A new Nationwide Financial advisor survey released today found that half
of advisors say they have clients asking about giving all their money to
their children in order to qualify for government assistance in paying
for long term care.
According to the Harris Interactive survey of 501 financial advisors,
more than two in five (42 percent) also say their clients think of
"Medicaid planning" as a way to preserve their children's inheritance.
"Medicaid should not be a plan, but used in instances where an
unexpected and financially devastating illness of one person threatens
to impoverish their still healthy spouse," said John Carter, president
of distribution and sales for Nationwide Financial. "Medicaid was never
intended to supplement the middle or affluent classes. Medicaid was
meant to help care for the poor."
Currently, 49 percent of Americans who need long term care services
depend on Medicaid to pay for their long-term care expenses.1
Most in this program are our nation's impoverished, including those who
eventually exhausted their assets leaving Medicaid as a last resort.
However, others purposely gave away their assets to their heirs in order
to qualify for the program and avoid paying their own long term care
While the Deficit Reduction Act of 2005 helped make transferring assets
to children much less practical by implementing a five-year, look-back
provision, instead of a three-year look back, "Medicaid planning" is
becoming a more often used tactic. However, there are many issues
seniors should be concerned with when thinking about impoverishing
"Many of our advisors tell us the most important aspect to their cliens
when planning for long term care is maintaining control," Carter said.
"People who resort to repositioning or giving away their money often
find they sacrifice control when having to ask for money that used to be
theirs. They also give up control when protecting an inheritance for
their children outweighs comfort in their final days."
Advisors say only 15 percent of their clients understand the potential
costs of long term care well and over a third (35 percent) say their
clients understand the costs "not at all well." People living to age 65
have a 70 percent chance of needing some type of long term care in their
lifetime.2 The average cost per year for a nursing home is
projected to be $265,000 by 2030 - and that's not even for a private
Nationwide Financial launched the Personalized Health Care Assessment
program to help advisors estimate their clients' health care expenses in
retirement. The program uses proprietary health risk analysis and
up-to-date actuarial cost data such as personal health and lifestyle
information, health care costs, actuarial data and medical coverage to
provide a meaningful, personalized cost estimate that will help clients
plan for medical expenses.
"Instead of guessing, advisors can use this tool to provide a fact-based
cost estimate based on their clients' health risk and lifestyle and
build a plan from there," Carter said.
According to our survey, fewer than a third of advisors (31 percent)
agree their clients understand the various long term care options
available to them in addition to traditional stand-alone long term care
The most commonly known long term planning choice is the traditional
stand-alone long term care policy. While it is very customizable, some
clients don't like the "use it or lose it" nature of these products.
There are also hybrid products available. A long term care rider can be
added to the life
insurance coverage being purchased. This plan will provide funds for
the insured should they need long term care. However, in the event no
long term care is ever needed, the insured has a death benefit to leave
"As financial professionals, it is our job to help protect our clients'
financial health without sacrificing their dignity," Carter said. "In
many cases proper long term care planning that includes some type of
long term care insurance protection will not only better suit clients
financially, it will allow them to keep control of their assets, their
life and most importantly their dignity."
Advisors can visit www.nationwidefinancial.com/healthcare
to learn more.
The 2012 Financial Advisors and Health Care Costs Study was conducted
online within the U.S. by Harris Interactive on behalf of Nationwide
between July 18 and July 25, 2012. The respondents comprised a
representative sample of 501 financial advisors with at least 50 percent
of their clients having $250,000 or more in total investable assets.
Results were weighted as needed by firm type. Respondents for this
survey were selected from among those who have agreed to participate in
Harris Interactive surveys. Because the sample is based on those who
were invited to participate in the Harris Interactive online research
panel, no estimates of theoretical sampling error can be calculated.
Nationwide Mutual Insurance Company, based in Columbus, Ohio, is one of
the largest and strongest diversified insurance and financial services
organizations in the U.S. and is rated A+ by both A.M. Best and Standard
& Poor's. The company provides customers a full range of insurance and
financial services, including auto insurance, motorcycle, boat,
homeowners, pet, life insurance, farm, commercial insurance, annuities,
mortgages, mutual funds, pensions, long-term savings plans and specialty
health services. For more information, visit www.nationwide.com.
Nationwide, Nationwide Financial, the Nationwide framemark,
Nationwide YourLife and On Your Side are service marks of Nationwide
Mutual Insurance Company.
1 National Clearinghouse for Long-Term Care
2 LTCI's Revolutionary Evolution, Nov. 1, 2011,
Life Insurance Selling
3 Life and Health Advisor, "Don't Let Your Clients
Get Blindsided By Unexpected LTC Costs," 2010
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