Cost of Long Term Care

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A lot of people incorrectly assume that health insurance and Medicare will cover long term care. They cover medically necessary care for up to 100 days, or until you stop improving or stablize. After that, you’re on your own.

The majority of Americans over 60 do not have long term care insurance yet 70% will need care. So, why do people not buy insurance?

Most will say the cost of the policy. An average policy, depending on age, health and benefits chosen, will cost $1,000-$3,000 per year per person.

But what about the fact that the same people who say they will “self-insure” for long term care will never “self-insure” a parking meter… they always put money in the meter, even though they could easily afford and “self-insure” the parking fine.

We make decisions based mostly on emotion. That’s what causes people to buy stocks when they are high and sell when it crashes, the opposite of what seasoned investors do.

What if you “self-insure” for long term care, how much will it cost you? The national average for nursing home care is $89,000/year with some areas over $140,000/year. Home care and assisted living average $50,000/year. See how much care cost in your state: download the Cost of Care brochure.

For every $1,000 of monthly retirement income you want to generate from your own savings, you will need about $230,000 in assets, according to the Schwab Center for Investment Research. For example, if you want only $3,000 a month, or $36,000 a year, you would need savings of $690,000. That’s a conservative estimate, assuming that you earn 5.2% on your investments and live off the earnings without dipping into the principal.

If you cannot afford a long term care insurance policy, how are you going to afford paying out of pocket? The other option is spending all your cash for your care. This includes anything of cash value: savings, investments like stocks, bonds, life insurance, annuities. Medicaid allows you can keep only $2,000.

There are 30 states with filial laws that allow the state to make your children repay Medicaid for your care expenses, although this is rarely done. Fifteen years ago the #1 reason people bought long term care insurance was they did not want to be a burden on their family. Today, the #1 reason is people do not want to outlive their money (and end up on Medicaid-Welfare Health Care).

Some people will buy long term care insurance for asset protection. Most states have a Partnership program that will protect assets from Medicaid if you own a Partnership long term care insurance policy.

You have five options to pay for long term care:

1. Self-insure.

2. Long term care insurance and Partnership.

3. Life insurance with long term care rider.

4. Annuity with long term care rider.

5. Medicaid.

The life insurance and annuity do not qualify for the Partnership (neither do group LTC policies). The life/LTC or annuity/LTC are often bought because: the person’s health will not qualify for traditional LTC insurance, or the person has too many cash assets and they’d never spend down to qualify for Medicaid. An old life policy or old annuity can be converted to one with long term care benefits without paying capital gains.

You can continue down the same road, uninsured, until either a diagnosis or a serious change of health, like a stroke, will disqualify you from insuring. Then you will only qualify for state assistance. At that point you would have to have used, sold or given away your assets 5 years before applying for Medicaid. Who has the ability to see 5 years into the future?

*  The best age to insure: the age your health will still insure you.
*  The best benefits to get: enough to cover what you cannot afford to pay out of pocket.


For updated quotes and more information visit: https://guidetolongtermcare.com


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Why You Should Consider Long Term Care Insurance in Your Retirement Planning

If you haven’t already done so, now is an excellent time to consider adding long term care insurance to your retirement portfolio. Because uninsured long term care expenses can pose a significant risk to the assets you’ve worked a lifetime to accumulate, long term care insurance should be considered as part of a complete financial plan.
 
As former Senator told the United States Senate Special Committee on Aging, “Although the need for health insurance to cover a patient’s medical expenses in case of catastrophic illness is widely recognized, few people are insured against the costs of providing long term support services for that same person. This lack of insurance coverage jeopardizes the financial security of families and diminishes the economic security of the country.”
 
The likelihood that you may need long term care is significant.  Some 70% of Americans who reach the age of 70 can expect to utilize some type of long-term care during the remainder of their lives.  And while long term care includes a broad range of services, from in-home care to nursing home care, each comes at a cost.  Those costs could be substantial, and could have a significant adverse effect on your retirement portfolio.
 
Why? Most forms of health insurance focus on medical expenses, not the custodial care and nonmedical expenses associated with long term care. Medicare only covers nursing home care after a related three-day inpatient hospital stay and even then for only 20 days before a daily co-payment is assessed and Medicare only covers a total of 100 days.

Medicaid doesn’t kick in until one has spent down a significant portion of their assets (spend-down to $2,000*).  Therefore, if either you or your spouse needs long term care, you may have to pay for that care out of your accumulated assets … unless you have long term care insurance.

genworth-nursing-cost-2016The average cost of a private room in a nursing home met or exceeded $80,000 annually.  If one partner needs such care, the cost could quickly and substantially erode the assets acquired over a lifetime.
 
Let’s use a hypothetical couple living off the interest of $500,000 of invested assets to illustrate how serious an impact long term care expenses could have.

