Long Term Care

Long term care insurance sounds straightforward. Like life insurance, we want to pay now to cover a later, inevitable event. But care costs many years from now will be higher, inflation will eat into your benefits, and quirky contract language in many policies can limit what you receive.

There are several key things you should watch for and resources you can use to avoid paying more than you have to.

Don’t Count on the New U.S. Plan Just Yet

The federal government will eventually set premiums and rules for a newly effected plan, the Community Living Assistance Services and Support Act (CLASS). Part of the 2010 health care overhaul legislation, everyone will be accepted regardless of age or health, but it may take until 2012 for all the details to be worked out, with benefits available only in 2018 and after.

And the plan will require that you be employed and contribute to it for 5 years before benefits eligibility. Further, the Congressional Budget Office estimates average benefits at $75/day, while current nursing home costs are in the range of $200/day. On the other hand, those living below the poverty line can anticipate premiums of only $5/day.

Unless these conditions fit your circumstances, you should consider long term care insurance from a private insurer. Beware Premium Creep.

Who You Deal With Matters

First, choose your agent wisely. Independent agents who represent many different companies will offer you more options. Make sure the agent has 10 years or more experience in long term care insurance, and choose from one of the top ten companies in the industry, as they also have experience and will be less likely to increase rates.

To locate a broker, check iiab.net (Independent Insurance Agents’ site) or pianet.com (National Association of Professional Insurance Agents). To cross-check the top companies against what the agent recommends, contact your state insurance department and its council on aging.

Assess whether your retirement strategy can withstand up to a 50% premium increase over time. Premiums are not fixed and have risen sharply in recent years. So make this inevitable rise in costs part of your planning.

Take Out Inflation

Strongly consider adding an inflation protection rider to any long term care insurance policy. They increase benefits to keep pace with the cost of care. So-called “future purchase options” are also available, which add more coverage as costs rise. The problem with these options is that you may not be able to afford to pay for them down the road when the need arises.

Do Your Premiums Ever End?

Traditionally, policies stopped charging premiums when benefits started. It is now more and more common to see premiums still being charged as benefits are paid. Shop to see if you can find a good policy which guarantees that its premiums will stop when benefits are paid.

Cover All the Possibilities

Remember the “long term” part when choosing long term care insurance. Even though you may only need in-home care presently or envision it in the near future, buy a policy that covers nursing home care and assisted living care as well. Be aware of your family health history and plan for what is logically possible to happen to you. Plan not only for general age-related infirmities but also for specific conditions for which you may be at higher risk.

Healthy habits and preventative measures are great. Wishful thinking and avoidance are very costly and fit very nicely with the old phrase “penny wise and pound foolish.”

Read the Fine Print

Both the Definition of Terms section of a policy and the specific paragraphs covering What is Covered and What is Excluded are prime areas where consumers can find themselves signing a document they wish they had not.

For example, transfer from an assisted living facility to a temporary care center may be covered only for a certain number of days, or even excluded if the temporary center has more that a certain limited number of beds.

Check whether certain services you presently use, such as an informal, non-licensed in-home health provider will count toward your “exclusion period”–the time before you start getting benefits for a preexisting condition.

Consider Using a Care Manager

When evaluating insurance or any other aspect of elder care, it is often helpful to consult an experienced, objective advisor as to how to plan and implement the services your elder requires and deserves.

It is best to entrust your elder care management only to those with the highest level of training, broad expertise, experience and ethical standards.

A variety of semi-professional organizations and franchises have arisen in response to the greater demands of our aging population. While some may be competent, it is best to carefully assess the reliability and accountability of any provider, as oversight laws are often slow to adapt to rapidly changing industries such as this.

Established professionals with legal and health elder health care experience are already well regulated through government bodies and professional licensing organizations, providing a measure of comfort and security that you will be well served.

The senior population in Virginia is growing at fast rate that makes up 12 percent of the state’s total population. According to some experts, the adults age 65 and above will comprise about 19 percent of the population by the year 2030.

