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Archive for the ‘Long-term Care Insurance’ Category

According to the U.S. Department of Health and Human Services about 9 million Americans, now 65 or older, will require long term care. HHS expects that number to rise by 25 percent to 12 million by 2020. With health care costs rising and longer life expectancies, funding long-term care needs is an increasing concern for millions of people, especially senior citizens.

The average annual cost of nursing home care is $74,806, according to Genworth Financial’s 2007 Cost of Care Survey, but that figure can fluctuate depending on the level of care required, and the state in which the care is provided.

However, it is important to remember that when planning for long -term care, the focus should not be on the cost of care currently, but what care will cost when it is most likely needed. That may be 10 years, 20 years, 30 years, or longer.

Now let’s consider five essentials regarding long term care insurance.

1. There are different types of provisions in long term care insurance
The type of long term care that is provided depends on the patient’s medical necessity, psychosocial needs, and financial situation. Types of long term care include: skilled nursing, intermediate, custodial home-based and hospice care.

2. Policyholders must meet certain conditions to receive benefits.
Long term care benefits begin when policyholders meet certain conditions. A licensed professional performs an assessment to determine if there is a medical necessity for long term care. Medical necessity is generally defined as an inability to perform daily activities, such as bathing, dressing, or eating, due to severe physical limitations or cognitive impairments.

3. The type of policy and the needs of the individual determine the cost of long term care insurance.
Annual premiums can vary significantly depending on your age, health, and the type of policy, but policies can run as high as $5,000 or more per year, However, you do not have to pay that much. Your premium could be reduced by choosing a shorter benefit period, buying at a younger age, sharing care, choosing a longer elimination period, reducing the daily benefits, and including inflation protection.

4. A typical policy pays for care either in a nursing facility or at home
You may fiercely resist living out the rest of your life in a nursing home and would prefer to live at home. These benefits include homemaker/home helper service and home health services which would cover both non-medical and medical services in the home. Today’s best long term care policies are designed to provide for this.

5. Your premiums may be tax deductible
There are tax advantages to acquiring long term insurance. Whether you buy it as an individual, a sole proprietor or as a corporation, the premiums can be treated as a tax deductible medical expense. Your tax adviser can update you on the current federal and state rules and limits.

1. LTC Insurance provides peace of mind in the years before needing care. It allows you and your family to know that if needed, there will be ample funds available for both high quality care and the opportunity to choose where you want to receive the care. Having these dollars available also protects your retirement savings and your children’s inheritance.

2. LTC Insurance is about family. LTC insurance does not replace what families do. Instead, it enhances family support and allows them to provide and supervise high quality care.

3. LTC Insurance is a gift to your children -LTC Insurance enables them to care for an aging parent without overwhelming their lives, both financially and emotionally. Children often want to care for their parents, but without adequate funds, many will find the job beyond their capabilities.

4. Medicare does not pay for Long Term Care. Medicare will pay for care for 20 days only after a 3 day Hospital Stay (if it’s a 2 day stay…you are ineligible!) and then a very small fraction of care for the next 80 days. Do not count on Medicare for your Long Term Care.

5. Medicaid is not a desirable option. To receive funds from Medicaid, you will need to spend down your assets to the point of impoverishment. Transferring assets to protect them from this requirement must happen 5 years prior to needing care. Medicaid was designed for the impoverished and you do not want to be dependent on this system during the most vulnerable time of life.

6. Long Term Care at home or in a facility is expensive. Paying for it on your own, out of income or assets, poses a serious threat to your retirement and financial plans. LTC Insurance will help protect your retirement plans and assets. It’s important that those dollars be preserved so your spouse and family can have the type of lifestyle for which you have planned.

7. It’s easy to be in denial while thinking, “this will never happen to me”. The probability of needing LTC is at about 60%. We are now living longer and dying slower, increasing the probability of needing care. Without this protection, you risk the emotional and financial well-being of your family. LTC may be the largest financial risk most Americans face.

8. It’s better to create a plan 10 years too soon than one day too late. If your health changes, you might not be able to purchase LTC Insurance. As you get older, it gets more expensive to purchase. If your health changes after you have purchased a policy, the rates will not increase, as they are “locked in” regardless of your age or health condition.

9. LTC costs are high – both now and in the future. Think about the cost of care in 20 to 30 years. At 5 percent inflation, the cost will double about every 15 years. That means the purchase of a LTC policy, with built-in inflation protection, solves a possible million-dollar care problem in the future.

10. LTC Insurance can improve your quality of life through “aging in place”. These policies are considered part of a “nursing home avoidance strategy”. It provides you control, so you can age with dignity and receive care in the least restrictive environment possible of your choosing!

