Leah Woodford 00:00
Hi, and welcome to Retire Smart Austin. I’m Leah Woodford, and with me today is Phil Capriotti Sr, John Solyman, CRPC, and we’re with Empower Wealth & Tax. Welcome to the show, guys. Good to see you back in studio. Good to see you as well. Looking sharp again. Thank you.
Philip Capriotti 00:50
It’s a pleasure. Leah, it’s always a pleasure to see you, and you’re looking mighty fine as well. You keep up the good work and tell my husband- and my husband, your husband and my wife, they chose well.
Leah Woodford 01:01
Well, I am looking at this little button on your lapel. Can we talk about that a little?
Philip Capriotti 01:09
Certainly, certainly. So, this is a Wealth Council. Last year, I was invited to participate in a show. It’s and check your local times. It’s on Fox Business on Sundays, sometimes Saturdays. And it’s a national- it’s a national syndicated show. So, it’s called the Wealth Council on Fox Business. You’ll see us there each and every week. I’ve told, I’ve told a lot of you, I work with some of the top advisors from across the country, and many of these advisors, not only are they top advisors, but you’ll see them on Charles Payne, Fox Business, you’ll see Marie in the Morning on Fox Business. So, it’s a pleasure to be part of that group. It was a pleasure to be chosen as part of that group. And so, we’re starting a brand new season, 2025 was our first season, and now we’re in 2026 and the cameras are rolling and we’re having a whole lot of fun. We talk about every topic that you could possibly imagine, like today’s topic, long term care and home health care, to tax planning, to wills and trusts. We talk about everything. New tax laws that have passed and that type of thing.
Leah Woodford 02:20
Well, congratulations. That’s quite a feather in your cap.
Philip Capriotti 02:24
Thank you. It’s a lot of fun. It’s actually, it’s, well, here’s the funny thing, okay, I was born and raised in Pennsylvania, Philadelphia. Well, I had guys I graduated from high school “Yo cap. I saw you on Fox Business on Pennsylvania! Did you move back?” Like no, no, no, we didn’t move back. But at any rate, it is kind of fun, and it’s nice. I love the interaction with all of the other advisors, because we share ideas, we get new ideas, we kind of mentor each other. And it’s a beautiful thing.
Leah Woodford 02:55
That is wonderful.
Philip Capriotti 03:00
Thank you. Thanks for asking you have (indistinct) wealth counsel.
Leah Woodford 03:02
Oh, well, today we’re going to be talking about personal funding and long-term care. Which one of you two gentlemen want to tackle that one today?
John Solyman 03:11
Well, I’ll take the lead on that. So go right ahead. So Long Term Care is a subject that a lot of people out there really, underestimate the cost or the need for it, okay? And I would say there is few categories, or I would say three categories of families out there, there is the ultra-high net worth, right? Okay? Clients out there, and they’re the cost of long-term care for them is nothing. So those are more folks that are looking into probably just using their personal funding for it, right? And there is folks that have limited resources, okay? And fortunately for them, they have government program to serve those and now they have a category right in the middle, okay, those folks that not in the ultra-high net worth, worth 50 million up, okay, but also, they don’t qualify for all the programs that those that have limited resources have, and they have to use their hard earned money to fund Long Term Care, wow, okay, and this category, or group of people, The usually end up having to pay hundreds of 1000s of dollars just to a use somebody to care for them or a help their kids. Okay, not to worry about caring for them at this stage of their life, at the get season. So, I get really passionate when we talk about long term care. It’s preserving our wealth if we do it the right way. So, we have to, don’t have to use our own money to fund it, if that makes sense.
Leah Woodford 04:47
No, it does make sense, and there’s a misnomer. I think a lot of people think that Social Security covers long-term care costs. I’ve heard that, and that is not the case.
