Why Long-Term Care Destroys Wealth Without a Plan (Ep. 347)

"So we have seen depression, alcoholism, drug abuse when it's a caregiver, because they're just trying to cope. There's videos out there. It's heartbreaking. As a matter of fact, there's a documentary — I think it's called Caregiving. But Bradley Cooper, the actor, produced this thing because his dad needed care, and he realized how hard this was. So he put together this documentary on PBS. Everybody can go and watch it. You can download the PBS app and watch it for free. But it was just eye-opening."

Okay. We are back. We had to take a coffee break. Michelle was on coffee. So we'll just pick up right where we left off.

So we were talking about the lifetime benefit. You are going to buy long-term care, and it's going to be 22 months or 34 months or 36 months, or whatever the magic number is.

Correct.

But you can also buy those policies that are lifetime. You can't outlive them.

Right. And I said it a little bit earlier — when I'm dealing with a couple, or when I'm dealing with females, I do like the lifetime coverage. Because one, you don't want to leave someone without. And especially in a couple situation, one could use up a short bucket or a limited bucket and leave the other one without. And then also, females, we live longer. We have a higher probability of Alzheimer's. And so 75% of nursing home residents are female. It can be a female issue. So that's why I want to make sure.

And then I still go back to that story. If that lady had lifetime coverage with the husband that had Parkinson's, and she delayed turning on the benefit because she was trying to save it for the bad part — if she had lifetime coverage, she would have turned that on immediately. She would have turned that on. It could have saved her health. And then she wouldn't have had to worry about it. You don't have to ask the doctor to help your husband die faster.

That is the thing that broke my heart. The thing that my client went through — she's like, I don't want a divorce. That's not the point. You shouldn't resort to that.

Exactly. You should not have to go through that emotion, as well as wondering if your spouse is going to get good care, how you're going to go see them, how that transition is going to be.

I ran into a guy at Think Tank a couple weeks ago that was 80. And he works out every day. And he showed me a picture of his muscles. But he said, I have to, because I need to take care of my wife. And she's 200 pounds. And when she falls, I need to be able to pick her up. And he's 80. And so he is lifting weights every day, making sure that he stays strong to care for her.

So two things on that. One, when people will tell me, Michelle, I'm healthy, I don't need this — I go, you're the problem. You're going to live a long time. So start smoking. Don't exercise. Eat bacon. Like, seriously.

So, you know, my mom has passed away. But my mom was not a healthy person. And my husband and I talked about this, and same with his dad — his dad wasn't a healthy person. And so we already had this mapped out. We said, my mom and your dad will not need care. They're going to pass away. And they did. Both of them passed away pretty quickly. But his mom and my dad are healthy. His mom, she'll be 80 this year and doesn't take any meds. Lives on her own. She will probably live a long time. So her body might outlive her mind, is my point.

So I don't mean to joke, but sometimes I do. Sorry. But I have another story about a guy taking care of his wife.

So I'm at this estate planning attorney luncheon. And the topic was longevity and long-term care and how to protect the estate and all that. So I was a special guest speaker. Well, they had another gentleman come in as a special guest speaker. And so when he came in the room, you just knew this guy had a commanding presence. Well, come to find out, he was the local high school football coach. I mean, you just hear his voice. This guy walked in, everybody listened, because his voice just carried. He was retired, but everybody knew him.

And so they had him come in to talk, because he had been taking care of his wife. So he starts telling the story. And I will say, the story might make you laugh, but it's also maybe a little inappropriate. But I'm going to share it anyway. So that's a little cliffhanger for everybody.

I've heard it before. I don't think it's inappropriate.

Okay. So he starts telling the story. His wife ends up with Alzheimer's, but she ends up with the kind where she's catatonic. So she just kind of curls in. She can't really move her arms, and she doesn't speak. She's just really kind of locked up. So it made caring for her even more difficult. But he took care of her for a very long time.

But then he was sharing that he did finally move her into a home, because it was just around the clock, and it was too much. He wasn't getting rest. He wasn't sleeping. And so he visits her every day. But he said, because he was caring for her — the one thing that I learned through this whole process is, it's a heck of a lot easier to take a bra off than it is to put one on.

