Long Term Care

Long-term care (LTC) refers to a variety of services designed to help a person get through the day. Assistance is provided to help a person remain as independent as possible. Services involve help with activities of daily living. LTC services can be rehabilitative, after an injury or stroke where recovery is an extended process. Other LTC services help with bills, laundry, food preparation, transportation and shopping. Age is not a determining factor in needing long-term care. About 60% of individuals over age 65 will require at least some type of long-term care services during their lifetime. About 40% of those receiving long-term care today are between 18 and 64. It is important to note that once a change of health occurs, an individual could be uninsurable.

• Your own home
• A residential care facility
• Skilled nursing facility (nursing home)
• An adult day center
• A hospice facility or hospice services provided at home

• Nurses
• Certified Nursing Assistants
• Physical, occupational and respiratory therapists
• Home Care Aides and homemaker services
• Friends
• Family

They include:

• Dressing
• Bathing
• Transferring (moving in or out of a bed or chair)
• Toileting
• Eating
• Continence care

The inability to perform two or more activities of daily living, or having a severe cognitive impairment trigger benefits under a long-term care insurance policy.

The cost of long-term care can depend on your city, state, and the type of care. Here is an interactive map to show the costs of types of care in different locations.

If you require in-home assistance from a Home Care Aide, you may start out with an hourly visit but if you should become frailer, you may also begin to need help with activities such as bathing. This may increase the time the aide would need to spend with you per day and may increase the cost of service. Also, if your needs change and you require the services of a skilled nurse instead of an aide, the cost of care would become higher.

Generally, the yearly average cost of an aide is less than that of a yearly average cost of a nursing home, but, for instance, if you need around the clock care, a care coordinator can help with identifying the costs. Again, much depends on your care situation; some care is covered by medicare, like physical therapy, dressing changes, infusions etc.

The fear of premium increases in the future is a major cause of indecision.  It helps to know that there are remedies for individuals who have policies and need to lower the cost. If you are designing a policy today, there are options available that address the two biggest drivers of higher than necessary cost in LTCi premiums.

1. Life-time benefits: Most companies no longer offer lifetime benefits. This benefit choice is over-kill. The remedy: a 2, 3 or 5 year benefit. Couples use a shared care rider.
2. High inflation coverage: The trend when LTCi was less expensive was to get 5% compound inflation for a lifetime. Our current interest environment is a risk for insurers who cannot expect these type of returns on long term investments.  There are design options to use with policies, also John Hancock has tied future benefit increases to the CPI.

There are basically four ways of paying for LTC services:

1. Self-Insure or Self-pay

Self-Insure means setting aside or having enough money to pay privately for future LTC services, if they become necessary. Remember the cost of care as seen on the interactive map. Much LTC is provided by friends and family. The cost to a family member can take its toll in lost wages, early retirement or cessation of a career.

2. Medi-Cal

Medi-Cal is a joint federal-state government program for low income individuals that will provide coverage for long-term care expenses if your income and assets are very low or after you have exhausted almost all of your owned assets. It is an entitlement program based on strict income and asset guidelines. You may be required to spend your own money for care, living expenses and other “allowable” expenses before becoming eligible for Medi-Cal. This is referred to as the “spend-down” period. Even though every state has different eligibility criteria for this government program, assets and income are subject to review in order to determine your eligibility. Many people try to transfer all their assets immediately after it has been determined that they require long-term care assistance; however, this time period will not always meet the “look-back” period criteria. States are increasingly using the laws that are in place to recover moneys owed to Medi-Cal.

