Long-Term Care FAQs

Q) Who Provides Long-Term Care Services?

A) Traditionally, family members provide care for the relative in need.(2) As their illness progresses, the patient may need more care than the family member(s) are willing or able to provide and may require homemaker services at home, or need to be placed outside the home; such as in an adult day care center, or an assisted living facility, Hospice or a nursing home.

Q) What Does Long-Term Care Cost?

A) The financial impact of long-term care is significant. Though it varies in every state, a year in a Nursing Home will costs an average of $79,000. An Assisted Living Facility is on average $37,500 per month. Home Health Care runs anywhere from $12,000 to more than the cost of a stay in a nursing home.(3)

Q) Who Pays For Long -Term Care Costs? Actually there are four basic options. Let's take a look at each.

a) Private long -term care insurance may allow more freedom to choose where and with whom they will seek their care. An individual does not have to spend down their assets to use it. There are several policies that can be tailored to match what an individual believes they will need should the time come when a chronic illness or long term care needs arise. The costs of these policies vary with the choices made.

b) Medicaid was created as a safety net for individuals. To get Medicaid help, one must meet federal and state guidelines for income and assets.(4) It is no secret that many people use Medicaid to pay nursing home bills. Medicaid, however is very limited as to the sites of care the government will pay for. Some providers that a person would like to turn to for help at this time do not accept Medicaid patients. For example, companies that provide custodial care in the home, many assisted living facilities, as well as some nursing homes.

c) Medicare's skilled nursing facility benefit does not cover most nursing home care.(5) Medicare will pay the cost of some skilled care in an approved nursing home or in the individual's home, but only in some situations. This benefit only covers a situation if a medical professional indicates there is a need for daily skilled care after a hospital stay of at least three days. Medicare should not be relied upon to pay for long-term care needs.

d) Private Pay would be all out-of-pocket monies to cover the entire cost which can be extremely expensive.

Q) What are the exclusions?

A) The circumstances under which benefits are not payable, even if you would otherwise qualify for benefits under another section of this policy for any care or services are as follows: This policy will not pay for any care or services which are:

1. Provided without charge in the absence of insurance; or
   
   
2. Due to a condition for which you can receive benefits under Workers' Compensation or the Occupational Disease Act or law; or
   
   
3. The result of war or any act of war; or
   
   
4. Reimbursable under title XVII of the Social Security Act (Medicare) or would be so reimbursable but for the application of a deductible or coinsurance amount; or Reimbursable under any other federal, or state health care plan or law, except Medicaid. We will reduce our benefits payable by the dollar amount paid from the government health care plan or law to the extent that the combination of Our coverage exceeds 100% of the actual charge for the covered services.

Q) At What Age Should Long-Term Care Insurance Be Purchased?

A) Long-term care insurance usually is purchased at age 45 or older.(3) However, long-term care cost can arise at any time. For example; accidents, strokes, multiple sclerosis, and Parkinson's disease could arise at any time. Long-term care cost can effect even those in their 20's and 30's.

Q) Why Would an Individual Purchase a Long-Term Care Insurance Policy?

A) People purchase a long-term care insurance policy for several reasons. A few that should be considered are: To avoid being a burden and prevent stress on spouse and/or family who may not be able to provide the emotional and physical care needed. To help preserve independence and freedom of making choices rather than being dependent upon others. To help conserve an estate and retirement assets, especially for a spouse, while protecting children's inheritance. To help fund high-quality long-term care. To help avoid having to move away from a hometown area and give up friends and physicians. Overall, the investment is very small in relation to the benefit received.

Q) In Purchasing Long-Term Care Insurance, How Is It Determined What Benefit Amount Will Be Needed?

A) When considering long-term care insurance, think about two different situations. What is the cost if the policy is used and what is the cost if the policy is not used? With this in mind, there is the possibility of purchasing a policy that pays for 60 to 70 percent of the current cost of a stay in a nursing home. This will reduce the premiums, however 30 or 40 percent of the costs will be incurred personally if a claim arises. An example of this is as follows: Assume a nursing home cost per day of $125.00 or $45,000 per year. A 60% benefit would pay $80.00 per day or $29,000 per year A 70% benefit would pay $90.00 per day or $32,850 per year. Consideration should be given to paying a higher premium for a policy that will pay up to 100% of room and board costs.

Q) What Benefit Period Should A Person Choose?

A) If longevity runs in the family, consideration should be given to an unlimited benefit. While more expensive, an unlimited benefit would ensure lifetime coverage. Experts recommend no less than a three-year benefit period.(3)

Q) What About Home Care?

A) Many experts agree that for couples and individuals who have nearby support or, a policy with 100% of home nursing benefits to be paid at home, might be the way to go. If a single person has no nearby caregivers, in all likelihood such an individual will receive help from outside of the home. Thus, it may be prudent not to purchase a home care benefit.

Q) What is an elimination period and how Is one chosen?

A) An elimination period is the number of days care or services are received before benefits are payable.(6) Most people choose a 30-day elimination period.

Q) What About Inflation Protection?

A) Long-term care costs are expected to rise in the future, so it is wise to purchase some type of inflation protection. Most companies will offer a choice between compound and simple inflation. Simple inflation increases the maximum daily and weekly benefits by 5% of its original amount. With simple inflation, benefits will double every 20 years. Compound inflation is very similar to simple inflation except the maximum daily benefits are increased by 5% of the previous year's amount. Benefits will double every 15 years with this type of inflation. Some insurance companies have the option of a Cost of Living Increase rider gives an individual the option to increase a maximum daily benefit on a specific anniversary date with a premium increase.

Q) How Is a Budget Established For Long-Term Care Insurance?

A) While circumstances differ, some experts suggest that the premiums be no more than 6%(3) of an individual's income or up to 1.5% of assets.(7) Many times programs can be designed which fall far below these maximums. It will depend on personal preference and background.

Sources:
1. http://www.prepsmart.com/women.html
2. "Do Consumers Understand LTC?", LIMRA'S Market Facts
3. MetLife Mature Market Institute, 2009 Cost of Care Survey
4. Georgetown University Institute of Health Care Research and Policy based on Levit et al. 1996
5. "The Dollars and Sense of Covering Long Term Care," Business & Health, February 1996.
6. Fortune®, August 17, 1998
7. Direct Approach®, 1996