LTC 101 - Long Term Care Associates

Long Term Care "101"

Long Term Care services are designed to assist someone who has lost some or all of the ability to care for himself or herself due to an illness, an accident or simply the frailty of aging. Long Term Care includes a wide range of services which help people maintain the normal activities of daily living - like bathing, continence, dressing, eating, toileting and transferring (moving from a bed to a chair or from a chair to standing, etc.). Long Term Care services can be provided in your home, in and through community resources or in a formal setting such as a nursing home or assisted living facility.

What is Long Term Care Insurance?

Long Term Care Insurance provides funds to help you cover long-term care costs in the same manner Health Insurance provides financial coverage for doctor's visits and hospital bills. However, it is very important to understand that Long Term Care Insurance and Health Insurance are two distinctly different types of insurance. Health Insurance coverage applies to sicknesses and illnesses from which the insured is expected to recover; these are typically known as acute conditions. But would Health Insurance provide benefits for someone who suffered permanent paralysis from an accident or stroke? Or for someone who developed Alzheimer's? Or for someone who simply became frail as natural result of the aging process and as a result suffers a long-term inability to care for one's self?

Health Insurance would likely provide coverage for doctor visits, hospitalization, and maybe even some prescription medicines. But if the individual's condition progresses to the point where he or she requires custodial care, Health Insurance would likely not provide coverage.

Long Term Care Insurance has been designed to pick up and provide coverage where Health Insurance leaves off. So in the case where the individual's condition has progressed to the point where he or she requires constant supervision or assistance carrying out basic activities of daily living, long term care insurance would provide funds to help cover the insured's long-term care expenses.

Those who have purchased long term care insurance share that it has also helped them maintain their independence and freedom of choice over how and where their care services are provided. It can allow you to protect your assets and ensure that your long-term care needs will not create a physical or financial burden on your famiy.

Will I Need It?

If you are lucky you won’t but statistics tell us that 43% of us will need it at some point in our lives. Compare that to your home insurance where the likelihood of your home being destroyed is 1200:1 and yet few of us want to take the risk of losing our homes in a catastrophic event.

When we really sit down to think about it, a health event or accident can be even more devastating because the cost is open-ended. Often we don’t know when long term care will stop being needed. It could be a few months to many years.

Would you feel comfortable writing a check for $6,000 this month if you or your spouse needed care? Would you feel comfortable writing a check for $6,000 a month for 6 months? What about one year? Two years? At two years you will have spent $144,000. Long Term Care Insurance transfers all or part of that risk to the insurance company. You are simply buying a pool of money to draw from when you need it. If you choose inflation protection, that pool will grow over time.

Won't Medicare Pay For This?

The following criteria must be met in order for Medicare to pay for any of your long-term care bills.

You must have a hospital stay of three consecutive days (not counting the day of discharge).
You must be admitted to a nursing facility for the same illness you were hospitalized for within 30 days of discharge.
Medicare covers only skilled care or rehabilitative care given in a certified skilled nursing facility or in your home. Custodial Care is not covered when that is the only kind of care you need.
You must be certified by a medical professional that you need skilled nursing or rehabilitative services daily.

How Much Will Medicare Pay for a Nursing Facility in 2007?

Days 1-20: Medicare pays 100%, provided that you are receiving daily skilled care.
Days 21-100: You pay the first $124 per day, and Medicare will pay the balance.
Days 101+: Medicare pays nothing.

Finding The Right Product

Unlike a life insurance policy, There are several “moving” parts to a Long Term Care policy. You have the flexibility to make choices and these choices affect the premium.

Some of the basic choices are:

Facility Daily Benefit - dollars per day you receive from the insurance company. The average cost per day for 2006 was $160.
Facility/Home Care Period – this will be stated in numbers of years. The average stay in a facility nationwide is 3 years.
Home Care Daily Benefit – dollars per day to take care of you at home. The average cost in 2006 was $20.00 an hour.
Inflation Protection – since health care costs continue to outpace inflation with no sign of letting up, this feature is highly recommended.
Elimination Period – how many days you can afford to pay for a facility before the policy takes over. People usually choose 0 to 180 days.

We represent all major insurance companies that:

Are committed to the long term care industry
Have been in the industry for 15+ years (Long Term Care insurance is a relatively new offering)
Have a track record of paying claims
Offer complete coverage
Are client-friendly

Do I really need this?

In order to qualify for Medicaid-paid Long Term Care, a single individual can have no more than $2,000 in assets (not counting your home). In the past, some attorneys and financial planners would work with people to show them how to “give away” their assets in order to qualify for Medicaid.

Medicaid was and is meant to be used only by the truly needy. The government is working to close the loopholes which people have used in the past. (Currently there is a five year “look-back period” to see if a person has given away assets.)