Michael: Good day. Welcome to a Financial Planning Explained and I am your host, Michael Menninger, certified financial planner, and as we always talk about this show is designed to be an educational experience for the viewers, and I am very pleased to have as my guest, not only was he my first guest on my first show, but he happens to also be the first time I'm having a repeat guest on the show, so Bryan Adler, thank you very much for joining us guys for -.
Bryan: I forgot I was-.
Michael: You are. You are.
Bryan: That was October
Michael: Somewhere, it seems like it.
Bryan: Yeah, it was cold, rainy day. It was great - beautiful.
Michael: Oh, you have just wonderful cold, rainy day. Good day for ducks, but anyway, so what I want to do is today, we're going to piggyback on last week's episode. We had Jack Winville, who is a long-term care planning specialist who also got involved in selling the insurance products and stuff like that, but he was probably outside of the legal side. One of the people that I've met as a professional who knows the industry that well. Well, I should hope after doing it for 20 or 30 years and having to deal with his parents going through it himself, but Bryan comes in from the legal side and I've also referred clients over to Bryan because also as an attorney. really is very educational, and that's one of the things I like about the most which is why I like to have a moment show very knowledgeable in the subject material. I guess you're one of what 45 or is 45?
Bryan: It might be a few more now certified overall attorneys.
Bryan: Be a few more state wide now.
Michael: Not a lot. Okay, so he's one of the few shelter elder law attorneys in certified elder law attorneys in the state of Pennsylvania, and you also practice in new jersey, too, right?
Bryan: Yeah, Philadelphia, metro area in south jersey, Princeton south.
Michael: So we're going to take today and maybe look at it also from the long term care planning, but also from the lens of the legal side, plus I believe you have people on staff who assist and guide people through the process.
Bryan: That’s right.
Michael: So here, I am talking about your company. you're a partner with rough cough law. why don't you tell me a little bit about your firm, little bit about yourself. and then we'll jump in, and I know you've had the opportunity to see last week's episode, so - but let's pick it up and piggyback and jump up well.
Bryan: So yeah, well, that was a great reduction. I mean, you touched on. I'm a board-certified elder law attorney and Rothkoff Law Group. We’re in the law firm only. We do elder care. We do elder care coordination, long-term planning. We don't do criminal law. We don't do medical malpractice, but you do a state planning to do it, and that's it that's encompassed.
Michael: Oh, of course.
Bryan: It is an ability, lots exactly right, but we take unique approach to it, so and I used to be this guy, a traditional elder law attorney, focuses relatively narrowly. It's about guardianships estate planning, Medicaid asset protection and getting a lot of limited. Michael: By the way, I will have, you know. that is a - it's a turnoff to me a little bit a turnoff, and it's like, you know the herald that like -.
Bryan: You get pigeonhole like attorneys, already been a lot of a broad swath apocalypse.
Michael: Right. It's all about pulling the money out and let Medicaid take over, so they're not going to take the money with the practicality of the matter is you're not going to get the same level of care.
Bryan: That's the downside to it, and so you - I would have someone coming to my old, my old practice, which was a 10+ years ago. They come in and say - “My mom needs care.” and I say “Well. she needs a nursing home” Because if so, I can save this much money. That's what how you justify paying me. oh, no, she just need some home care or she just assisted living. it's okay, go pounds and like I can't help you”. I could do some stay planning, maybe you can do some asset restructuring, but the big nut isn't there the big asset protection strategy right there.
My practice now in the reason I left my old practice and joined Rothkoff Law Group was because it's a care first approach. It's looking at the seniors looking at the loved ones, looking at the family, get the best here, and we've got five social workers on staff that coordinate care for our family.
Bryan: We would an occupational therapist on staff that coordinates the occupational side of things, and we forgot to pay for care, so it's no matter to me if you're a nursing home or assisted living or home care or hospice or pilot of care, we’ll coordinate it. Then I figure out a pay for it, whereas the flip side of the model is, we're going to go on Medicaid. We're going to - we're going to get the payer source first and then cram it into an environment or a care environment that accepts that payer source.
