CKBlog: Financial Planning
Wednesday, May 30, 2018
Financial Planning Hits Home
by Steve Haberstroh, Partner
“Mom, I’m not going to bathe you!”
It was January of 2006. I left work and called my parents to talk to them about a very serious topic. No, I wasn’t asking them to help cover my rent. And no, I wasn’t in trouble with the law. This was far more serious. I just couldn’t get rid of a disturbing image in my head; bathing my parents. Let me explain.
I was 24 years old, living in Boston and working as a Financial Planner with Ameriprise Financial. Most of my days were filled with meeting with clients or prospecting for new ones. But it also meant learning more about my craft. One such way was to attend seminars by specialists of one of our core areas of investment planning, tax planning and protection planning—code for insurance.
Today’s seminar was on something I had never considered, Long Term Care Insurance. So when the representative from Genworth Financial (then a division of General Electric) [see note] visited our office, I was excited to learn. Little did I know that seminar would change my life.
Long Term Care Insurance—What Is It?
I learned a lot that day about LTC Insurance. In a nutshell, buyers of this insurance pay a monthly or annual premium to purchase a bucket of money that can eventually be used to pay for a nursing home or a qualified (and expensive) health care worker to come to the home to help bathe, feed, transport, and provide care. Buying this insurance can either protect a family’s assets from being used to pay for care or can be used to pay for a more desirable facility rather than relying on state programs. Ever visit a nursing home?
Generally speaking policyholders can tap into funds if they cannot perform two of the so-called “activities of daily living” or ADLs. ADLs can include activities such as:
Once a person cannot perform any two of these, they qualify for long-term care and therefore can tap into LTC coverage.
Other Notable Facts about LTC Insurance:
- 70% of people over 65 will need care
- 44% of 65 year-old men will become ADL disabled in their lifetime.
- The number increases to 72% for 65 year old women (women live longer than men, increasing their odds of needing care)
- Average Length of Care: 3.9 years (if more than 1 year)
- 2017 Median Cost of Private Room Care
- NY State: $140,416
- CT: $162,060
- CA: $116,435
- FL: $106,580
Sources: Genworth and AARP
If you don’t have the assets or insurance to pay for private care, you may rely on Medicaid. In general, you must spend down all but $2,000 of your assets as an individual (not including primary residence and one car) plus be below income requirements, which vary by state. It’s safe to say, you don’t want to qualify for Medicaid because it means you have spent down virtually ALL of your assets and have very little income.
If you do qualify for Medicaid and need nursing home care, you will be assigned to a facility based on bed availability and proximity to your home.
If you don’t have sufficient assets, don’t own a LTC Policy and don’t want to be admitted to a nursing home supported by Medicaid, you better have family members willing to feed you, clothe you, help you use the toilet, and bathe you.
So as the seminar wrapped up, I could not shake the vivid imagery of having to bathe Mom. Maybe it was a sales tactic, but it worked. When the seminar wrapped up, I sat with the Genworth LTC specialist to run some policies. Our family needed this and I was going to be the one to convince my parents. If Mom and Dad weren’t going to pay for this, I was going to convince my siblings to chip in.
I spent the weekend in Connecticut with my parents to discuss the topic. It was a difficult conversation. If discussing my parents’ demise wasn’t bad enough, I had to convince them to shell out thousands of dollars each year so I didn’t have to care for them. How dreadful!
My father is brilliant and has an analytical mind. He also happens to be an Investment Advisor (who I now work for) so I knew I was in for a serious grilling. Then there’s Mom. She’s even smarter than Dad but waaayyyyy more frugal. Even after getting through dad’s “net present value calculations” I knew I was in for a tougher fight convincing mom (who pays the bills) to write an annual check of $6,000-plus.
But my pitch worked. I should have been more proud of myself and happy for protecting my family’s assets, but the image of bathing my parents was still there. Eventually it faded. But each year it was resurrected when mom received the annual bill. Like clockwork, each spring I’d get a call or text which read, “sent the check to Genworth today.” To which I’d always respond, “Thank God Mom! No way I could bathe you!”
