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Old 01-18-2018, 08:33 PM   #61
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There definitely are differences even if you are unable or don't care to see them.

If you have a high career earner vs a low career earner ... and while those benefits may not be perfectly proportional to their contributions due to bend points, etc. .... they are nonetheless significant enough to fairly say that benefits are relative to contributions. Also, there are specific payroll taxes that fund these benefits and they do not come out of general fund taxes.
Yes those bend points as you call them result in 90% pension on the first 10K in earnings, 32% pension on earnings up to $60K and a paltry 15% pension on the remaining amount up to $115K. Despite the same 12.4% confiscation of your earnings.

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No one "pays into" Medicaid or other gov't programs (SNAP, CHIP, etc) but those are supported by general fund revenues.
Have you ever seen the medicare taxes confiscated from your earnings with no upper limit?

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The big difference between ACA, Roth conversions, etc. and Medicaid LTC manipulations is the magnitude of the benefit when a year in a nursing home costs Medicaid $35k or more... any benefits from those other programs are peanuts by comparison.

At least in the case of Roth conversions, it is a tax minimization game and it is well established that one can arrange their financial affairs to minimize taxes. Nowhere does it say that it is proper to arrange you financial affairs to qualify for social program benefits.
You may be off a bit in this $35K number. Nursing homes I've investigated routinely charge private payers $10K+ per month. But they say they don't get as much from medicaid.

By the way your $6,000 roth conversion example results in a $360B tax dodge when applied to only 60 million of the boomer population. Which is 16 times larger than the entire medicaid expenditure of $22 billion spent on Long term support services through managed care organizations (nursing homes?)

Playing by the rules is still playing by the rules.
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Old 01-18-2018, 09:46 PM   #62
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.... Have you ever seen the medicare taxes confiscated from your earnings with no upper limit?

You may be off a bit in this $35K number. Nursing homes I've investigated routinely charge private payers $10K+ per month. But they say they don't get as much from medicaid.

By the way your $6,000 roth conversion example results in a $360B tax dodge when applied to only 60 million of the boomer population. Which is 16 times larger than the entire medicaid expenditure of $22 billion spent on Long term support services through managed care organizations (nursing homes?) ...
Did you notice that I wrote Medicaid and not Medicare? Do you know the difference? If not, they are two totally different programs that unfortunately have similar names and are often confused.

The $70k private pay was almost 10 years ago and in a low cost area... the $10k/month isn't surprising... I was intentionally conservative.... your higher number would make my point even better that the magnitude of the cost of these Medicaid shenagians is much more than Roth conversions and the like.

And your Roth conversions comment is so bizarre that I'm not even going to bother to respond to it. Getting a little desparate to make an argument, eh?
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Old 01-18-2018, 10:11 PM   #63
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I’ve been involved in this (sometimes rather heated) discussion in previous threads. Based on that experience, I just don’t see the two sides of this argument reaching common ground; they usually don’t on this subject. And, you know, that’s OK.

But, I will say that I’ve heard a new argument on this thread which, if I understand it correctly, bears some scrutiny. That being that it’s OK to “use the rules” to take a little bit but, it’s not OK if you take a lot.
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Old 01-18-2018, 10:25 PM   #64
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Well, you and others obviously don't get it. The Roth conversions, ACA, et al are just a matter of timing of things that you ultimately will do... you will ultimately take money out of that tIRA through Roth conversions, withdrawals or RMDs.... you will ultimately take SS sometime between 62 and 70... etc. If you are smart about the timing then you pay less in taxes or get more later because you deferred earlier.

The Medicaid LTC manipulation requires much more effort and planning... you have to consult with some slick lawyers, set up trusts, move and retitle assets, etc. to essentially have your neighbors pay for your nursing home care because you are too cheap to pay for it yourself even though you have the means to do so and you prefer to cheat the system so you kids can have the money.

I think it is pretty clear which is more egregious. I think it would be pretty clear to most people. Un-American too.
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Old 01-18-2018, 10:46 PM   #65
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Well, you and others obviously don't get it. The Roth conversions, ACA, et al are just a matter of timing of things that you ultimately will do... you will ultimately take money out of that tIRA through Roth conversions, withdrawals or RMDs.... you will ultimately take SS sometime between 62 and 70... etc. If you are smart about the timing then you pay less in taxes or get more later because you deferred earlier.

The Medicaid LTC manipulation requires much more effort and planning... you have to consult with some slick lawyers, set up trusts, move and retitle assets, etc. to essentially have your neighbors pay for your nursing home care because you are too cheap to pay for it yourself even though you have the means to do so and you prefer to cheat the system so you kids can have the money.

I think it is pretty clear which is more egregious. I think it would be pretty clear to most people.
You repeatedly insult our intelligence by this refrain that "we don't get it," when it's obvious that we understand exactly what you're saying, but simply don't subscribe to your argument and find it hypocritical. You merely highlight differing degrees or results of the same kind of manipulation.

