All Forum Posts by: Kalyanii K.

@Scott Trench  Hello!  So wanted to touch base with you about your reply on healthcare.  Part of the problem I see is that it isn't the fear that an unforseen problem will come along that is not covered by insurance, it is that Medicare and all health insurances that I deal with at work do not cover the cost of care, only the cost of medical expenses.   To put it another way, the biggest problem isn't their medical expenses-it was the actual cost of living in a place where people can have help with their Activities of Daily Living (ADLs).
 

In my previous post when I spoke about the fictional couple, they were covered under commercial health insurance-it was the cost of their care that was the problem-specifically memory care.  So for example, health insurance will cover most of the cost of doctor visits, ER visits, hospital stays, minus deductible.  But who will help the patient with care needs-help with bathing, getting dressed, transferring, and giving their medications?   Private caregivers cost approx $25-30 per hour in my area and have to be paid out of pocket.  Assisted living is costly but less than a private caregiver can average out to be.  Long term care facilities are very expensive, about 3x the cost of assisted living.

   As for the market demand for the protection from this risk, the answer is to have long term care insurance.  In fact, if you go to the government Medicare website, it will go over this and state how Medicare doesn't cover ADL assistance.    Long term care (LTC) insurance covers the care needs of a person and fills in that gap.  So depending on the LTC insurance you have, you could have more coverage and so more care options.

   I love the Money podcast and am working on financial freedom myself, but I just think that people also need to become aware of the hidden costs in healthcare.  So many are surprised when they find out their health insurance does not cover care needs, and it just drains them financially.  That price that I put out there-$7,000 per month, was not for medical bills that insurance did not cover, but was the cost of living in a memory care facility where there are nurses who can make sure the person gets their medications, CNAs to make sure you are bathed, dressed, and you can transfer safely, and that you have a room to sleep in and meals.  Some of these places don't even have private rooms, so if you do not have a spouse, you might have a roommate that you do not choose, which could be good or bad.  

   Check out the government Medicare website  https://www.medicare.gov/coverage/long-term-care.html and it will also have links to another website, https://longtermcare.acl.gov/costs-how-to-pay/index.html that talk about this as well.   Cheers!!  Always love the thoughtful discussions on Bigger Pockets!

If her niece is selling the house, the niece should assist her family member with finding a new place to live.  Or Alice’s children can step up to help her.  I’m assuming the niece is the owner and that’s why she can sell the property and that Alice has been allowed to live there rent free by family.  So if she cannot apply for disabled housing herself and is in need of assistance, family should be involved, as they have been supporting her in this house rent free for years.  

And if her niece or children are “done” dealing with Alice and wants her to do this by herself-family dynamics can be weird sometimes-  providing her with an eviction notice may help push her up the housing list.  Also, family or friends might step up if they see that she will not have a place anymore.  

I see this happen from time to time where I work in the hospital.  Family members will usually work it out, especially if it is short term.  If she is disabled, she also might have a caseworker who can help her.   

Hello!  Just wanted to follow up to see how your rehab is going? Did you end up closing on this property?

I think scamming the system is never a good idea and takes away from people who truly need it.  With that said, again this for people who have a true disease component and need services, I’m talking long term care like they can’t bath/feed/transfer themselves and need constant care family cannot provide, Medicaid has been so helpful.  People are shocked at the true cost of health services for elderly individuals.

So I work in healthcare and am pretty familiar with long term care, assisted living, memory care costs.  For a person who has dementia or Alzheimer’s and family cannot take care of them anymore, a memory care facility starts at $7000 per month and can go over $12000 a month if they have behavioral issues.  Assisted living starts at $3600, Long term care can be over $4000 per month depending on their care needs.  For elderly disabled persons who cannot care for themselves and do not have family who can care for them, they either have to be very wealthy and have planned out their assets according to pay for the care they need or will have to spend down their money and assets until they have less than $2000 in assets, then can qualify for Medicaid.

 It differs by state but in Oregon, I believe they look back 5 years for asset distribution and if you own your own home, the state will place a lien on it and will reclaim it after you pass away.  If you are married, they can redistribute assets so your spouse will not lose their home.  

Many people don’t take the cost of care needs into consideration when thinking of their retirement years.  Long term care insurance is cheaper when you get it younger and is very beneficial if you need it when you’re older.  Also, Medicare only covers acute conditions and doesn’t cover caregivers, assisted living, memory care.  Many people don’t know that and think Medicare will cover that.  Medicare covers skilled nursing stays, so I think that’s where people get confused. 