Philip Capriotti 04:59
A lot of folks, again, a little bit of knowledge is a dangerous thing. And just to qualify what John said, in order to qualify for home health care and long-term care, you have to be pretty close to indigent. You have to be on Medicaid, not Medicare. You have to be on the government’s welfare rolls. In many cases, you own less than $5,000 of assets. So don’t think that if you have a half a million dollars, you might qualify for these programs. It’s not true, and most of the folks that come to us are concerned, again, with retirement income planning, and- but we like to point this out. I’m going to tell you a little story, and I’ll let John continue. I had a client about 10 years ago came to me, and the majority of his retirement wealth was in his 401(k) at the times, about 1.4 million is what he retired with. And he retired from one of the major oil companies out in Houston. And at any rate, his wife was a teacher, taught piano, and didn’t really make a whole lot of money. And so, we started talking about Roth conversions and diverting some of this money. And he was absolutely against it. And I told him, I said, you know, you have, you own your home. I said, that’s wonderful. You know, you own the bricks, but all of your money is in a qualified plan. I said, there’s going to be a problem. Now, he also had deteriorating, deteriorating health. Okay? He was overweight, and then he had medical conditions, heart conditions and so forth. I said, God forbid. And his first name was John. I said, God forbid, John, if you need home health care or long-term care, you’re going to have a serious issue, because your Medicare and your Medicare supplement will not cover it. Now, Medicare and the Medicare Supplement will cover skilled care only, meaning if you go into a nursing facility, and you plan to rehabilitate, recuperate and come out, but home health care is very limited. So, with that being said, he again, opposed it, and he didn’t want to get the insurance for it as well. So, at any rate, and again, what happened the worst? It’s the old Murphy’s Law. What can happen? You know, how did my mom used to put it, planned for the- plan for the worst, but pray for the best. Okay, so what happened was, he fall, broke a hip, never really recovered. He went into the hospital, had a stroke in the hospital, and I don’t know all the details, but at any rate, he came home now again, this gentleman’s running 250 plus pounds. His wife is about 125 soaking wet. She wants to take care of him. Well, what happened once they realized that she was not going to be able to take care of him, bathing and things of that nature, they started getting home health aides. Well, guess where the funds came from? The funds came directly from the 401(k). So basically, what he had is he’s taking out taxable money to pay for long term care, and he’s not getting a full deduction on that on his income tax. So, it created a nightmare. So, I’m glad that John brought it up, and I like this topic. We have a lot of different ways to cover these services. Like John mentioned, if you’re ultra-high net worth, and we’re talking 10, 15, 20, million and above, it’s not really an issue, okay, it truly isn’t, although you’re using your money. But we have insurance plans that will allow you to leverage your money. For instance, one of the companies that comes to mind, it’s an annuity company, okay? And I know everybody hates annuities, and I’m not a big fan for the most part, but there is a use for them. And one of these annuities, you put, you can put non-qualified money in it. Let’s say we put 200,000 in it, and they ask you a few health questions, but there’s no medical underwriting. They pay a stated rate of interest of between five and 6% a year, like a fixed annuity. And if you need home health care, you put in 200,000 if you don’t need it, you’ll get your 200,000 plus that stated rate of return. If you need home health care, they’ll double it, it’s 400,000 plus that rate of return that can be used towards home health care, if you need long term care, it’s triple. It’s 600,000 so a lot of folks, even my high-net-worth folks, are like Phil, and I still get a sense. I mean, it’s a no brainer, because a lot of folks don’t like to pay the insurance premiums. Because what happens, what we see, more often than not, unfortunately, is right around the time you need to care, when you start hitting your 80s, mid 80s, when you have a high probability one and two need home health care. I think of the odds, that’s when the insurance company if you even qualified for long term care. Insurance, start raising premiums. Wow. So, in many, many situations, you have situations with- where, every three years, they’re raising the premium 50% 100% so you price yourself out of but the point is, folks, you have to allot a certain account for home health care and long-term care. It doesn’t matter where we have to plan for it. Now, I know as baby boomers, we live forever and it’s always going to happen to somebody else, not us-
Leah Woodford 10:28
Absolutely, and that’s a great time to cut to break. Okay, go right ahead. Well, we got to cut to break, but we’ll be right back with Retire Smart Austin.
Philip Capriotti 10:44
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Leah Woodford 12:21
Welcome back, Austin. I’m Leah Woodford with Phil Capriotti Sr and John Solyman CRPC of Empower Wealth & Tax. And gentlemen, we are talking about long term care. Why is it? Nobody likes to talk about this.
Philip Capriotti 12:35
It’s a yucky subject, but the- and I use that word that’s one of my grandchildren, one of the words from one of my grandchildren’s vocabulary, many of us have experienced parents that needed care. Many of us were fortunate enough where our parents might have passed away without needing that care. My- I for one, we had a situation with my mother-in-law, wonderful, wonderful woman. Love her. I mean, I mean, she and my mom, they were kind of like, they were kind of like two peas in a pod. Well, she worked a lot out on the ranch. Okay, they have a- quite a bit of property up at land passes, but pardon me, with that which, which my wife owns now, because they passed. But what had happened was my father-in-law had sheep out in the front yard so he wouldn’t have to cut it. Honestly, yeah, you can’t even make this stuff up. I brought up- I was brought up the city, so I can’t make it up. Okay? And so, one of this, the sheep, you know, started having little sheep. What are they called? Lambs? Lambs, okay. So, mom was hand feeding, bottle feeding the lamb, okay. And so, every morning, she would wake up, open up the door, and the lamb would come. Well, and lamb got bigger and bigger and bigger. Well, what happened? The lamb knocked her over when she was coming in for feeding. She broke her hip and, and with that being said, Never now, this was at 85 going on, 86 years old, so, but she was in the epitome of health, perfect health. So, the point is, accidents happen. Many times, this situation- but at any rate, we had long term care insurance for them. But again, nobody wants to go into a nursing home, and that’s why nobody wants to talk about it. We like to set up care at home for folks, especially for our clients. You know, when you it seems like when you go into the nursing home, you lose control over your care. When you stay at home with home health aides and nurses, you’re in total control of your care. You just need the resources available to be able to be able to exercise that function.