Whether one set of manipluation is more "egregious" based solely on financial impact misses the mark -- it's all the same to us. The rules are the rules and if you play within them, there's no reason to cast aspersions on those taking advantage of them. At some point in time, if gaming within the rules becomes objectionable to our political or governmental leadership, they will change.
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Old 01-18-2018, 11:04 PM   #66
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Ok, let's have a poll and see what other members think.

http://www.early-retirement.org/foru...ml#post1999398
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Old 01-18-2018, 11:20 PM   #67
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If I go into a LTC situation, I am going to stay at home until my assets are depleted. And I plan on having a bachelor party every night, with strippers, as long as I am able to arrange it.

Spend, spend, spend will be the order of the day until it is gone. I'll be damned if I will conserve cash just to pay a nursing home.
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Old 01-19-2018, 12:16 AM   #68
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I think folks who shelter assets passing them along so they qualify for Medicaid have shot themselves in the foot, as we witnessed that poor daughter whose parents couldn’t buy into their desired CCRC because they no longer owned their assets. All of a sudden your flexibility is gone. I expect the parents were victims of some fast talking lawyer selling his services to implement this “great idea”.

Personally I want top notch long term care for DH and myself if we live that long and I hope to be able to pay for it. Heck we may be covering siblings - you never know. One reason I don’t plan on expenses going down as we age.
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Old 01-19-2018, 05:36 AM   #69
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For those of you who have not set up a trust, nor have purchased LTC coverage (which I have read you cannot trust to actually be there someday), how much are you setting aside for self-insuring? And what is your mechanism for doing so?

My greatest fear is I will end up in a nursing home for years, and it will bankrupt my spouse. I'd rather pass away quickly, but we all know we can't predict our future demise. My grandmother had Alzheimers and spent - oh I'm guessing 10 or 15 years - in a nursing home. That's a long time to self-insure for. I know it's not typical, but it concerns me since it happened in my family.
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Old 01-19-2018, 06:50 AM   #70
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Right now, I'm struggling with what we want with a Trust and whether we need one at all.
I suspect most people "get sold" trusts as opposed to actually needing them. Probably not too different than those who use FAs as opposed to learning to manage their money themselves. The Atty or FAs or very well trained in selling it to incur an emotional response on your part.

I used to think I needed a Living Trust until I looked into it and nothing could be further from the truth.

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Old 01-19-2018, 06:56 AM   #71
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My greatest fear is I will end up in a nursing home for years, and it will bankrupt my spouse. I'd rather pass away quickly, but we all know we can't predict our future demise. My grandmother had Alzheimers and spent - oh I'm guessing 10 or 15 years - in a nursing home. That's a long time to self-insure for. I know it's not typical, but it concerns me since it happened in my family.
I believe there are some states where, under secular law, it is legal to invoke professionals to "assist" you in accomplishing your goal should you need it.

The majority of people do not have long stays in nursing homes so I view it as a low probability. If terminal, I could always legally divorce my spouse and give her at least 1/2 the assets in the divorce decree and thus not bankrupt her.

I guess I use to be afraid of this too until I researched it further.

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Old 01-19-2018, 06:59 AM   #72
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DW's father took a reverse mortgage to increase spending as he aged and later wanted/needed to move into a CCRC as the housing market started to collapse. His townhouse sold with just enough to make it. Six months later he would have been out of luck. It's easy to ignore the implications of your actions.
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Old 01-19-2018, 07:55 AM   #73
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My greatest fear is I will end up in a nursing home for years, and it will bankrupt my spouse. I'd rather pass away quickly, but we all know we can't predict our future demise. My grandmother had Alzheimers and spent - oh I'm guessing 10 or 15 years - in a nursing home. That's a long time to self-insure for. I know it's not typical, but it concerns me since it happened in my family.
My trust, as I've mentioned, is Revocable and thus not a Medicaid shelter, and I never bought LTC insurance. I have enough savings and income (SS, a couple of small, non-COLA pensions) that if I threw all of my income plus 3 or 4% of my assets at nursing home costs, I could stay just about anywhere I wanted. Once you get to that stage, travel, car, home, etc, expenses and charitable donations are minimal or zero.

Now that I'm widowed, I have zero intention of marrying again as long as that means that the state might have me footing the bill for his LTC costs. I'm interested in having a good man in my life again but unless he's as financially solvent as I am, there will be no marriage.
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Old 01-19-2018, 08:00 AM   #74
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For those of you who have not set up a trust, nor have purchased LTC coverage (which I have read you cannot trust to actually be there someday), how much are you setting aside for self-insuring? And what is your mechanism for doing so?

My greatest fear is I will end up in a nursing home for years, and it will bankrupt my spouse. I'd rather pass away quickly, but we all know we can't predict our future demise. My grandmother had Alzheimers and spent - oh I'm guessing 10 or 15 years - in a nursing home. That's a long time to self-insure for. I know it's not typical, but it concerns me since it happened in my family.
We don’t have anything explicitly set aside, but our retirement assets should be able to cover a long nursing home stay - at least as long as LTC will cover - and still have enough for the surviving spouse. Knock on wood!

