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Affordable
Long Term
Care
Insurance
.
- Your chance of needing long-term care is 1 in 2!!
- 40% of people receiving long-term care are
working-age adults between the ages of 18-64!!
- The Cost of long-term care can be as high has
$200/day!!
The
following article provides general information about long term
care insurance coverage. We have retained an expert long term
care specialist to assist our customers!!
Kathy Halverson,
CLTC, CSA,
can be reached at (920) 468-1884 or talk to us for more
information!!
What is
Long Term Care??
Long-Term Care Insurance is
a misunderstood benefit for most employees. Long-Term care
insurance provides individuals that ability to maintain their
independence and lessen the probability of being a burden to a
caring spouse or family.
First, what is long-term care? You're probably thinking of
it as nursing home care, as that is what most people think.
This is a huge myth, because less than 20% of long-term care is
in a nursing home (The American Health Care Association, 1998/Contemporary
Long-Term Care, 11/98). 80% takes place in the
community-mostly at home with family members, some in adult day
care which works just like child daycare; and that fastest
growing form of long-term care is the beautiful assisted living
facilities. You're also probably thinking that long term
care insurance isn't something that interest you because only
older people need long-term care.
Surprise, again! Forty percent (40%) of people needing
long-term care today are working-age adults, age 18-64!
(American Academy of Actuaries, 1999) These are people who
have suffered traumatic injuries due to automobile or sporting
accidents like Christopher Reeve, or who experience unfortunate
illnesses such as Muhammed Ali with Parkinson's disease at age
54, brain tumors, aneurysms, MS, Lou Gehrig's disease, or even
strokes. 1/3 of the people in the U.S. who have a stroke
every year are under 65! (U.S. News and World Report,
3/15/99)
Because long-term care is so expensive, without proper planning,
long-term care can be the greatest threat to our financial
security. In the Green Bay area, one year of long-term
care is about $60,000 and that could be daily 8-10 hour shifts
of home health care, or semi-private nursing home care,
including miscellaneous changes like drugs and supplies (Health
Care Financing Administration, 1997 Statistics/The Washington
Post, 2/14/99). These costs are tripling
in 20 years, and if both you and your spouse need care, you can
certainly see how these numbers explode (General Accounting
Office, 6/91, and Health Care Financing Administration, 1998).
The life span of an Alzheimer's patient is anywhere from 3-20
years (Alzheimer's Association, 1998). Its a proven fact
that Alzheimer's patients live longer because they have no
stress!!
Who
Pays for Long Term Care??
Unfortunately, most long-term care expenses are paid
out of people's pockets-- out of the savings they have
accumulated for other reasons, such as college tuition or
retirement or by Medicaid, which is the welfare program that
pays for long-term care after you run out of your own money.
Why? Because long-term care isn't covered by familiar
forms of insurance like health insurance, HMO's, disability
income insurance, retiree health plans, VA Plans, Medicare
supplement or Medicare. These plans only pay for skilled
medical care, and most long-term care is just maintenance,
chronic care such as helping some bathe, dress, move around, go
to the bathroom, etc. For example, someone totally
paralyzed or in a coma from a car accident would probably only
need help that is not skilled, such as bathing and feeding, and
regular health insurance or Medicare do not pay for this kind of
care.
What Are The Odds I'll Need Long Term
Care??
It will probably surprise you to know that the odds of needing
some type of long-term care are greater than 50%!
That’s one out of two, and for most of us, it will not be
nursing home care, because most people will never be in a
nursing home. But home health care can cost just as much or more
than nursing home care. Even though most of us won’t need care
until our later years, it is very wise planning to begin paying
for it when we are young.
What if you looked out your bedroom window and saw one out of
two houses on fire? Or if you drove to work today and saw one
out of two cars having accidents around you? None of us could
sleep without homeowners or car insurance, and yet we know the
odds of losing our home or automobile are not anywhere near one
out of two! Most of us wouldn’t think of canceling our
homeowner’s policy after our mortgage is paid off and the bank
no longer requires us to have it, and yet we’re talking about
something that has a much greater chance of happening to us than
a house fire, and will probably cost much more than replacing
our entire house!
