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Posts Tagged ‘long term care’

The New York Times have just published an article entitled, ” Caring for the Caregivers ” and while I read the piece, I merely shook my head a few times thinking about the implications in the article and what I know from my perspective in the eldercare industry. One of the first things I learned in this business is that when it is acceptable people would want to age in place, meaning live in their homes with whatever help, be it homecare and/or technology, they will need for as long as they can. America’s aging population is increasing and there is a shortage of homecare aides to help this burgeoning group do what they want, which is to stay comfortably in their own homes.

But, as the article pointed out:

” According to the Labor Department, personal and home care aides are expected to be the second fastest-growing occupation in the United States from 2006–2016, increasing by 51 percent, slightly behind the expected growth in systems and data communications analysts. “

And who exactly are these people who come into the home to care for your parents? The NY Times article points it out succinctly, ” most home care aides are women, low income and minority, and many of them are immigrants. ” And although some of the states have taken steps to give them basic labor protections, most of these women work for agencies that under the existing federal guidelines are allowed to mark them as companions, leaving the caregivers with no rights to minimum wages and overtime. This is not to say all agencies take advantage of this fact, there are lots of agencies that have realized the efficiency of low-staff turnover and treating their workers accordingly. This sector of healthcare is growing rapidly and yet many of its workers are not protected. And they should be, because they are the backbone of the aging in place movement; the ones supporting and tending to the needs of our elders in their homes.  So what’s being done about this issue?

Right now, the Service Employees International Union is working to unionize homecare workers in every state. Washington and Montana have unionized homecare workers, while here in California, in-fighting is still ongoing between unions. Many have voiced the opinion that new laws and legislation has to be passed by the Labor Department to offer greater federal protection for homecare workers. I believe this is the best way to keep these workers safe. (Yep, that’s a nudge, President Obama, but I do realize you are very busy these days.) In the end, it all circles back to quality of care. Happy, well-paid, well-trained workers who work for agencies with low turnover are, and will always be, the ones delivering the highest quality of long term care to our mothers, fathers and possible even us one day.

Recently, I wrote about selecting a daily benefit for your long term care insurance (LTCI) policy. Ensuring that you start your policy with a daily benefit amount that matches the current cost of continuous care is vitally important. But there are a couple of additional steps you’ll need to take if you really want to ensure that the buying power of your policy benefits do not erode over time. Take note that inflation constantly eats away at the true value of LTCI benefits. This can only mean that a daily benefit that is adequate this year may be seriously insufficient once you actually need the care several years from now. That is the reason why LTCI policies typically offer some form of inflation protection to help ensure that your policy benefits will continue to keep pace with rising costs of the industry.

What are my options for inflation protection? Inflation protection options offered to policyholders can differ greatly from one carrier to another. But there are two options that are almost universally used by the majority of insurance companies: a 5% compound option and a 5% simple inflation protection option. Compounding interest will have a dramatically greater effect on the amount of total benefits available to you over a long period of time. Most investors know that to see the true effects of compounded interest, you need to be patient;as it can take several years to become readily apparent. This is also true of inflation protection in LTCI policies.

Now how to decide which choice will work best for me? Generally speaking, the more you wait to access the policy benefits, the more compound interest will benefit you. A lot of people seem to access their policy benefits after the age of eighty. For example, a person who is fifty years old could have thirty years or more before needing care. On the other hand, a person who is 65 may not see as much benefit from compounded interest. Another factor to consider is the how fast the cost of care has increased in the state where you plan to retire. There are some states in the South that have historically had much lower costs of long term care than other parts of the country. Other states, particularly those in the Northeast, have had regular and significant increases in the cost of care. A great place to start is with Genworth Financial’s interactive map, which shows the state averages for costs of care across the United Sates. The figures include nursing home, assisted living, home health care and home care costs. One cost-effective option is to raise the daily benefit along with simple inflation protection. This gives your benefits an initial head start and pushes the break-even point between simple and compound interest farther out on your timeline.

The Bottom Line: Weigh Your Options First. Since compounding costs more than simple inflation protection, it’s a good idea to ask for quotes on both to see how each choice works on your premium. A very good LTCI consultant will be happy to work with you as you select which inflation protection that will work best for you. There are no fast and hard rules in this area of policy design, but a healthy dollop of common sense and reason will usually help you make the best decision for your unique situation.

