Preparing For Long-Term Care Expenses (with transcript)

Preparing For Long-Term Care Expenses (with transcript)

Don Tiegs joined the ECA Marketing Team as a Life Insurance Wholesaler in January of 2015 after having eight years of experience as a field agent. This experience is evidenced in the relationships he builds with the insurance agents he supports as well as his own client base. He holds his Life, Accident and Health; and Property and Casualty insurance licenses.





Frank Samson:                   Welcome to The Aging Boomers. I'm your host Frank Samson, and of course, on our show we discuss so many of the issues facing boomers and their parents, which we know is growing population.  I want to thank everybody so much for their support. You know, our listeners are growing each and every day and it's due to you sharing information with family and friends about our podcasts and our interviews with some wonderful people in the industry, and many of you have just gone onto iTunes and downloaded the podcasts there. You could do it on iHeartRadio. Of course, you could do it on our own website, just on your iPhone or Android phone, on your apps, just type in The Aging Boomers and there we'll be and you could listen that way as well, makes it pretty easy. So again, thank you for all your support and we get a lot of listeners because of the great people that we bring on our show and we have another one for you today.


                                              We have with us Don Tiegs who joined the ECA Marketing team as a life insurance wholesaler in January 2015. He’s had eight years of experience in the field, which is evidenced in the relationships he builds with the insurance agents he supports as well as his own client base. He holds his life, accident, and health, property, and casualty insurance licenses as well. Don, I want to thank you so much for joining us on The Aging Boomers today.


Don Tiegs:                            All right Frank, thank you so much for having me. I really appreciate that.


Frank Samson:                    I got a list of questions and we have a limited amount of time, but I'm going to start out and see how far I can get. In the introduction, it says that you're a life insurance wholesaler. Maybe our listeners aren't familiar with that term as a wholesaler, so explain that a little bit more.


Don Tiegs:                           Yeah, absolutely. So I work for an insurance marketing organization that has offices nationwide. When insurance agents are out in the field, they have clients who may need either life insurance, or annuity or some form of long-term care coverage, they give us a call here. I'm more of an expert in life insurance and the LTC side of things, so if their clients need a life insurance policy, the agents will come to me, and we figure out what it is that the client needs, and we position the right product for them. So being an insurance wholesaler involves working with insurance agents in all 50 states and helping them position the right products to their clients.


Frank Samson:                    Great, and you have these agents are all over the country, right?


Don Tiegs:                            All over the country and Puerto Rico. Alaska, Hawaii, everywhere.


Frank Samson:                    So I have to ask you, what were some of the reasons you decided to get into long-term care, as you call it, LTC, and more specifically on the insurance side of things?


Don Tiegs:                           So my story is that I was working as more of an accountant prior to this, and then my mother passed away and she didn't have life insurance. It was all put on my father because the statistics say that the husband's going to die first, so all the life insurance is on my father. She was actually my dad's primary caregiver, so he had to go into a nursing home after that.

People shouldn't be without life insurance. My mom and dad both had long-term care policies, which is awesome, so that helped my father out, and helped our family out with that burden, but I realized that because my mother didn’t have life insurance, that there hadn’t been a benefit to paying for all this long-term healthcare year after year. There was no return of the premium, no death benefit, nothing.


                                              I got to thinking that I wanted to educate myself on these type of policies. I did a deep dive, I dug into it, and that’s how I found ECA Marketing. They've been wonderful and have trained me in all the different policies and products we have.


Frank Samson:                    Great story, thank you for that. You had mentioned some statistics when you were talking about your mother and father, can you share with us some more statistics? Do you have those available when it comes to people needing some form of long-term care? What do some of the stats show?


Don Tiegs:                           Yeah, so first of all, let's define what long-term care entails. We have to look at your activities of daily living. You have transferring. That means getting up out of a chair, getting up out of bed. Continence, toileting, bathing, dressing, and eating. It's the six activities of daily living, and if you need help with at least two of those six activities of daily living, you qualify for services or you may need some form of long-term care. Also, if you have a cognitive impairment, whether that could be Alzheimer's or dementia, then you also may need some form of long-term care.


                                              So, statistics. Let's talk about the cost of care. Now this comes from Genworth. The average cost for a one year stay in a private room in 2017 was $97,000. Now, that's average. Some people will be spending more, and some less.


Frank Samson:                    Right.


Don Tiegs:                           But can you imagine with the inflation rate, what could that cost be in 20 years? Now just doing a conservative rate of 3.5%, that $97,000 average stay would turn into nearly $194,000. I always look at that and I try to educate my agents and my clients.


                                              What impacts those rates? Well, you know, there's a higher demand as the population ages, as people live longer, and as family dynamics begin to change. When my mother passed, my brother and I didn’t have the resources we needed to take care of my father.