With the information about long-term care you know now, can you
think of any reason why you wouldn’t want to protect you and
your family from something that is very expensive, very likely
to happen, and is not paid by anything else until you’ve
exhausted most of your resources?
Solution is to Protect your
Financial Future with Long Term Care Insurance
How Will a Long-Term Care Need
Affect My Lifestyle?
The number of households providing care to someone over 50 has
tripled in the last decade, primarily because we have an aging
population. Three-fourths of the caregivers are women, and
two-thirds of them work outside the home. Over half of them
report missing work an average of one day a month, going to work
late, leaving early, and worrying about finances, giving up
promotions, personal time and even family vacations. Most of
all, caregivers experience overall stress and fatigue. To combat
these problems, some of them either go part-time or permanently
leaving their jobs altogether.
This could be any of us if someone we love, such as a spouse or
a parent, suffers a debilitating accident or stroke. To avoid
catastrophic changes, many people are planning ahead by
purchasing long-term care insurance on themselves, their
parents, and even their grandparents.
A long-term care policy
can mean not having to give up savings for college tuition or
retirement. It can also mean being able to keep a job, if you
choose to. It can mean the difference from being forced into a
nursing home because that’s the main type of care funded by
Medicaid or being able to stay home because the policy provides
money for home health care.
Often people think they can save the money that they would have
spent on long-term care insurance premiums and invest it to meet
their future long-term care needs. Although this sounds good in
theory several problems exist. First, a long-term care plan must
be a plan you can depend on to meet your future needs not one
that might possibly meet those needs. It is impossible to save
enough money, even with interest, to equal the benefits that
could be paid out under an Unlimited LTCI policy. Even under
optimum conditions, your savings would barely provide one year
of long term care, and you could never enjoy that money--it
would always have to remain in reserves should a long-term care
need arise.
When
trying to put this idea into practical application several
factors must happen to insure its success.
You can never miss a savings payment to your investment
fund.
You must consistently receive a high enough return on
your money.
You must make sure you don’t need care until you have
enough money saved to pay for it.
Even
if you could
guarantee all of the conditions above, which you can’t, you
still would not be able to put enough money away even with a
great rate of return to pay for an extended long-term care stay
that lasted much over a year.
Another
thought that is often voiced when people are considering
long-term care insurance is:
"I'm still young, I am going to wait until I'm closer to
retirement."
There are two very important points that need to be considered
when evaluating whether or not you should wait and purchase
long-term care insurance at an older age.
First, long-term care insurance is a health-qualifying
product. So, if you have any change in your health you may
not be able to qualify for coverage. And the very health issue
that keeps you from qualifying may eventually require you to
need long-term care.
Second, long-term care insurance premiums are age-based
premiums. In other words, your premiums will always be based
on the age at application. And as hard as it is to believe, you
will actually spend less on premiums buying earlier and paying
longer than you will by purchasing at an older age (if you can
qualify).
How Does Long Term Care Insurance Work??
The
problem is, if you are faced with a situation where you or your
spouse require long-term care, where will the money come from
to pay for it? Many families today are two-income families
and need both incomes to meet their current financial needs.
There is not enough extra money for a long-term care situation
particularly if one of you loses the ability to earn an income
because of an accident or illness. With the average costs listed
above, again, we have to ask the question, where will the money
come from to pay for it?
To help you understand long-term
care insurance, there are five features that determine how much
the policy costs. Here they are:
Daily Benefit: This is how much the policy will pay out
per day. To help you with this decision, you need to know that
the average costs for long-term care in our area.
Waiting Period: This is how long you are willing to pay
for your care before the policy starts paying; you can think of
it as your deductible. For example, a 30-day deductible means
the policy will start paying benefits after you have incurred
charges for the first 30 days of care. This only has to be met
once in your lifetime.
Benefit Maximum: This is how long the insurance company
will pay for your care. Examples are two years, five
years, or lifetime,
which means unlimited. If you choose a two-year benefit period,
the policy will pay for two years of care for you, then you will
start using your own money if you still need care. Your policy
may actually pay longer because the maximum is determined by
multiplying the # of days (730 in a two year plan or 1,825 in a
five year plan) X the daily benefit, so a five year plan with a
$100 daily benefit creates a benefit maximum of $182,500. If the
charge is ever less than the daily benefit; the remainder stays
in the pool of dollars and can extend the benefit period past
the five years. (The average length of care is about 3.2 years,
but about 25% of people at home and 15% of nursing home patients
need care longer than five years.)
