What is Long Term Care?
Long-term care (LTC) is defined as needing assistance for more than 90 days with your activities of daily living, or ADLs (bathing, dressing transferring, eating, toileting and continence) or needing substantial supervision due to a severe cognitive impairment (Alzheimer’s or other forms of dementia, etc.).
Doesn’t Medicare pay for Long Term Care?
Unfortunately, no. In fact, this is stated on the last page of your Social Security statement under “About Social Security and Medicare.” Medicare will pay for short-term rehabilitative care but only after you have stayed a minimum of three nights in hospital and your recovery is expected. This rehabilitative care is limited to 100 days.
Isn’t Long Term Care covered by the Affordable Care Act (ACA)?
Again, unfortunately, no. In fact, both the Federal and most State governments urge Americans to consider private Long Term Care Insurance (LTCi), if affordable. See LongTermCare.gov and Georgia Long Term Care Partnership.
What does a Long Term Care Insurance Policy Cover
Most policies today are comprehensive and pay for LTC in almost any type of setting including the home, assisted living facilities, adult day care centers, nursing homes, memory care facilities and even personal care homes. Most plans also pay for a care coordinator, caregiver respite, hospice care and equipment and home modifications for people receiving care in their homes.
How do I qualify for benefits if I have a LTC insurance policy?
To qualify for benefits, your doctor will have to certify that you will need standby or hands-on assistance with at least 2 of the 6 Activities of Daily Living (ADLs) such as eating, bathing, dressing, transferring, toileting or continence OR need substantial supervision due to a severe cognitive impairment such as Alzheimer’s or other form of dementia, stroke or accident (brain injury). Your doctor will also have to certify that he/she expects you to need this assistance for at least 90 days. These qualifiers are defined by Internal Revenue Code 7702(B) of the Health Insurance Portability and Accountability Act (HIPAA) of 1996.
What is the cost of care in my area?
The cost of care can vary widely depending on where you live and the type of care you need (home care, adult day care, assisted living, nursing home, etc.). A good source for this information is https://www.genworth.com/about-us/industry-expertise/cost-of-care.html.
What does a Long Term Care Insurance Policy Cost?
A typical couple (married or not, including a same-sex couple) in their mid-50s in good health can expect to pay about $200 per month for good middle-of-the-road coverage with a traditional policy that will provide a combined pool of benefits of about $200,000.
Hybrid or combination policies will cost more but provide financial protection against Death and LTC. These policies also have cash value that builds over time, and many offer a Return of Premium rider, i.e. you can cancel your policy and can get your money back.
What is the best age to buy Long Term Care Insurance?
There is no “magic age” to buy this insurance. It is when you are healthy and when you can afford the premiums.
However, the minimum age depends on the type of insurance you buy (traditional or hybrid), and the maximum age is around 78, depending on the carrier. The longer you wait to buy, the more money you will spend in premiums over the long run and the more difficult it will be to qualify from a health standpoint. The average age people buy LTCi today is 57, according to the American Association of Long Term Care Insurance (AALTCI).
Can my rates go up?
With traditional LTC insurance, premiums can and will likely increase in the future. Generally speaking, rate increases on traditional policies are infrequent, but they are probably inevitable in the long run.
Hybrid or combination Life/LTC policies have fixed premiums and can be paid over a lifetime, in a lump sum or customized over a certain number of years (5, 10, 15, etc.).
Can I use my policy to pay my children to take care of me?
Plans generally do not allow direct family members to be reimbursed for your care. However, some policies will pay a partial cash benefit in lieu of full reimbursement, which could be used to pay a family member or anyone, for that matter.
What should I look for in a company offering Long Term Care Insurance?
Look for a company that is rated “Excellent” or “Superior” by the credit rating agency A.M. Best. Equally important, however, is how long the company has been in business, how it underwrites and prices its policies, how it pays benefits, its track record of paying claims and its history of rate increases. These are good questions to ask an independent agent who specializes in this insurance.
Who is a good candidate for Long Term Care Insurance?
A good candidate, in my view, is someone who 1) is in good health 2) can afford the premiums and 3) recognizes the likelihood of needing this care someday.
What other options are there to pay for Long Term Care?
Retirement Savings: Although no one ever does it, you could “self-insure” and earmark a significant portion of your retirement savings today to pay for LTC, or start a special “rainy day” fund and hope that over the next 20-25 years you will have the discipline to save on a regular basis, that the market will always work in your favor and that you will not develop any serious health issues along the way.
Family Members are still the most common option both as payers and providers of long-term care, but children and spouses often underestimate the financial, physical and emotional burdens of caregiving.
Veterans Aid & Attendance benefit: Veterans may qualify for limited assistance through the Aid and Attendance benefit, but qualification is based on assets and income and specific dates of service.
Medicaid is the Federal-State funded program for the financially disadvantaged. In addition, any transfers of assets in the 5-year “Look Back” are subject to penalty.
Guest blogger, Eric Burkard, CLTC, is an independent life insurance agent specializing in long-term care funding solutions including hybrid Life and LTC Insurance policies and represents the top carriers in the industry and across the country. In addition to LTC, Eric works with individuals and business owners to find the best solutions for Life Insurance and Disability Income Insurance. He may be contacted at 770-777-5988 and www.burkhardinsurance.com.