                                              We have government programs out there to help pay for long-term care, but I mean that is scary just to think about what’s happening out there today that they might be limiting those resources.


Frank Samson:                    I'm sure you've heard parents say, "I'm staying home, and my kids will take care of me or whatever," but the reality is that as much as everybody wants that, it doesn't always work out that way, you know? People are working, kids are working, or maybe the level of care is such that it's just too difficult on the family. So, what are some of the options, Don, that people have out there to help pay for this type of expense?


Don Tiegs:                           There are several options. We could talk about private pay, you know, but let's talk a little bit about who actually pays for the care. We're talking about a retirement gap here. People in their retirement, they've planned this set amount of income. They've worked all their lives, put money away, invested well, and they have this set retirement income that comes in month after month after month. Well now, all of a sudden, if they're faced with a chronic illness, those expenses could go up, and thus, we have that gap.


                                              Well, let’s talk about who pays first. The government. 69% of the care out there today is payed for by the government. 18% is private pay, 7% is LTC insurance, or long-term care insurance, and 6% is paid for by family members or other sources.


                                             We can actually talk about self-funding. You could take money out of your managed money accounts, your IRA, your 401ks, your investments, your CDs. I've seen people take home equity loans, reverse mortgages, and honestly, that really isn't ideal because you've worked so hard your whole life and really you want to perhaps pass some of that onto your heirs. I’ll just tell you about my personal experience with my father. He went into the nursing home and they say the average nursing home stay for a male is two and a half years, okay?


Frank Samson:                    Right.


Don Tiegs:                           My father was actually in the nursing home for 11 years. He outlived his long-term care insurance, so he started self-funding. Well, my brother and I, we had to sell his properties, we liquidated his annuities, all the cash in the bank, took out all the cash that was put in his life insurance policies, and really just we had to do that spend down. Again, that's really not that ideal.


Frank Samson:                    Right, right.


Don Tiegs:                           Yeah, so when we are talking about things like annuities, there's one thing out there that most advisors don't know about, and that's the Pension Protection Act. The Pension Protection Act allows people who have annuity from nonqualified sources, meaning it's not from your IRA or anything like that, to  move that from one account to another account, and if you need long-term care, you'll be able to draw off of that annuity income tax free.


Second source, government programs. So we already talked about Medicaid, Medi-Cal. You know like okay, Medicare, does that pay for long-term care? It doesn't. It pays for short-term care. If people want to get more help then they have to spend all of their own income in order to qualify.


                                              And there's a third government program that a lot of advisors don't even know about, and that's called Veterans Aid and Attendance. So qualified veterans and their spouses can actually get up to $25,000 a year tax free to help pay for their long-term care needs.


Frank Samson:                    Right, and I know you're based in Minnesota, which has, in my opinion, some better opportunities for people to utilize government funds for long-term care than other states. But I would say in most states when you talk about government funding, it would, in most cases, just be in a medical facility like a nursing home, and not everybody wants to live the rest of their life in a nursing home. Many don't have the need to be in a nursing home, so they might want to be in some sort of assisted living, which in most cases is all private pay, or unless you have some sort of insurance, or the VA program like you mentioned.


Don Tiegs:                           Yep. Yeah, and you know if you talk or if you give a poll to the majority of the people out there, where is it that they want to receive their care? Almost all of the people would want to receive it at home.


Frank Samson:                    Yeah, absolutely.


Don Tiegs:                           And with people that come in, you know Handy Helpers or whatever, those places, they'll come in, or if they can't live by themselves, then they utilize resources like what you have, Frank.


Frank Samson:                    Right.


Don Tiegs:                            And they help place those people into an assisted living facility, or depending on their need, an actual nursing home.


Frank Samson:                    Exactly. Exactly. So, I know that your area of specialty is in insurance, and various insurance products out there, and I know there was a time that either you bought a life insurance policy or you bought long-term care. One of the statistics that you mentioned before that people that have long-term care insurance is in the vicinity of about 7%, which is very low in my opinion.


                                              I mean, obviously, more people should have it, but I think there's this perception out there that it's way too expensive. I see it all the time, so when they're talking about how the policy is expensive, they don't realize what expensive is until they're confronted with the cost long-term care.  


Now I do know that there’s a type of combination policy, that it incorporates both life insurance and long-term care. Can you tell us a little bit more about that and how it works?


Don Tiegs:                           Yeah, absolutely, so in my opinion, there's a crisis in traditional long-term care insurance policies. Like you said, it's expensive. The premiums aren't guaranteed. They're constantly going up. I've heard stories that people's premiums are going up a hundred, two hundred, three hundred percent, and it's just making it unaffordable.