Home Health Care: This feature provides benefits for a
home health aide or for licensed professionals to help you at
home such as RNs, LPNs, physical therapists, speech therapists,
respiratory therapists, etc. It will also pay for adult day
care. This feature is optional and costs additional premium;
however, most people prefer the option of staying home whenever
possible. If you have no one to live with, you may want to save
some premium dollars by not taking this option, as it is really
intended to supplement a primary caregiver’s services by
providing 8-10 hours a day help so the primary caregiver can
work or rest.
Inflation Coverage: This coverage is critical to keep the
policy as meaningful in the future as it is today. Twenty years
from now, care will cost about $190,000 and 30 years form now
over $336,000. The inflation benefit makes your daily
benefit grow 5% compounded for the rest of your life, whether or
not you use the policy. If you do use the policy (for assisted
living or nursing home care), your premium stops and you get the
best of both worlds: your benefit is growing 5% compounded for
the rest of your life, and you aren’t paying premium anymore!
This benefit is crucial, because who would think of buying
hospitalization insurance that only pays hospital room rates at
what they are today?
Benefits For Choosing myPersonal Long Term
Care Policy
All
policies are sold individually. Why? Because your family has
unique needs.
Family Health History Varies greatly. The best example is
Alzheimer’s disease in a family. The life expectancy for an
Alzheimer’s patient is 3-20 years. The average length of
long-term care needs is 6-8 years. Not too many of us have the
kind of cash it takes to sustain this type of financial crisis.
Family Assets If your assets are not expected to exceed
$100,000 in your lifetime (not including your house and car), a
long-term care crisis would put you on the welfare program. If
your assets are over $100,000 (not including your house and
car), you will want to consider protecting your assets. None of
us work this hard to give our money away.
Independence Many individuals do not want to be dependent
on their children. Of course, your children say they would want
to take care of you—but could they? Would you want them to care
for your personal needs? If you want independence and/or the
“Ritz,” you will want to provide it for yourself!
No Family You may choose a nursing home only policy,
which in the time of need would provide you constant care.
If you consider yourself “too young,” consider the fact of
inflation. The cost of long-term care is tripling in the next 20
years. As an example, for every $100 Daily Benefit today, ten
years from now, you would have to buy a $163 per day policy,
which means the premium would be much higher, and you will be
paying premium at ten years older. Imagine in 20 years paying
for a $265 Daily Benefit? Premiums stay the same for the rest of
your life unless there is a class rate increase, so you want to
lock in the premium at the earliest age possible.
More importantly, you may not qualify for a policy if you
experience a serious health problem or accident between now and
then. Most importantly, you will be covered if you have an
accident or develop a debilitating illness now.
Should You Obtain Long Term Care Insurance
For Your Parents??
Only
if your lifestyle is important to you. Becoming a primary
caregiver overnight can alter your lifestyle dramatically.
Consider this “real-life” situation:
Bob and Mary work
full time. With two children in college and one in high school,
that’s understandable! They are keeping up just fine, until
Mary’s father who has always been in good health, has an
unexpected stroke. After a short hospital stay, he is admitted
to a skilled nursing facility to help him recover from the
stroke. Mary can’t believe it when she learns that Medicare and
his Medicare supplement stop paying after about five weeks of
care in the skilled nursing facility, after which her father has
stabilized. In fact, he is recovered enough to stay home as long
as there is someone around. He waits anxiously for Mary to take
him home.
Will Mary quit her full-time job to care for her
father?
Will she go part-time? Now the expenses that she and Bob must
meet are greater because elder care needs are added to college
tuition needs.
The answer to the question in the title of this article is
“Absolutely, yes, positively, even if you have to pay the
premium.” Paying the premium is much less expensive than
providing the care yourself, or paying someone else to provide
it at upwards of $4,000 per month or more. The exception to this
is if your parents have less than $100,000 in assets not
counting their home and car, they may be able to qualify for
Medicaid, but their choices for care will be very slim. That’s
why many children pay the premium so their parents won’t be
confined to the limited choices offered by the welfare system.