Together with the increasing adult population, these seniors will most likely suffer from health and economic issues that will require care from a loved one or paid care services in order to continue life at its fullest. The group of elders 85 and above are the most susceptible to health problems. Women live longer than men, so women will more likely need long term care services than men do.

Demographics clearly visionalize what could happen among seniors in the next years. This also raises concern as to how Virginians would respond to those needs amidst the price hike of most long term care services. And the most intriguing question is: Who’s going to pay for it?

The Genworth Financial, a fortune 500 financial security company, conducted statewide survey and reported that nearly two-thirds of people age 65 and above will need long term care either in their residences or in a nursing facility. However, the irony of this is that nobody wants to discuss it or admit it to themselves. Almost 90 percent of people aged 55 and above admit that they have not talked about long term care issues with their spouse, partner, children, and relatives. This clearly implies that most Virginians are hesitant to plan for their long term care, obviously because of its high costs and there’s no state program, even Medicaid, that will support such care.

The Genworth Financial reveals the figures of the survey. In Richmond area, the rate of home health aide accrues to about $16 to $20 per hour. The rate of assisted living facility costs between $1,300 and $5,675 a month. The private nursing home daily rates in Richmond area range $187 to $284 per day, while adult day care costs around $46 to $64 a day.

The Virginia Long Term Care Insurance Partnership

Like all partnership programs, the Virginia long term care insurance partnership is a joint effort between the state government and private insurance companies to help people plan for their long term care needs. Insurance companies agree to adhere to the requirements of the state and the Deficit Reduction Act by providing what is known as the “partnership policies.”

The most popular feature of partnership policy is the asset disregard. Before, people have to exhaust their assets first until they reach the Medicaid limit. All applicants are expected to have a maximum assets worth $2000 for individual and $2300 for couples, meaning that you have to eventually remain poor in return for Medicaid assistance. However, with asset disregard, applicants need not deplete their assets just to be included on the successful list of Medicaid recipients because the asset disregard feature allows policyholders to keep much as they want. This is because the amount the policyholder can protect is equal to the amount of insurance benefits received under the partnership policy. Also, partnership policies include annual inflation protection and tax-qualified benefits.

Are you the recipient of an endowment policy? If you are, the amount of time before the settlement matures may be too long for you. You may have an immediate need, and there is no way for you get the money right away. In case of emergencies or whenever a need presents itself, there will be no way for you to capitalize on your settlement. This was in the past. Now, you can make use of endowments selling.

We all know how these policies work. You will have to wait a considerable amount of time for you to enjoy the benefits. You have to wait for a number of years before you see any money. True, your future is secured, but you will have to wait for this time to come. Sadly, you never know when emergencies may come. No one wants to be stuck in a situation wherein you have no options.

These insurance firms may have the option to let you collect your settlement at an earlier date. However, the value of the settlement is too low for you to accept. The amount may not be enough to take care of the immediate need. Furthermore, the amount may not be enough to cover the initial investment of the policy. Cashing out early is just not worth it.

Through endowment selling, you are presented with much better options. With this option, you get a much higher value for your policy compared to the surrender value of these insurance firms. Compared to surrendering your policy, the amount you get from selling is much greater. This simply means that you get to take care of situations like emergencies in a much better way.

In today’s troubled times, there is a greater need to have ready cash at hand. However, due to the financial crisis, there is just not enough ready cash to come by. This is when we have to make use of endowments selling. This presents us with options to take care of situations that need ready cash at hand. This way, you are always on your guard.

You may ask yourself how much more will you get from selling your policy? The value varies from policy to policy. However, it is still much larger than what the insurance firm has to offer for a surrender value. There are some policies that sell for 30% more compared to surrendering the policy. As you can see, the amount is much more significant.

Why are these policies purchased? Firms purchase these policies to gain more from their investment in the long run. This is why endowments are in demand. However, you have to understand that there are endowments that are more in demand compared to others. It is not the same for all policies.

