Long term care insurance Archives

Long-Term Care in America — Part 3

This is the last in a three-part series on long-term care insurance written by Pat O’Neill. Pat has pointed out that long-term care insurance is not for everyone. But if you do not have long-term care insurance, I hope it has provided you with insights as to whether or not you should consider it.

When should you buy long-term care insurance?

If you decide LTCI is right for your situation, the best time to buy is now. Why?

  • Lower premiums now and lower cumulative premiums over the life of your policy. See the example below.
  • Avoid the risk of developing a condition that may make you uninsurable.
  • You are covered immediately should you develop a need now.
  • Wider choice of insurance companies to choose from.
  • If you cannot care for yourself, you will get the care you need.

Example:  Bob is 50 years old and purchases a LTC policy. He pays for it until age 90. Now, let’s say Bob waits four years and buys an equivalent policy at age 54. (We assume Bob remains healthy and the company does not change the base premiums.) He pays for this policy until age 90. The cost of waiting four years could cost Bob an additional $17,362 in premiums. Bob did not save anything by waiting. It cost him money, and he took the risk of not being covered for four years and of becoming uninsurable.

What are the benefits of LTCI?

A good LTCI policy delivers broad and flexible benefits to help provide and pay for the LTC services you need.

  • Relieve the potential burden on your loved one
  • Maintain choice and quality of care.
  • Maintain independence
  • Protect assets for spouse’s use or to pass on
  • Avoid having to rely on Medicaid.
  • Potentially save hundreds of thousands of dollars, should you need care.

What does LTCI cost? Like a car, it depends on which one you buy.

The cost of a LTCI policy is based in part on your age and health when you apply. It also is based on the level of benefits you choose:

  • Monthly or daily benefit
  • Benefit period/lifetime benefit amount (pool of money)
  • Elimination period
  • Inflation protection
  • Additional options (e.g., shared care for spouse/partner, etc.)

What discounts are available?

  • Spousal discount
  • Preferred health discount
  • Group coverage discount with an employer or association

The most important thing to remember is that you should have a plan for your long-term care. It costs no more to meet with a dedicated specialist who can help you analyze all your choices and help you make an educated decision about what is best for you.

Pat O'Neill

Pat O’Neill is an independent long-term care insurance specialist. She works with individuals, businesses, and associations. You can visit her Web site at http://web.ltcfp.com/PatriciaO’Neill and download her booklet, Dignity for Life, or you can reach her at 703 534 3255 and pat.oneill@ltcfp.net.

Long-Term Care in America — Part 2

Last week we noted that there is a high risk of needing long-term care (LTC) at some time in our lives (68% for those 65 and older), the cost is high, and it is an especially important issue for women. There are four options to provide the care:

  1. Self-insure (use your own assets, including retirement funds)
  2. Family (spouse, children, siblings)
  3. Government (Medicare [very limited] and/or Medicaid)
  4. Transfer some of the risk to an insurance company

What is LTC insurance?

LTC insurance pays for LTC services. Policies vary in terms of what they will cover, and insurance companies require that applicants qualify for the coverage through an underwriting process.

Do you need LTC insurance?

LTC insurance is not appropriate for everyone. The poor should not buy it because they will likely qualify for Medicaid. The independently wealthy may want to self-insure. Middle-class Americans may want to consider LTC insurance for peace of mind and to protect their family, their retirement assets, and to maintain their quality of life, independence, and control.

What are the types of LTC insurance?

  • A reimbursement policy reimburses you for the actual costs of specific, defined services up to the selected benefit.
  • A cash policy pays the full selected benefit regardless of services provided.
  • Combination of the two.

Are LTC insurance premiums tax deductible?