For the sake of this discussion, assume the couples’ investments are earning approximately eight percent annually, generating about $40,000 per year in income.  Let’s also presume this couple needs all of this income to support them while they’re living together in their home.
 
Based on an $80,000 annual cost for nursing home care, it may appear that this couple has enough for a little more than six years of care. However, that basic calculation does not consider the living expenses of the spouse who remains in the community.  

If this couple is using all of their investment income to provide for their living expenses, they will soon need to start withdrawing from the principle for a portion of those living expenses as well as for the long term care expenses of the partner who needs care.
 
In circumstances like these, it’s easy to see how the assets accumulated over a lifetime could soon be completely exhausted.
 
Long term care insurance can help provide the funds to pay for the care you may need, while simultaneously protecting the assets you’ve worked a lifetime to accumulate. Long term care insurance may also help preserve financial independence, choice, and dignity, and those can be priceless.
 
It’s never too early to consider insurance because your health can change at any time, meaning you may be uninsurable and end up paying out-of-pocket.

The Partnership Asset Protection program is available in most states. This will protect your home and assets to the limit as was paid by a qualified policy.

Some people have too many assets to benefit from the Partnership. They may prefer an annuity or life insurance with a long term care rider. You can use an existing whole/universal life policy or existing annuity to fund a new policy with long term care coverage. The Pension Protection Act allows this transfer without having to pay capital gains.

Feel free to contact us for more information or for an updated quote.

Be Prepared: Get Long Term Care Insurance Quotes


.* States can differ on spend-down.

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Everyone should do some estate planning.

Everyone—regardless of how small their wealth—should do at least some estate planning. 

Some things to consider include:

• A will: This is the most basic of estate-planning documents, yet a Caring.com survey this year showed that more than half of Americans don’t have a will. That’s surprising and troubling all at the same time. A will can provide certainty and clarity and eliminate  the grey areas when property is moving from one generation to the next. Don’t just assume everything will end up with the people you want it to if you fail to leave specific instructions.

• A trust: Not everyone needs a trust, but it often makes sense. Basically, a trust allows you to control your assets from the grave. You can set certain restrictions, which is especially helpful if your kids are young or they don’t really manage money well. That way you may be able to keep them from blowing their inheritance all at once. For example, a restriction might be that they don’t receive the money until they earn a college degree.

• Power of attorney: It’s important to assign someone power of attorney so that if you become incapacitated that person can speak on your behalf and sign important documents. You can also have a living will to outline your wishes, which could help your family make tough decisions about your healthcare.

If you don’t plan for your long term care who will?

Long Term Care Insurance Quote


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Have You Had The Conversation?

The Conversation Project is dedicated to helping people talk about their wishes for end of life care. They offer a collection of “Conversation Starter Kits” that you can download for free.

Talking with loved ones openly and honestly, before a medical crisis happens, ensures that everyone understands what matters most to each individual at the end of life. You can use a starter kit for yourself, or to help others communicate their wishes.

conversation2There are several different kits: for families and loved ones of people with Alzheimer’s or other dementias; how to choose a health care proxy and how to be a health care proxy; how to talk to your doctor or nurse about your wishes; and one for parents of a seriously ill child.

There are starter kits in English, Spanish, Mandarin, French, Hebrew, Korean, Russian, Vietnamese, and Hindi.

Organizations can purchase printed copies to distribute and add their logos.

The cost of care can be devastating, the national average is over $7,000 per month. To plan means to be insured before needing care, even before the diagnosis and not everyone can health-qualify for insurance (Can You Qualify?).

To find out more about long term care insurance see the Guide To Long Term Care

Long Term Care Insurance Quote


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Sources of Help for Seniors

There are many government-supported benefits for seniors, including some programs that are not widely known. Seniors and their caregivers can find services through some helpful online resources listed below.

The National Association for Home Care & Hospice has a Home Care and Hospice Agency Locator and a Caring Store with workbooks and manuals for caregivers.

The Visiting Nurse Associations of America has a Find-a-Provider website.

The Eldercare.net website contains a searchable database of resources that are available at the state and community level. For example, there are connections for legal services, elder abuse prevention, health insurance assistance, home health care, and long term care. Users can enter their data to search for specific programs to meet their individual needs.

The National Council on Aging provides a website called BenefitsCheckUp.org on programs for the elderly, which it says can help some seniors save thousands of dollars on the basic costs of living.


The Older Americans Act of 1965 (OAA) established a national network of federal, state, and local agencies that help older adults live independently, called the National Aging Network. Anyone 60 or older is eligible for services under the OAA; those most in need get priority. The network includes 56 State Agencies on Aging, 622 Area Agencies on Aging, and more than 260 Title VI Native American aging programs. Its programs are supported by tens of thousands of service providers and volunteers. A few examples of the many programs in the network are:

EyeCare America provides access to free medical eye care and annual eye exams;

Program of All-inclusive Care for the Elderly (PACE), which provides stay-at-home alternatives to living in a nursing home;

Chronic Disease Self-Management Program (CDSMP), which gives workshops that help people manage health conditions such as arthritis, asthma, emphysema, bronchitis, cancer, depression, anxiety, diabetes, heart disease, high blood pressure, stroke, osteoporosis, and HIV/AIDS.