The question of whether to buy LTC insurance should be based on the same reason other types of insurance are purchased “exposure to loss.” We buy fire insurance in case our home is damaged by fire, auto insurance is a totally understood need and of course the need for life insurance is fully comprehended.

Why would we even hesitate about the purchase of Long Term Care Insurance? What really is at risk in the event of needing financial protection? In a few words… everything you own is what is at risk. In the event of a nursing home stay the cost is firstly born by the ill person. At risk could be all assets including your home. The question is LTC insurance protection for everyone and the answer is no, long term care insurance policy is not for everyone. For a portion of the population, a long term care policy makes sense as an affordable and worthwhile form of insurance. Buying long-term coverage should not cause financial hardship to the family and should be based on an overall examination of your assets.

The rules governing financial responsibility of LTC expenses are based on the ability to pay and the assets available to be used for the care. Married couples generally can protect their home along with a certain amount to other assets. The amount of these assets varies based upon the state of residence of the couple. Some states allow as much as $100,000 in assets other than the residence to be exempt and other have a lesser amount.

In almost all situations involving a single person, all assets are exposed to the cost of a nursing home stay. Once again each state may have its own set of rules and it is important to be aware of those limitations.

It is impossible to predict who will need LTC, but past studies point out the likelihood of needing such care at 38% of those over age 65. These figures can be slightly misleading because it deals with entering and using a nursing home facility and often times it could be for a recover from surgery or just a short stay. The real numbers of who will need LTC for a period longer than 180 days is about 8%.

In making a decision on whether to purchase LTC insurance should always be based on the assets available and how a well spouse’s life may be affected by the loss of any or all of those assets. Like all important life decisions it is important to use great caution and to make certain the need for the policy fits your specific situation. It is always important to get a second opinion and one from a source other than the insurance agent.

With Nursing home Cost’s running $4,000 to $6,000 a month and outpacing inflation, it is a small wonder that most seniors cannot afford the Long term Care insurance premiums. Their are low cost Alternatives available for seniors who just can’t afford the rising cost of these Premiums.

Many Seniors even question if they need Long Term Care Insurance. Take a look at the Stats and decide for yourself.

Long Term Care by the Numbers In the year 2010 about 12 million older Americans may need long term care A Study by the U.S. Department of Health and human Services predicts that 40% of all Americans over the age of 65 will need Nursing home care 22% of all Americans over the Age of 85 are in a nursing Home According to the US Government 40% of the People Currently receiving Long Term Care Services are between 18 and 64.

Many older People are under the belief that Medicare and Medicaid will cover the cost of Long Term Care. Every State has their own rules about what income and net worth requirements will qualify you for Long Term Care assistance. Here are some qualification rules in use by the State of Missouri as published in the Consumer Guide for seniors from the official Web page for the State (http://insurance.mo.gov/consumer/senior/ltcguide.pdf)
(For other States check the State.gov web page and then search on insurance and long term care)

In the State of Missouri Medicare Pays Long Term Care as follows
First 20 Days Medicare will pay all For the Next 80 Medicare and the Senior Split the Cost based on some Formulas Beginning on the 101st Day you are responsible for all Long Term care Costs.

What About Medicaid? Here are some Rules in place in the State of Missouri.
A Single person has to spend down their assets to under $1,000 before Medicaid will pay. A Married couple would have to spend down 1/2 of their assets or more. According to the following rules A Spouse may keep between $13,740 and 68,700. So if a Couple only has $13,740 the Spouse gets to keep it all and Medicaid will pay the long Term Care Costs. But if a couple has $500,000 in Assets the Spouse only gets to keep $68,700 before Medicaid will Pay. Certain Assets are Exempt from the Spend Day requirement and it is strongly advised if you have significant assets that you contact a Financial Advisor or attorney, who specializes in asset protection for seniors in your State.

Now that you have the Facts the Question is how do you protect yourself at a reasonable cost. Many Insurance companies offer Annuities and Equity Indexed Annuities with a Nursing Home Benefit. These Annuities would allow you to take your Annuity over a Span of 5 Years to help pay for your long term Care Expenses. In Addition to the long term care benefit these annuities offer Tax Growth, Up to 10% Bonuses for the first 5 years and many other Benefits.

If you are a Senior concerned about the High Cost of Long term Care but really cannot afford the High cost of Long term Care Insurance Premiums then Annuities with a Long Term Care Rider may just be the solution you seek.

If you’ve ever considered purchasing a long-term care insurance policy, you probably already know how expensive it is for that type of coverage. Then again, if you know how expensive it is to stay in a retirement community, you know that it will drain your savings very quickly if you have no coverage against it. It’s nearly impossible to know ahead of time whether you will need to stay in an assisted-living environment at some point in your life, so the decision of whether to buy long-term care insurance is a high-stakes gamble.