  • The Health Insurance Portability and Accountability Act of 1996 (HIPAA) provides a tax incentive for individuals to take financial responsibility for their long-term care needs.
  • A portion of tax-qualified plan premiums may be deducted as a medical expense on Schedule A of the federal form 1040.
  • Some states allow tax credits for premiums not deducted on a federal return.
  • Premiums may be paid for from Health Savings Accounts (HSAs).
  • There are specific deductions for business owners and self-employed individuals. Please consult with your

What does Partnership mean?

Partnership-qualified policies can further help middle-class Americans protect their assets. In addition to preserving assets that would have been spent for LTC services, a partnership-qualified policy provides dollar-for-dollar asset disregard should you ever need to apply for Medicaid. Every dollar spent from a LTC policy for your care will protect a dollar of your assets from needing to be spent down in order to qualify for Medicaid.

More information can be found at The National Clearing House for Long-Term Care Information at www.longtermcare.gov.

NEXT WEEK:  When should you buy LTC insurance, what are the benefits, and what does it cost?

Pat O'Neill

Pat O’Neill is an independent long-term care insurance specialist. She works with individuals, businesses, and associations. You can visit her Web site at http://web.ltcfp.com/PatriciaO’Neill and download her booklet, Dignity for Life, or you can reach her at 703 534 3255 and pat.oneill@ltcfp.net.

Long-Term Care in America — Part 1

Pat O'Neill

Pat O’Neill is an independent long-term care insurance specialist. She works with individuals, businesses, and associations. She will be enlightening us on long term care in America in a three-part series.

Former First Lady Rosalynn Carter said,
There are four kinds of people in the world:
Those who have been caregivers
Those who currently are caregivers
Those who will be caregivers
And those who will need caregivers.

Rosalynn Carter

What is long-term care?

Long-term care (LTC) is for people with a prolonged illness, a disability, or a cognitive impairment (such as Alzheimer’s disease). Care may be provided at home, adult day care, nursing home, and assisted living community. LTC includes both skilled care and personal care. Up to four generations can be affected by a LTC need.

The need for LTC can start gradually, or it may come on suddenly due to an accident, stroke, heart attack, or major illness. You may need care for a short time or for many months, years, or the rest of your life.

Leading causes of LTC:

  • Alzheimer’s Disease and Related Dementia – 31% of LTC claim dollars
  • Circulatory Disease and Hypertension Related – 16%
  • Parkinson’s and other Central Nervous Systems Conditions – 14%
  • Stroke – 9%
  • Broken Hips and Related Injuries – 9%

Who may need LTC?

  • Today, about 63% of people needing LTC are over 65. However, 37% are 64 years of age or younger.
  • The longer you live, the greater chance you will need assistance due to chronic conditions.
  • For people ages 65 and older, there is a 68% lifetime probability of needing LTC at some point in their lives.
  • About 44% of people reaching age 65 are expected to enter a nursing home at least once in their lifetime.
  • LTC is an especially important issue for women.

How much does LTC cost?

The cost depends on the amount and type of care you need and where you get it. Below are national average annual costs for care provided in different settings as of 2009. You can learn the current average cost for your area by going here.

  • Nursing Home – national average cost was about $219 per day for a private room, or $79,935 annually.
  • Assisted Living Facility – national average of $3,131 per month (for a one-bedroom unit) or $37,572 per year, including rent, meals, and most other non-medical fees. Costs can be higher if more care is needed.
  • Home Care – The national hourly rate for home health aides was $21. Yearly costs vary widely depending on the amount of care needed.

Who pays for LTC?

  • Personal resources (income and assets) of individuals or their families
  • Long-term care insurance
  • Some assistance from Medicaid for those who qualify (must have low income and very little assets)
  • NOT – Medicare, Medicare supplement insurance, and health insurance usually will not pay for LTC.

NEXT WEEK:  What is long-term care insurance and do you need it?

You can visit Pat O’Neill’s Web site at http://web.ltcfp.com/PatriciaO’Neill and download her booklet, Dignity for Life, or you can reach her at 703 534 3255 and pat.oneill@ltcfp.net.