And the whole room just stopped. And then they started laughing. And he was good-hearted about it. But it really does, for whatever reason —

It's very eye-opening.

It is. And here's something — I love this one. Because you think about, I'm going to pick somebody up off the ground. I'm going to maybe wipe their butt. I'm going to maybe have to change some diapers. I'm going to have to shower somebody. But you don't think about dressing that individual.

Well, and her arms being locked in. And then he's having to put them through hoops and pick up things and put them in places. And men don't put bras on every day. So, I mean, women don't even like to do it. It's a pain in the butt. So for a man to have to learn those things, I think, is extremely eye-opening.

Yeah. He was painting her nails. Curling her hair. Drying her hair. Men having to learn how to do those things.

I see a lot of that on social media. Because for whatever reason, I end up on dementia social media. Because I watch, like, how are they caring for those people and how to care for those people. So I think that we don't think about the little things. We think about the things people talk about a lot. But we don't think about those things. So I like that story. Because it makes you think.

Yeah, you're like, wow, I never thought about putting a bra on.

Well, and here's the problem. Most people — when I say most people, there are people that are aware, but there are also people that deflect. Because remember earlier when I said, if I say long-term care, people think nursing home. And they go, I don't want to talk to you about it.

So I get a lot of excuses when we start talking about planning. I'll get, Michelle, I will shoot myself. This is a very popular one.

Oh, yeah. I hear that one a lot.

I'm going to drive off the road.

Yeah. And people do it. Well, we have an epidemic of seniors committing suicide.

Well, but I have clients that their family members have committed suicide after their dementia. I mean, we've even known, like, Robin Williams.

And so, if someone says that, depending on the relationship I have with them — so, like my dad, he joked about it. This is years ago. And he said something about that. And I said, I understand why you're saying that. But is that what you want your granddaughters to remember? That doesn't have to be the option. Is that how you want them to view you? And, I mean, he thinks my girls are the world. So that kind of crushed him when I said it that way.

Now, I say things like that because I really want you to think. Because, again, those are flippant things that people say to deflect.

That's like a farmer telling me, the best way is to have the last check bounce. You want me to get pissed off in about five seconds? That is the dumbest thing I've ever heard. Because it doesn't work that way.

No. Like, you worked your entire life to build this. And you want the check to bounce, to put the next generation in a position where they have to figure out how to do that. Like, what if it's not a check, but it's 15 checks?

I mean, we're talking — again, because that's the issue.

Here's another question I have. We're all over, because we're both kind of squirrely. But what happens when we have all these boomers going in on Medicaid because they have not planned? Because the boomers' mentality — and I'm just going to pick on boomers because they're the next generation going in — the boomers' mentality is that I paid into Medicaid, so it should pay for me. What happens to the Medicaid system when we have the majority of these people in the system? Does it collapse the system? Are there statistics out there on that?

So it's ugly. So here's a handful of things. Let's talk about the boomers. Boomers, 1946 to 1964. So the oldest of the boomers are turning 80 this year. And there's 20 years of them falling right behind.

Oh, I thought we already — okay.

No. So we have not even started to see it.

My dad just turned 80. So he's the beginning of the boomers.

So he's the beginning. So we have not even seen what's about to happen. We expect to start seeing this in droves in the next five to six years. At that time, we expect high demand for care. The question is, will there be enough supply? Will there be enough care providers, care facilities to take care of them? I can't answer that question.

So here's the first thing that boomers will do. Supply and demand will take hold. We all know basic economics. If there is high demand for something and low supply, they charge more for it. So now that's going to increase the costs. So that's number one, is the boomers. Again, I said it earlier, the boomers are coming. That's why you can swing a dead cat and hit an assisted living facility, because they're trying to keep up with demand.

But that's also why a lot of these insurance policies are now paying the children, because there's a lack of care providers. And that really got bad.

But are those policies that are now paying the children, are those old policies? How recent do we have to have bought that policy to have that provision?

More of the newer ones than the older ones. Now, there are cash benefit policies that have been around a long time, and those you could use to pay your kids.

