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Posts Tagged ‘long term care insurance’

We do not survive in a wonderful world and the risk of fraud exists. It may be a fraud through a company offering you products, or it can be fraud through con artists, but the sad fact is it exists. Clearly, the primary thing anybody must consider when they are thinking of receiving long-term care insurance is research. Researching a corporation is one of the top ways to avoid long-term insurance fraud. Standard & Poor determines the strength of insurance companies, as well as giving detailed financial profiles on thousands of insurance companies. You can also look at Fitch Ratings, which give financial strength ratings for several insurance companies.

After you make a decision on a long-term care insurance policy, make sure you obtain the policy when you meet with the insurance broker. When you get a policy, you are asked for a month’s premium up front to process the application. If you prefer not to agree to the policy or you are declined, you ought to get your money back in full.

You can as well talk to contacts of yours to find out what insurance company they go through for their own long-term care insurance policies, if they do. However, do not receive their word because they might be victims of long-term insurance fraud and not even identify it yet. Just do research the company and if you find out something troubling, allow them know. Conclusion Long-term care insurance is one of the most excellent things you can do to make sure you are not a financial burden on your relations. If you do this, you ought to be okay and be able to prevent yourself from becoming a victim of long-term care insurance fraud. You should just inquire for assist from an insurance sales rep who specializes in long term care insurance to reply some questions.

We do not live in a wonderful world and the risk of deception exists. It can be a fraud through a company offering you products, or it can be fraud through con artists, but the sad fact is it exists. Obviously, the primary thing everybody should consider when they are thinking of receiving long-term care insurance is research. Researching a company is one of the top ways to avert long-term insurance fraud. Standard & Poor determines the strength of insurance companies, as well as giving detailed financial profiles on thousands of insurance companies. You can as well look at Fitch Ratings, which give financial power ratings for many insurance companies.

After you make a decision on a long-term care insurance policy, make sure you obtain the policy when you meet by the insurance broker. When you obtain a policy, you are asked for a month’s first-rate up front to process the application. If you prefer not to agree to the policy or you are declined, you ought to get your money back in full.

You can also talk to contacts of yours to get out what insurance company they go through for their own long-term care insurance policies, if they do. However, do not receive their statement because they may perhaps be victims of long-term insurance fraud and not even know it yet. Just research the company and if you discover out something troubling, let them know. Conclusion Long-term care insurance is one of the most excellent things you can do to make sure you are not a financial burden on your family. If you do this, you must be okay and be able to put off yourself from becoming a victim of long-term care insurance fraud. You be supposed to just inquire for assist from an insurance representative who specializes in long term care insurance to respond a few questions.

Long-Term Care Insurance

Underwriting is essentially the acceptance of risk in return for payment. In long-term care insurance, this occurs when an applicant becomes a policyholder, paying the insurance company to accept the risk that may require them to pay out claims on the applicant’s behalf. Many people wonder what the application process and the underwriting process for long-term care insurance are about and how it all works. I’ll discuss all of that in this article.

Some financial planners propose that LTDI is your best bet as it will protect your income if you are unable to work for a period of time. LTDI is also sometimes referred to as income protection insurance. With this kind of policy you must be unable to perform your normal occupational duties in your work environment. These policies are created for people who are actively working;although those in risky jobs may find that they are undesirable to insurance companies. If a covered disability occurs, then a specified monthly benefit is paid to you for a finite period of time (typically no more than two years).

Long-term Care Insurance (LTCI) should be purchased in your fifties or as soon after retirement as possible; it’ll pay out a monthly benefit for the type of care your policy allows. LTCI is geared toward the senior market. There are three basic types of policies;each of which is based on where benefits will be paid: either in a facility, at home or both.

The primary objective of underwriting is to spread the risk among the pool of policyholders as equitably as possible in a manner that is also profitable for the insurance company. The premiums that each policyholder must pay are directly affected by how much money the insurance carrier expects to have to pay out for claims. This means that the insurance company has to manage the risk that it will have to pay money out of that central pool of funds. The more they have to pay out, the higher the cost of the insurance for everyone. Risk management involves analyzing the potential risks for each applicant (and the associated costs of those risks) in order to set premium rates for policyholders and mitigate the potential financial losses for the insurer.

Critical care insurance pays one lump sum and then terminates, but your particular life-threatening condition must be enumerated in your policy. With critical care insurance, you are paid a lump sum after you have been diagnosed with a critical illness. The idea is that auxiliary expenses tend to pile up when diagnosis occurs, even if a person is insured.

What underwriting procedures are employed?

The first step of underwriting that all carriers use is the application form where the applicant lists his or her relevant personal health history and authorizes the insurance company to examine their medical records.