Most of Wisconsin’s health care budget go extensively on long term care services. In fact, the 2005 budget recorded to nearly $2.2 billion expenditures on long term care; 48 percent for home and community-based services (HCBS) and 53 percent for institutional care.Informal care provided by family and friends is excluded from those expenditures. Providing informal care to elders and disabled is very important since insitutional care services are so expensive these days and they could likely double in the future.

The population of the elderly in Wisconsin soared to more than 51,000 between the year 1990 and 2000. This number is projected to increase in the next 25 years. By 2020, the senior population will have increased to to 1.02 million; meanwhile, the population by 2030 is expected to reach 1.34 milllion. Wisconsin’s elderly population is slightly higher than the national average.

Long term care has been a dilemma for most Wisconsin elders and their caregiving families. People are expected to squander even their last life savings just to provide themselves and their loved ones with decent and adequate LTC services. Long-term care is very expensive that it could shove people to poverty.

Medicaid allocates nearly haf of the nation’s budget on LTC services. In 2004, Medicaid paid roughly one-third of LTC expenses, whereas the 30 percent were allocated to 30 percent for nursing homes.

Based on the report from Kaiser Commission on Medicaid and the Uninsured, Wisconsin shelled out 41.8 of its total Medicaid budget on LTC in the fiscal year 2003 alone, outpacing the national expenditures of 31.6%. LTC does not choose whom it will save from the burdening costs in nursing homes and residential care. It is lavishly expensive for individuals and families to avail such care in any types of settings. Seniors without a yearly budget of around $70,000 – $90,000 will not make it to avail quality long term care services. In 2003, Wisconsin got the 11th spot for the highest percentage (4.9 percent) of elderly aged 65 and above who were in nursing homes. Many elders wish to receive care in their home or community, but the availability of home care becomes less visible as family caregivers have competing priorities between work and family. Unfortunately, the percentage of available family caregivers is lagging since 2005. This can be explained by demographics: smaller families, more women in workforce, and the increasing number of divorced or divorcees. Although family members want to provide care for their aged parent or loved one, they would rather send their loved ones in nursing homes for long term care.

How do citizens plan for LTC needs? Wisconsin residents believed that they would pay long term care expenses themselves or with the help of an insurance company. Many residents can’t seek help from Medicaid because the financial program requires applicants to deplete their assets before they qualify for assistance. This means that the half of the population should lead a lowly life for the sake of getting long term care assistance. It seems unfair for many taxpayers who have contributed much in the nation’s budget.

However, the state of Wisconsin has a newly-found program that empowers care services for all residents. The institution of the Wisconsin Partnership for Long Term Care marked the progress of LTC in the state.

For many Floridian elders who have no family members to assist them perform their daily activities means a greater need for nursing home care. Both old and young Floridians thought that either Medicare or Medicaid pays for home care, but what’s ironic is that both public financial programs focus more on assisted living or adult day care. Out of millions of Floridian elders, only a portion receives government assistance for home care services.

In a survey conducted, eight out of 10 respondents want to stay in their homes or communities as they approach retirement. Reportedly, only 14 percent of Medicaid funding is allocated for home and community-based services, which is obviously a way lower than the national average of 27 percent. Most budgets are allotted for nursing homes.

The Genworth Financial conducted Cost of Care Survey in the state of Florida and found out that the costs of long term care in the state is rising faster than the inflation. The four largest cities surveyed has increased costs dramatically for nursing homes: 5 percent in Jacksonville, 4 percent in Tampa – St. Petersburg region, and 3 percent in Miami-Fort Lauderdale and Orlando.

The average annual rate of nursing homes in Florida is $82,125 while semi-private room is $73,825.the most expensive facilities are found in metro areas of Naples and West Palm Beach with daily average rates of $313 and $247, respectively.

Over the past decade, Florida government has discontinued spending on some long term care programs though demands for those services have increased. Since 1996, the number of recipients of Community Care for the Elderly program has dropped off to 15,376 from previous 41,990.