But let's talk about this — I want to get back to the boomers, because there's something very profound that we need to talk about. So the problem is, let's say you're my kid and I'm going to pay you to take care of me. And this is the part that advisors don't know and they don't talk about.

Okay, so now I'm going to pay you, let's say, the $10,000 a month that I get. Well, me getting it from the insurance company, I get it tax-free. But as soon as I pay you, you're now my household employee. There are eight tax forms that I now have to do. I have to itemize. I've got to send you a W-2 or 1099, all these things. And you have to pay taxes.

I have to fill mom and dad with an itemized form in order to have the insurance company pay me.

But they're not telling that. Because, look, the government might not know where they send their money, but they sure know where you get yours. And so if you're starting to show you're getting $10,000 a month in a checking account, they're going to figure that out. So you have to now pay taxes on that, because you're earning an income for services. They don't talk about that.

And the insurance company is not going to just hand over $10,000. They want it itemized.

Well, the insurance company will. So a lot of people out there will hear insurance —

They don't need it itemized?

Nope. So here's what they'll do. A lot of the insurance companies will advertise, we don't need receipts, no receipts, no receipts. They're half correct. They don't require receipts, but the IRS does. So you have to keep every single receipt, because you have to prove what you spent that on, if you get audited.

Well, that's the trick, isn't it?

Right. You want to make sure you're keeping those. So they're not checking it constantly, but it's an if-I-get-audited situation.

Okay. So let's go back to the boomers before we get on another squirrely train.

Well, what I was going to say, back to Medicaid — and so the boomers, because they're going to be putting even more. Look, the states are broke as it is. They're trying to find ways to handle this. But with the boomers coming in, and now they're not only Medicare, but now Medicaid, it's going to put even more pressure on the states.

So here's what's happening. And it's already happened with one state, the state of Washington. The state of Washington had the Washington CARES Act, because they're trying to help this problem with aging people. And so they passed legislation that they will tax every W-2 employee. This has already been passed. Every W-2 employee. So if your child works at Burger King, they're paying this tax of 0.58% without a cap. You'll pay on this forever. 0.58% of every dollar.

Now, it doesn't seem like a lot, but what do you get for it? Well, there's a wait before you can actually access it. But it's only going to pay for a couple of years of care, and like $36,000. It's nothing. It's a drop in the bucket. But the reason why they're doing this is because they see a problem and they need tax revenue, because that's the only way states get it. They can't print money. There are 12 other states that are looking at this law right now. They haven't done anything yet, but they have to.

So in Washington, though, you don't have to pay that tax if you prove you have a long-term care policy. Because all of my clients in Washington are looking for long-term care.

And it was a big, big deal when it first passed. Lots of long-term care being sold. And there's no income cap.

Are they requiring a certain amount of long-term care coverage, or just any amount to avoid the tax?

Just any amount.

See, and that's where — which is dumb.

Well, it is. So that's where you get government officials that don't know.

It's the cheapest long-term care policy. You don't pay the tax and you still end up on Medicaid as a supplemental.

So this is where government did not consult with industry. They could have helped them out, but they didn't. They just thought, well, we're just going to pass this tax. Which, look, we're all tax-rebellious. If I can avoid paying taxes legally, I'm going to sniff that out. I'm going to find that. But it doesn't handle the problem. So they might have brought attention to it, because people don't want to pay the tax, but they really haven't solved the problem. If anything, they've compounded it.

But going back to the original question, we are going to have a massive problem. I'm not a huge pusher of long-term care if it's not lifetime, but it is our responsibility to make sure that we take care of ourselves. And if we have worked our entire lives and we've stuck 15% into our 401(k)s, or we've bought land, or we've done whatever — why are we not making sure that Medicaid is not going to be our answer, with a roommate? Like, I don't want a flipping roommate. I have to go to the nursing home on Medicaid. I can't have home care.

Well, some states are offering home care now.

Oh, okay.

They are. So, for instance, Minneapolis — and we won't get into this too much, but Minneapolis has been in the news a lot. And in Maine. Because of Medicaid paying home health care agencies, but there was fraud there. And that's the problem, is there's not a checks and balance. So that's also making it worse on the states, because they're paying this money out but people aren't getting the care.

