Long Term Care

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Please also review Hybrid Life Insurance for more information. 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 care 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. 

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. A major  LTC insurer recently stated that over 80% of their LTC claims are now coming from Home Health Care. People naturally would rather stay in the comfort of their own home whenever possible and if they have the resources to do so. With costs soaring for long term care, in the DC Metro area the average cost is over $300 per day (over $100,000 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
  • The cost of nursing home care in the DC Metro area is about $100,000, or $300 per day
  • 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

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
  • the inability to perform certain ACTIVITIES OF DAILY LIVING (known as ADL’s) for an extended period of time

When are Long Term Care Benefits Payable?

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 – or having a Cognitive  Impairment. ADL’s include bathing, continence, dressing, eating, toileting and transferring (moving to and from a bed or a chair). Typically, benefits are payable under most Long Term Care policies when a person is unable to perform at least two ADL’s.

When you are considering a policy 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.

Cognitive Impairment – having a ‘cognitive impairment’ or mental incapacity is also a benefit trigger where benefits are paid. 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. 

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. 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 Long Term Care expenses.

Call our office today to discuss your questions and concerns, rather you already have LTC coverage or if you are currently not insured. We will review your current policy and make recommendations in light of the new products that have become available. Or  if you are not currently covered for long term care expenses, as independent Brokers we will provide the information you need in order to make an informed decision regarding this extremely important risk.