Often the carrier will schedule a phone health interview that lasts for about fifteen to twenty minutes. One of the main purposes of this telephone call is to assure the carrier that the applicant does not have any cognitive problems that would become evident in the way the phone conversation is conducted.

Afterward the carrier will often request a copy of the medical records from the applicant’s primary care physician to verify that person’s overall health. If the applicant has been treated by a specialist for any serious illness in recent years, a copy of those medical records may be requested as well.

This is where the whole process can sometimes bog down for a few weeks if the doctor’s office does not process the record request quickly. However, once the carrier receives the medical records, a final underwriting decision usually follows very quickly.

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Many people are unwilling to purchase long-term care insurance (LTCI) until much later in life, in their 80s rather than in their 50s, say, but many recent articles have been showing up in everything from senior care trade publications to small local dailies, which actually touch on the subject of the LTCI industry trying to welcome the burgeoning senior baby boomer market. LTCI is an idea many do not want to entertain, and yet aging and long-term care always will be an issue. Some naysayers speculate that it’s obviously in the insurance companies’ favor to have these premium payments rolling in. But to them we would like to point out that even with that being salient, LTCI, although it is possible to be in wolf’s clothing, is still a sheep, because the consumer will pay less if insurance is purchased when they are still young and (hopefully) healthy. Looking into Your LTCI Options? In due time, a LTCI recipient actually pays less, not just incrementally, but as a whole, because the premium is not only based on the age at which you buy, it is typically locked in from the beginning. Here’s an example from an upcoming article by Gilbert Guides

CEO, Jill Gilbert, in Active over 50 magazine:  If a healthy 55-year-old woman purchases an LTCI policy at about $1,500 a year, by the time she is 85, she will have only paid $45,000 for thirty years of coverage. But for that same policy, a 65-year-old woman pays around $2,800 annually, which means that she pays $56,000 for twenty years of coverage;a marked increase. Waiting to buy an identical policy at 75 always increases the annual cost to about $7,500; this means that the oldest policyholder in this comparison ends up paying $75,000 for only ten years of coverage;a whopping 400% increase from the 55-year-old woman! Find out how long-term care insurance can help you? Get a free long-term care insurance consultation and quote.

One close family friend of mine recently called on the phone to ask me, “So I am thinking about long-term care insurance, what exactly should I be looking for and where do I start? ” And my answer was, ” Are you confused?” “Yes.” “Well, that’s how most people start.”  We both laughed, but the point remains that picking a long-term care insurance plan can be very confusing. Our other postings on the subject I have covered the benefits of buying a policy especially in the early years of retirement. But what should you be looking at when you are shopping around for an LTCI policy?, and how do the policies actually work?

1. Check out what will be covered.  LTCI policies vary and may cover home health care, homecare, adult day care (and health care), assisted living, skilled nursing care, hospice care or some combination of these, look closely and see what is covered. Your best bet is to get a policy which covers most, if not all, of these possibilities.

2. How benefits will be paid out. Most policies pay by a daily benefit. Sometimes the daily benefit is calculated using a monthly average. This is advantageous when working with homecare, nurses or aides might work sporadic hours if, for example, a family caregiver is available. Secondly, benefits are paid on either an indemnity or reimbursement plan. So benefits are either a lump sum payment regardless of what the charge is OR (in the case of reimbursement) the insurance carrier will only pay the actual charges for care even if the charge is lower than the maximum daily. There are times when the unused funds are carried over.

3. When your coverage will begin.  A lot of policies spell out how many activities of daily living (like dressing or bathing) you must need assistance with before your coverage begins. There is also a waiting period, which usually runs from 0-90 days, but sometimes is longer. So you need to consider what you can afford to cover before your benefits kick in.

4. How long will your benefits last.  How long will the benefits last? A few years? Maybe 10 years? Although this is somewhat of an unknown, you need to take into consideration if you are predisposed to a chronic illness and what kind of funds you may have at your disposal.

5. What will your benefits be “worth” once they are paid out to you. Not only should you look at how these are paid out but how exactly paid out with regards to inflation. Many policies offer some sort of inflation protection. Considering long-term health care costs only seem to be rising, this protection translates into having a financial cushion protecting your assets.

6. Which resources can help you make the best decision.  There are actually three resources that you may need to use when making the best decision: ratings companies, a reliable agent and yourself. Make certain you choose a company who has been in business and is highly rated by A.M. Best, Moody;s, Standard & Poor;s, or Weiss. Looking for professional assistance with long-term care insurance and which policy meets your needs? Get a free long-term care insurance consultation and quote. Finding an agent is tricky. Many people are “referred” by carriers or internet searches. This is just like mushroom-picking by memory, but this is not in your best interest. Look for an agent that sells a variety of products, but specializes in LTCI.