Michael: And so that's the immediate elder law attorney that you think how am I going to take all of the assets away, so we go on to Medicaid, and I'd like to dispel that as the first thing to do and squash it, because I actually kind of don't like it. It's saying, “Hey. Mom, dad, whichever it might be, I'm going to pull all of your assets out, so we get it. Meanwhile, all the money that you earned and saved, and protected all these years, you're given it to us, and we're going to give you lousy care for the rest of your life”.
Bryan: Now don't get me wrong. There are a lot of the law turns out there that do it in what I believe to be the right way. The care first approach -.
Bryan: - And I want to be honest, I want to stressed that there are a lot of great elderly attorneys that are traditional attorneys. It just my old practice, meaning when I felt I was traditional planner was too Medicaid-focused. It was too asset-focused, the right person focus. I always want to clarify that because I had a lot of good friends, there are traditional old law attorneys. They do great work, but yeah, you want to look at the person first and many case on the end, all be all, frankly, it's becoming more difficult to access.
Bryan: It's not as available as it once was. It's a political football. It's constantly being bastardized. You know, they cut here. It doesn't cover this. It doesn't cover that it's more difficult to access. You want to look at the industry, the last gas jack from last week. The long-term characteristic tool and tool kit, no kids a tool and a tool kit. Private funds are a tool and tool kit. If you only look at one tool and all you have is a hammer, everyone's a nail.
Bryan: But if you look at it as everyone's a house to build, you're going to take your - you can take your whole kit with you. And you're going to use whatever is most appropriate.
Michael: Well, so again, what people don't understand about Medicaid, and I use it is it's basically welfare. It's only once you're out of money
Bryan: So you can't look at that way. You're not necessarily wrong, but we have to look at stark realities, Mike. So yes, Medicaid once was concerned welfare, they said, change the name in Pennsylvania from department public welfare to department of human services. But the reality is Medicaid, yes, it's a public benefit program. Yes, you have to be indigent to access it but I asked the studio audience as people are listening who has $15 000 dollars a month to pay for a nursing home or $8000 or $9000 of them.
Bryan: They persisted, living for in the average length of staying. Those two environments is lived about two and a half years but the average length of the need for care could range from 8 to 20.
Bryan: Particularly if you have a dementia-related issue, so yeah, people say - “Ok, two and a half years, if I get a three-year long-term care policy, I'm good to go”. That's not worse. You might have an onset much earlier. and you might have this eight-year trajectory, so the reality is that when you're paying $15 000 a month, even if you blend it down to ten for eight years. It's going to break anybody. How are you supposed to swing that? The reality is better than 80% of nursing home residents are on medication.
So you go into a nursing home, you might be solid middle class. You might be solid blue-collar, a house, half a million bucks in the bank with a retirement account with a pension. So security, I can swim that for long particular view of spouse, so I think the perspective that Medicaid is a welfare program. It's not wrong, but I don't think that it's fair to paint that brush with nursing home residents because the costs are so staggering -.
Bryan: - Because three and ten are going to wind up there and I'm going to pay for it.
Michael: Well, so it also what I've learned just from having different clients in different places, I recall one client going in, “I want to say it was Shannon dell but I'm not certain of that one.
Michael: Does Shannon do have a care all the way throughout. Right so, touch you right around the corner from our office.
Michael: So my understanding is that someone goes in there and they spend call it $300 000 dollars for a unit and then they pay like a minor monthly written, and that carries them through the rest of the way.
Bryan: They can’t. So there's multiple types of models for that's called a Continuing Care Retirement.
Bryan: It's typically three levels of care on one campus independent apartments, which is nothing more than a part.
Michael: That’s exactly where it is.
Bryan: You’ve heard of it and then you have assisted living or personal care, which is more commonly referred to.
Michael: That's where they come in once or twice a day to make sure that -.
Bryan: You're helping you right open you with bathing, toileting, medication management, getting it out of bed. It's people need personal care or memory care. but they're not they don't need a high clinical care support in the even nursing home that's high court, which is basically a hospital, but it is now. Yeah, if you look at the trajectory of the last 25 years, hospitals twenty-five thirty years ago looked like nursing homes today, nursing homes twenty-five thirty years ago look like assisted livings today, it's been this clinical sweet reservation. But a CCRC, you might have a buyer where you pay three, four, five even a million dollars. There are some in that, that charge that have a big buying like that, that's an option, and they'll give you a life care contract, where if you pay your fees and if you run out of money to keep caring for it.