So you're really leaving it into someone else's hands, the type of care you want. And I don't know about you, I want choice and I want dignity.

Right. Exactly. And a policy is going to give you that.

So let's talk about — I know we're like an hour and a half in here, but you're probably not an hour and a half in, because we're going to break this up into a couple of podcasts. Because this is — well, I'm no Joe Rogan.

So when we look at cost, like we talked about mine a little bit, but what are we looking at? I know there's a range, and I know that's a loaded question, but what can we expect? Can we have a little bit of money? Do we do it with a lot of money? What are our options?

Yeah. So I've got people that are maybe of moderate means and they want to make sure that they're not burdening their children. Or maybe they never had children. That happens. We don't have children. Or the ones we have are not great. So they are just making payments on that.

So like you did a 20-pay because you wanted to pay.

I did a pay-to-age-95 because I wanted the smallest premium with the largest benefit, because I had other things I was doing with my money.

Again, there's a difference. There's options. Even if mine would have not been a 20-pay, I would have been not at $1,000 a month. I'd have probably been closer to $400 or $500 a month, or even less than that.

But you bought a really rich benefit. So that's good. And you wanted that.

Yes.

So some people, again — there's many different ways to plan. And that's the neat part about my process, is I find out exactly what you need. We talk about your goals. We talk about your family, what assets you do have, because we could do things over a period of time. We could do it one time and be done. It's neat.

So I have some people that say, I've got good cash flow, I want the bulk of it taken care of. Great. Then we will do it accordingly. I have some people that say, Michelle, I'm going to retire internationally. Well, maybe we base it on that. I have some people that say, Michelle, I want every penny paid for, because I've had family members that have Alzheimer's and I know how expensive it is. So get me the rich benefit.

We have people that are wealthy. And when I mean wealthy, I mean wealthy. And they're doing this, but they do it for a different reason. So we've got some people that are doing it because they don't want to be poor and they don't want to be on Medicaid and they don't want to be a burden. They don't want to move in with their kids. But I've got people that are wealthy — I mean, upwards of $25 million plus. They have some wealth, and they do it for a different reason.

They do it really for three reasons. Number one, because they always avoid taxation. If they can get tax-free money, they don't want to use their taxable money. They want tax-free cash flow. And they're really good at it. They'll pay CPAs a lot of money to avoid paying taxes legally if they can. So number one, they do it for the tax benefits.

Number two, they do it for the leverage. Remember, we were talking about pennies turning into dollars. Wealthy people know that really well. That's how they got their wealth. They don't pay $600,000 for a property. They pay $500,000 for it. And then they make their money when they sell it.

The third reason that they do it, which is really important — they always give their money instruction. Meaning, I don't have one bucket of money that everything comes out of, because then the behavior is different. So I might have real estate that behaves a certain way. I've got my income cash flow here. I've got my investment here. And they behave a certain way, and I give it instruction. This is designed specifically for this. So they do it not because they need it. They do it because they want it.

But we can also, if we're making $100,000 a year or $200,000 a year — in some states, that's not a lot of money to be living. We can still afford something. We don't have to be wealthy. I think that people have this misconception that you need to be wealthy to afford long-term care. And especially when you buy the long-term care policy that has some cash value, that has some death benefit, it's not a throwaway policy. That money's not gone. If I wanted to borrow against my long-term care policies, I could do that.

I don't do that.

You shouldn't. And I don't advise doing that. It's not designed for that. But if all hell breaks loose, I have the ability to do that.

Right. We have to think about it and change our mindset a little bit, that it's not grandpa and grandma's policy that was just gone and the premium's going to go up.

Now, there are options to still buy those types of policies. And they're still appropriate in some situations.

Yes. And it's going to be a fit. But if we need something and we're saying, hey, do I do infinite banking or do I do long-term care? Well, if we've already started you on infinite banking and we need to sneak a long-term care policy in there before we do another infinite banking policy — if we do that, then maybe it's time to do that, because it's going to be the most affordable time to do it.