John Solyman 14:57
And I think it’s a great point, though, it’s a. Lot of folks, they think it’s a yucky subject. They do not talk about it. But at some stage of our life, and I told you, I come from a medical background, so at some stage of our life, people will need it. Now, the sensitive part about it is, do I want to delegate that to my kids or my significant other to do it, or I can hire somebody, get somebody to take care of it, and have my kids and my spouse or kids just supervise for it. And so having a long term care a plan in place is the whole process. And I think we’re going to get to the cost of it and how we fund it. And it’s very easy to do that, and I’m going to go in details on that.
Leah Woodford 15:41
Well, and correct me if I’m wrong. But I heard the recent stats are, it’s going to happen to a married couple. It’s just a matter of time, one or the other is going to need long term care.
Philip Capriotti 15:51
There’s no, no doubt about it. And this fact, I think the statistics are, if you make it to age 65. Okay, number one, you have a 70- That’s the magic number. You got to get to 70- 65. Once you get to 65 you have a 77% chance that one of you is going to live to 85
Leah Woodford 16:12
Wow. And it’s usually the woman, right?
Philip Capriotti 16:16
You have a 45% chance one of you is going to make it to 90. Now, here are the statistics we normally fade out. Get to go talk to St Peter, hopefully we were good enough to qualify somewhere between 82 and 85-86. Our spouses, female spouses, live for an average, an average, mind you, of 14 years after we’re gone, that’s right. Out of the 2022 risk and processes of the actuarial society. In addition to that, now you’re by yourself, 98% of all social security survivor benefits are received by women. Only two out of 100 are men. So, gentlemen, you get the idea. Wow. So normally, what happens is one or the other is eventually going to need some type of care, normally triggered by either an accident or some sort of a medical condition, stroke, that type of thing. And again, we said, Medicare will cover 100 days for skilled care. But when it comes to home health care, cleaning, all of the cooking, cleaning, if you can’t perform two out of six daily living activities, you have to be prepared to either receive home health care benefits and- or, if it’s severe enough, long term care benefits. And so, all we’re saying is, it’s not a gloom and doom situation. All we’re saying is, what account will you use? We have to plan for it. It’s all part of your retirement income plan, planning for long-term care and home health care services.
John Solyman 17:59
And I think if your advisor is not talking to you about it, he’s setting you up for failure down the line. Because again, long term care cost can go up to 100, 200, $300,000 a year if you want to get the level of care and maintain the lifestyle that you have. So just preparing for that and using the resources that you already have for it can save you a lot..
Philip Capriotti 18:25
And by the way, that example that I was talking about earlier, about that, the about the client that I had, he spent over 800,000 of his 401(k) on home health care and long-term care before he passed away.
Leah Woodford 18:39
So, what about his wife after, you know, after he passed, she
Philip Capriotti 18:43
She lost one of the Social Security checks, and she actually had to sell the home. They had to do a reverse mortgage on the home to make ends meet. He actually still had a mortgage on the house. It was a small mortgage, but he still had a mortgage on the house. So again, he had an opportunity to plan but refused to.
Leah Woodford 19:03
Wow. So, so, so crazy.
John Solyman 19:06
Yeah, yep. To that point too. I think this is some people end up having to do such a thing when they don’t have the resources, but they need the care. Some people go into that using their own equity, reverse mortgage and all these kind of things again, because they didn’t plan for it ahead of time. And I think the perfect age for doing so is 50 and 60. So that’s what it is.
Leah Woodford 19:28
Absolutely. Well, we got to cut to a real quick break, but we’ll come right back. We’re Retire Smart Austin, stay tuned.
