Options for Long-Term Care and November Market Update.
Long-term care includes a wide range of services someone may require to meet personal needs. According to estimates from the Administration for Community Living, 60% of us will need assistance with things we might currently take for granted.
Whether it is because of an unfortunate event or due to age-related health conditions, things like getting dressed, taking a bath, running errands, or making meals may require assistance.
Planning is key, but many people are unsure what insurance covers, and others are often misinformed about Medicare coverage.
There are several common misconceptions about what Medicare does and does not cover.
Medicare only pays for long-term care if you require skilled services or rehabilitative care. But there are limits.
- Medicare will cover a nursing home for a maximum of 100 days. The average Medicare-covered stay is a much shorter 22 days.
- It will also pay if you are at home and are receiving skilled home health or other skilled in-home services. Generally, long-term care services are provided only for a short period of time.
Medicare does not pay for non-skilled assistance with the Activities of Daily Living, which comprise most long-term care services. These would include bathing, eating, getting dressed, getting in and out of bed, walking, and assistance using the bathroom.
You will have to pay for those long-term care services that are not covered by a public or private insurance program.
Medicaid, however, does pay for the largest share of long-term care services. To qualify, your income must be below a certain level, and you must meet minimum state eligibility requirements.
To be eligible for Medicaid, you must have limited income and assets, and income limits for Medicaid vary by state.
Medicaid counts things like Social Security and disability benefits, pensions, salaries, wages, as well as interest and dividends. It will not include food stamps, housing assistance from the federal government, and home energy assistance.
Medicaid will also review your assets when determining eligibility. These include checking and savings accounts, stocks and bonds, CDs, and property outside your primary residence.
Additionally, equity in your home may affect whether Medicaid will pay for long-term care services, including nursing home care and home and community-based waiver services.
Some people consider gifting assets to family to help qualify under Medicaid’s strict limits. If you are considering this strategy, beware of the look-back period, which is 60 months in Washington D.C. and all states but California, where it is a more lenient 30 months.
According to the American Council on Aging, the date of one’s Medicaid application is the date from which one’s look-back period begins. Gifts made during this look-back period may affect your eligibility for Medicaid benefits.
The takeaway: Medicare coverage for long-term care is limited, and there are hurdles that may prevent you from obtaining Medicaid.
Laws vary depending on the state. If you have additional questions, we’d be happy to assist you.
Paying for long-term care
Long-term care insurance can be a great option if you’re planning for or concerned about the future. If you don’t have long-term care insurance or cannot obtain it, here are some options you may consider outside of Medicaid.
Life insurance that includes a long-term care benefit could provide needed cash, while policies with an "accelerated death benefit" provide tax-free cash advances while you are still alive. The advance is subtracted from the amount your beneficiaries will receive when you pass away.
You may also tap existing assets. Health Savings Accounts can be used to pay qualified medical expenses without incurring a tax liability. Depending on your age, you may take tax-free withdrawals to pay long-term care premiums.
If you have a Roth IRA, you can pay long-term care costs or premiums without paying taxes.
You may also be eligible to invest in a long-term care annuity. You will pay a lump sum of money and receive a set amount of income, paid regularly, for the rest of your life. Long-term care annuities offer special provisions to help pay for long-term care expenses.
Reverse mortgages and home equity loans may also help cover expenses.
There are no income or medical requirements to get a reverse mortgage, and you must be 62 or older. The loan amount is tax-free and can be used for any expense, including long-term care. However, if you have an existing mortgage or other debt against your home, you must use the funds to pay off those debts first. A reverse mortgage could affect Medicaid eligibility but does not affect Medicare or Social Security benefits.
You might also consider a home equity loan. But beware that the inability to make payments could force foreclosure. And, in today’s rising rate environment, your payment could rise.
The need to access or finance long-term care is an unpleasant prospect most of us would rather not consider. But avoidance is not a strategy.
Be proactive. Be aware of your options.Plan early.
As always, we are here to answer any of your questions or get you pointed in the right direction.
September volatility gives way to a strong October
Based on data from the St. Louis Fed dating back to 1970, September has historically been one of the worst months for stocks and this year was no exception.