For information on Long Term Care Insurance, see the Guide To Long Term Care

Long Term Care Insurance Quote


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Groundbreaking ideas tested in high-tech Alzheimer’s facilities

A new concept is revolutionizing the care of patients with dementia and Alzheimer’s disease.

The idea is an assisted living facility that is like a time capsule for residents. The home’s interior is designed to look like a small town in the 1940s. Each resident’s room is a small house, with a front porch light that turns on by timer every night. The carpet outside the rooms looks like grass, with “sidewalks” leading from one room to another. In the ceiling, fiber optics change from sunlight to stars for day and night. Chirping bird sounds make the space feel like outdoors. There is a movie theater, a barbershop, a saloon and salon and supermarket.

The idea is to set up an environment that nurtures memories, promotes functional independence, and stimulates new learning. This charming environment can trigger fond nostalgic memories that will help the residents relax. It also creates the feeling of living in a community rather than an institution.

The innovative environments are created by Jean Makesh, an occupational therapist who is CEO of The Lantern Group. The Lantern Group has Ohio facilities in Chagrin Falls, Ashtabula, and Madison, with plans to expand: website.

6791senior-care-infographiccost-002

For more information see “Alzheimer’s on GuideToLongTermCare.com

Long Term Care Insurance Quote


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California Partnership Plan: Changes Needed

After age 65, 70% of people will need long term care at some point. The costs are potentially staggering. Financial advisors recommend long term care insurance to protect oneself against the excessive costs of nursing home care or home services.

Medicare pays for doctors, hospital costs, drugs, and some other health care needs, but not for long term care – longtermcare.gov

Long term care is the care needed by someone who has difficulty with two or more activities of daily living (ADLs) over a period of 90 days or more. Over 12 million people in the United States need long term care now, with almost half of them under 65 years old.

One of the incentives for people to get long term care insurance is state Partnership plans, which allow insureds to protect their assets if they use up their insurance and need to apply for Medicaid (called Medi-Cal in California).

In the 1990s, California, New York, Indiana, and Connecticut were pioneer states in creating Partnership programs, where insurance payouts for long term care can be deducted from the insured’s assets if the plan runs out and Medicaid is needed. Partnership programs save states money by encouraging people to buy long term care insurance.

To encourage more Americans to plan for the risk of needing long term care Congress passed the Deficit Reduction Act of 2005 (DRA). The new law permits the creation of beneficial public/private partnerships; a joint-effort between states and insurance companies who offer Qualified Long Term Care Insurance Partnership Policies. States would then amended their Mediciad law(s) to allow for the Partnership.

Insurance companies have agreed to offer high-quality, affordable long term care insurance protection that meets the stringent requirements set by the federal legislation and states.

Not all policies sold in your state are Partnership qualified. The most common non-Partnership policies are sold through employers, unions, associations – these are group policies and only individual policies are Partnership. Not all insurance companies policies qualify for Partnership in every state, check with us about your state or a specific company.

Partnership policies not only offer benefits to pay for long-term care costs. They offer the special additional benefit of Asset Protection should you ever need to apply for Medicaid assistance.

Now most states have Partnership programs, but California’s program needs to be updated.

To qualify for the state Partnership, California requires a long term care insurance policy to have a minimum of  $190* a day in coverage and a 5% compound interest inflation protection for someone under age 70. But these requirements may make the premiums out of reach for average Californians.

In  Partnership states created after 2005,  inflation protection is the only requirement for a plan to qualify for Partnership and 3% compound is about half the cost of 5% compound, making a comparable California Partnership policy about twice the cost.

The requirements can change from year to year. But another problem is that California long term care insurance Partnership policies do not have reciprocity; that is, if the insured moves to another state, although the insurance policy moves with the insured, the Partnership asset protection no longer applies. You would have to move back to California to use the Partnership asset protection part of the policy.

All the other Partnership states have reciprocity – even the other Partnership pioneer states New York, Indiana, and Connecticut.

California spends over $14 billion annually on long term care through its Medicaid program (called Medi-Cal). The only state that spends more is New York at over $15 billion. Total long term care Medicaid spending for the United States is over $118 billion.

In 2005, about 1.5 million Californians used long term care services. That number is expected to skyrocket: 6.5 million Californians will be 65 and older by 2025. Nearly a million will be 85 and older, and many of them will need long term care.

It is obviously in the interest of states to encourage people to get long term care insurance. However, the policies have to be affordable or people will not insure. Also, since people move around, reciprocity between states is essential. California needs to make these changes to its Partnership program so it can include more people.

To find out more about Partnership plans nationwide, click here.

*2016 minimum daily requirement


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