Since I work in a hospital as an RN case manager, you see how sickness can play out and can be devestating to patients and families until they have no choice but to go on Medicaid.  

It’s hard for people to factor healthcare costs for retirement since it’s so variable.  But I can say most people I work with in the hospital have some form of LTC insurance.   There is an increasing gap between people who have enough foresight to plan for catastrophic healthcare needs and people who think their money in their 401k will be ok for retirement only to find out it won’t last that long.  

Let’s do some math.  Bob and Sue have 1 million in their 401k by age 65 and think they are doing good.  Sue has a stroke, goes thru rehab but now cannot bathe or dress herself or transfer without help and Bob can help her sometimes but not all the time as he is forgetting how to do simple tasks.  Kids live far away so Bob and Sue move to assisted living together.  

Assisted living is rounded out at $5000 per month for both of them. So for 2 years this works.  $5000 per month x12 months x2 years is 120,000.

Now Bobs memory is getting worse. He cannot remember how to do his own ADLs (activities of daily living like bathing or dressing) and needs cuing.  Sue cannot do this because of  her health so he needs to go to memory care.  Memory care is $7000 a month and Sue’s care is $5000 because her care needs have increased.   

So 7k x12is 84k plus 5kx12 is 60k so $144,000 per year.  

At the end of year 5, total cost is $532,000.  (120,000 for first 2 years, then $144,000 a year for 3 years).  

Now Sue is diagnosed with Alzheimer’s and still has deficits from her stroke so she has to go to memory care, costing 7k per month.  Bob has declined further and his dementia has changed his behavior and he has yelled at people, and even has hit staff and refused to take his medicine.  He has to go to a memory care facility that can deal with his behavior and the facility will charge more so now he is charged $12,000 a month for his memory care and Sue is $7000 a month.  

So for year 6: 12x12 is 144,000 per year for Bob and Sue 12x 7 is 84,000 per year so for both is 228,000.  

Year 7: Total cost for this year is 228,000.  Nothing has changed and they are still in memory care.  

Their 401k is now 1 mil- 532,000 (first 5 years) is 468,000.  Minus year 6 costing 228,000 is 240,000 now minus year 7 is 12,000.  

At the end of year 7 when they are 72, their 401k is basically drained and they will need to be on Medicaid to continue to get the care they need.  

So total disclaimer here:  this doesn’t account for any additional interest earning in the 401k or other assets or SSI or if they have to hire someone else manage their money.  I’m just trying to show how quickly medical expenses add up and what people may think is enough money may not be.  That’s why it’s so important to have these programs.  If again, you truly need it is the key I’m trying to get at.  Not the I’m going to scam the government so I can have food stamps type of mentality. 

Wow!  Great!  That is incredibly inspiring.   Thank you for sharing.  happy that you are in better health now and that you are crushing it!  How did you keep yourself motivated during the harder times?

Wow, definitely a hoarder house....Get rid of all that junk and you’ll have a better idea of what your dealing with!  Make sure you have some extra $$ budgeted in for surprises...

Wow! Great job!  Thank you for sharing how much effort and time you put in to find this deal.   It’s incredibly inspirational and motivating!!!  Also how detailed you were in your numbers!  

Hi and welcome to BP! There are many different routes in REI and you will hear different strategies. What I understand, from your post is that you are more interested in a lower cost home that would be comfortable to live in (no work needed) so you can save money for an investment while your fiancé (congratulations!!) would like to live in a higher cost home that needs work so you can value add and create equity, like a live in flip. Both strategies would work but really depends on your goals. What's your market like, how much money can you save if you bought a lower cost home vs how much equity would you create with the work you do to the house. You need to run your numbers and see what your long term goals are first.

I feel like you can have both, peace of mind when you come home and income generating property but there is usually delayed gratification involved. In REI if you are very serious, there is more work up front then it gets better long term. But as always, run your numbers and see what your market is like and what you would be able to tolerate.

 For example,  if you get a 250 k house and can add 100k of equity in it, then sell after 2 years, theoretically you would make more than if you can save about 30k a year for investment property.  If you get a 250 k property and add 40k of equity in 2 years then saving 30k a year makes more sense.  These numbers are just examples, but you get the idea!  

Beautiful! Great work! Are you doing this while working another jobor are you a full time REI? If working full time, how do you coordinate everything?

Wow, great job!