Bryan: And depending on how you choose. depending on the community, you might just pay a fixed monthly fee, whether you're an assistant living nursing home independent living, you might pay what it actually costs but they also fee for service communities. When you move in, you pay $300 000 or $400 000 for an independent living, you pay seven, eight, nine thousand for assisted living. You pay twelve, thirteen, fifteen for nursing.
Michael: Well, but see the first one strikes me as a whole lot more predictable -.
Bryan: - And it's essentially long-term care insurance policy.
Bryan: And it's regulated by the insurance industry of the department insurance regulation.
Bryan: So it really is an insurance project. You’re absolutely right.
Michael: So I just look at that as a solution for a lot of the people who aren't wealthy.
Michael: Because the practicality of the matter is, is that the - you know, $10 000 dollars a year. Or $15 000, I'm sorry a month.
Bryan: Yeah, a month.
Michael: Okay, you're talking somewhere one hundred to one hundred and fifty thousand dollars a year. It does not take long to wipe out your assets. Now one thing that people have a propensity to say - “Well, gee, I can't afford ten dollars”. Of course, you can't afford ten thousand dollars, and you don't necessarily have to have an insurance policy that covers $10 000 dollars a month, but because if you have social security, that might be $2000 dollars a month and a pension. That's $2000 dollars a month for your money in the bank, right, then what you gotta do is trim that a little bit exactly because then your assets will not be wiped out in 3 or 4 years, and they can last a direction.
Bryan: That's the calculation that's the calculus that goes into this. You know, a CCRC isn't perfect forever.
Michael: Continuous care.
Bryan: Continuing care, retirement community. okay, that's the relevance of that's
Michael: That's the Shannon.
Bryan: Correct. Okay. It's not for everybody. There are limitations to it often that you might be able to buy in can be prohibitive for some families. It also limits your ability to engage in asset protection planning if that's important to you, it can limit your ability to access public benefits such as Medicaid in the nursing home. If you're in a facility that doesn't accept it, so it's not for everybody. It's just like long-term care insurance. It's just like that, as Jack mentioned. The hybrid product, you know, we have to bet you the annuity. We do a big buy and you got to put a big chunk of money.
Michael: Yeah, yeah, yeah,
Bryan: That's for - that's great for some, it's terrible for others.
Michael: You know, that's interesting - that you're creating and you're describing to me different solutions. For instance, the person who may, for whatever reason, have had a heart attack or a strong or chronic back problems or whatever might put them into long-term care may not be able to get a long-term care policy, but may be able to accomplish the same goal. For instance, pop and chan and dell with three or four hundred thousand dollars, and if it's a $1000 dollars or $2000 dollars a month for life, and they keep that thing, hey, guess what? That was their way of affording it,
Bryan: And you're looking at those buying those facilities, those organizations, they're set up for someone who's 70-75 years old to move in. You call in long-term care insurance policy carrier when you're 75 incentive to policy, good luck.
Michael: Well, yeah, your premiums, if you can even get a policy
Michael: Your premiums are just -.
Bryan: But a CCRC is giving you a very similar approach to it and frankly, it could be a better approach. The longest long-term care policy I see written today's 5 years. Go on to the days of unlimited daily rates gone are the days of unlimited plans. It's a fixed daily - fixed time period with maybe an inflation rider, simpler comp.
Bryan: So you're still it's still a fixed pool of resources, whereas with the CCRC, it may again may a tool kit. You have some certainty, you know that if you go broke, they're gonna still keep carrying.
Michael: Right. I know that's a beautiful thing, so we're about ready to take a break, but I wanted to point something out that Bryan just said it's a misnomer in the industry or shall I say it's a misnomer, common misnomer. We're asked to review long-term care policies by the children of parents who may need it, and we see that. Let's say, for instance, it's $300 dollars a day for 5 years. People like - “Oh no, what do I do at the end of 5 years?”. Well, point in a case of point what it really is if you were to take $300 dollars a day, times 365 days a year, times 5 years, that gives you a number of almost $500 000 dollars, that's a pot of money.