Of Americans that reach the age of 65, an estimated 45% will require some type of long-term care insurance in their lifetime, according to Milliman, an actuarial firm. This means that the odds are nearly even, but it’s slightly more probable that you will not need LTC insurance. If you have a debilitating condition like diabetes, severe arthritis, or obesity, the probability that you will need LTC goes up. Furthermore, medical technology continues to improve by leaps and bounds. It’s not unreasonable to think that by the time you’re elderly, medical technology will keep you alive but won’t return your youthful exuberance. Therefore, the percentage of Americans who require LTC will probably rise over time.

If LTC insurance was more affordable, it would be an easy choice to make. Traditional policies that pay a $150 daily benefit and adjust for inflation typically cost upward of $1000 per year. Fortunately, some insurers who offer long-term care coverage are coming up with ways to reduce premium costs. Here are a few things to remember when you’re shopping for LTC coverage:

1.) Don’t buy coverage unless you think you can afford a 10-20% increase in premiums later on. If you cannot make your payments, your coverage will be discontinued and whatever money you have paid already would be wasted.

2.) Save money by opting for a 90-day elimination period. This is similar to a deductible, but for LTC insurance. Your premiums will be lower, but if you need LTC in the future, you will have to pay for the first 90 days.

3.) Consider a policy that will cover a maximum of three or five years. 92% of policyholders with a three-year benefit period who file a claim for LTC do not use up their benefits. This may sound risky, but the premiums will be much lower and there is only a slight chance, statistically, that your benefit period will expire while you still need LTC.

4.) Consider a plan with a reduced daily benefit. You will pay lower premiums, but you will still need considerable savings to pay for LTC. This is a good half-measure for those on the fence. Some plans will pay based only on the services provided – not room and board. This is a viable option because your retirement plans probably already assume that you will have to pay a mortgage or rent every month.

5.) Choose an insurer that allows unlicensed caregivers. You don’t need a trained nurse for daily tasks like feeding and bathing, and unlicensed help costs much less.

If you follow these tips, you may find a long-term care insurance plan that’s affordable enough to be worthwhile. The risk of needing long-term care and having to pay for it entirely from personal savings is big, and will probably increase. Nobody can tell you with certainty whether or not you will need it, but if you do, you certainly would want to be covered.

There is a perfect storm brewing in long-term care. Most of those at risk are either oblivious to it, in denial that it will not happen to them or procrastinating thinking they have lots of time to act.

The truth of the matter is taking responsibility for your long-term care sooner than later will give you options that you may not have later on. Your options will disappear as you get older and with that you won’t be as healthy.

The truth of the matter is that people are living longer and as there is a growing need for long-term care. The resources for providing this type of care are shrinking. There will be more “baby boomers” needing this type of care than there will be caregivers ready and able to provide care.

The public is not aware that Medicare isn’t a solution to the long-term care problem in America. According to Medicare & You 2010, Medicare only pays for medically-necessary skilled nursing facility or home health care if you meet certain conditions. Long-term care can be provided at home, in the community, in assisted living, or in a nursing home. A skilled nursing facility is covered only after a 3-day minimum inpatient hospital stay for a related illness or injury. Medicare doesn’t cover long-term care or custodial care in this setting. “Medicaid is a joint Federal and state program that helps pay medical costs if you have limited income and resources and meet other eligibility requirements.”

Many people have put off getting long-term care insurance because they believe they will be provided benefits through the government. Perhaps, they also do not completely understand the benefits of long-term care insurance.

It is important to educate yourself on what long-term care insurance can do for you and your family. How does it fit in with your overall retirement plan? It is designed with a specific purpose in mind.

Long-term care insurance helps you pay for services that other health insurances do not cover.

In the event you become unable to care for yourself, this insurance will take care of all of the mandatory costs to get you the help that you need. It pays for home care givers, home nurses, specialists, etc. It will even pay for care in facilities like: nursing homes and Alzheimer facilities. It will help to pay for hospice care and respite care as well.

This is a great additional insurance to have. You will be able to have reassurance by knowing that in the event you need this type of care, irrespective of what your age is, that all the costs will be covered and you will be ready to receive satisfactory care. Believe it or not, the large portion of those who need this kind of care are between the ages of18 and 64 (working age people). That just goes to show you that even younger folks need this insurance and that it isn’t necessarily for the older generation.

Schedule a consultation with a Long-Term Care Specialist to see if this makes sense for you. Then, you can put together an educated long-term care plan.