Yes.

And if we needed it, we had it. Don't advise using it. But I think that people feel like it's a luxury. Like, I've gotten into this too — life insurance is not a luxury. It's a necessity.

It is. And we also think that with long-term care, right? Oh, that's just a luxury for the wealthy people.

Right. But there are different types of policies where it can be the necessity, and it can act and do as a whole life policy does.

Yeah. So I had — and again, the younger and healthier you are, the better the number.

How young can you be? With life insurance, you were talking about the group, because we asked this before, but I don't think we ever answered it. With the group, you said 18. But if I'm just going to buy an individual policy, not the group stuff?

You'll be in your 30s. Depending on the carrier. Like with OneAmerica, it's 35, just as an example.

Okay. So as low as 35.

We don't get a lot of 35-year-olds. They're trying to raise kids and save for college and pay off mortgages and things like that.

But so I had a couple of 45-year-olds — 44, 45 — and they wanted to start it, but they couldn't afford the full amount. So we did a stacking strategy. So they bought the smallest policy that they could get, which was going to give them in long-term care benefits $1,500 each per month, for lifetime. Again, that's not enough to pay a nursing home. But again, if they need care at home, that helps. And I'll tell you why you need to think about it for even young people. This is not just an old person issue.

And it costs them $100 a month. That's dinner out. We spent more than that going out to dinner last night. So we're talking about dinner out once a month. You can have this start. It is really that inexpensive. But people have this thought in their brain.

So then what I showed them was, five years later, we'll do another one. Five years later, we'll do another one. Now, the older you get, of course, the price goes up a little bit, because you're older age. But it was still very affordable, because by the time they were 50, kids are gone. They're out of the house. They've graduated from school. So now you get this extra cash flow. You're more established in your career. You've got the extra money. Credit cards might be paid off, whatever it is. So it made sense to do that strategy for their situation.

Now, the reason why young people need to think about this — because dementia has increased, I have an article, 323% for people in their 30s. And it's not just the dementia thing. There are reasons why you might need this when you're younger. People don't think about this.

Number one, accidents happen. Accidents happen all the time.

Number two, strokes. You were telling me yesterday about someone that's very close to you. His wife had a stroke in her 30s. This happens. Now, she's healed and recovered. That's great. That's the nice part about these policies. They can turn on and turn off. So as you're rehabilitating and you need that help, instead of your spouse quitting his job to take care of you, we can hire some pros to come in and take care of you.

So what that means is, you can use it, and then as you recover and you move back home, it stops, but then it starts again.

It can start again in 20 years, 30 years, 40 years down the road. That's correct.

The third reason is what shakes most people. So what most people don't realize is cancer. And that happens at every age. So cancer — oftentimes, especially if you haven't had it, you think about something you die from, or something you heal and move on. But people miss that battle in between. And when people are battling, they can become very frail, very weak. These policies get turned on all the time to help people while they're battling cancer.

At home.

At home.

This was something that was very — I actually forgot you talked about that in our agent training. I just did not think about the cancer piece of it. And who doesn't know somebody that's battling cancer right now?

Now, if they're battling cancer, they can't buy it now. So the point is, you got to do these things before you get it.

But we're buying cancer policies from our disability. Like Aflac or whatever. We're buying cancer policies and thinking about helping pay for the cancer treatment. But we're not thinking about the care during the cancer treatment.

Yeah. When you're at home and you can't get out of bed and you can't feed yourself and you can't even get dressed. You can't get a shower. You need someone to help you with that.

And oftentimes when you have a home health care person come in, they have a written plan of care, meaning here's what we're going to do. You know, Mary Jo needs a shower on Tuesdays, Thursdays and Saturdays — I'm just making it up. But while they're there, they clean your house. They cook a meal for you. They do some of the laundry. So even though they're there for more of that custodial type care — that's what they call it, custodial care — where I'm actually helping you get out of bed.

Oh, and also I want to make mention, because I keep on thinking about this and forgetting. These policies also pay for supportive equipment, meaning you need a ramp put into your house because now you're in a wheelchair. It'll pay for that.