Philip Capriotti 19:37
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Leah Woodford 21:10
Welcome back, Austin. I’m Leah Woodford with Phil and John, and we are talking about- we’re talking about long term care, but I wanted to ask you guys about the sandwich generation. I mean, people my age, myself included, we have kids, but we also have parents that require long term health,
Philip Capriotti 21:29
Yeah, and we ran into that situation again with my mother in law, and now again, we had the resources and I basically what we did is we put an addition on her home, and we hired a 16-hour, 16 hour a day home health aides. So, we had one shift that came in the morning made her breakfast, okay, and we had one shift- that shift that came in and made dinner and then stayed with her through most of the night. But many times, we find you need three different shifts. Well, guess what that care cost to keep mom at home so she didn’t have to go into the nursing home? That was over $125,000 and that was two years ago. And again, we had the resources to do it. We had them already set aside. And believe it or not, my mother-in-law was a retired teacher. She actually had home health care. She had long term care coverage that she had purchased like 10 years ago, never even told anybody so she was a planner, but for most of us, that sandwich generation, that’s the wake up call when you’re caring for a parent that should be your first that’s, that’s the good Lord above telling you, this is your few potential future plan for it. In my opinion, my professional opinion,
John Solyman 22:52
Yeah, and we need to talk about how we cover the cost for that, because everybody sometimes either their health is getting in the way, Do I qualify for that, or do I have the resources for it? And there is many ways, actually you can fund that, such a plan or a strategy to cover your long-term cost. Some of the things a lot of the clients out there, they have HSAs health saving accounts. Actually, not a lot of people know that you can use your healthcare HSA accounts amounts in there to pay the premium for a long term care policy. Really, you can use that also. A lot of the folks that Mr. Capriotti mentioned it- mentioned it a little bit ago, that you can use your saving your non-qualified money, so it’s a lump sum, that by just thinking outside the box, you can transition that into double the amount, okay, future reserve. If you need it for long-term care, it’s there. And if you don’t use it, it still goes to the family, to your heirs, so not use it or lose it kind of scenario, right?
Leah Woodford 23:53
There’s a lot of use it or lose its though that are out there, aren’t you? There is a lot.
John Solyman 23:57
And some people need it, okay? Because something is better than nothing, okay? Because I would rather use insurance money, okay, then using my own money for that, or having to sell my home or stuff like that, right? But again, there is a lot of resources out there that you can use using the current resources that you currently have within a plan that fits you. Okay, we’re not, maybe we’re not going to plan for a $200,000 a year long term care coverage, but maybe 100,000 anything that you have in place will help you not to drain your savings sooner than you expected.
Philip Capriotti 24:34
Especially if it happens to the male first, and like in our situation, that we saw with that client, where the husband wife could not take care of him. There was no, you know, no way they wouldn’t what. They didn’t want to go into the nursing home because, again, he didn’t have the resources for that. And they make you sign off financial responsibility. They can’t make you sell your home anymore, but they can certainly leverage it and lean it for later after second spouse dies, but more importantly, that one of the biggest issues that I have folks, for folks that plan using insurance policies, is every three years, they get a notice from the insurance company to either raise premiums, reduce benefits or take riders off, like inflation, riders and so forth, and again, it’s when we need it. So, I like to tell you you have three options. Here’s what you have. Number one, use your own resources. Use your own money, set it aside, and if you need it, or your spouse needs it if you’re married, fine, there it is. Number two leverage it, put that money in an account that’s insured. It gives you a stated rate of return. And then if you need home health care, you’re leveraging it two to one. If you need long term care, you’re leveraging it up to three to one. And then, last but not least, you can purchase your own long term care insurance that should be done through the ages of 50 to sometimes around 60-62, once you reach 65 it becomes prohibitive. The cost for the insurance becomes prohibitive. And then, of course, last, I guess, the fourth option is throw caution to the wind and don’t plan for it at all.
Leah Woodford 26:22
How many people do that really that high?
Philip Capriotti 26:25
I actually now, for our clients, I actually have them sign a release. We have a form stating that we warned them about long-term care costs, because what happens is you have the kids come in after parents have passed and want to sue you for not giving them proper advice. So, we record everything, we give it, and we give it to the clients, and we also enlighten the children, and helping the kids understand it on the front end is just good estate and financial planning. I would say, if your financial advisor, whether it’s a he, she or what have you, is not talking about the planning. They’re more one dimensional. You really need to look at and cover all of the bases, because this is one of the most overlooked, I would say, one of the most overlooked debts, potential debts, that we’re going to face through our retirement, years, primarily later retirement.
Leah Woodford 27:20
So, it’s not only going to impact you, but it’s also going to impact your children, most likely.
Philip Capriotti 27:25
That’s right. Guess who has to sign when you have to go into the nursing home? Sign financial responsibility? The kids do.
Leah Woodford 27:31
Make sure that you call Phil and his team at 888-818-6557, again, that’s 888-818-6557, or simply click the QR code at the bottom of the screen. Remember, you only get one chance at retirement, and you got to get it right.
Philip Capriotti 27:51
Thank you so much. Leah, really appreciate it. God bless you.
Leah Woodford 27:55
So fun.