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All too many times overwhelmed caregivers are physically and emotionally depleted and need to take time to rest and care for themselves. Believing in a holistic approach to caregiver stress and a strong commitment to helping our members find the right solutions, we created this blog to help you connect with others who, like you, may be facing the same eldercare issues and challenges. Feel free to comment, ask questions, and submit articles. Please forward the blog link to your family and friends. They'll be glad you did.

Warm regards,

Patricia Grace
founder & CEO
Aging with Grace

Friday, September 11, 2009

Eldercare Funding Part V: Long Term Care Insurance

by Patricia Grace

With Baby Boomers reaching retirement and Americans living longer than ever, Long Term Care Insurance (LTC) policies should be on the minds of many people, in particular those close to retiring and those who will need to take care of loved ones over a long period of time. Long Term Health Care Insurance protects you, as well as those you love, in the event that extended health care is needed in your lifetime. It also provides benefits in the event of a long-term illness or injury. Owning a long-term care insurance policy also provides you choices in deciding where or how you receive care. It helps pay for benefits for care that is delivered in your home, in the community, in adult day care centers, in assisted living communities, or in nursing facilities.

No one likes to think about long-term care. However chances are, one day; most of us will need it. In fact, according to the U.S. Department of Health and Human Services, 70% of people age 65 and older will use some form of long-term care services during their lives.

What is covered by Long Term Care Insurance?

Under almost all policies, coverage will kick in if you can’t perform certain activities of daily living — like walking, eating or bathing — because of a physical or cognitive impairment. Verify that the coverage will start if you can’t perform any one of the above activities — not necessarily all three. For example, someone may well be able to eat after they are too frail to walk or bath unassisted. Once a policyholder meets the definition of a triggering event, the kind of care that is covered varies widely.

Make sure that all types of care are covered- including nursing homes, assisted living and in-home personal care attendants. Most policies provide for all three types of care; however it’s important to make sure your policy does.

Claims have also been denied because insurers say a particular nursing home or other long-term care facility doesn’t qualify for coverage, leaving policyholders responsible for huge bills after they’ve already become a resident. Be sure to check that the policy you are considering doesn’t include overly narrow restrictions.

Who pays for long term care?

Many people are under the impression that Medicare, Medicaid or their health insurance will pay their Long Term Care costs…this is not correct!
  • Medicare has eligibility requirements for skilled nursing care only and is for a limited time period.
  • Medicaid is a welfare program. It will NOT cover long term health care costs for the average American.
  • Health insurance and medical supplements DO NOT cover nursing home care.
  • Individuals and families through their savings, assets, and cash pay most of the costs associated with long term care at home, in assisted living or in a nursing home.
Why should I have a long term care policy?

You are taking an important step towards securing the financial future for you and your family. Your greatest financial risk today and in the foreseeable future is not your hospital or doctor bills, but the very high cost of long term care.

  • Over 40% of all Americans over the age of 65 will spend some time in a nursing home due to a prolonged illnesses or disability. Your risk of needing long term care is probably much greater than you realize. Assistance may be needed on a temporary or permanent basis for performing basic ADL’s such as bathing, dressing or toileting.
  • Care might be provided in an assisted living facility, an adult day care center, a nursing facility or even at home.
  • Once a patient reaches the arbitrary number of days in the hospital, Medicare payments stop regardless of the individual patient's actual condition or the need for continuing care. When Medicare payment stops, patients are released from the hospital as quickly as possible. Most patients must then finish their recovery from illness or injury in some type of nursing home facility, or, when possible, arrange for nursing medical services in their own homes.
Long term care and women

Why is long-term care a woman's issue? Simply put…women live longer than men. Women have higher rates of disability and chronic health problems. On average women outlive men by about five years and married women more often than not outlive their husbands. Women who reach age 65 can expect to live an average of 20 more years and those who reach age 75 an additional 13 years. A third of long-term care insurance claims begin between ages 70 and 79; over half (55%) begin after age 80. More than two-thirds of Americans age 85 or older are women. Eight out of 10 centenarians are women. Thus, women are far more likely to need long-term care insurance.

Reducing the cost of long term care insurance

Affordability is a vital ingredient in any successful long-term care insurance plan. And there are ways to help make this kind of insurance more affordable without sacrificing good coverage.
If you receive quotes from several highly rated insurers and yet find that the premiums are still too much to bear, there is no need to panic and assume that long-term care insurance costs too much. You may be able to adjust the benefit amounts of the original quotes to bring the premiums more in line with your expectations.

One way to lower premium costs is to make sure you know what the actual costs of care are in your area. There are many statistics used when discussing long-term care costs and often these are based on national averages. The actual cost of home care, assisted living facilities and nursing facilities in your particular area may be much lower.

You can find out what long-term care costs are locally by downloading the latest Genworth Cost of Care Guide or by calling a 2-3 local home care agencies and/or assisted living communities to request information on their daily/weekly/monthly rates. Another way to lower long-term care insurance premiums is to shorten the benefit period. Many consumers feel that having an unlimited benefit equates to better coverage. A recent study published by the American Association for Long-Term Care Insurance in their 2009 Sourcebook revealed that only eight percent of those who buy a three-year benefit period exhaust the policy and still need care. Only a little over one percent of those with a five-year benefit period will see their claims closed due to policy exhaustion. Lowering the benefit period can be a practical way to lower insurance costs without sacrificing vital coverage.

Another way to economize on long-term care insurance premiums is to increase the elimination period (the number of days after your care begins that precedes the insurance company’s first payment of claims). Almost ninety percent of individual long-term care insurance policies use an elimination period between ninety and one hundred days according to the same 2009 Sourcebook referenced above. If your initial quotes used a thirty-day or sixty-day elimination period, you may be able to significantly lower the premiums by choosing a ninety-day elimination period instead. However, it is important to make sure that you are able to pay the full cost of care during the elimination period. In the long run this option might not provide the savings that you are hoping to gain.

This article concludes the series on eldercare funding options. Hopefully, you now have a better understanding of the financial products available to meet the rising cost of long term care, while protecting your financial legacy.

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