-
How Do You Discuss This Sensitive Issue With Your Parents?
One of the most
frustrating concerns among employees today is how to get
parents to talk about long-term care needs—before a crisis
hits.
About two-thirds of adult
children have never had a conversation because they don’t
know what information their parents need or where to find
it. Talking to parents about private, uncomfortable matters
are never easy. From long-term care insurance to
end-of-life wishes, this conversation is loaded not only
with concerns about maintaining independence, but also with
unexamined family dynamics, sibling rivalries, and
communication problems.
-
When it is time for “the conversation”?
No one plans on
needing long-term care services and certainly no one plans
to take care of a parent. So think ahead. Many preparations,
such as buying long-term care insurance, must be done well
in advance. Getting involved in parent care does not mean
controlling their lives. It means framing questions and
helping them make choices. The best way to start this
process is to learn about home and community-based services
and the associated cost of care.
The next step is
communication: Set up a family meeting in person, by e-mail,
in private Web chat rooms, or through telephone
conferencing. Everyone possible should be involved: parents,
adult children and their spouses, grandchildren, and
concerned relatives or neighbors.
Break down communication
barriers between adult children and parents that can leave a
family at risk for exposure to financial, physical, and
emotional consequences when Mom and Dad need long-term care.
Typically, children have a pretty good understanding of what
parents desire in terms of death and dying and estate
planning, but no idea of the dreams and visions for the
years when they may need long-term care.
Oftentimes, you
will encounter resistance from parents who are embarrassed
or who don’t want to think they might someday be a burden.
It is wise to employ a third party professional to
facilitate these conversations. Not every family succeeds in
getting their parents to do some early planning. But the
risks of not even trying to have this conversation are
significant.
Families need to
make a paradigm shift in thinking about long-term care, from
the notion that remaining at home is always best to
realizing that assisted living residences may be a better
option, both financially and emotionally, especially if
there are no caregivers available.
We don’t walk away from
our parents when there are physical, financial, and
emotional issues, we step in and take care of them. It is
about relationship.
Medicare
Medicare is a national health insurance program fro people 65
years of age and older, certain younger disabled people and
people with permanent kidney failure. Like your regular
health insurance, it is not intended to provide long term
custodial care!
Qualifications:
-
Must
have a hospital stay of three consecutive days (not counting
the day of discharge)
-
Be
admitted to a nursing facility for the same illness you were
hospitalized for within 30 days of discharge
-
Be
receiving skilled care only
-
Be
certified by a medical professional that you need skilled
nursing or rehabilitative services daily
To get Medicaid (welfare) program to pay, you have to be down to
about $2,000 in assets ($89,280 for married couples in 2006).
Then that program only pays the part your income can't.
And, legislative efforts are expected to continue to make it a
criminal offence to transfer assets to family member or others
to try to qualify for this program, because it is a welfare
program intended just for poor people and funded by taxpayer
dollars. It also provides very limited choices, such as
very little home health care, no private room care, and you must
go wherever there is a bed available. If choice and
independence are important to you, the Medicaid program is not a
desirable option.
Medicaid (welfare) is a joint federal and state program that
provides medical assistance for certain individuals with low
incomes and limited assets. It is primarily designed to
provide care for the indigent. Medicaid is designed to
provide long-term care in a nursing facility only.
Assisted living facilities and custodial home health care
services are not covered under Medicaid. This severely
limits your care options. Relying on Medicaid means giving
up your independence and choice of who provides your care and
where those services are provided.
Open Enrollment
Given
the pace of your busy life, taking on yet another responsibility
may seem overwhelming. Pressure at work, mounting bills, demands
from the kids, a busy social schedule—they all stretch you thin.
Now imagine adding an ill parent or spouse to that equation,
especially if they require care for a long period of time.
We have an open enrollment period. Contact our Human Resource
Coordinator, or our plan administrator:
Halverson Planning, LLC
(920) 468-1884
www.info@halversonplanning.com
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