2011

LONG-TERM CARE INSURANCE

WHAT IS LONG-TERM CARE?

·        A wide range of medical, personal and social services often needed by someone who has a prolonged illness, disability or a cognitive impairment (such as Alzheimer’s disease)

·        These services may include

Ø Personal Care: Help with Activities of Daily Living (ADLs)

§  Bathing

§  Eating

§  Dressing

§  Toileting

§  Continence

§  Transferring

Ø Home health care

Ø Respite care

Ø Hospice care

Ø Adult day care

Ø Nursing home care

Ø  Care in an assisted living facility

Ø  Care management services

LONG-TERM CARE COSTS

·        Costs can be expensive

·        Costs depend on the amount and type of care needed and where obtained

·        Nursing Home Costs: In 2007, the national average cost of nursing home care was about $181 per day for a semi-private room, which does not include items such as therapies and medications

·        Assisted Living Facility Costs: In 2007, assisted living facilities reported charging an average fee of $2,714 per month for a one-bedroom unit

·        Home Care Costs: In 2007, the national average cost of part-time basic home care (home health aide three times a week) was $16,000 per year

NEED FOR LONG-TERM CARE

·        Risk factors:

o   About 70% of individuals over age 65 will require some type of long-term care services during their lifetime

o   Over 40% will need care in a nursing home

o   Age – the risk generally increases with age

o   Marital Status – Single people are more likely to need care from a paid provider

o   Gender – women are at a higher risk than men, primarily because they tend to live longer

o   Lifestyle – Poor diet and exercise habits can increase your risk

o   Health and Family History – can also impact your risk

PAYING FOR LONG-TERM CARE

·        Individual Personal Resources: paying from their own funds by using savings, investments, selling assets, etc.

·        Medicare: Medicare does not cover most nursing home care, although they will pay for some skilled care only in specific situations.  You should not rely on Medicare to pay for your long-term care needs

·        Medicare Supplement Insurance (Medigap): Medigap policies do not cover long-term care costs

·                                Medicaide

o   Medicaid pays nursing home care only for individuals who are low income and who have spent most of their assets

o   To get Mediaid help, you must meet federal and state guidelines for income and assets

o   Federal law requires your state to recover from your estate the costs of the Medicaid-paid benefits you receive

PAYING WITH LONG-TERM CARE INSURANCE

·        Insurance that will pay or reimburse for some or all of the long-term care services

·        Offered by private companies – see list of companies in Maryland

·        Buyer beware!  This is an expensive product and the language is not standardized, making policies difficult to compare

·        Many options are available, including

§  Benefit amounts

§  Benefit periods (per day, per week, per month)

§  Benefit triggers

§  When Benefits start (Elimination Period)

§  Inflation protection

§  Third party notice

§  Waiver of premiums

§  Restoration of premiums

§  Non-forfeiture benefits

§  Premium payment option

·        Consider buying Long-Term Care Insurance if you

o   Have significant assets and income

§  Assets: $100,000 to $500,000 excluding home and car

§  Annual retirement income over $30,000

§  Understand your rights under the Spousal Impoverishment Law

o   Want to protect some of your assets and income

o   Can pay premiums, including possible increases, without financial difficulty

·        Other Considerations on buying Long-Term Care Insurance

o   Take your time – this is a major lifetime decision

o   Evaluate your support systems

o   Check out the financial stability of the insurance company

o   Insure there are well defined benefit triggers

o   Fill out the application yourself and check for accuracy

o   Do not sign a contract or make a payment before you have read and understood it

o   Contact SHIP at 301-590-2819  for assistance in understanding

§  Spousal Impoverishment law

§  Financial stability of insurance companies

§  Benefit triggers

§  What constitutes a good policy

§  What affects the premium cost

§  Tax Qualified vs. Non Tax Qualified policies

§  Other Long Term Care Insurance issues