During September, the Dow shed 8.8%, and the S&P 500 Index gave up nearly 10%. Historically, stocks turn around in October, and the remainder of the year is favorable for investors. So far, markets have not deviated from this pattern. The rebound in October fueled the best monthly rise in the Dow since 1976.
Table 1: Key Index Returns
Dow Jones Industrial Average1
S&P 500 Index3
Russell 2000 Index4
MSCI World ex-USA*5
MSCI Emerging Markets*6
Bloomberg US Agg TR Value Unhedged USD7
Source: Wall Street Journal, MSCI.com, Yahoo Finance, Bloomberg
MTD returns: September 30, 2022—October 31, 2022
YTD returns: December 31, 2021— October 31, 2022
*In US dollars
Bear market rallies are not uncommon, and it’s not unusual for overly negative sentiment and oversold conditions to lead to a bounce, as we saw from June through August of this year.
October’s strong rally was not simply technical in nature. According to Refinitiv, reported second-quarter earnings and profits for most companies in the S&P 500 are coming in ahead of low expectations.
Simply put, we didn’t see the earnings apocalypse that some had feared. However, there were some high-profile exceptions.
Reports from Amazon (AMZN), Microsoft (MSFT), Alphabet (Google, GOOG), and Meta Platforms (Facebook, META) are telltale signs of what’s happening in some sectors of the global economy. Profit misses and a disappointing outlook negatively impacted their share prices.
A Wall Street Journal story late last month all but guaranteed a jumbo-sized rate hike during November, and we got 0.75%, as expected. But there was also speculation that some Fed officials are growing increasingly apprehensive of the current steep path of rate increases.
Some Fed officials are starting to suggest that the Fed should slow the pace or magnitude of hikes and possibly stop hiking rates early next year as they assess the impact of recent policy actions. Unlike this past summer when some Fed Governors pushed back on talks of a pivot, they haven’t rushed to deny the potential for a slowdown in the pace of rate hikes moving forward.
Fed Chair Powell was still hawkish at the last press conference but hedged his remarks, stating that they will remain resolute on inflation but will assess the data and react to changing economic conditions. The most likely outcome is that the Fed maintains its current talk of being tough on inflation but hints at a more flexible policy amid rising economic uncertainty.
Leading Economic Indicators, the housing market, and the inverted yield curve, suggest a recession is unavoidable, and we may see it early to mid-2023. The question we can’t answer is: How severe will it be and how long will it last?
The general economic fundamentals have yet to shift noticeably. Just as low rates, low inflation, and record corporate profits helped drive equities higher during the 2010s, today’s high inflation and high-rate environment have led to a bear market.
That said, bull markets follow bear markets, as shown below. Eventually, the major indexes will reclaim their previous highs.
Table 2: Declines in the S&P 500 Index since the end of WWII
Number of declines
Avg decline %
Avg length of decline (months)
Avg recovery time (months)
Source: Guggenheim 5/16/2022 The S&P 500 Index is an unmanaged index of 500 larger companies and cannot be invested in directly. Past performance is no guarantee of future results.
Regardless of what the next several months have in store for investors, we are prepared for it. We’ve taken the steps we believe to be appropriate and will remain vigilant in guiding our clients through the shifting market and economic environment.
If you have any questions or would like to discuss any concerns you may have, please feel free to call us.
As always, thank you for the trust and confidence you have in us and for the opportunity to serve you and your families.
- The Dow Jones Industrial Average (DJIA) is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange (NYSE) and the NASDAQ. Dow Jones Indices is general in nature and not tailored to the needs of any person, entity or group of persons. It is not possible to invest directly in an index.
- The NASDAQ 100 Index is a basket of the 100 largest, most actively traded U.S companies listed on the NASDAQ stock exchange.
- The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
- The Russell 2000 Index refers to a stock market index that measures the performance of the 2,000 smaller companies included in the Russell 3000 Index. The Russell 2000 is managed by FTSE Russell and is widely regarded as a bellwether of the U.S. economy because of its focus on smaller companies that focus on the U.S. market.
- The MSCI EAFE Index is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada.
- The MSCI EM (Emerging Markets) Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of the emerging market countries of the Americas, Europe, the Middle East, Africa and Asia.
- The Bloomberg Barclays U.S. Aggregate Bond Index is an index of the U.S. investment-grade fixed-rate bond market, including both government and corporate bonds.