                                              There are people like my father who are outliving the benefits of the long-term care policy. Back in 2002, there were 104 different insurance companies offering long-term care policies, the traditional long-term care policies. My statistic that I have written down here, as of 2015, so three years ago, there was only 12 left.


                                              The insurance companies are recognizing that trend, and what they're starting to offer is life insurance policies that have living benefits. Meaning that there's an option that you can add onto your life insurance policy, whether it's a true long-term care option, or just a chronic illness option. With the true long-term care options, it's great. Those are great policies, but it's very limited. Let's say you have $100,000 policy, and most LTC, or long-term care riders on those, you'll be able to accelerate that death benefit by 2% per month, per year. So, $2,000 a month for up to 50 months, and then your life insurance is gone.


                                              With a chronic illness rider, that's even more limited. The benefit is actually really hard to calculate and they'll reduce the death benefit, and in order for you to even qualify, most carriers actually require you to be confined to a nursing home, whereas with the LTC riders, you don't have to be confined. It doesn’t have to be permanent, and you can receive care from your own home. The hybrid policies, they're a really good option for people who might not have any options now.


Frank Samson:                    So, when you were talking earlier about private pay, private pay means you have to pay for it yourself. The government's not going to pay, so you have to pay for it out of your own pocket. There's third party assistance for those private pay options, and one of them you mentioned was the Veterans Administration of course, and the other is long-term care insurance.


                                              I just want to make sure people understand, those are probably two of the most beneficial options out there, but I want to emphasize to our listeners that it doesn’t cover all your expenses. So, with that certainly let's talk about that asset based long-term care policy.


Don Tiegs:                           Sure, so I kind of hit on it a little bit earlier. Let's say, Frank, you're working everyday, you're putting money away, you have accumulated wealth; however, you want to either pass it onto an heir or a charity.


                                              We see this all the time, and as a matter of fact, I was just working with one of my agents here in Minnesota. He has a husband and wife couple who have about $100,000 in a CD that they're not going to use. They set aside that for their long-term care. They have the option to use asset based long-term care, where we’re just going to move that CD money from one account into another account and you're not spending it. It's like rearranging your financial furniture. We're actually just moving your couch from the living room to the den. You still have it. It's still accessible. If you change your mind, you can get your money back, but what this does is it leverages that money.


                                              That $100,000 goes into a second-to-die life insurance policy. That means if they wanted to accelerate that, they could have over $6,000 per person per month for the rest of their lives.


Frank Samson:                    Right, yeah.


Don Tiegs:                           That's just one example of an asset based long-term care. With asset based long-term care, you get your money back in three ways. One, if you change your mind, there's a return to premium. Two, if you pass away, there's a death benefit, or three, if you need long-term care, you accelerate that death benefit and there's an option to add an additional rider that would extend that benefit forever.


Frank Samson:                    Yeah, there’s some great options out there. Now if there’s any advice you can give our listeners, that would be great. 


Don Tiegs:                           Yep, okay so really the very first step is just have that talk. Whether it's you and a loved one, or a spouse, or some family member, a daughter, or even your parents. Just start having that conversation about, "You know, if we had to pay for your care today, what asset would you use to pay for it?"


                                             Then talk to a financial professional. I talk with people all over the United States, and I help educate them on these type of products. There's a lot of very knowledgeable professionals out there, but then there are some of them that really aren't knowledgeable in like the Pension Protection Act, or the Veteran's Aid and Attendance, or that these asset based long-term care policies even exists. Find a knowledgeable professional in that field, and let them together explore all the options for you.


                                             Once you complete your plan, let your loved ones know that you have this plan because if something were to happen to you, you would really want your loved ones to know that this plan exists. Unlike what happened when my mother passed away, we had no clue that she did not have life insurance. Let them know that this plan exists. Those are my five steps for your listeners, for your audience members.


Frank Samson:                    Great. Great, and then tell us how they can get in touch with you or learn more about your organization, and maybe that download as well.


Don Tiegs:                           Yep, absolutely. So, what I suggest is go to So, A-S-S-E-T-B-A-S-E-D-L-T-C,, and there will be a download form. It's from It has everything you need to know about long-term care insurance.


                                              If you need a financial professional, like I said, there's some that are very knowledgeable, but if your financial professional hasn't talked to you about long-term care, the Pension Protection Act, or if you're a veteran, the VAA, get a hold of me. You can email me at Don, Just let me know who you are, what area you're in, and I will find you a knowledgeable representative.


Frank Samson:                    Great. Great. Don Tiegs, ECA Marketing, thank you so much for joining us, a wealth of information, and I wanna thank everybody out there for joining us as well. Be safe out there, and we'll talk to y'all soon.


Preparing For Long-Term Care Expenses (with transcript)