Bryan: Correct. it's so ten years ago if you use it
Michael: Exactly so, I just wanted to point that out -.
Bryan: - Not a guarantee some policies don’t. Some policies are fixed temporarily, but that's rare. You're absolute that half a million could last ten years, or even half the policy -.
Michael: Right, and that's right. and the reason why companies got away from doing care forever is because if you think about the insurance company, there's no way of defining their risk. For instance, if they said we'll give you $300 dollars a day for life, his life two years, five years, ten years, whereas you indicated potentially twenty years.
Michael: Boy, I'll tell you what the insurance company loses big time on that one anyway, good opportunity for us to take a break. So please stay tuned, will be back with you in just a few moments.
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Michael: Welcome back to Financial Planning Explained with my guest Bryan Adler, who is an elder law attorney in Pennsylvania and New Jersey and we left off talking real quickly about, you know, the continuing care facilities and you know you're really knowledgeable in the show and I'm learning every day from you, and I think that's great. One of the other things I had a client having - and I also want to get to talking about the long-term care products again. It's just a different things because we talked about that during a break, which I think is very educational to the viewers, but one of the other things that I had found is that and you had indicated that the CCRC facilities are the same way. but I've seen a client go in and most times what they do is they always look at your financials.
Michael: And they look at your financials because they don't want you to run out of money in two years, they run a matrix.
Bryan: They look at your income because if you got ten thousand bucks a month of income, you know you're retired cop, then a retired firefighter in high. So security -.
Bryan: They're gonna be a lot of concern with what you have in the bank but if you are a widow and you didn't work in your claim, survivor's benefits of a thousand a month, they're going to see a lot in the bank.
Michael: Sure. Basically, they want to make sure that you're going to be there and so what I thought was pretty cool is that they had a benevolence fund that's ok, and he actually ended up throwing $86 000 dollars non-refundable money. Ok through $86 000 dollars, which is almost in its own way, the original life insurance policy so that what happened is that if he died, $86 000 dollars remains in the fund, but if he runs out of money, the not $86 000 dollars and everybody in the facility threw in continues with his care.
Bryan: That's and so you look at it two ways. there are the life care contracts. we do a giant buy-in. There are some CCRCs where the buyers are comparatively 86 grams a lot of money, but they're comparatively small and fifty to eighty ninety thousand dollars non-refundable, and yes, that's right, they could it goes into that fund for that very reason because you have people are gonna go broke -.
Michael: Because they lived longer and you know. so the funny thing
Bryan: So why pushed you to a nursing home to go and Medicaid if they could stay in assisted living -.
Michael: Right exactly.
Bryan: Lower, lower cost, less restrictive environment.
Michael: Right, and so you know, it's kind of funny, and whenever you really thought about it, but in talking to jackman vote from last week, he had said what happens here is the people who get the better care. live longer, which is you don't think about it, but you're like, duh -.
Bryan: That's right.
Michael: If you're getting better care -.
Bryan: You look forever.
Bryan: How many we're doing so well, keeping people alive, not our minds. We can't do anything to keep our brains going, dementia hits, there's -.
Michael: I'm going to disagree with you on that one only from the perspective of I remember having a client who ended up. I mean, they were really in just sort of poor health and very fast, and I don't mean to disagree with you, but what happened was when they went into assisted living. All of a sudden, they're getting three meals a day. They're getting a medication, so why boy. they just whipped it right or -.
Bryan: Absolutely right, increase socialization. There's no doubt about that. What I was referring to is you get diagnosed with Alzheimer's. There's no medical intervention that does anything but I'll go on a limit. It does virtually nothing. There is a new drug add, a helm that was just approved, but even and I would invite you to our annual symposium with Dr. Jason Carlos is the keynote speaker. he's been all over the news about out of helm, and it's a really questionable effectiveness.
Michael: Is it designed for long-term or is it therapeutic? What you have -.
