Do You Need Insurance for Long-Term Care?  

I just read an article on long term care insurance in Parade Magazine and it helped me notice how far people have come about educating themselves and planning for this realistic risk.  When I began in the industry 10 years ago I would send out letters explaining what long term care insurance was.  A few weeks would pass and I would follow up with the people on the phone and when I asked if they got that letter on long term care insurance 3 out of 4 people would mistakenly hear lawn care and tell me they don't need their grass cut.  Seeing the industry mature into a key financial planning tool is a positive sign and having respected publication like Parade write articles keeps spreading the word.

The article in Parade Magazine started by describing that people are living longer which is good, however with that longevity comes a high risk of needing long term care before you die.  Many people still assume Medicare will pay for their care, but in fact it pays only the first 100 days at best after jumping through the government's hoops.  Medicaid will pay only after you've spent all your life's savings and that is the problem.  For people who want to live their last few years comfortably or leave something to their family long term care insurance could be a solution.  The article goes over some keys factors to consider before buying:

The Cost
The older you are when you buy long term care insurance, the more your premiums will be. For people 60 to 70, premiums can range from $1000 to $8000 a year per person. If you buy a policy at 60, you probably won't use it for 20 years or so, it is imperative to buy the “inflation rider.” This will increase your benefits over time. 

The Benefits
A long-term care insurance policy pays a predetermined amount ranging from $50 to $400 per day and the payments can last from a 1 year up to unlimited or lifetime benefit period.  In order to use your benefits most all policies use the activities of daily living or ADLs.  Most policies require you to need help with 2 out of 6 ADLs.  Eating, bathing, dressing, toileting, transferring, and maintaining continence. 

The article closes with these keys facts to consider:
• 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. 

At LTCtree we work with most all the main carriers and will show you the top 5-6 in a side-by-side comparison format so simply fill out the form below and we will mail you your quotes. 

Facts and Statistics on Long Term Care

1.  The National Association of Health Insurance Advisers states that: Disability insurance and Long Term Care insurance do not cover the same things.  In-fact, disability insurance provides you with income if you were to become injured or sick and cannot work. Disability insurance is not designed to pay and cover long term care expenses. 

2.   The Georgetown University Long-Term Care Financing Project found:  It is estimated that approximately 49% of people 65 and older will need Long Term Care at some point in their lives, and that 72% will use home health care services.

3.  The U.S. Department of Health and Human Services and Human Resources and Services Administration state: In most cases people will have to spend all or almost all of their assets to qualify for Medicaid benefits.  While the maximum level of assets you’re allowed to keep varies from state to state, people are required to spend down assets to a significantly before they can qualify for Medicaid benefits.

4.  Congressional Budget Office conducted a study, “The Cost and Financing of Long-Term Care Services before the Subcommittee on Health Committee on Energy and Commerce U.S. House of Representatives, Table 1.”  The study found that Medicare is not the primary funding source for most senior citizens' long term care costs.   Medicare spending accounted for 16% of the total Long Term Care expenditures in 2004.  Medicare primarily covers acute care, it pays only for limited stays in post-acute skilled nursing care facilities and home health care of about 20 days maximum.

5.  The Georgetown University Long-Term Care Financing Project also found: Most long term care is not provided in nursing homes and one might think.  In-fact 80%of all Long Term Care is actually received at home or in community settings.  If you stop and think about it, people are simply more comfortable at home so it makes sense. 

6.  The Official U.S. Government Site for People with Medicare, www.medicare.gov; Medicaid and Long Term Care, “What is Long Term Care?”  Medicaid does not cover long term care services received in the home.  Medicaid mainly covers long term care services that are received in nursing homes. In the few states where Medicaid does cover home health long term care services, it is done on a limited basis mainly for physical therapy and rehab services.

7.  U.S. Department of Health and Human Services found: The average length of stay in a nursing home about 2.9 years and of those people admitted to nursing homes, 50% stay less than six months, and only 10% stay three or more years.

8.  The Georgetown University Long-Term Care Financing Project: Almost 40% of the people receiving long term care are under the age of 65. 

9.  John Hancock 2005 Cost of Care Survey, conducted by Harris, Rothenberg International, LLC, 2005 found: On average, a one-year stay in a nursing home in the United States costs about $71,000.10.

 Hillary Clinton and proposed Long Term Care Insurance tax break

As the Democratic Presidential contest winds down Hillary Clinton was in North Carolina pitching a proposed law that would gives families, caregivers, and long term care insurance premiums a tax break as she sees the high cost of long term care a hardship for American families.

Her proposal calls for a $3,000 tax credit to an individual with major long-term care needs or even their caregivers, a tax credit to cover 75% of long-term care insurance premiums and expansion of the Family and Medical Leave Act to cover employers with 25 or more workers.

Tax proposals like this are going to be imparative for America's Seniors so that they can have a plan for if and when they do need long term care services in-which this year are averaging $77,563 per year.  Most people ask themselves where will they get that kind of money?  If a person can deduct the long term care insurance premiums off their taxes that is a huge first step in the right direction.  

Clinton mentioned in her town hall meeting: "It is important that we all recognize that praying for our country, praying for people in positions of authority is what people of faith are called upon do; Despite the American birthright of being able to complain about politicians, which I totally accept, I think we all recognize the sacrifices of people who put themselves into the arena of politics." 

At LTCtree we watch the news reports closely because a financial plan with long term care insurance can be the difference in having assets to live off of throughout your retirement and having to depend on government assistance because a person didn't plan.  Tax breaks like this will help the average person with the premiums so that they can insure that they won't be a burden to their kids.  Take a minute of so to fill out the form below.  We work with most all the blue-chip companies and will mail you out the top 5-6 quotes.