney is looking to recommend LTCI to their client, how do you work with them during that process?
Tom: Sure. So, the first place to start is actually our intake form. We’re actually pretty excited. We have a brand-new intake form. You can get to it at [medicaidannuity.com/LTCI]. And it’s really designed to do a couple of things. The first it’s designed if you just want to send your clients there. If you just want to stay out of it and just work on the estate plan and not take time with the Long-Term Care Insurance, you’re more than welcome to do that. But it’s also set up to do the intake form with your clients, really have more of a collaborative meeting. So we can help educate your clients on what their options are in long-term care.
Amy: What are some of the common mistakes that people should avoid when they’re looking at LTCI policies?
Tom: Yeah, I think the first mistake that you want to avoid is a rejection or a denial of insurance. And we have certain strategies that we can utilize to help minimize that. The second thing you want to do is avoid buying a policy that’s too expensive. You don’t need–everyone does not need a policy that has to be five years and has to pay $8,000. Sometimes a two-year policy with the right amount of inflation can be very, very meaningful for someone and very, very affordable, too. And that kind of alludes to the last point. The biggest thing you want to consider with a long-term care policy, besides price, is it has to have a meaningful monthly benefit. So, every single policy out there is going to have a limit on how much it’ll pay per month. And we like to see the policies that have a very substantial monthly payment, albeit maybe a shorter term, because we know that that’ll really help protect the assets versus a policy that’s slim. A couple of thousand dollars a month doesn’t always, almost always doesn’t help someone when they…
Amy: Sure. It might not cover that bill.
Tom: Right, a $9,000 a month bill.
Amy: So, you mentioned affordability as being a mistake. What does a policy typically run someone in 2019?
Tom: I’d say the average for probably most of our clients, we look at–for a traditional policy–a monthly amount would be about $250. For an asset-based [policy], you’re probably looking at about $90,000 to $100,000 on average. Of course, you can always go higher or lower, but that’s usually about the average. So, not quite as expensive as people think.
Amy: Now, do you have any other advice or any other final tips or tricks for attorneys looking to incorporate LTCI into their practice?
Tom: Yeah, I think that we have a lot of exciting strategies that we’re ready to unveil. So, we’re going to have a lot of training coming up, so look for that. The other big thing is to just reach out to us. One of my roles here is just to help educate, so a lot of my day is spent with half-hour, hour phone calls with attorneys who are just grilling me on questions they have about long-term care. And I can give them relevant case studies more geared to the type of clientele they work with.
Amy: Okay, great. Well, that was very helpful. Thank you, Tom. Remember, everyone, that adding Long-Term Care Insurance strategies into your practice is only a click away at Krause. If you want to grill Tom, too, you can do that. He is available. If you have any other questions about how Krause Financial Services can help you in your practice, just give us a call at 855-552-5893. And thank you for watching.