A very serious topic had become a joke within the family. Until another event would be burnt into my brain.
Fast forward nearly 15 years. It’s the late summer of 2017. Mom had been experiencing symptoms for about six months. It started with what we hoped was just “drop foot”. She couldn’t lift the toes on her right foot. The weakness grew and began to spread a bit. Every so often she would trip and fall. Turns out it wasn’t “Drop Foot,” it wasn’t Lyme’s Disease, it wasn’t Parkinson’s or Alzheimer’s. Nor was it Multiple Sclerosis. After visiting with several doctors and specialists, she was referred to the head of Neurology at Yale who “was a specialist in ALS.” No!
In October, 2017, the diagnosis was delivered. “It’s ALS.”
Mom and Dad called me from the car as they left Yale New Haven Hospital having just been delivered a blow far more devastating than Mike Tyson could deliver. When I answered the phone and heard my mother say “Hi hun,” I just knew. I could hear it in her voice. Mom is the strongest person I know, but how do hide your despair having just heard your body would slowly (I hope) fail you while your mind would know EXACTLY what was going on? Trapped in your own body. ALS is no joke.
I’d be lying if I told you I remember what exactly what happened or what I said. I know I asked many questions and offered up some comfort. Ever the optimist, I told her we were going to fight and if anyone can beat this, “it’s you Mom. And we are going to do this together.” But I was crushed.
It felt like life was knocked out of me. Eventually, I gathered myself and sat back down at my desk. I tried to look at my Bloomberg screens or type up an email but I was frozen. Mom and ALS? Those words would forever be connected.
We Fight. But Not Alone.
Since diagnosis, our family hit the ground running. The first couple of weeks was to research the disease and the organizations that could help Mom in her battle. The average person with ALS passes away within two-to-five years from diagnosis. But Mom isn’t average. She told us “I’m going for 15,” so those were our marching orders.
Tipped off by a family friend living with ALS, we honed in on the ALS Therapy Development Institute (ALS TDI). We loved their motto, “ALS isn’t an incurable disease, it’s an underfunded one.” We decided we’d start a fundraiser to help fund their research. We created the #ALSPepperChallenge and it since has gone viral, raising over $570k and, more importantly, raising Mom’s hopes. (For more on the challenge, visit www.als.net/pepper)
Friends, family, celebrities, and the folks at TDI have all joined in the fight to support Mom and the thousands of warriors battling ALS. But the disease is persistent. It’s one thing to help with raising awareness and funds but it’s another to help Mom brush her teeth and bathe herself.
She is not there yet, and we hope it will be many years until she collects on the LTC policy (if ever). Depending on the case, it can cost $200,000 to $300,000 annually for a person living with ALS. The policy likely won’t cover all costs associated with fighting this disease, but should Mom need around-the-clock care, we have a plan and a pool of money to help lessen the financial burden. Which allows us to spend less time worrying and more time with Mom.
“I’m One of the Lucky Ones”
The disease seems to be progressing slowly. If you can believe it, Mom is one of the lucky ones. She says so herself. But it’s not all about luck. I’m convinced that her drive, work ethic, and positive attitude is fending off this monster. She is still walking (with a cane or walker), still going to work (as a social worker), and babysitting her five grandkids (her favorite thing in the world). Living the fullest life possible.
Mom and I do weekly lunches together. That makes me lucky too. Our family has chosen to celebrate life and the good times—which just keep on rolling. We just had the most wonderful Mother’s Day celebration as a family. I’ll never forget it. The day was full of love, laughter and happy tears.
That’s what financial planning is all about. Putting the right plans in place and executing on them so you can spend time doing what is meaningful to you. And in this case, instead of worrying about bathing Mom, it means I can focus on showering her with love.
Note: I and CastleKeep do not represent Genworth or any other insurance company. While we do not sell insurance products, we do help clients understand their current coverage and insurance needs and may point out potential insurance shortfalls as part of the financial planning process.