Bryan: It's infusion. I don't know enough about it. It's infusion-based, very expensive. I think it's like in the hundreds of thousands of dollars a year and that the efficacy is very questionable, and that is considered the biggest breakthrough in the last thirty years of Alzheimer's treatment. It barely. I mean, Jason -.
Michael: Doesn't have a couple hundred thousand dollars and something that doesn't really work -.
Bryan: Some it might really work. Dr. Carlo wish is much more skeptical. Yeah, I'll get you take it to the symposium. I think I'll be collected.
Michael: That’s cool. That’s cool. So anyway, we're talking a little bit about the long-term care products, and I know that my mother has for life product -.
Bryan: Which good luck in that now.
Michael: Oh yeah, you can, it doesn't exist. I think she got it in like 2001, 2002, and I remember 15 years ago that the insurance companies and there were probably about ten players, but there were about four or five GE Transamerica general which is what he is now.
Bryan: Okay, okay, go.
Michael: Bit enough principle a bit there are. and they all prided themselves. We've never raised our premiums to our existing customers. What they would do is next year. You buy a new policy, you're paying for the old people, but now they're beginning to do -.
Bryan: And that was a common sales tactic where they would say either we've never raised premiums or your individual premiums can never go up because you can't raise by law. You can't raise an individual right -.
Michael: But you have the whole class when they have to go through the application of the state leader, however you know, and she's been concerned is my mother at about potentially needing to go into a facility. And she said - “You know, but these premiums are just climbing and climbing, and so I looked at our policy. I'm like -”Holy cow. You got yourself a catalog”.
Bryan: Oh, you can't get rid of it.
Michael: I'm like - and oh, by the way, you don't want to pair back on your benefits, you know, because I'm like -.
Bryan: You always a ham-fisted approach that they send out those illustrations, keep your policy. This - it will reduce your policy premium and it destroys it just or we'll give you a check for $20 000 dollars if you had the policy for 15 years. You pay $10 000 dollars a year for it, you can tell you a little pittance. I look at these things I said. don't ever hear back -.
Michael: I've done, and I've had that with clients before, and I'm like - “No, you don't want to do it”. The only thing that I have actually done because it wasn't affordability issue is, you know given their advanced age. They were pushing 85 and the daily rate was already accumulated to be a pretty high -.
Bryan: Where it's in a cover, right, you can write -.
Michael: Like I said, you know what I said. I took the compounding officer, which made it affordable to that.
Bryan: That's there's a fairness to that, and you have to look at it. You know, that's right. If you've got somebody that comes to me and says - “Look I can't afford this policy anymore. All right, well, you look at that circumstance that they're if they just say I don't feel like spending 5000 years, 5000 a year, and I'm looking at a million dollars in the bank and say, you're a fool.
Michael: Right, there's can't afford and don't want to afford it, you know, and you know what. You figure out a way, you figure out a way to afford it, because you're right. They don't want to afford it because you're right, the premiums are getting high -.
Bryan: Well, Jack made a good point last week point six percent of a million-dollar portfolio is -.
Michael: The trump change.
Bryan: The premium no - trump change if you're getting even a percent or two return, it's paying the premium, and that's all right, you're barely growing like if you're getting 2% by your adviser, and that but that's still enough to pay the policy, and then some. so I think that that's a very valid point there. It’s peanuts.
Michael: Oh, it is absolutely is in it. and you know, and that's a good way of looking at it, but not people don't always look at it that way. they see the check for $10 000 dollars or $6000 dollars.
Bryan: Where their eyes were their wide-angle lens.
Michael: It is and you know what the big difference between us and the clients, and I tell them this all the time, and it's not to be mean, but I tell my clients all the time. I say - “I got one giant advantage over you”. I said “I don't have the same emotional connection that clouds strip judgment, and that's not to say that you know that their judgment is bad or anything else, but they don't see it from the outside different lens.
