Tag Archives: Eventuality

Wealthy Americans See Need in Long-Term Care Insurance

Wealthy Americans See Need in Long-Term Care Insurance

“You can’t take it with you when you go.” By today’s standards, this translates to something more like: it’s probably a good idea to make your money work for you in the here and now. That’s a lesson wealthy Americans seem to be coming to terms with, according to a survey commissioned by PNC Financial Services Group.

PNC asked Harris Interactive to conduct an online survey in October and November 2005 among a nationwide cross section of 1,485 adults age 18 or over with annual employment incomes of $150,000 or more, and at least $500,000 in assets. They also polled retirees with $1 million or more in assets. What the researchers found was that nearly half of the respondents, or 47 percent, reported that providing for their health and wellness is their chief financial concern. Despite their obviously solid financial footing, those surveyed proved that people everywhere are recognizing the fact that medical expenses and long-term care costs are a major threat to financial security for themselves and their families.

The survey also uncovered just how significant a threat these respondents viewed long-term care costs. More than one-third of those polled, or 35%, felt that long-term care costs and expensive medical treatment were a “threat or huge threat.”  Oddly enough, although these wealthy Americans realize the vulnerable position future health care needs place them in, few have made any real attempt at planning for the eventuality. The survey showed that twenty-two percent of those with living parents worry about their parents’ lack of long-term care insurance. In fact, 70% of those responding said that they had not purchased long-term care for themselves or their spouse because they didn’t want to pay premiums for a policy they may never use.

A significant factor that may be contributing to this mind set is the result of a practice used by wealthy parents for some time now that helped their children care for them if they required long-term care. In the past, parents transferred all their assets to their children. This strategy not only protected the assets, but also made the parents eligible for Medicaid. Parents can still do this, but it’s not as simple a transfer as it once was.

Currently, if an individual wants to transfer assets to become eligible for federal assistance, they must do so within three years of becoming eligible. However, a new law that took effect on February 8, 2006 makes it more difficult to qualify by just giving your money away. Individuals will now have to transfer assets within five years of entering a nursing home to qualify for Medicaid. Each state has the option of implementing the new rules according to its own timetable.

The implications of this new law include having to prove that money was given away innocently, meaning that it wasn’t transferred for the sole purpose of making the individual eligible for Medicaid. Although there are Medicaid hardship waivers, claimants will have a hard row to hoe to prove they qualify.

The new law will change the start of the penalty period for an individual who has transferred assets from the date the transfer was made to the date they applied for Medicaid. The law may also penalize family transactions that have occurred over time, especially if the individual hasn’t kept accurate records, by increasing the look back period from three to five years. The outcome of all of this additional tightening, according to the Congressional Budget Office, is that 120,000 people, or approximately 15% of new Medicaid applicants, will be delayed eligibility each year. In light of this new development, it seems that the most prudent course of action is providing for your own needs with a sound long-term care insurance policy. Call us today 800–240–3390 to learn about a policy that is right for you.

A Reality Check Concerning Long-Term Care

A Reality Check Concerning Long-Term Care

Despite all of the words written about longevity increasing the possibility of more people needing long-term care, there remain a number of myths surrounding the subject. The issue is so emotionally charged, that most people prefer to create their own reality about long-term care rather than face the truth. It is painful to admit that parents or other loved ones could someday have senile dementia, Alzheimer’s, or another debilitating disease that will change them from the person we know into someone vastly different.

In the event of a long-term care need, it’s important that the family stays focused on the emotional and physical needs of the person needing care. Having properly planned for this eventuality with insurance coverage allows them to do so. Many families assume that they will be able to handle the demands of long-term care on their own. What they don’t realize is that having the responsibility of being a caregiver has a major impact on your life. The demands often cause people to give up jobs in order to devote the necessary amount of time needed to provide care. It can also drive a wedge between family members if a spouse becomes an absentee parent because they are spending most of their time providing care for their own parent.

That’s why it is so important to have long-term care insurance to provide suitable care without placing undue stress on the family of the person requiring the care. While this makes sense in theory, many people are reluctant to purchase long-term care insurance because they believe certain fallacies about this type of coverage. The first is that you can pay for long-term care costs from your own assets. Many people believe that a reverse mortgage or stock portfolio can take the place of a policy. However, the cost of caring for an extended illness can easily wipe out one’s assets and bring a family to bankruptcy.

Many people also falsely believe that long-term care is only administered in nursing homes. In fact, the majority of people receive long-term care today in their own homes or community based facilities, not nursing homes. Depending on the policy, long-term care insurance can cover nursing home stays, home health care and community-based services.

When you are comparing policies, there are several factors to consider before making your decision:

·   The financial strength of the insurance company underwriting the policy.

·   The current cost of care in your area so that you can choose a daily benefit that will cover the needs of the person receiving the care.

