Tag Archives: Term Care Insurance

Most Long-Term Care Claimants Are Younger Than You Think

Most Long-Term Care Claimants Are Younger Than You Think

UnumProvident Corp.’s “Landscape of Long-Term Care” profile of its claims activity revealed that almost 58 percent of group long-term care claimants are younger than 65. It also showed that the top five claims causes are cancer, stroke, neurological disease, dementia and multiple sclerosis.

The insurer noted that its group policies cover about 550,000 employees, and that approximately 200,000 individual long-term care policies are in force.

Additional data uncovered in its analysis of group long-term care claims included:

·   More than 66 percent of all claimants under 65 received care at home, while 17 percent received nursing home care. The National Association of Insurance Commissioners estimates the average cost of nursing home care at approximately $70,000 per year.

·   A typical claim for UnumProvident policyholders under 65 lasts a year or longer.

·   The average age of under-65 claimants is 53, with more than 15 percent younger than 45.

The company also indicated that the conditions affecting these under-65 claimants could require months if not years of treatment and care. In addition, many of these conditions worsen, as the claimants age. Considering that more young people are suffering from conditions like obesity and diabetes, the expectation is that incidence rates will continue to rise for this age group.

The report also referenced U.S. Senate Special Committee on Aging estimates that approximately 10 million people need long-term care today. This figure was compared to a January 2006 Wall Street Journal/Harris poll that found just 9 percent of those surveyed had purchased long-term care insurance. The researchers concluded that the low number of long-term care insurance purchasers is indicative of the lack of education for this coverage and unawareness of the financial risk assumed without carrying coverage.

The most important result of this study, however, was to shatter the myth that long-term care means end-of-life care. The claims analysis shows that both group and individual long-term care insurance is frequently used at much younger ages, a fact that should motivate more employers to offer this important benefit. It should also serve to remind individuals to talk with their insurance agent Brian Gruss 509-927-9200 about protecting themselves from the financial risks associated with long-term care.

Federal Legislation Allows States to Develop Long-Term Care Partnership Programs

Federal Legislation Allows States to Develop Long-Term Care Partnership Programs

President Bush signed the Deficit Reduction Act of 2005 into law on February 8, 2006. Among other issues, this legislation offers all states more latitude in the way they operate Medicaid programs. One of the most significant changes, as outlined in Section 6021 of the law, allows states to develop Long-Term Care Partnership programs. These programs permit individuals who have exhausted their private long-term care insurance to access Medicaid without the same means-testing requirements as other applicants. Any state that wants to develop such a partnership program must meet the extensive federal requirements outlined in the provisions. Private long-term care insurance policies are also subject to stringent requirements in order for the insured to be eligible for the program.

The first long-term care insurance partnership programs were developed in the 1980s to encourage people to buy private long-term care insurance instead of relying solely on Medicaid. The original programs were only permitted in California, Connecticut, Indiana, and New York and were designed to allow anyone who had bought a qualifying long-term care policy and used up their benefits, to retain a designated amount of assets and still qualify for Medicaid as long as they met all other eligibility criteria.

Under the Deficit Reduction Act, private long-term care policies must meet even more criteria than before, including federal tax-qualification, and having certain consumer protection and inflation provisions. Inflation protection is a major qualifying criterion under the current law. Purchasers of long-term care policies that are under the age of 61 must have a policy with compound annual inflation protection.  

When an individual purchases a long-term care policy, they are usually offered a choice of inflation protection riders. One is the simple inflation rider. In this instance, the policy’s original benefit amount is increased by a defined percentage (usually 3-5%) on an annual basis. Another option is the compound inflation rider.  In this case, the benefit amount is increased annual by a defined percentage of the current benefit amount, not the original benefit amount.  Compound inflation protection provides a rapid increase in the benefit amount, providing a larger pool for the insured to draw from. Although a 5 percent increase is what most insurance companies typically offer for compound inflation protection, the Deficit Reduction Act lets the individual states decide on the applicable percentage rate.  

Long-term care insurance purchasers between the ages of 61 and 75 must also have some level of inflation protection. However, the law has not defined what that level should be. The Deficit Reduction Act also mandates the U.S. Department of Health and Human Services to develop a reciprocity agreement that enables purchasers of private long-term care insurance to use their benefits in other partnership states.

Be sure to speak with an advisor to discuss your long-term care needs and whether your state offers a Long-Term Care Partnership program.

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.