But I agree that unless you have say an “extra” $2M - the max many LTC insurance available today will pay out, it’s tough to self-insure.

Well I guess many LTC policies payout a lot less than that. Is $400K max payout or less more typical?

If that’s the max an LTC policy will pay out anyway and you already have that amount in “extra” savings than you have the equivalent of a policy. Note that for folks with very long stays in a memory unit or expensive place will use up their policy anyway. And only one of you needs to be covered because the other will spend down the remaining assets if needed.

This doesn’t protect heirs. Some people buy LTC Insurance to protect their heirs.
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Old 01-19-2018, 08:32 AM   #75
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+1 Our maxsafe spending including the value of our two homes would be almost enough to pay for nursing home care for two (though we actually spend a lot less and maxsafe is a worst case scenario) so I think that we will be fine self-insuring. I have looked into LTC insurance in the past and IMO it was a poor value proposition... it just seemed that the premiums were very high compared to the benefits and the risk.
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Old 01-19-2018, 08:48 AM   #76
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I recall in the mid 1990's there were a few years where there were potential criminal penalties for certain types of Medi-Caid planning. I believe it was federal law. So tell me again how Medi-Caid planning is the same as income timing and other things people have mentioned?
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Old 01-19-2018, 09:12 AM   #77
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We don’t have anything explicitly set aside, but our retirement assets should be able to cover a long nursing home stay - at least as long as LTC will cover - and still have enough for the surviving spouse. Knock on wood!

But I agree that unless you have say an “extra” $2M - the max many LTC insurance available today will pay out, it’s tough to self-insure.

Well I guess many LTC policies payout a lot less than that. Is $400K max payout or less more typical?

If that’s the max an LTC policy will pay out anyway and you already have that amount in “extra” savings than you have the equivalent of a policy. Note that for folks with very long stays in a memory unit or expensive place will use up their policy anyway. And only one of you needs to be covered because the other will spend down the remaining assets if needed.

This doesn’t protect heirs. Some people buy LTC Insurance to protect their heirs.
My wife and I have Federal LTCi, purchased when I was an employed Federal employee. Our maximum benefit for each of us is $516K over 5 years, with an annual inflation adjustment. With two premium adjustments over the last 14 years, we now pay $4200 for both of us, which is reimbursed from our HSAs. Our retirement assets and pensions would cover a lot of years in LTC, aside from our LTC insurance. We bought the insurance with the idea that it would be easier on our family to handle the transition -- emotionally and financially -- if we went into LTC.

On the other hand, my wife and I manage my BIL's healthcare and finances. BIL has MS and currently resides in an assisted living facility. He has a very good Federal pension, SS Disability income and no retirement assets but he's backstopped with a modest special needs trust my MIL set up before she passed. We can manage his assisted living expenses with his income streams, but if he goes into a skilled nursing facility, which appears likely because MS never gets better and his cognitive skills and mobility are rapidly deteriorating, all of his income streams would be exhausted in 3-5 years because of the cost of skilled nursing care, in which case he would then be reliant on Medicaid.
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Old 01-19-2018, 09:13 AM   #78
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For those of you who have not set up a trust, nor have purchased LTC coverage (which I have read you cannot trust to actually be there someday), how much are you setting aside for self-insuring? And what is your mechanism for doing so? https://www.caniretireyet.com/long-t...ent-buying-it/

My greatest fear is I will end up in a nursing home for years, and it will bankrupt my spouse. I'd rather pass away quickly, but we all know we can't predict our future demise. My grandmother had Alzheimers and spent - oh I'm guessing 10 or 15 years - in a nursing home. That's a long time to self-insure for. I know it's not typical, but it concerns me since it happened in my family.
I’d suggest you look in to CCRCs. There’s a good FAQ here on E-R.org.

Regarding LTCi, we’ve reached the same conclusion as PB4 - we will not buy it because it’s not a good deal. Note that with LTCi, you are not buying insurance that “covers you for the rest of your life” or “for the duration of your need.” Instead, you are simply buying a future series of payments, usually for a few years. And, a quick NPV calculation will show LTCi for what it is. See this great post by Darrow Kirkpatrick from “CanIRetireYet.’


https://www.caniretireyet.com/long-t...ent-buying-it/
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Old 01-19-2018, 09:22 AM   #79
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Have you ever seen the Medicare taxes confiscated from your earnings with no upper limit?
Yes, but the poster you were quoting was saying we all pay into MedicAID.

Let's not confuse Medicare with Medicaid, even though it seems half the population does.
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Old 01-19-2018, 09:45 AM   #80
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Yes, but the poster you were quoting was saying we all pay into MedicAID.

Let's not confuse Medicare with Medicaid, even though it seems half the population does.
You forgot the
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