Really?

Yep. It'll pay for grab bars in the john or in the shower. It'll pay for a human lift. So you need to have a lift put into your home to get out of bed, so that your spouse doesn't break their back trying to lift you.

I mean, I'm young and healthy now. I can't pick up my husband now. I can't imagine being 80 and doing it. I mean, I lift up his legs when I'm vacuuming underneath it. But people don't think about how hard that is to pick up another dead weight body.

I had a long-term care agent. He did a conference for me, and he said that when he goes to people's homes, they're like, oh, my wife will take care of me, or my husband will take care of me. And he's like, okay, husband, lay down on the floor and I want to see her pick you up right now.

We're not waiting. I'm not picking Scott up.

Right.

I mean, you can. You'll figure it out.

So I watch — obviously, I'm on TikTok a lot. And I will come across videos of people that have been in an accident and they're paralyzed, and their spouse is having to get them out of bed, move them to the chair. And oh, my gosh, it's just — and they're in their 30s, you know, they're in their 20s and 30s and something happened.

Yeah. That hunting accident, whatever it is that is going to cause me to be paralyzed. Skiing and falling wrong or whatever. But it's never going to be you. It's always going to be someone else.

Yeah. And that's the part. I did not realize that they would pay for all that equipment.

Yeah. And medication dispensers. Like, anything.

Does that qualify into the monthly amount then?

Again, depending on the policy, but for instance, OneAmerica, they will allow you up to two months' worth. So for yours, you've got $8,000 or so a month. So I'll just use that as an example. So you would have $16,000 that you could use toward a human lift or a ramp or grab bars or anything that you need, home modification wise. But then they're paying the $8,000 every month going forward for your care.

They also will pay caregiver training. So let's say you do decide that your daughter's going to take care of you and she's in it. She doesn't know how to do this. So they will actually pay for caregiver training.

So like when my grandpa came home for a minute — he did come home for a minute — he had a permanent catheter. Well, my grandmother had to be trained on how to clean that, replace it, move it up. You don't know how to do this unless you're in the medical world.

So it will pay for caregiver training. OneAmerica's policy specifically, they have an agreement with a company called Amada. Amada is a national home health care agency, to where your daughter could call them and they get coaching calls, and it's completely paid for by the company. Your daughter can have a coaching call with Amada and she goes, hey, my mom's got sundowners — that's where you're up all night and you sleep all day — I don't know how to take care of her. And they will coach her on, here's some things that you can try. So she has a resource that she can go to and these people will help. They might come in person for coaching, or it might be virtual or over the phone.

Do they provide any type of mental health therapy for the caregiver?

I don't know about that, because it's a home health care agency, but they deal with that.

But does the long-term care pay for any of that for the caregiver?

But that is a big, big problem. So we have seen depression, alcoholism, drug abuse when it's a caregiver, because they're just trying to cope. There's videos out there. It's heartbreaking.

As a matter of fact, there's a documentary — I think it's called Caregiving. But Bradley Cooper, the actor, produced this thing because his dad needed care. And he realized how hard this was. So he put together this documentary on PBS. Everybody can go and watch it. You can download the PBS app and watch it for free. But it was just eye-opening.

And this one guy talked about his wife had a stroke right after they had a baby. The baby was like a year old. She's in her 30s and kept on having them. And she can't do anything for herself. He had to quit his job. And now they're just living on the generosity of family and friends.

But he talked about, when he would leave and come home, he would sit in the car and scream and cry. This is a grown man, scream and cry. And he started recording social media videos as a part of his own therapy. Just to talk about it. And, you know, you're crying in the shower because you don't want them to see it, because it's hard on them too.

And so your health ends up failing, because you don't have time for yourself. You're not going out and visiting friends and having fun. And you've given up on all of that. And you're not exercising. You're not taking good care of yourself. You're eating on the fly. You're doing everything that you can just to survive. People don't realize how hard it is.

And that's why, again, I go back to my daughter that said, Mama, I would never. And bless your heart. You have no idea. Now, she's a good one. And I know that she will do everything possible to take care of me. But I don't want her to.