3. Medicare

Medicare is the federal medical insurance program for people age 65 or older, and disabled persons of any age receiving Social Security benefits 24 months after benefits begin. It was designed to pay some of the costs of certain health care services in order to provide recipients access to a basic level of healthcare. The majority of care provided in the U.S. today in connection with chronic long-term illnesses or conditions is personal or custodial care and may be rehabilitative in some cases. Medicare will generally not pay for personal or custodial care. However, Medicare will cover some long-term care expenses for a short period of time per Medicare benefit period if:

• • • After a minimum three-day stay in a hospital, not including the day of release, you require a high level of care, as prescribed by a doctor, such as skilled nursing care or rehabilitation services. Medicare pays for the first 20 days of your stay in a skilled Medicare approved nursing facility.
    • On days 21 through 99 of your stay, you pay a daily co-pay amount determined yearly by the Centers for Medicare and Medicaid Services (CMS). Medigap policies may cover the daily co-pay amount. You must be improving at a hearty clip to qualify for this continuance of benefits.
    • After 100 days, Medicare will pay nothing for these services. The intent of Medigap policies is to provide coverage for Medicare copayments and deductibles. A Medigap policy will not continue paying after the 100 days.

Admission to a nursing home is not enough to qualify for Medicare payment. The level and type of care determines whether short-term Medicare coverage for long-term care will be provided. Medicare does pay for short-term home health care, providing certain guidelines are met.

4. Long-Term Care Insurance

Why purchase Long-Term Care Insurance? This insurance is designed to help pay for or reimburse the cost of covered long-term care services if you need them. It is not the same as medical insurance, which generally provides coverage for doctor visits and hospital stays. Depending on the type of policy and coverage selected, long-term care insurance can provide coverage for long-term care in many settings: your own home, nursing homes, adult day care, and residential care facilities.

1. Not connected with or endorsed by the U.S. Government or the Federal Medicare program.

WHO COULD BENEFIT FROM PURCHASING LONG-TERM CARE INSURANCE?

The need for long-term care can happen at any time, not just as you age. If you are single, it is less likely that care by family members will be readily available. Long-term care insurance can help pay for or reimburse you for the covered services that you require. If you are married or live in a multi-member household and you and your partner age together, your day-to-day functions may decline at the same rate. If your adult children live in another location or if your care needs are greater than a family can provide, you may require outside assistance. Also, if certain chronic conditions run in your family – the kinds that require some type of daily assistance – long-term care insurance is important for you to consider. If you don’t have a specific policy designated as long-term care insurance (called “Nursing Home and Home Care Insurance” in some states) you usually are not covered for long-term care expenses. In some states, chances are you are not covered for long-term care expenses.

In general, long-term care insurance can provide coverage for anyone 18 years of age and older. The younger you are when you purchase long-term care insurance, the greater the chance that your health will be good and you’ll be insurable. Generally, the younger you are, the lower your annual premiums will cost per year. Many people buy LTCi as an employee benefit when younger.  At about 50, people start to get serious about this coverage on their own.  I bought my LTC policy at age 48.

It is important to be able to afford the premiums, not only now, but in the future. If you are on a fixed income or if you have limited savings, the premiums may be too difficult to pay over the long run. In this situation, you may want to look closely at your needs and resources and perhaps talk with a family member or financial advisor to decide if this is the right purchase for you.

The cost of a policy is based on such factors as:

• Your age at the time the policy was purchased
• The type of the policy purchased (a “basic policy may cost less than one compared to one from the same company that offers more features)
• The amount of the daily/monthly benefit you have purchased
• The number of “extras” such as riders or options you may choose to purchase
• The amount of time the daily/monthly benefit will be paid or reimbursed

Much of the cost of LTCi has been due to inflation riders. Because this is a long-term investment, the benefits have had to keep up with inflation. Methods of yesterday (5% compounding inflation rider) have caused insurers to raise rates because of the low interest environment. LTCi is a new product and enough information was not available. Now we have more accurate information from claims history.

Here’s what to consider:

• A policy of shorter duration
• A policy with inflation based on CPI
• A shared care rider for couples
• Get a policy that provides strong benefits, hold back on the bells and whistles
• The help of a knowledgeable agent can help you be educated and know your options

1. We can tell you if you qualify for LTCi. A short discussion on the phone can help you know the likelihood of qualifying.
2. We can:
   • Run a quote with you
   • Find the best company and design a plan to meet your needs and budget
   • Help you understand the cost benefits and nuances
3. Plan design is a passion of mine. We work with clients via screen share or meet  at your home or business, or in the office of your financial advisor.
4. We can take you through the entire process and will keep you informed every step of the way