·   The length of the benefit period. Since it is difficult to determine how long a person may require care, many people choose policies with lifetime benefits.

·   The number of days the policyholder will be responsible for paying out-of-pocket before coverage begins. This is known as the elimination or waiting period.

·   The inflation protection provided by the policy. This feature ensures that benefits provided by the policy will be adequate to cover future needs.

And finally, many people believe they can rely on Medicaid for long-term care. The policy changes to the Medicare program mandated by the Deficit Reduction Act of 2005 have made fewer people eligible to receive benefits. The safest course of action is not to wait and learn that your family member cannot qualify, but rather prepare for the future with a long-term care policy.

 

Obtain Long-Term Care Insurance While Young for the Best Rates

Obtain Long-Term Care Insurance While Young for the Best Rates

An American Association for Long-Term Care Insurance study of all 2005 long-term care insurance applicants revealed that 42 to 58 percent of all applicants between the ages of 50 to 59 qualified for good health discounts. Additionally, the percentage who qualify for good health discounts decreases somewhat for applicants in their 60s, but drops dramatically for applicants in their 70s.

Consumers who are in good health typically qualify for discounts that can decrease the cost of long-term care insurance by 10 to 20 percent each year. This means that a couple can save hundreds of dollars annually for the protection they need.

The researchers exemplified their findings by breaking down the total number of applicants into percentages who qualified for good health discounts by age range:

·   Under Age 30 – 66.5%

·   Between 30 to 39 – 61.0%

·   Between 40 to 49 – 53.7%

·   Between 50 to 59 – 44.2%

·   Between 60 to 69 – 31.9%

·   Between 70 to 79 – 18.8%

·   80 and Over – 11.2%

Eight leading long-term care insurers that represent approximately 80 percent of all individual policies sold in the U.S provided the study data. The researchers concluded from examining the statistics that consumers understand they will need long-term care at some point in their life. However, they often wait too long to plan for that eventuality. This failure to plan causes them to purchase long-term care insurance late in life and they end up paying a much higher premium as a result. The researchers went on to note that consumers don’t realize changes in their health can result in higher premiums for long-term care insurance, or make them ineligible for coverage at all.

There were two other important conclusions drawn from the study. First, consumers should begin investigating long-term care insurance options while they are still in good health, which for most people is in their 50s. The second is that consumers with less than perfect health should seek advice from a long-term care specialist who knows which health conditions various insurers will accept. Once a consumer has been declined by one insurer, they may find it impossible to obtain coverage from any insurer.

Study Shows Shorter Duration Long-Term Care Policies Are Adequate to Meet Most People’s Needs

When asked why they haven’t purchased long-term care insurance, most people answer that the coverage is simply too expensive. However, that excuse may be eliminated thanks to a national study conducted by Milliman, a leading independent national long-term care insurance actuarial firm.

The researchers examined claims data from approximately 1.6 million policies currently in-force. Their goal was to determine what percentage of long-term care insurance claimants with shorter duration policies actually exhausted all of their policy benefits. What they discovered is that only 14.4 percent of closed long-term care insurance claims lasted longer than 24 months. The study further revealed that approximately 33.2 percent of open claims last longer than 24 months, only 5.6 percent of closed claims lasted longer than 36 months, and only 16.2 percent of open claims last longer than 36 months. The study concluded that for a three-year benefit period, only 8 out of every 100 claimants exhausted their benefits.

Of course, there are catastrophic situations where individuals may need long-term care for many years. However, according to the study’s findings, the majority of consumers can receive adequate long-term care insurance protection with a shorter-duration policy. This is an important discovery, especially for those who believe unlimited protection is too expensive. The researchers added that some protection is better than none at all, and a shorter-duration policy is clearly more affordable. A consumer can reduce the cost of long-term insurance protection by 35 to 40 percent by purchasing a three-year benefit versus an unlimited benefit.

In an April 2006 article entitled Six Steps To Buying A Long-Term Care Policy, which was published on www.kiplinger.com, the author Kimberly Lankford offers the following advice about choosing a long-term care insurance benefit period:

“Increasing your benefit period from three years to lifetime could double your annual premium, so you should weigh the odds that you’ll need long-lasting care versus the extra price you’ll pay for coverage. The average nursing home stay is less than three years, but those averages include people who are in a nursing home for just a few weeks after a hospital stay and others who are in the nursing home for a decade or more, says Driscoll. (Marilee Driscoll is the author of The Complete Idiot’s Guide to Long-Term Care Planning and is quoted throughout Lankford’s article.)

“And these statistics do not include the home health care, assisted-living facility care and informal (unpaid) care received elsewhere,” she says.

Most people opt for a three-year or five-year benefit period, but it may be worthwhile to pay extra for a longer benefit period if you have a family history of Alzheimer’s or some other chronic disease.

If you’re trying to save money, Driscoll recommends shortening the benefit period rather than extending the waiting period.”