Long Term Care Myths You Can’t Ignore – June 2012

The Tax Code Says What???
Strange but true: If you steal property or engage in illegal activities, you must report the income on your tax return. If you don’t, you can be charged with tax evasion. (This is how Al Capone was finally sent to prison.)

So criminals, be sure to keep accurate records!

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Long Term Care Myths You Can’t Ignore
Dave Palm, Financial Advisor

What if I told you that, in the future, the cost of your residence would be $5,901/month or $71,905/year? Crazy? Not if you are one of the 7 in 10 Americans over the age of 65 who will need in-home care, assisted living, or long-term care. Don’t stop reading if you are under the age of 65! The reality is that there is a very real chance that you or a family member will be faced with long-term care at some point in the future. Without proper planning, long-term care expenses can have a very dramatic impact on your retirement.

Myth #1: Medicare and Medicaid will cover the costs associated with long-term care.

Medicare will only cover a limited amount of expenses and only for 100 days. In addition, only skilled nursing facilities are covered. If you require in-home care or assisted living facilities, you are on your own. Medicaid will only apply after you have depleted all of your assets and there could be facility limitations. If you are married, total asset depletion could cause a significant hardship on your spouse.

Myth #2: I can pay for long-term care with my retirement savings.

While self-funding is an option, drawing income for everyday living while covering long-term care expenses can quickly deplete your savings. The example above is for a basic semi-private room. Using that example, if you needed 24 hour care for 5 years, the cost could be over $360,000. Again, this could have a significant impact on your spouse’s standard of living.

Myth #3: If I purchase long-term care insurance and never need long-term care, all of that money will be wasted.

Insurance companies have worked hard to address these concerns. Some policies offer Return of Premium provisions. Others offer a combination of life insurance and long-term care insurance. This way, you have long-term care coverage if you need it. If you don’t, it acts as life insurance.

Myth #4: Long-term care insurance will only cover me if I am in a Nursing Care Facility.

Long-term care insurance may cover a wide variety of things and some policies may be limited to full nursing care. However, most policies now cover both medical and non-medical care in your home. Additionally, adult day care centers or assisted living facilities may also be covered. It is important to review your policy options and compare different insurance companies with your advisor.

Myth #5: I am not yet at retirement age and I am in good health. I don’t need to think about long-term care right now.

By starting now, you can at least identify the options you have available. Waiting may have negative implications on your long-term care plans. As your age increases, so does your premium. Also, the likelihood that you might develop a condition that would prevent you from qualifying for a policy increases. There is no time like the present!

Myth #6: I don’t qualify for long-term care insurance due to my age or health issues.

There are more options available than you might think. Home equity or reverse mortgages, life or viatical settlements, annuities and continuing care retirement communities are all options for long-term care.

Whether you are planning for retirement or nearing retirement, if you have not made plans for long-term care it is important to meet with your financial advisor to determine your options. You will be surprised at the variety and flexibility of the options that are now available.

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Are you a small business owner who is good at your trade but feel like you know nothing about accounting? Fear not, for you are not alone. Like many small businesses, you started a business because you are very good at something and wanted to be your own boss. Wonderful, but when were you ever trained on how to manage the financial side of your business?

At Shaw & Associates, we recognize that small business is a driving force of our economy and helps to create prosperous communities. We are dedicated to helping small businesses succeed. Success starts with financial management. Here are a few tips to help you clean up your books.

• If you have not already done so, implement a business accounting software, such as QuickBooks, that allows you to run thorough, easy-to-use reports to help you really track what is happening.

• Seek out training or hire a knowledgeable bookkeeper. Do whatever it takes to feel comfortable with your books. Utilize the help menu in QuickBooks, try an online interactive help forum, or attend one of our educational events. We will even sit down with you individually to train you on Quickbooks, payroll, or whatever is necessary to get you up and running. In about two to three hours, we can take a client who is unfamiliar with QuickBooks or accounting concepts and teach them the basics.

• If your business needs the assistance of a bookkeeper, even if it is only a few hours a week, make sure you hire the right person. Not sure what interview questions to ask prospective candidates? We can help with the interview and hiring process to ensure you find the right bookkeeper.

• Reconciliation is the key to bookkeeping happiness. Make sure all your bank, credit card, and loan accounts are reconciled on a monthly basis. For most businesses, there are very few transactions that do not involve transfers into or out of one of these types of accounts, so if these are reconciled regularly, your books should be in pretty good shape.

• The details matter! Enter transactions accurately. Lump-sum deposits or credit card payments without details do you no good. Enter the vendor, customer and expense for all transactions.

• Conduct regular mini-audits. Tax time may be the only time your accountant has access to your books to help clean them up. However, once a year is not sufficient, and as a business owner, you should not settle for this. An accurate, clean set of books is necessary to make intelligent, informed decisions about your business.

Does all of this sound expensive? Successful business owners will recognize that it is not nearly as expensive as paying your accountant to wade through messy books during tax season, or worse, as costly as making a decision based on incomplete financial data. Keep in mind, accountants are less busy and more available from May through December, so don’t wait until tax time to get your books in order. Put it on your calendar and do it!

Remember, successful businesses are those that have made the commitment to understanding the accounting side of their operations and using the information to make the best decisions.

Mark Your Calendars for a Business Educational Opportunity

Many of you attended our recent Lunch & Learn on the basics of business financial statements. To expand upon the ideas discussed, Shaw & Associates will be a guest speaker at the Cache Bank and Trust Toolbox Series. Please join us for “Managing Financial Statements To Create Business Value”. Tuesday, July 17, 2012, 11:30 a.m. – 1:00 p.m. at Cache Bank & Trust, 4645 Ziegler Road, Fort Collins.

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