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 Long Term Care (LTC) - Studies show that the largest uninsured risk facing Americans today is the cost of providing for Long Term Care. People are now living longer, but not necessarily healthier lives. Conditions that would have caused death only 10-20 years ago can now be treated. You can spend a lifetime building an Estate and have it severely depleted just to provide care for a modest long term stay, which could leave a surviving spouse in an awful financial situation. Studies show that Medicare, Medicaid and private donations pay only a fraction of the cost of Long Term Care. It is 'Private Wealth' that is paying the majority of Long Term Care expenses. |
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| We are now seeing a trend in Long Term Care claims where the majority of claims are for 'home health care', verses an Assisted Living or Nursing Home facility. As people would rather stay in the comfort of their own home whenever possible and if they have the resources to do so. With costs soaring on the National Average to over $200 per day ($60,000 per year), how long could your savings hold out? This is why Long Term Care insurance now plays an integral role in the new retirement environment. With proper planning, you can maintain your quality of life, retain your independence and protect yourself and your family from these financial burdens and tough decisions. |
Below are some interesting statistics:
- Chances are greater than 50% that each of us will require extended care at home or in a nursing home
- One in four people who live to age 65 will spend one year or more in a nursing home, and one in three will spend three months or more
- Today, the national average cost of nursing home care is about $50,000, or $137 per day for total costs. The DC Metro area average cost is over $100,000 per year
- 3 Home care costs average more than $12,000 per year
- Approximately 48% of long-term care costs are paid for by individuals as of out-of-pocket costs
- Medicare only pays 8% of long-term care costs
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What is long-term care insurance?
Long Term Care (LTC) insurance gives you the independence to live your life on your own terms. It pays for care and assistance that you receive in your HOME or at a facility, when it is no longer possible to care for yourself. This need arises through various situations including:
- natural course of aging
- an accident
- chronic illness
- cognitive impairment
- or the inability to perform certain ACTIVITIES OF DAILY LIVING (known as ADL's) for an extended period of time
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How and when does a Long Term Care policy pay benefits?
The most common method for determining when benefits are payable is based upon the insured's inability to perform activities of daily living, commonly known as ADL's. Generally speaking, the most common ADLs used by insurance companies are bathing, continence, dressing, eating, toileting and transferring. Typically, benefits are payable when a person is unable to perform a certain number of ADLs, such as two of the six.
When you are considering a policy that bases payment of benefits on ADLs, be sure you understand what it means by the inability to perform a particular activity of daily living. Some policies spell out very clearly what they mean by failure to feed or bathe oneself. A definition that says you must have someone actually help you perform the activity, also known as hands-on assistance, is more restrictive than one that calls for someone to supervise the activity, which is also known as stand-by assistance. The more specific a policy describes its requirements, the less hassle you or your family will have when the need to file a claim arises.
Note: the six ADLs have been developed through years of research. This research also has shown that bathing is usually the first ADL that a person is unable to perform. If a policy only uses five ADL's and bathing is not included, it may be more difficult to qualify for benefits through that policy than through a policy that includes the bathing ADL.
Cognitive Impairment - Many policies also have a provision for 'cognitive impairment' or mental incapacity. This type of provision generally provides benefits if the insured is unable to pass certain tests assessing his or her mental function. The provision is especially important if a person has Alzheimer's disease. Most states prohibit policies from containing an exclusion for Alzheimer's disease. However, a policyholder who has Alzheimer's disease may not qualify for benefits if he or she is physically able to perform the activities of daily living specified unless the policy has a provision for cognitive impairment or mental incapacity. If the policy uses only an ADL benefit trigger, those with Alzheimer's disease may not qualify for benefits. But if a policy also has a benefit trigger for cognitive impairment or mental incapacity, an insured with the disease is more likely to receive benefits.
Legislators are supporting and encouraging the purchase of Long Term Care insurance as a big step towards solving the problem of an aging population and the eventual need for assistance and care. Congress has passed favorable laws for 'Qualifying Plans' giving tax favored status to the benefits received and the premium paid. States are also encouraging it's residents to acquire Long Term Care coverage by giving special tax credits and deductions for the purchase of Long Term Care insurance. For instance, the Maryland General Assembly passed a law effective July 1, 2000 where a Maryland resident can have up to a $500 tax Credit (which is better than a deduction) for the first time purchase of a Long Term Care policy (when the premium a equal to or greater than $500). President Bush has also indicated that he supports a full 'Federal income tax deduction' for premiums paid for Long Term Care policies.
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Why is Long Term Care so Underinsured: The main reason we have seen that people do not get 'Long Term Care' insurance is because there seems to be a lack of knowledge and general confusion as to what Medicare will and will not pay for. Please click here, or review the Medicare links in the Resources Section of this page, in order to fully understand exactly what expenses Medicare will and will not pay. The truth of the matter is, Medicare pays less than 10% of expenses associated with Long Term Care. That's because most of the expenses involved are for custodial care, not skilled medical care which Medicare does pay for.
There is also a misconception that Medi-Gap (Medicare Supplement) policies or employer sponsored medical insurance group plans will pay the costs associated with Long Term Care and again are mistaken. This can place an enormous emotional and financial burden on an entire family, and it can leave the person in need of care dependent on others. We realize that not everyone has the same Long Term Care needs or the same priorities. That's why we offer a large range of policies from the most competitive companies, so that you can design the coverage that best suits your needs and can best fit your budget.
We are also finding that families are pulling together on this matter. We have set up many Long Term Care Policies where the children are sharing the premium cost with their parents, so that the premium is not a burden for any one person to bear. We have also seen the children split the entire premium cost among themselves, when their parent(s) are not able to manage the premium themselves. This is a good answer for children to ensure quality care for their Parent's, that they would personally not be able to provide if needed. It also ensures assets that might eventually be passed down to them will not be depleted or gone all together, due to unmanageable Long Term Care expenses.
Don't let this risk go uninsured any longer! Click here or in the left toolbar for a personalized 'Long Term Care' quote for you, or for someone you care about today!
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