Bryan: And they need that advice because they need to have you know, I mentioned that the hammer and everything looks like a nail. That's a great - Iwas great at all, you know you look at these long-term care products, you look at asset protection strategies like you're a vocal trust. You look at CCRCs, look at a traditional long-term care policy. It's great for someone that has a lot high income or tonight in the bank but if you don't have either of those. You're out. You're out of the game. Furthermore, they're not - they're more difficult to get now. Jack makes those hybrid products where you have to put $300 000 dollars into it that's great if you got the cash for it. You need three hundred percent, but then there's consequence to buy an annuity. You put money into an annuity so I can go to the bank and take it out tomorrow. There might be surrender panel -.
Michael: Your writers are all kinds of there's that and you lose some of the benefits. I mean, the purpose of annuity is for the insurance company to guarantee a lifetime pay.
Bryan: Correct. so there's ups and downs. everything we do, an irrevocable trust that's an abdication of control of your assets. Yeah, you know, we're lost it. Your wins in losses there. There's no silver bullet, it's you don't pull one level all the way. You pull a little bit on old -.
Michael: Ah you know, that's right up my alley because you know the key I've always said in financial planning is to build alternatives and flexibility and everything else because the only thing you can guarantee. You're ready -.
Bryan: If you have no idea what's coming -.
Michael: You guarantee is nothing is guaranteed exactly.
Bryan: It’s all about planning my - I've got a very good friend who calls the three P’s, and I'm going to use it. I'm gonna use it an arguable inappropriate word, but he says at the sic P’s -.
Bryan: Seven. Proper Planning Prevents Pittsburgh Performance.
Michael: Proper Prior Planning Prevents Pittsburgh Performance, that's seven.
Bryan: Seven pieces, and this is true to that.
Michael: There's absolutely truth to that. nobody plans to fail, they just fail to plan. I mean, that's a ultimately shame, but it's the truth.
Bryan: I couldn't agree with you more. It never hurts to have a conversation because you're going to sit down and say - “Oh, this policy going to cost me $10 000. Okay, well, trust is gonna cost me this or the newly gonna cost me that where CCRC is. You put a plan together. My job is an elder care attorney isn't to get someone on Medicaid, but I may it's not to put money into a trust. I may it's not to have to advise someone to get long-term care insurance but I may it's about figuring out how to get someone the best care possible.
Bryan: How we can pay for without going broke.
Michael: Absolutely, and absolutely, and that's exactly what we do, but just from a not necessarily in the elder law planning or elder planning or long-term care planning but it's all of the financial planning inevitably, and I always joke and say this but you know, people have all kinds of goals and most people, including myself. I have ten dollars worth of goals. Yeah, I got three dollars in my pocket. That's exactly right so what ends up happening is that you have to sacrifice some to get the others or you've got to figure out, how can I increase the amount of money in my pocket to afford the ten dollars? Are you going to bring the ten dollars down to three or need to bring the three to ten? Or everything gets sacrificed a little bit -.
Bryan: You plan early, and you be paid.
Michael: The earlier you plan, the better chance you have.
Bryan: Last week when you said to jack. the difference between retirement planning, long-term planning is retirement. Everybody wants it. They want to save, right, nobody wants to already want to save a long-term retirement planet. You said it yourself. You can't start saving for a time or 65. You shut yourself in the foot.
Michael: All right, exactly -.
Bryan: It's the same concept of everything else.
Bryan: You know, you don't want to come rushing to me when you were to get powers of attorney in place when your loved one was unconscious or has the dementia.
Michael: It’s too late for a little bit on that, right? So Bryan, right out of time, is there anything that you want to really mean because we're really out of time.
Michael: Worst-case scenario I get you on here again, that's fine. I mean, this is great.
Bryan: And I want to thank everybody for you know, out there watching today, and you know, we hope to do it again, answer more questions.
Michael: Love to this is Bryan Adler. You could see his name up on the screen, Rothkoff Law. What's your website?
Bryan: Rothkofflaw.com. There you go rock there.
Michael: So I thank everybody for joining us this week. I hope you learned something and picked up and piggyback and what we saw last week with Jack Linville. Long-term care planning is a very important subject, and it's a component of overall financial planning. Thank you very much for joining us. Thank you again, Bryan. I look forward to having you again.
Michael: And we'll see you next week, have a great weekend.