Private insurance companies sell LTCI policies to offset the costs of long term care. LTCI, like all insurance policies, requires premiums to help recipients avoid paying large amounts of money in the event of an illness or an accident. Premiums are based on the individual’s age at the time of purchase and are usually locked in for the life of the policy. LTCI covers the following, {depending on the policy you choose: and is dependent on the policy that you choose:}

1.Care in a skilled nursing facility

2.Care in an assisted living facility

3.Home health care

4.Adult day health care

When buying a LTCI policy, it allows the policyholder to select from many options, such as the amount of the daily benefit, the number of years the policy will pay benefits, and, after the applicant qualifies for a policy, the number of months or days before the policy will begin paying benefits.

It’s very important to evaluate policies carefully to see which of them offers the benefits you require with a premium that fits your budget. Policies differ in their benefits, contract conditions, deductibles and premiums. It is also important to consider the rising cost of health care. Be sure the LTCI policy provides inflation protection for benefits to increase as health care costs continue to rise. Policies are generally labeled according to the place in which benefits are paid.

Homecare-only policies pay for care at home and in an adult day care or adult day health care facilities. Make sure the policy includes both types of day care. Facility-only policies pay for care in a skilled nursing facility and in a good assisted living facility. Comprehensive policies pay for care in a skilled nursing facility, assisted living facility, adult day care or adult day health care facility, and at home.

Since LTCI claims are always paid many years after the purchase of the policy, it is imperative to check the following:  Financial strength of the company. The industry’s major rating services are A.M. Best , Duff and Phelps, Moody’s, Standard and Poor’s and Weiss Ratings . Reputation and claims-paying history of the company. Contact your State Insurance Department for more information on specific private insurance companies.

Applicant must be healthy at the time of application. Each insurance company has individual requirements and/or limitations. Not sure when is the right time for you to buy an LTCI policy? Or how to assess what you will need from a policy? Visit our Expert Column on Financing Long Term Care to find out more.

A vital ingredient in any successful long-term care insurance plan is to have an affordable policy without sacrificing good coverage. If you have recieved quotes from several highly rated insurers and yet find that the premiums are still too much to bear, there is no need to panic and assume that long term care insurance costs too much. You can just adjust the benefit amounts of the original quotes to bring the premiums more in line with your expectations, and ensure an affordable policy.

Know the Costs of Long-term Care Where You Live

One way to lower premium costs is to make sure you know what the actual costs of care are in your area. There are lots of statistics used when talking about long-term care costs and often these are based on national averages. The actual cost of home care, assisted living facilities and nursing homes in your particular area may be much lower. You can always find out more about local long-term care costs by either downloading the latest Genworth Cost of Care Guide or by calling a few local home care agencies and long-term care facilities to ask for comparison rates.

Adjust Your Benefit Period

Another way to lower long-term care insurance premiums is to use a shorter benefit period. Many consumers feel that unlimited benefits are necessary for quality coverage. A recent study published by the American Association for Long-Term Care Insurance in their 2009 Sourcebook discovered that only eight percent of those people who bought a three year benefit period exhausted the policy and yet still need care. Only a little over one percent of those with a five-year benefit period will see their claims closed due to policy exhaustion. This can only mean that lowering the benefit period is actually a practical way to lower insurance costs without sacrificing vital coverage.

Reexamine the Elimination Period

One way to bring down long-term care insurance premiums is to increase the elimination period (the number of days after your care begins that precedes the insurance company’s first payment of claims).

Take note that almost 90% of individual continuous care insurance policies use an elimination period between ninety and one hundred days based on the same 2009 Sourcebook referenced above. If you have initial quotes used a thirty-day or sixty-day elimination period, you may be able to significantly lower the premiums by choosing a ninety-day elimination period instead. Remember that there are other ways that an experienced long-term care specialist can help make this kind of insurance which is affordable for you. If you ask for suggestions on lowering your premiums, the specialist will be happy to work with you to craft a long-term care insurance policy that is effective and affordable.

No one likes to pay insurance premiums of any kind and long term care insurance is no exception. The ony why we pay these premiums is because the alternative leaves our retirement income and investment assets exposed to high risk if long-term care becomes necessary and we have to pay for the care ourselves. It is no secret that the cost of health care facilities care can quickly drain your retirement funds and force a retiree into financial ruin. With purchasing a long term care insurance, a policyholder is accepting a small loss each year in the form of premiums paid. This small loss helps ensure that he or she will not be wiped out financially by unmanageable long-term care costs in the future.

3 Choices for Premium Payment Periods

People who are unfamiliar with long-term care insurance often wonder how long the premiums will need to be paid. The answer is that there are three choices for the premium payment period usually offered by insurance carriers. The most popular choice by far is a ” lifetime ” payment period that requires the payment of premiums until death or until the policy is activated. Some object to paying these premiums for such a long period of time. My reply to these objections is that I usually ask prospective clients to consider other forms of insurance that they currently have right now. For instance, would they expect to only pay premiums for health or would they prefer medical insurance for a short time only, or do they plan on paying those premiums for life? Would’t they expect to pay auto insurance premiums for as long as they drive? Isn’t it reasonable to pay homeowners insurance premiums for as long as they own a home? As long as the financial risk is present, the payment for the insurance premiums will always be there. Since the risk of needing long-term care is present for as long as we live, long term care insurance premiums can be expected for the remainder of our life.