Don’t Let Long-Term Care Needs Take You By Surprise

Don’t Let Long-Term Care Needs Take You By Surprise

One of the most pressing concerns for seniors is ensuring they have adequate health insurance, especially since the government is providing less and less and the cost is going up and up. Long-term care is one area that is taking many seniors by surprise.

There has been a longstanding gap between the long-term care needs of seniors and what’s really covered by Medicaid and Medicare. Of course, the latest restrictions that limit the availability of nursing home coverage through Medicare doesn’t help. The bottom line is that seniors simply can’t afford to ignore this issue and let it take them by surprise.

Of course, finances are going to greatly impact the approach to long-term care.

Sadly, those with a minimal income and assets have few affordable options available to them. They will usually quickly go through their limited funds and qualify for Medicaid rather easily.

On the other hand, those with incomes over $75,000 a year and that have over $500,000 worth of assets are facing an endless cycle of out of pocket expenses. Even those that have planned well for the future can watch as their nest egg drastically depreciates from years of long-term care expenses. A nursing home bed alone can cost thousands of dollars each month. Purchasing long-term care insurance to pay for these costs is a prudent choice for this group.

A third group is the middle class. This group is comprised of those with moderate incomes of $30,000 to $50,000 and assets not exceeding a few hundred thousand dollars. This group often isn’t well off enough to afford long-term care insurance, but is too well off to quickly qualify for Medicaid. Long-term care needs of one unhealthy spouse can eat away at savings to the point that a healthy spouse is left impoverished for the remainder of his/her life.

If the funds simply aren’t there to buy long-term care insurance, there are some other options. For example, an existing life insurance policy may be sold through a life settlement, a reverse mortgage, or simply downgrading homes can all be additional sources of money. None of these may be pleasant thoughts, but they are methods that can free up cash for long-term care needs. However, it may be a smart decision to use these new funds to purchase long-term care insurance instead of paying long-term care costs directly out of pocket.

The benefits of assisted living facilities, nursing home care, and skilled and custodial home healthcare are invaluable. And there are many issues, from emotional to financial, that influence how long-term care needs are addressed. More often than not, when a spouse, parent, or loved one is no longer able to care for themselves, the healthy spouse, child, or relative isn’t so quick to spend savings on caregivers and skilled nursing care. Instead, the healthy person risks their own health to care for their incapacitated loved one. This can create a serious physical or emotional burden that words cannot describe.

When early steps are taken to ensure appropriate long-term care is available, life can be much easier for the senior and their family. With appropriate long-term care planning, the spouse, child, and so forth may focus their energy on providing attention and love instead of completely altering their life to become a primary caregiver.

Predicting what future medical needs will be is impossible in most cases. Some seniors may never reach the point that they need long-term care needs. However, statistics show that almost half of all senior citizens will eventually need nursing home care. Even those that don’t require nursing home care will usually still require some type of skilled, semi-skilled, or unskilled assistance. So, it’s vital to protect your health, as well as the health of your family, by planning ahead for these times of uncertainty.

Long-Term Care Partnership Program Makes Policy Purchases More Attractive to Consumers

Long-Term Care Partnership Program Makes Policy Purchases More Attractive to Consumers

Few expenses can deplete a lifetime of savings as rapidly as the need for long-term care. The Long-Term Care (LTC) Partnership Program, a federally supported, state-operated initiative, helps individuals protect themselves against this possibility by encouraging them to purchase long-term care insurance policies.

Basically, the program works like this: An LTC Partnership Program-qualified policy will cover the cost of long-term care initially, after which time the policy owner will be able to apply for Medicaid to pay for additional long-term care services-but without having to spend down personal assets as would normally be required. By permitting individuals to protect a portion of their personal assets, the program is intended to provide an incentive to purchase a qualified long-term care insurance policy, a result that would benefit individual consumers and insurance companies, too, by creating a more active market for long-term care insurance.

At the same time, states participating in the program hope to save dollars by having more individuals pay at least a portion of long-term care expenses with policy benefits, thereby delaying the point in time at which Medicaid kicks in. Medicaid currently accounts for close to 49% of overall long-term care funding, while private health and long-term care insurance pay just over 7%, according to information from the National Conference of State Legislatures.

The LTC Partnership Program began in the mid-1980s. Currently, qualified policies are available for sale in 23 states, according to the Long-Term Care Partnership Program Technical Assistance Website. Most other states have programs in various stages of development or approval.

