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Long Term Care Planning Tax Incentives for Business Owners

December 14, 2019

Hi and welcome to this edition of The
Insurance Experts. It’s my pleasure to have on the line Chris Roehm. Chris is a
life insurance expert and I’m so happy to have you on the episode today. Thank you Marc. It’s good to be here. Okay so first of all how did you get into the
insurance world? I know you have kind of an interesting back story there. Yeah
it’s probably not the standard um the way path that most of most of the people
you work with have taken I was actually sharing a cab with a
friend of mine and he was bragging on how much money he made that year and
and I said geez if I ever get out of the software business I’m gonna go and
do this the day I sold my company I called him and said you know I’d sold my
business I’m thinking to get into financial services what should I do and
he said come to work for me you can start on Monday that’s clearly how I
how I got into this crazy business. That’s pretty cool and I know you’ve
been into it for many years now when did you get into the industry?
Well that was 13 years ago 2006. Okay and obviously you’re focusing on life
insurance and and you probably discovered that you were helping a lot
of people at the same time as you were making money they’re doing that right?
Yeah I sold a lot especially early on I sold my house I sold my car I sold my
furniture I’ve been focusing on after I left his employment almost exclusively
on planning for the entrepreneur business owner so it’s business
continuity business succession and then I found sort of a niche that I really
enjoyed working with the professionals so I become the life insurance guy for
the lawyers themselves or for the CPAs themselves. Very cool and so today I know we want to talk about long term care planning and obviously that’s a very
emotional and powerful topic for many people out there how did you kind of
come across this issue of long term care planning? Well of course when you take
the CFP courses and the exam if you don’t recommend someone you know plan for their long term care where they buy insurance or a plan for it otherwise you
fail and so I’ve known all along that how important it is to an overall financial plan and then
about I guess it’s five years ago my wife had some eye surgery and I actually had to
take care of her for four or five days and I know most people would say well
four or five days that’s nothing well and she’s the nicest person in the world
I’m the luckiest man in the world I’ve been married to her for 34 years and but
you know she turns into this psycho and get me a Tylenol! I need a Coke I’m freezing turn the fan on and I’m like I am NOT doing this in the long term you know so that actually
motivated me to get some long-term care insurance. You know nothing motivates nothing more powerful than having a personal
experience taking care of a loved one even I guess if it’s for three or four
days I won’t make light of it but you know you get a glimpse into what it
might be if you had to take care of someone for three or five years right?
I’m just telling you if you think that you know someone’s going to take your
year you’re gonna take care of your spouse or your spouse is gonna take care
of you try it for a little bit I mean it’s definitely um it’s not it it’s not
the kind of thing that I would be good at. Right and I know there’s a lot of
people out there listening to this that are probably taking care of their
parents and they kind of understand what long-term care’s about because they
actually paid the bill for it right they paid for the home health care agency or
they paid for the assisted living or the nursing home and so it does get quite
expensive to pay for that care again when you’re not equipped to want to be
that caregiver yourself but there are ways to make it financially viable and
that’s where I know you want to talk about insurance today you mentioned you
work with a lot of business owners and I want to talk to you about the business
owner kind of tax incentive for getting long-term care insurance so obviously
you were talking about the IRS doesn’t do this you know kind of out of their
goodwill let’s talk a little bit about the IRS and why they do this. Yeah I
think that um really if you look at all the reasons for tax deductions tax
credits tax savings it’s always forwarding the you know forming the
overall goal of the United States of America
I mean charitable deductions so because charities can provide social services
that the government can’t and you know if you invest in a new forklift for your
for your warehouse that you know grows your business and makes you pay more
taxes in the future or more money in the future so the reason that that there’s
ways to deduct premiums on long-term care I think it’s the same reason is
that the government knows that if all of us as we age and if we become a burden
on the government it’s going to be better to give us a tax deduction today
and let us buy some private insurance than rely on Social Security Medicare Medicaid you know down the road. Exactly and Medicare only covers it for like 20 days so it’s not designed for
long-term care even on your Social Security form it says like you may want
to consider private insurance because they’re really encouraging you because
you might end up on Medicaid and the way that that happens most people on
Medicaid they impoverish themselves they weren’t necessarily poor to begin
with but they became poor by paying for care and then the government has to pay
for it so like you said you’d buy a private insurance policy you’re actually
staying off of Medicaid so the government is not going to pay for it at
the end. To qualify for Medicaid long-term care I
think you can only have like two thousand dollars of assets of qualified
assets is that right? That’s correct although if you’re currently in crisis
taking care of your parents and they’re in a nursing home
there are Medicaid planning attorneys that can help rearrange your assets
rearrange your estate in legal ways so that you can gift the the money to kids
and then you qualify like you said for the $2,000 threshold. Right I think
there’s a five year look-back and I will in Florida you gotta do that five years ahead of time. Yeah there’s different look backs
there’s different rules around that but let’s let’s kind of talk about the
business owner tax incentive I’m sure the people out there want to hear about
this so you can do this with both traditional plans and you can also do it
with hybrid policies so life insurance long-term care policies and effectively
you can take either a portion or all of the premium as a tax deduction business
expense you know through your business which is worth a lot of money if you’re
paying taxes and the benefits are still tax-free so I know you have some clients
you’ve worked you know you’ve talked to about this and you’ve done some hybrid
long term care planning where do you think the opportunity is for your
clients out there? Well I think the opportunity is when I find that when I
meet a client that has an older cash value policy we can redeploy that cash
that they’re never going to use and then I kind of take it out you know for they
may have bought the policy to pay for a kids college or something it let the
cash build up for one reason but if we can swap that policy today for an equal
or greater death benefit and include a long-term care rider I think I think
everybody I showed that to is very keen on that. Yeah so you know it’s
interesting there are some situations where it almost feels like it’s too good
to be true because you’re just redeploying money that you have
allocated elsewhere in a better way you’re just getting more value on your
death benefit more long term care coverage. I was explaining and I’m
like I would say Marc you know there’s no free lunch so why are we doing this
so you’re giving up access to this cash I did one last earlier this year there’s about two hundred and thirty thousand dollars of cash value in
a policy so in exchange for you giving up access to this cash we’ll give you you
know the same death benefit and we’ll include a long term care rider and then
they kind of understand it it’s no free lunch. Right right and there’s always
trade-offs but again because you’re working with insurance experts life
insurance experts I’m a long term care expert we’re also partnering with other
long-term care experts in our network to help your clients we’re gonna find the
exact right solution that fits you and we’re gonna shop the market for
multitude of carriers to do that. And that’s why I’m coming to you Marc for
you know for this help and this partnership is that you know one of the
really good things is that there’s one thing my clients hate is paying
insurance premiums but luckily they hate paying taxes more. Right exactly
okay well I’m gonna have you on future episodes thanks again for being on our
show today and we look forward to talking in the future. Thanks very much.

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  • Reply Ace Hardy December 14, 2019 at 4:24 am


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