The state of Florida has showed concern with the growing needs of adults for long term care. The state government decided a massive Medicaid overhaul plan that would boost home and community based programs for low-income groups. However, the plan failed but the state has developed another program called the Florida Long Term Care Partnership.

Florida Long Term Care Partnership

The state decided to augment Florida long term care insurance for people from all walks of life, especially the impoverished. The Long-Term Care Partnership started since 1980s as pilot program in four states. The plan was established to persuade people from buying LTC insurance to finance their long term care needs that will, otherwise, lessen the Medicaid spending and prepare people for future needs. When the Deficit Reduction Act of 2005 compelled all states to utilize this program, the Florida Legislature passed this bill the same year. The state directed the Agency for Health Care Administration to administer programs that would provide incentives for policyholders and to establish rules and regulation in coordination with the Office of Insurance Regulation. In 2006, Florida lawmakers passed the senior protection bill that reforms the LTC insurance to become more affordable for the people.

Under this partnership program, policyholders are free to retain their assets equal to the amount paid by the private insurance policy. For instance, if a policyholder has $30,000 worth of assets, Medicaid will disregard the amount of assets and still qualify the individual for assistance. The inflation protection is another distinct feature of partnership policies that help protect policyholders from the increasing costs of LTC.

The Genworth Financial conducted a study of the statewide costs of care in some key cities of Ohio. According to data, the average annual cost of a nursing home in Ohio is $74,825 for a private bedroom while $67,890 for a semi-private room, these rates are less expensive than the national average. Long term care can be either medical or non-medical, and these services can be administered at home or nursing home facilities. Families in Ohio that stick with the traditional home care have average expenses of $42,328 for Medicare-certified home health aide, while those in assisted living facilities spend around $39,330.

Long term care services roughly batter people to debt and, worse, poverty. Elders are protecting their assets that they can pass along their heirs, but it could suddenly be depleted as long term care costs rise. People who are not insured are obliged to shoulder all long term care expenses, unless their assets are low enough to qualify for Medicaid assistance. An individual must have $1,500 worth of assets and couples with $2,250 to become eligible for Medicaid program in Ohio.

Ohio Long Term Care Insurance Partnership Program

On September 1, 2007, the Ohio Revised Code 5111.18 petitioned the Ohio Department of Job and Family Services and several departments such as the Department of Insurance and the Department of Aging to conduct partnership with insurance companies in Ohio. This program was called the Ohio’s Partnership for Long Term Care Insurance. Its goal is to encourage Ohioans to purchase affordable long term care policies to finance their health needs in the future.

Partnership Policy Features

The main selling point of the partnership policy is the asset protection benefit. This feature is not developed to lure people from purchasing policies and increase sales; the primary goal of this is to protect potential policyholders from losing their assets when applying for Medicaid assistance. Everyone can benefit from Medicaid without exhausting his or her benefits. The asset protection or disregard uses dollar-for-dollar model wherein every dollar that a person receives from policy benefits is the amount of dollar that he or she can protect from Medicaid. An individual’s assets are protected regardless of the amount Medicaid sets for eligibility.

Through this, Medicaid has no control over how much assets a person wishes to keep, unless the person does not comply with the partnership rules. Thus, if the partnership policy doles out $300,000 for long term care benefits and services, an individual can still keep the same amount of assets or even more and still qualify for Medicaid eligibility. Private insurance policies purchased on or after August 12,2002 can be converted to partnership policies.

The second feature that is included in all long term care partnerships is the inflation protection minimums. The amount of inflation protection varies on the age of policyholder at the time of purchase. Policyholders aged 60 and below at the time of purchase are entitled for 3% minimum inflation benefit. Otherwise, policyholders above 76 years have the option to include inflation protection in the policy benefits.

Third feature is the reciprocity agreement. This allows partnership policyholders to continue the benefits when they move to other states. However the state the person has moved in shall comply with the reciprocity agreement to obtain the benefits of the partnership policy purchased in Ohio.