Right. It is the resentment piece of it. It is tough.

Well, then you go through these bouts of anger where you're angry at your parents, but then you feel guilty of being angry, because it's not their choice. They didn't choose this. But they didn't prepare.

And my massage therapist, her mom is in the nursing home and she sees her every day. She goes every single day. She takes her out, goes to the library, buys a book, whatever. She's very mentally aware, but physically she just needs a little help. But she's like, it is so sad to see that these other residents don't have anybody come see them. Like, their kids will be like, no, I'm not buying you a banana, there's bananas in the cafeteria.

Are there numbers or statistics or anything that says, hey, we're going to actually live longer and healthier at home than we will in a nursing home, because you're going to ignore us in the nursing home? Like, we have nobody except the caretakers.

But like with my grandparents — I experienced it not so much with my dad's grandparents, but with my mom's parents. My grandpa was, like, super active. And all of a sudden he goes to the assisted living. Oh, he's needing help feeding himself. I'm like, oh, for the love of Pete. You were totally fine before you went in.

Like, their mentality shifts. It does. I'm around old people, so now I'm old.

Yes. And they're out of their comfort zone. Like, I want to stay with all the junk that I've accumulated. It's my junk. It's my stuff. It's where I'm comfortable. I do better.

Everybody knows that people heal better at home, even when you're recovering from a surgery or whatever. They want you to get home as much as you can, because you do better at home. It's just anecdotal. I don't have — I mean, I can find plenty.

I was just curious if you knew.

I think the life expectancy to stay at home would be longer, and you would be happier and healthier mentally. But if you don't have the funds —

Right. That's just it. Like, with long-term care, now I know it can pay for me to stay home. I'm still stuck, Michelle, on the fact that I can get a ramp. I had no idea.

Yes.

How many people have long-term care policies, or parents that have long-term care policies, and the kids are paying for that out of their pocket? They don't know. And they don't know that the long-term care would pay for that.

That's right. They don't. Because their agent probably didn't know.

Do they also then pay for the contractor to come in and install said things?

I don't know about that. I'll find out a little bit more. Actually, I just read it yesterday that it is. They do pay for the actual — what do you call it? You're going to get X amount of dollars, so you spend it every month.

That is so fascinating. So the labor is the word I was trying to think of. They'll pay for the labor to have it put in. Because there's kids that don't live there. Like you said earlier, we don't have any kids around. So now we have to find somebody to install it. They retired in Florida. You live here.

Oh my God, what a great business opportunity for a little handyman. I'm just going to old people's houses and I'm installing bars. So I know that that's what they need. But that's all I do all day, is install bars in old people's houses.

Well, I have a really good friend of mine. She actually started as my realtor, but we've been buying and selling houses for 25 years, so she's become our friend. And so I was telling her, I said, you know, have you ever thought about specializing as a realtor in the senior market? And she was like, no. I said, think about it. You've got boomers that are going to be moving out of their houses. Junk-filled houses — I say junk.

There's a specific certification for that. Did you know that?

I did not.

But the only reason I know is because my realtor loves elderly people. And we are also good friends from buying and selling. And she was, at one point, looking at getting certified, because people take advantage of the elderly. And she just really loves to work with them. And so there's a certification to work specifically with elderly people for their home sales. And moving them into, like, maybe assisted living, or maybe we take them out of their house and we put them in a townhome.

What another great business opportunity. It's called the driveway moment. And so it takes place — the kids used to walk up to the house, it would be filled of memories. Now they walk up and they look at it and now it's a project. Because one, they have to clean it out. Or mom's in the nursing home, so now I've got to sell this house.

And what a lot of people don't realize is, you don't even have the POA. You need a power of attorney to do anything. So you haven't even put things in place. You can't make decisions. So that delay costs you market timing on selling that property. You have to find junk removal. You've got, I mean, all these kinds of things.

And that's whether they need long-term care or they just pass away. Like, oftentimes that happens. But if they need long-term care, again, they're hemorrhaging dollars. So now you're selling a property below market value, because you have to. And so now you're looking at this house going, now there's repairs that have to be done.