Shorter Premium Payment Periods Equal Higher Premiums

The second and third options for payment of long term care premiums gives the policyholder to condense all of those expected premium payments into a shorter time period. For those under fifty-five years of age, a ” pay to age sixty-five ” option may make sense. For others a ” ten-year pay ” option may be a good choice. Because the expected premium payments over a lifetime are simply condensed into a shorter timeframe, the cost of these premiums is much higher. Therefore, these options usually make sense for policyholders who can take advantage of tax deductions that help them reduce the overall cost of their long-term care insurance.

Planning for long term care is complicated. Each person’s needs are unique, therefore, the cost of long-term care varies greatly. Some social and physical assistance is available for free or at a low cost, while very expensive nursing home or home health facilities can cost upwards of $200 per day. There are many different ways to finance long-term care. You will probably need to use a combination of payment sources, which may include long-term insurance, Medicare, Medicaid or other programs, in addition to your own resources.

It is essential to consult a professional such as an elder law attorney, financial planner or an accountant when planning for long-term care, this person should be well versed in estate planning, public programs like Medicaid, and the issues and needs of older persons. These long term care professionals often work as a team. Gilbert Guide would like to suggest getting a second opinion before making any final decision especially on financial matters. Check out our Learning Centers and Expert Columns where our long-term care assistants will point you in the right direction, raising awareness of the issues you need to know about when planning for your future.

Here are many of the options available to reimburse for senior care: (Click on the links below to see what else is covered outside of long-term care.)  Medicare, which for long-term care, covers some skilled nursing care either in a nursing home or in the home along with hospice care.  Medicaid, which is the partially federally funded yet state-operated program provides medical care for certain low-income individuals and families who have limited resources. Medicaid usually covers nursing home care, however for some certain states, funding is available for assisted living, homecare or home health care.

For Medigap, whose policies are available to Medicare, A & B enrollees who are not Medicaid recipients have the option to sign up for and covers some nursing home care.  Managed Care (HMO) provide enhanced services for nursing home care above Medicare’s basic offering along with additional medical assistance outside of long-term care. Long-term Care Insurance (LTCI) actually covers everything, from non-medical homecare to nursing care; however, it depends on the type of policy you purchased. Veterans Benefits will cover adult day health care, home health care, respite care and hospice care.

In a long term care insurance (LTCI) policy, the elimination period is often referred to as the policy deductible. In many ways it is similar to the deductible used in major medical insurance policies. One significant difference is this: rather than a certain dollar amount that you will initially pay for your own care expenses, there is a specified number of days for which you will be the one responsible for your own care.What are My Options? In these day, there are just a few carriers that offer a zero-day period for elimination. The most common choices are 30, 60, 90, 180 and 365 days, although these periods can vary from one carrier to another. The choice of 180 or 365 days is most often made by those who have significant assets of their own. Choosing a longer period can help keep the expenses of LTCI extremely low.

Even if one chooses a 90-day elimination period, the amount of funds put at risk is miniscule once compared to the asset protection afforded by the total pool of a policy’s benefits.What is a Reasonable Choice for an Elimination Period? Some of the popular financial authors suggest setting it as low as possible, perhaps even at zero. It’s true that once the elimination period is short, the less likely it is that you will have to pay out when the time comes for you to begin receiving continuous care.

However, low elimination periods have a very dramatic effect on the premiums that is paid throughout the life of the policy. Usually some form of compromise is necessary for the sake of affordability. In deciding the elimination period, many policyholders remember that insurance is often used as a way to avoid extremely dangerous financial losses rather than insuring against every possible expense. Accepting even just a small portion of the risk involved can be a reasonable and economical choice for most individuals.

The Smartest Thing You Can Do: Remember that what is right for most people may not be right for you. In deciding on the best elimination period for your particular situation, it is prudent to consider what the cost would be for the most expensive assisted care that you may have to receive, which is usually used for facility care. Once you have a good idea of the daily costs for facility care in your area, multiply the costs by the various elimination period choices and determine the amount that you feel is affordable.

Once you have decided on the elimination period that will best fit your situation, earmark those funds for your care, and then let them grow, so that they keeps pace with inflation, at the very least.  Remember that a little financial common sense goes a long way toward making a wise decision about the LTCI elimination period.