Program specifics will vary state to state. For example, some use a dollar-for-dollar model: If an individual purchasing a qualified long-term care insurance policy worth $150,000 exhausts policy benefits, he or she can qualify for Medicaid to pay for additional long-term care expenses without having to spend down $150,000 worth of personal assets. Other states use a total assets model: Individuals who purchase qualified coverage of at least a set dollar amount can protect all individual assets after they have exhausted policy benefits.

States set the requirements for qualified long-term care policy provisions. These may include whether qualified policies must be comprehensive or facility-only, and minimum daily benefit amounts.

Statistics on the ever-rising cost of long-term care services make it clear how great the need is for long-term care planning. According to Genworth Financial’s 2009 Cost of Care Survey, individuals needing long-term care services will see the following national averages:

• $183 per day for a semi-private room ($203 for a private room) in a nursing home that provides 24-hour-a-day skilled care.

• $2,825 per month for a private room in an assisted living facility providing assistance with personal care, as well as some medical care.

• $18 per hour for home health aid services provided by a non-Medicare-certified but state-licensed agency (for example, assistance with bathing, dressing, transferring, etc.).

• $46 per hour for home health aid services, sometimes including skilled care, when provided by a Medicare-certified agency.

• $10 per hour for adult day care services in a community-based setting.

Companies exploring adding a long-term care benefit to their voluntary benefits offerings should check to see whether partnership program plans are available in their states. The advantages of such policies-in a time when the need for long-term care services is on the rise, along with the cost of such services-can help make long-term care a voluntary benefit that employees truly welcome.

Long-Term Care Knows No Financial Distinction

Long-Term Care Knows No Financial Distinction

Ensuring adequate health care is one of the top concerns for seniors. With costs skyrocketing and government purse strings tightening, planning for long-term care has never been more important. Don’t let the costs of long-term care take you by surprise.

In the area of long-term care, there is a huge gap between what seniors need and what Medicare and Medicaid cover. Combine that with new restrictions limiting the availability of Medicaid nursing home coverage, and it’s clear to see that seniors and those nearing retirement simply can’t afford to ignore this important issue.

While your approach to long-term care may vary depending on your economic situation, the benefits of custodial and skilled nursing in-home care, assisted living facilities and nursing home care know no financial distinction. Unfortunately, for those with low incomes and little assets there are few choices. Most likely, should the need for long-term care arise, you’ll quickly spend down your assets and easily qualify for Medicaid.

For those with an annual incomes exceeding $75,000 and with assets of $500,000 or more, you could simply pay for it out of pocket. But with nursing homes costing thousands of dollars a month and some seniors needing years of care, even a well-lined nest egg could experience a drastic drop in value. A more prudent approach would be to purchase long-term care insurance and use that to pay for any long-term care you or your spouse may need.

The real quandary is for those of moderate means, with incomes between $30,000 and $50,000 and assets of a few hundred thousand dollars or less. Long-term care needs could gut your life savings and impoverish the healthy spouse. But long-term care insurance can be very expensive and hard for these seniors to afford.

If purchasing long-term care insurance isn’t an option, there are still some strategies you can use to cover yourself. Selling your life insurance policy, called a life settlement, is one option. Reverse mortgages can also free up needed cash. Selling your home, however unpleasant that may be, can also provided needed funds. But in all of these strategies it is better to leverage those proceeds by using them to buy long-term care insurance, if possible.

For now, let’s consider some issues that will greatly influence how you address your long-term care needs. The reality is that when someone is no longer able to care for themselves, usually the healthy spouse (if there is one) will take over. Regardless of wealth, few people are quick to dip into their savings to hire nurses or other caregivers to help out.

Often, the result is that the healthy spouse sacrifices their own health and well-being to care for the sick spouse. The caregiver becomes exhausted and emotionally spent trying to meet the overwhelming needs of their spouse.  Sometimes adult children can step in to help shoulder the burden. You may know some families who have lived this for years, with sons and daughters spoon feeding their parents and changing their diapers. The emotional toll on the family in these situations is indescribable.

Life can be so much easier when seniors take active steps to provide for this type of care properly. The family can spend their emotional and physical strength on cherishing their loved one, without disrupting their own lives in the process.

No one can predict what their needs will be as life draws to a close, but the fact remains that nearly half of all seniors will need nursing home care and those who don’t, are likely to require at least some outside help.  Be smart and plan now for how you’re going to provide for your long-term care. Your health, and the health of your loved ones, depends on it.