Also, if the agent’s commission rates are standardized, then it is not financially gainful for him or her to up-sell you. And although most of these decisions can and should be aided by professionals, it is your job to be vigilant. Use common sense along with the help of professionals. It can be hard to determine what your long term care needs are. A good place to start is by looking at what many consider the baseline;that is, what the federal government offers to its employees via the Federal Long-Term Care Insurance Program.

It’s always pleasing to highlight good news! Recently, the New Jersey legislature passed a law that will offer seniors on Medicaid more long-term care options. By the year 2008, all senior citizens living in New Jersey will have a choice in the type of long-term care they receive through Medicaid, under a law made by Governor Jon S. Corzine. The law provides “an extraordinary change in direction and policy in a way that makes sure our seniors have a choice,” said Corzine at a recent AARP summit on long-term care. Currently, New Jersey spends $1.68 billion of its Medicaid long-term care budget on nursing home care, compared with $162 million on community-based care like assisted living facilities, home health care and adult day care. That’s a whole lot of money going to skilled nursing facilities. The law will now help bridge the gap between money going to nursing homes versus money going to people in the community.”Rather than requiring that nursing homes be the first stop, now nursing homes will be the appropriate stop, if necessary,” said Dr. Fred Jacobs, state health commissioner for New Jersey.

Skilled nursing facilities are the right choice for many seniors who require this type of specialized care, however, seniors should never be placed in a nursing home simply because there are no other options. On a more personal level, the law always provide for appropriate changes in a person’s home including the installation of bathroom handrails and other safety features. Home health aides and even respite care are now under the Medicaid umbrella of covered services. There are already so many choices to make regarding long-term care, the passing of this law will enable you to make better and smarter choices that will really suit your needs! Most funding for adult day services is generated from participant fees, city government agencies and charitable sources.

More and more companies are beginning to offer long-term care insurance (LTCI) to their employees as part of an overall health care benefits package. And since buying group medical insurance is usually a way to get lower insurance rates, most people automatically assume that the same is true with LTCI policies. But in most cases, individual LTCI policies will be able to offer not only lower premiums, but it can also give better benefits if they are examined in a true “apples to apples”  comparison. Group LTCI can be a good answer for those who have severe health problems, as they may be able to qualify under the “simplified”  underwriting procedures. The same lenient qualifications also drive up the cost of coverage for everyone else in the group.

This is one reason why individual LTCI policies actually cost less for relatively healthy applicants, the underwriting procedures in use effectively screen out most of those costly severe health cases. One of the ways that group LTCI companies can mask or hide the increased cost of their policies is by not including an automatic inflation benefit as part of the premium. Sometimes they tell you that they are giving a 5% compound inflation protection, but they do it as something called a “Future Purchase Option.”  This actually means that they will come again every three years or so to make an offer based on an additional 5% compound increase in benefits. This is the least expensive way to buy LTCI initially because inflation protection is not built into the premium. The problem is that it is the most expensive way to buy LTCI over the life of the policy because you are buying additional protection every three years at a later age. Moreover, you are paying for that additional protection at that later age instead of the age when you originally purchased the policy. So these kind of policies often wind up costing the policyholder twice as much or more over the life of the policy, as if they have just brought the automatic inflation protection built into the policy then. Another method that group policies use to lower premiums by providing less coverage is reducing the home care benefit to 50 to 75% of the daily benefit.

This may indeed lower costs, but it is not helping policyholders accomplish what they usually want most: to stay at homecare and remain as independent as possible for as long as they can. Of course, some group policies can be a very good value, but it always pays to compare them to individual policies using identical benefit features to make the comparison fair for long term care.

People often confuse Medicaid for Medicare, another popular government-sponsored program. However, these programs are very different in what they are designed to do. Medicare is actually the national health care assistance program given by the federal government. Its function is to make sure that affordable home health care is available to all seniors and disabled people younger than 65. On the other hand, Medicaid is a program run by the individual states, along with some federal assistance, and it varies considerably from one state to another. Medicaid’s main function is to provide assistance to those who have very few assets. One of those areas that many people need assistance with is health care, and so Medicaid picks up the tab for assisted care costs that many seniors simply cannot pay for on their own. Medicaid is a wonderful provision to make sure that those with few means receive the care they need even when they cannot afford to pay for it themselves.

