Planning for Dignity:
Preparing for the Challenges of Long Term Care

It is not a comfortable subject to think about. For most seniors, the idea of needing long term care, let alone spending time in a nursing home, is very disconcerting. And yet with statistics showing that the odds of someone over the age of 65 needing long term care being one in four, and the odds of at least one member of a married couple needing long term care being seven in ten, it is a challenge that must be faced head on.

First the bad news. Long term care as we have seen above is a common need that seniors have. We all know people who have spent time in a nursing home, or have required extensive home health care. Perhaps you have helped to provide care for a parent or other loved one. It can be both an extensive (average stay in a nursing home is 2.6 years) and an expensive (costs as high as $50,000 per year) proposition.

What is worse is that help is not necessarily on the way, at least help from the government. Medicare pays for only about 2% of long term care costs in America . Medicare pays only for skilled care (the vast majority of care is intermediate and custodial), and it does so at the rate of 100% of the cost for the first 20 days of care, everything above a significant daily deductible for days 21 to 100, and then it pays nothing. Medicaid is another Federal program that can pay for long term care, but as a form of welfare program, it requires you to spend down your assets first before it will pay. The Medicaid spend down process is not something that one would choose to go through unless you had to … You have worked hard all of your life, too hard to see a lifetime of savings disappear.

But there is good news. Many seniors first looked at Long Term Care Insurance back in the late 1980s and early 1990s when the industry was still in its infancy. They concluded that the policies were too expensive and they really only covered Nursing Home care, where no one wanted to go anyway.

That has changed greatly in recent years. With a greater claims payment history to work with, insurance companies have lowered rates on new policies, at the same time that they have made them much more consumer friendly. Policies now have available extensive home health care options that allow you to receive care in your home, and to retain the dignity and independence that you desire and deserve. Some policies even have provisions where from the policy proceeds you can pay a family member or trusted friend to provide your care.

It is important for you to explore your long term care options. If you do not own a long term care plan, it is time for you to learn about the extraordinary new options now available to you. If you do own a long term care plan, you might want to compare the newer programs that are available to you that may increase your benefits and perhaps even lower your costs.

Long Term Care Insurance: What To Look For In A Good Plan
There are a number of key features to look for in a long term care insurance plan. There are many differences between one company’s policy and another’s … some are not of great consequence, but others can make a big difference should you ever need long term care and access the benefits of the policy. Some issues to consider:

1. The Company Itself. Make sure that the company that is underwriting the policy is a financially secure company that will be around when you need them. A.M Best is an independent analyst that rates the financial strength of insurance companies. We only recommend long term care insurance carriers that are rated “A (Excellent)” or “A+ ( Superior )”. Also, most policies base your annual premium on your age at the time you purchase it. Although they reserve the right to raise your rate in later years, you should look for companies who have not raised their rates on current long term care insurance policy owners. Many seniors have been hurt over the years by companies that increase their premiums beyond the client’s ability to pay, thus forcing the client to drop their plan just at the point when they may actually need the coverage. The best indicator of future behavior is past behavior: look for companies who are financially solid and who have never had a rate increase.
2. Home Health Care Coverage: Westport Insurance Group, LLC does not recommend long term care insurance plans that do not cover home health care. The home is the location where seniors want to receive care, and long term care insurance should cover care there, as well as care in a nursing home or assisted living facility. Also ask, who can provide the home health care? Do they only pay for higher levels of medical care in the home, or will the policy also pay for someone to come in and look after you, help with cooking and cleaning, or just provide some help and companionship? Will the policy pay for a friend or family member of your choice to provide the care for you?
3. Benefit Triggers: Most plans today will pay for care when either there is a cognitive impairment such as Alzheimer’s, or if you are unable to perform a certain number of activities of daily living, such as eating, transference, bathing, toileting, and continence. Look for a plan that requires that you need help with no more than 2 of these daily activities for you to receive benefits, as well as one that will trigger benefits if there is a cognitive impairment.
4. Adequate Benefit Levels: Your plan should provide enough in money for you to be able to afford the care you require when you qualify to access the benefits of the policy. If Nursing Home costs where you live are $50,000 per year and your plan only pays for $35,000 per year, you need to be in a position to pay the remaining $15,000, or you may need to rethink whether you have adequate coverage. An inflation protection provision where your benefit levels will grow at up to 5% per year can help to keep up with the rising costs of home health care and nursing home care. If your current plan does not have inflation protection, you could in time be looking at a large gap between what care will cost and what your policy will pay for.

Conclusion
If you have purchased long term care insurance, and after careful review you conclude that the benefits and levels of coverage are appropriate for you, congratulations! If, however, you have yet to cover yourself against the potential devastation of long term care, or if your current plan does not meet some of the standards that we have just looked at above, it would be wise to begin now to explore your options. The late Senator John Heinz, who chaired a Senate Committee on Long Term Care, once said that to insure possessions such as your auto and your home but to not insure yourself against the costs of long term care, is “like wearing a bullet proof vest with a hole over your heart.” If we can be of assistance in “bullet proofing” your life savings and your dignity from long term care, please feel free to contact us.

Important Notice: This article is intended only as a brief over view of a concept. The ideas discussed here may or may not apply to your specific situation. Please read all product disclosures and brochures, and consult with any appropriate legal or tax advisors before making any financial decision.