Do You Need Insurance for Long-Term Care?

  I wanted to post this as families inquire about this often and thought it might be helpful.

 Jessica Sherman, LMSW, Eldercare Advisor 

 

By Lynn Brenner
Published: February 17, 2008, Parade.com To learn how to check an insurance company’s credit rating, calculate the coverage you may need and access other online resources, click here.

Americans are living a lot longer. That’s good news. But increased longevity has created a new financial dilemma: how to prepare for the high cost of old age. Some of us will need care for chronic ailments, and many more will need assistance with dressing, bathing and housekeeping tasks. Professional help is expensive. On average, a home health aide costs $19 an hour; an assisted-living facility is $2968 a month; a private room in a nursing home is $206 a day. Medicare rarely pays these bills. Medicaid does, but only for the poor.

Long-term care insurance is an alternative, but policies are expensive and may pay less than you expect. Here’s what you need to know:

The Cost
The older you are when you buy, the more you pay. For people aged 60 to 70, premiums can range from $1500 to $8000 a year. If you buy a policy at 60, it’s likely to be two decades or more before you use it—so, the younger you are, the more important it is to pay extra for an “inflation factor.” This will boost your benefit over time but could double the policy’s annual cost.

Your premium is supposed to stay fixed, but it probably won’t. While an insurer can’t single you out for an increase, it can raise premiums for all policyholders if claims exceed expectations. This has often happened, forcing people to cancel policies after years of payments. Indeed, today’s cheapest policies are the ones most vulnerable to steep increases in the future.

“A renewable policy is worthless if you can’t afford to maintain it,” says Allan Kanner, a New Orleans lawyer who sued one insurer on behalf of more than 13,000 policyholders, some of whom had seen their premiums jump more than 700%. Their average age: 92. The case was settled out of court.

Experts say future premium hikes are inevitable, because insurers have no reliable way to predict claims. 

The Benefits
A long-term care policy pays a predetermined amount—from $50 to $500 a day—and the payments can last from a year to life. But you get no benefits unless you meet the policy’s definition of incapacity: the inability to perform two or three of five basic tasks, such as dressing and bathing yourself. These tasks are called “activities of daily living,” or ADLs. Some policies require you to need help with two ADLs to get paid; others don’t pay unless you need help with three.

Policy Language Can Be Misleading
It’s easy to assume you have more coverage than you really do, so be sure to read the fine print. For example, most policies do not start paying until the end of an “elimination period,” which can vary dramatically in length. Some policies determine this delay on a calendar, while others count the number of days you’ve been receiving care. For example, if you get one weekly visit from a health aide, a “30-day delay” could mean that you get no payments for 30 days or 30 weeks, depending on the policy.

How you receive your money also varies. Let’s say your daily benefit is $300. There are three ways it can be paid. With a reimbursement policy, the insurer pays you or your service providers. If they charged $250, the insurer uses the extra $50 to extend the length of time your benefits last. With an indemnity policy, you get $300 for each day you have a receipt for services received, whatever they cost. Finally, a cash policy pays you the $300 per day, with no receipts required. How you spend the money is up to you.

Expert Advice
If you decide to invest in a policy:
• Buy from a company that has top financial ratings. You want the insurer to last at least as long as you do.
• Avoid policies you need a paycheck to pay for. You must be able to afford premiums after you retire.
• Don’t buy more insurance than you need. Few people require lifetime benefits. The average stay in a nursing home is just 2.5 years, and 43% of residents stay less than one year.
• Don’t choose a policy solely on the seller’s recommendation. Get a second opinion from a certified financial planner or an elder-law attorney.  

Read the fine print and also ask for in-depth explanantions regarding restrictions written into your Long Term Care Insurance contract.  One family found out that they could not use their Long Term Care insurance coverage for a Residential Care Home (RCH) because their contract required that there must be a full-time RN on their staff.  Most RCH will have a nurse on call 24 hours, but very few can afford to have a full-time nurse on staff.  The language in this policy was effectively restricting the family from choosing any other type of care except a skilled care facilitiy - or Nursing Home - for their loved one.

Long Term Care Insurance policies also incorporate standard language in contracts for Home Health Care coverage that states that in order to be reimbursed the Home Care provider you select must be licensed.  As it turns out, this requirement will be waived in states where Home Care agencies are not required to be licensed.  If you only require homemaking or personal care services, and do not need skilled medical care or Physical or Occupational therapy at home, then you are not restricted to choosing a licensed provider.  This is good to know if there are only a limited number of providers to choose from in your area.  

When I click on the link above, I found this guote as the only quide for how much to buy.

 

"Don't buy more than you need
Consider your health and your family history. How long did your parents and grandparents live? How good was their health in their old age? Don't assume you need a policy that provides lifetime long-term care coverage. The average nursing home stay lasts two and a half years; 45% of people over 65 don't stay that long, and 20% stay five years or more. Some experts say most people don’t need more than three to six years of coverage.   "

Did you not read this artilce before posting?

Why would I buy LTCi based on nursing home stays? why do we believe what is being said.  I would suggest you review the LEWIN Report to bertter understand the truth about nurinsing homes. Forget nursing homes. Focus on the real problem.

only 3% (nationally) of all seniors are in NH for LTC. That # is decreasing.

20% of all seniors are at home in some level of care. This should scare you enough to but LTCi. 80% of ALL LTC takes place in the community.

 

Long term care insurance is important. When you get retired nobody will take care about you as you get older. At this stage you need special personal care. You care heir a person to take care of you, but for that you need money and long term care insurance gives you that money.

 

This is one of the best investments you can make this time around since people live much longer and their chance that they'll be needing assistance for their daily living activities increases. So if you want to protect your assets and save your family from the burden of paying for your expensive long term care you should purchase this early.

This is a great summary. I own a home care agency and it breaks my heart that people don't have long-term care insurance! In the next 10 years the 85+ population will quadruple and the chances of needing non-medical custodial care (not covered by Medicare) increases significantly over the age of 85. Not having the coverage severely limits choices and increases worry and stress for the last years of life. I do my best to work with people that can't afford our services, but usually the burden falls to the adult children or worse, the client ends up at the mercy of MediCal (Medicaid) to find an empty bed in a facility not of their choosing. I recommend to everyone I know to get Long-Term Care Insurance.

 

in my opinion it totally worth it since we all know that after some age its very difficult to do our activities of  daily living and it has its own advantages also and to know more about this policy just consult with expert agent or your friends.

The question is are you willing to take the risk? Buying LTC plans can be a risk but it is a preparation that can save you from possible staggering costs in the future in case you will require long term care services

Long-term care insurance is a good way for aging people to protect their assets and to not be a burden on their family if a time comes when they can no longer care for themselves. It is a good investment for your future. This is the time where money matters a lot. Everyone cares for you only if you have money in your hand. As it is also gives safety for your future.

 

Insurance of home