Spring 2008
Who Needs Long Term Care Insurance

Our Experience:

Senior Care Management provides care management and home care services. It has been our experience that spouses and adult children whose family members have long term care insurance are able to access services at a time of crisis with fewer emotional and financial reservations. It is our hope that the information in this newsletter will help you make the right decision for you and your family.

What is Long Term Care Insurance?

Long term care is needed when you have a chronic illness or disability that requires assistance with: bathing, dressing, toileting, walking, or eating. Long term care insurance helps pay for services to address these needs with home care, assisted living, adult day program and nursing home care. For many people, the need for care develops gradually and increases over time, starting with home care and perhaps ending with facility care.

A long term care insurance policy that has all of the features we recommend (see checklist) for a healthy individual who is in their early 60s can cost between $2,000 and $3,000 a year. In comparison, the most expensive level of care in a nursing home in this area, based on a review of local facilities, will cost between $86,000 and $96,000 annually.

Who should buy Long Term Care Insurance?

Long-term care insurance is a mechanism for protecting one's assets and estate from the high costs of long term care. Long-term care insurance also provides peace of mind by addressing fears of being impoverished or not being able to pay for care.

The people who should not purchase long term care insurance are those who have limited assets. The Medicaid program will cover this group. Also, people who have sufficient assets to pay for care from their existing resources without adversely affecting their standard of living should not purchase such insurance. So who are we taking about? Generally, if you have $200,000 plus a house it is not advisable to buy the insurance.

If you are single or do not have heirs, then the insurance may not be important.

When to buy LTC insurance is another question. The younger you purchase the insurance the less costly the monthly premium may be, but you will be paying for a longer period of time. If you wait until you are 65 as many financial planners advise, you may have a health history that will make you ineligible for the insurance. This is a decision that can only be made by looking at your individual family health history and availability of discretionary income and then deciding what will work best for you.

What to Look for In a Policy

Make sure you are purchasing a policy that covers a wide variety of long term care services/settings such as daycare, homecare, assisted living and nursing home care. Look for a policy that requires that the person be unable to perform no more that two activities of daily living, one of which should include bathing. You will also want a policy that has automatic compound inflation protection, otherwise the cost of care will outstrip the insurance benefit. Select a 30-day elimination period, in most cases Medicare will pay up to the first 30 days of care. A policy that covers 3 or 4 years is usually sufficient; on average, women utilize care for up to 3.7 years. Buy only as much insurance as you will need. If the cost per day is $175 and you can pay $75, then only purchase the outstanding amount.

Where to Go to Find an Insurance Policy

Many large employers are offering group Long Term Care Insurance as an elective benefit. A group plan can be helpful if you have a medical condition that may not qualify you for an individual plan or if the employer is providing a discount or allowing the plan to be paid with pre-tax dollars. Consider a private plan if you are healthy or if your workplace is not offering these incentives.

If you need a local referral for a specialist in Long Term Care Insurance contact Senior Care Management at (609) 882-0322.