Speaking of that, this is my new conversation. Okay, I have two things. One, I have a gal that I went to high school with, and they teamed up with some franchise. They've created a franchise, and they are going in and cleaning up these homes and doing estate sales for elderly people.

But I have a question on the selling at under market value. So a lot of the conversations I'm having right now are, hey, mom and dad's intent is to sell you this farm ground. And we're going to give you this farm ground at a discounted value for sweat equity. But we're not doing it yet. We would prefer you — we just die and you buy it from the siblings at a discounted rate. So we're going to put that in our trust, that you're going to buy it at whatever rate.

But what happens if we don't have long-term care? We have a trust set up, but the land's not owned in a trust, right? Because they don't want to lose control of it. So it's in a revocable trust. Or it's just in their name personally. Like, we're talking about farmers. They don't have anything, right? But they have this agreement or this will. Because a lot of people think a will is the answer.

And so now I go into the nursing home. Medicaid — and correct me if I'm wrong, but this is a conversation I'm having — Medicaid is not going to say, okay, you can sell that to John for the discounted value because of sweat equity. Medicaid is going to say, no, it's worth $10,000 an acre. You're selling it for $10,000 an acre. John has to pay $10,000 an acre, not $5,000.

Correct. Because we don't care. They're going to go by the value of the asset.

Because I also heard an elder law attorney say that they want an appraised value. Like, even if you sell it to John at $5,000 an acre, they want the appraised value, because on the five-year look back, if it was worth $10,000, you're coming up with the other five.

It's an improper transfer is what they'll call it. So basically what happens is — and by the way, everybody would do that. Oh, I'll just sell it to my kids for pennies on the dollar. Well, now I'm transferring. So it's an improper transfer.

So what they'll do — I'll use easy math. Let's say I had $100,000 in the bank. And in that five-year period, I gave that to my kid. So what they'll do is they'll say, okay, well, the average nursing home is $5,000 a month. So we would take that improper transfer and divide it by $5,000 a month. So what is that, 20?

I do girl math. $100,000 divided by $5,000. Yeah, 20.

So you have 20 months as a penalty period, meaning they won't pay anything for 20 months, because you had an improper transfer. So somebody is coming up with the difference and they're going to have to pay for the nursing home for that period of time before Medicaid is going to kick in.

Yes. This is like my nonstop conversation with these people, Michelle. Because I'm always talking about estate planning. Well, death is one thing. Living is a different thing.

I'm talking to the kids. I'm like, okay, what's mom and dad's estate plan? Well, do they have a trust? No trust. Okay, so the land's not in a trust. And then I'm like, do they have long-term care? Nope. Okay. So we don't have long-term care. We don't have the land in a trust. Mom and dad are 80. And we have a five-year look back.

So let's just say mom and dad are both 85. Living at home, all is great. Mom goes into the nursing home. And they're not both in the nursing home. It's not the last one. It's mom goes into the nursing home. Medicaid won't kick in until dad sells that land. So the land still has to be sold to the kid at fair market value.

So I actually — similar, but not to the kid — the farmer that lives behind me. The farmer died. His wife still lived in the home. And the son moved in with mom to kind of help take care of her. But he ended up farming the land. So nothing was transferred out of mom's name, because it was in mom's name.

And mom needed care. So he tried to take care of her. He couldn't do it. And he wasn't married. He just was living in the farmhouse, and moved her into a nursing home. Well, he started selling off pieces of the land to the other farmer that lives in town. And he finally just sold it all, because she needed long-term care. And he had to. There was no other choice. It was expensive. So he sold off all of it to the other farmer to pay for her care. Never went on Medicaid, because they wouldn't qualify anyway, because they had to sell this land.

Right. But it was already too late by the time she passed away. He had already sold off all the land. So now he just worked for that farmer. So now the legacy is gone.

Thanks for listening to the Farming Without the Bank podcast. We hope today's episode has inspired you to take control of your finances in new ways. Don't forget to check out our website, farmingwithoutthebank.com, and engage with us on our Facebook page, Farming Without the Bank. Join us next week as we smash more financial myths and empower you to accomplish your financial goals. We'll see you next week.