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Scott Reynolds
Scott Reynolds
Apr 21, 2010

nursing-home 

A portion of the new Health Care Reform act focuses on Long Term Care. It is a Government sponsored LTC plan called CLASS or Community Living Assistance Services and Supports Act. This act will provide for a national LTC entitlement program. The plan offers a basic level of coverage guaranteed issue (no qualifying based on health) to working Americans. It actually works like a “pay ahead” plan like Social Security.

The plan can be offered by employers, but not mandatory. In that case premiums would be paid through payroll deduction. The plan will be offered to everyone even if self employed or their employer doesn’t offer the plan. It will have a mandatory 5 year vesting period before any benefits are payable. There is no set premium yet, but estimates are between $150-$250 per month. Once an individual has the loss of 2 Activities if Daily Living, or Alzheimers, they would be eligible t0 receive at least a $50 benefit per day towards some type of Long Term Care. The plan may pay up to $75 per day depending on the level of ADL loss. And there will be specific enrollment periods that employees could enter and leave the program.

The problem with this type of plan is that is doesn’t go far enough to cover someone fully. The average annual cost for Home Health Care is over $25K. The CLASS plan would only fund half the cost. An assisted living facility average cost is $41K, the plan would fall short there as well. And for Nursing Home care at an average cost of $72K per year the plan is very short. For most people, the need for a private LTC policy to supplement this plan is necessary.

The CLASS plan will not go into full effect until 2016, so the final details are not complete. But hopefully this gives you some idea of what to expect.


Scott Reynolds
Scott Reynolds
Apr 14, 2010

RetirementNestEggs

Most employees have the ability to contribute to a group 401K retirement savings plan through their employers. Most employers will even match their employees contributions up to about 6%. Some employers offer a full pension plan with no employee contribution. However, if you are self employed or your employer does not offer any type of retirement plan, you will want to look into starting an Individual Retirement Plan. These plans are a way to save for retirement while also receiving tax advantages for doing so.

There are basically 2 types of plans available for individuals. The Traditional IRA and the Roth IRA. They both have beneficial attributes. You must determine the right one for you. In a Traditional IRA your earnings grow tax deferred until after age 59-1/2. When you withdraw them they are taxed at your current rate. Contributions and earnings can be withdrawn penalty free after age 59-1/2. In addition, in a Traditional IRA your contributions may be tax deductible.

The Roth IRA is the other plan available. In a Roth IRA your earnings are tax free if withdrawn after age 59-1/2. Contributions (only) can be withdrawn tax and penalty free at any time. However, unlike the Traditional plan, contributions to the Roth IRA are not tax deductible.

In both plans you have the ability to choose your investments. Typically you have the option to select from thousands of stocks, bonds, or mutual funds. A mutual fund is a vehicle that uses combinations of investments and is managed by a fund manager. Investing with a mutual fund allows you to spread your risk over a larger pool of investments.


Anne Arbogast
Anne Arbogast
Jan 15, 2010

old_couple_beach

Starting with “the basics” is always a good idea. An easy to read and understand section on the Social Security Administration website has many topics for search options.  Start at http://www.socialsecurity.gov/retire2/ and select a link that most interests you. Choose from “Benefits Calculator” or “Near Retirement?” or “Eligibility Issues” and more.

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Scott Reynolds
Scott Reynolds
Jan 13, 2010

Many people don’t recognize the need for long term care insurance. The average cost for a semi-private room for 1 year is $68,000. The average stay in a LTC facility is 2.2 years. Most people would need to plan for that type of major expense. There is a general feeling among Americans that if they have the need for long term care that their family will take care of them in the home. Although that may be the case, at some point the level of medical assistance needed will surpass the ability of family. Home health care is much less expensive than care in a facility. The average is about $18,000 per year based on 3 visits from a healthcare professional per week. Medicare and health insurance do not pay for LTC. However if you have exhausted all of your assets you may be eligible for Medicaid assistance through your state. It is a last resort for many people as the thought of losing the majority of their assets in order to get the care they need is not something they want to think about. As with any insurance, LTC premiums are based on your age and therefore are less if you are younger when you enroll.

long_term_care


Scott Reynolds
Scott Reynolds
Jan 06, 2010

Although some people claim that they never want to retire, the reality is that eventually health concerns will force them. A recent independent survey showed that only 43% of Americans have calculated how much they need for retirement. Of those that have a 401K available, as much as 25% do not participate. The average American spends 20 years in retirement. A major determining factor for most people is Social Security. Social Security pays you about 40% of your pre-retirement earnings. If you have had any opportunity to meet with seniors, you will see that if their only income is Social Security they are not doing very well. Some claim that Social Security will no longer exist in the near future. Many people think that they cannot afford to save for retirement. The fact is that it won’t happen for you. You must take the steps to make it happen. Even if that step is contributing 1% to your 401K, or setting aside $50 per month into an IRA or some other plan that gains interest. Even a little progress is better than none.

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