Only problem is that Medicaid does have its limitations, and one area that is draining Medicaid of its precious resources is long-term care. In fact, based to the Centers for Medicare and Medicaid Services, in 2001, Medicaid paid for almost 40% of the annual long-term care bill in this country. So what exactly is long term care according to its definition placed by Medicaid? It is generally custodial care that is provided when a person needs assistance for activities of daily living, which include eating, bathing, dressing, continence, toileting, and transferring. Skilled care on the other hand, which is paid for to some extent by Medicare, is for situations in which you are expected to get better as a result of the care. It is often referred to as short-term rehab, and includes changing dressings, IVs administering medications, and physical and speech therapies. Once a patient’s progress stops, the skilled care reverts to custodial care. Medicare will not pay for long-term care if it is not accompanied by the need for skilled care, and so the problem falls on Medicaid to pay for the ongoing costs of custodial care. Although Medicaid will pay for long-term care, there are severe restrictions on the qualifications for assistance.

First and foremost, Medicaid is a program designed to help those who are impoverished. In order to qualify for long-term care assistance through Medicaid, a person must spend practically all of his own assets before Medicaid will begin to pick up the tab.  Medicaid, in general, is not set up to provide care in a home setting. Usually the care must be provided within a residential facility, meaning that a person has to give up much of his independence in order to qualify. Much of the individual’s ability to control the kind of care received is also lost, because the state will determine where and how the care is administered since it is paying for the care. The rising expenses of getting long term care are placing many state Medicaid programs under pressure, and much needs to be done to help make sure that this vital program for those who have few means will be able to continue to serve those who need it most. As a result, both state and federal governments are encouraging most Americans to take the responsibility for their own future long-term care needs. Getting more information on the important issues surrounding long-term care and how it affects us all is a good place to start.

When Should You Consider Buying Long-Term Care Insurance?

The only short answer to this question is the month before you need to make a claim  But since none of us have a crystal ball to tell us when we will be having a stroke or heart attack, or be diagnosed with a debilitating disease such as multiple sclerosis, Parkinson’s or Alzheimer’s, we simply can’t rely on waiting till the last minute to buy long-term care insurance. The truth is that anyone, at any age, can have an unexpected accident or change in their health that they could not possibly have foreseen that will require long-term care. A couple of well-known examples of such a situation are Christopher Reeve and Michael J. Fox.

Unfortunately, many people think of long term care insurance as protection that is mainly for older folks. But that is simply not the case. In fact, almost 40% of those receiving long term care are younger than 65 years of age! This surprising information testifies the undpredictability of such a need arising at almost any age.So, I suggest that the best age to purchase LTCI is at the earliest age that you:

1. Can comfortably afford the premium.

2. Have enough income and/or assets to protect that it justifies the cost of the policy.

Another sound reason for getting long-term care insurance earlier in life is that the premiums are lesser and you will most likely easily qualify for coverage, perhaps even at a preferred rate that will save you considerable amounts of money throughout the life of the policy. Unfortunately, as we age, most people stand a higher risk of developing health conditions that could cause them to become uninsurable at some point, or at least substantially drive up the cost of a good long-term care insurance policy. My recommendation is to avoid these problems by investing in LTCI at a relatively early age if you can. And since the cost of long-term care is not covered by medical health insurance, it only makes sense to protect your assets against one of the most devastating threats to your personal finances. Then, in most cases, the earlier you get coverage for long-term care, the better.

One rule that I always adhere is that I don’t discuss politics and religion unless I am with my close friends and relatives, it’s just too easy to cross the line from thought-provoking to offensive, most especially for someone who is as opinionated and outspoken as I am. After reading a recent article on President Bush’s 2.9 trillion spending plan for 2008, however, I feel I have no choice but to break my rule. President Bush recently went before Congress, controlled by the Democratic Party for the first time in his presidency, and proposed a 2.9 trillion budget that will entirely cut down 70 billion in funding from Medicare and Medicaid over the next 5 years, while increasing military spending and without affecting first-term tax cuts. While the proposed time frame is in line with Democratic goals, there seems to be some dissonance in terms of federal priorities.  If you are a higher-income beneficiary, you could expect to pay much higher long term care insurance premiums and more for drug coverage.

One more component of the plan, according to the New York Times: ” freezing Medicare payments to home health care agencies and reducing inflation allowance paid to hospitals, nursing homes and other providers. ” Considering Congress, negative response to the president’s proposal from last year, which suggested smaller Medicare reductions, it’s unlikely this plan will be accepted as is. Whether you bat for the left or the right, though, there’s no denying that the fast increase in the retirement-age population puts a lot of pressure on the federal budget. Remember that entitlement for the older Americans come from income taxes on people of working age. It takes five working Americans to support one senior citizen’s entitlements. How would, or should, the government respond if Social Security trustees have projected accurately, and by 2030 there are only three workers for every adult older than 65?

It is entirely possible for Medicare, Medicaid and Social Security to consume federal spending. Are there options that don’t involve spending cuts or tax increases? How and where should we conserve to avoid a fiscal crisis without stripping Americans of the care to which they’re entitled?