“77% of Americans age 30-65 think they should know more about Long Term Care Insurance”

– 2010 Prudential Long-Term Care Consumer Awareness and Attitudes Study

 

We understand that the process involved in learning about long term care can seem confusing and complicated. So daunting in fact, many people find themselves discouraged and end up taking no action whatsoever.

Secured Retirement Strategies Group is here, first, to answer your questions, making the learning process easy to understand so that you can acquire the tools and knowledge necessary to create a plan that provides the best solution for you and your family.

There are many more areas of concern that are expressed by our clients and we are here to provide current and unbiased information so that a plan can be made to offset the greatest liability you may face in retirement.

Key aspects of education include:

What is long term care?

The need for long term care typically arises as part of our normal aging process, but can also be the result of a degenerative condition such as Parkinson’s or after a stroke. An illness such as cancer can result in the need for care as well as a cognitive impairment – such as dementia or Alzheimer’s disease.

Long term care is not just for the elderly. It can be needed at any time. Young people can require care due to unexpected illnesses, diseases, injuries or accidents.

Because long term care is not medical care, but rather help with the activities we perform every day, it is referred to as “custodial” or “non-skilled” care.

Non-skilled care includes help with performing your daily activities such as getting out of bed, using the bathroom, taking a shower, getting dressed, eating.

Because this type of care can last a very long time it is considered chronic.

It is this type of care that can become very expensive.

What is the terminology associated with long term care?

The terminology you will hear most often are words and acronyms such as:

  • ADL’s: This refers to Activities of Daily Living which are the basis of the second word, “triggers”. ADL’s consist of:
    • Bathing
    • Dressing
    • Eating
    • Toileting
    • Continence
    • Transferring
  • Triggers: In most long term care policies a physician must declare you are no longer able to satisfy two ADL’s – or – that you have a cognitive impairment. Once these ‘triggers’ are met, benefits will begin based upon the terms of your policy.
What is the best age to purchase long term care?

The sooner the better. More people in their 40’s and 50’s are looking at coverage while they’re still young and healthy. Qualifying for coverage is essential so applying while your health is good or above average is important.

How much does long term care insurance cost?

There are many factors that determine the cost of long term care protection; age, health, features you may want to include in your policy. These factors are all considered when determining the cost. Most importantly, you do not want to purchase something that will be a hardship to you. Policies can be designed to meet your needs and financial goals.

What do actual long term care services cost (home care, assisted living, nursing home, etc.)?

That answer is determined by the area of the country you live in and the type of facility you are needing. One year in a nursing home can exceed $100,000 per year and home care averages more than $40,000 per year. This type of care is expensive so learn the facts about the cost of care in your area.

What impact do various policy features have on cost and future benefits?

Policies come in many different varieties and contain features that can affect the cost of your policy. Features may include; Inflation protection in the form of a Simple or Compound inflation rider, the daily benefit, Home Care benefit, elimination periods, marital discounts, to name a few.

Where would the money come from to pay for long term care?

Medicare does not pay for long term care. Medicare pays for skilled care, or rehabilitation, in a nursing home for short periods after a 3-day hospital stay (up to 100 days).

Medicaid is a program in which you must satisfy asset and state eligibility requirements.

Private health insurance does not cover long term care.

If you need long term care, YOU will pay for it either by choice or by default.

How does a person qualify for long term care insurance coverage?

It is true you must qualify for long term care insurance coverage. So, the sooner you begin the planning process, the more likely you’ll be able to qualify for this protection. Companies vary on the medical and telephone interviews required when an application is taken. You will be informed at the time of application exactly what to expect in terms of medical underwriting or non-medical underwriting.

How does a person qualify for benefits?

You must meet specific requirements written in your contract in order for a long term care policy to begin paying benefits; typically, a doctor must certify that you are unable to perform two Activities of Daily Living (ADL’s) for ninety days or a doctor certifies you are cognitively impaired (dementia, Alzheimer’s).

Where is long term care provided?

There are choices in the settings you receive care.

  • Your own home
  • Adult day care centers
  • Assisted living facilities
  • Nursing homes
What type of care is provided?

Care is typically provided by a non-skilled caregiver. This person or group of people will help you with your everyday activities, such as bathing, dressing, eating. Adult day care centers also allow you to socialize and interact with others in a desirable setting.

How can you receive long term care coverage at home?

A great many people today purchase long term care insurance so they can stay in  their own home and remain independent for as long as possible. Make sure your policy will pay benefits when receiving care at home. Also, understand who is eligible to provide care. Some policies will pay for family members and others require certified caregivers.

Are there tax advantages in purchasing long term care coverage?

There are tax advantages when purchasing long term care policies thanks to provisions in The Pension Protection Act of 2006. Learn how you can use whole life insurance and annuities to take advantage of these incentives.

What about life insurance policies that include long term care benefits?

There are policies today that are designed to pay out a benefit if you need long term care and pay out a death benefit if you don’t. They have become more attractive than the ‘use it or lose it’ policies of the early 80’s. Both life insurance and annuities can provide long term care benefits to you, on a tax-free basis if the policy meets specific criteria.

How does the lack of planning affect the family?

National Council on Aging surveyed daughters and sons who were caregivers for their parents and look at what they said…

  • 40% – being a caregiver had a major impact on their jobs.
  • 11% – being a caregiver forced them to give up a promotion.
  • 66% – being a caregiver had a major impact on their family life.
  • 30% – being a caregiver had a major impact on their health.
  • 14% – being a caregiver forced them to cut back on funding their children’s education.
Planning for long term care is important if you:
  • Don’t want to become a burden to your children or other family members who would need to step in as the caregiver
  • Want to protect the assets for you and your spouse or partner
  • Want to stay in control of choices that will need to be made
What if you plan to self-pay?

I would carefully weigh the pros and cons of using your own retirement funds to pay for long term care. Look at options to transfer the risk to your portfolio if the need for extended long term care occurred.  If your own funds are used, will there be enough remaining funds for you or your spouse? How might that affect your plans to leave a legacy to your children?

By mitigating the risk to your portfolio of an extended long term care event, the plan you have so carefully put into place can remain viable.

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