Intro to Long-Term Care
37
Long-Term Care Everything you need to know to make the right decisions for your future
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12-Sep-2014 -
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Long-term care is a growing concern among seniors and Baby Boomers alike. Yet few take the first step to planning for their care. Many don't know where to begin. Use our presentation to understand what LTC insurance covers and learn about alternate strategies to protect your assets, your family and your finances as you age.
Transcript of Intro to Long-Term Care
Long-Term Care
Everything you need to know to make the right decisions for your future
What is it?
Typically provided for an extended period of time
Assistance with Activities of Daily Living (ADL)
Understanding
Long-Term
Care
Long-term care can be broadly defined as care provided for the benefit of those who are unable
to care for themselves
Supervision due to a severe cognitive impairment, such as Alzheimer's disease
Six Types of ADLs
• Bathing• Dressing• Eating• Toileting• Transferring• Continence
Assistance
with
Activities of
Daily Living
(ADL)
…for long-term care?
• When/if you can no longer perform 2 of the 6 ADLs without substantial assistance
• When/if you need supervision due to severe cognitive impairment (memory, orientation, reasoning)
• Expected to last for 90 days• Primary Care Physician
How do
you
qualify…
Where is Long-
Term Care
Provided?
• Historically thought of as nursing home coverage
• Most often in your own home (75% of claims are for Home Health Care)
• Where you need it -- Most policies cover all levels of care
Good
News!You will probably live a long life.
Bad
News!You will probably live a long life.
More of a reality NOW than ever
Advancements in Medical Technology, Treatment,
Medications
Living a
Long &
Healthy
Life
with living better
Living longer is not always synonymous
re
Funding
Options
For Long-Term Care
Out of love and necessity, families help.BUT...
• Families are smaller, and are living farther apart• Work and other responsibilities put limits on how
much family is able to help• Inadequate experience in providing care• Physical and emotional demands• Personal dignity
FAMILY
Medicare and Medicaid generally
Medicare• Health insurance
which covers skilled, not custodial care
• Limited coverage for care at home (where most coverage begins and often continues)
• Less than 100 days in total
Medicaid• Designed for those in
financial need
• Level of need and care is determined by state
• Medicaid is the largest payer of LTC services (50%)
GOVERNMENT limit your long-term care options.
Jeopardizes your goals and may be costly.
SELF-INSURED
Maine Asset LimitsCouple: $110,000
Single: $2,000
$70,000 per year for a private room in a nursing home
Expected to rise to $190,000 per year by 2030
Spend down of assets in order to qualify for a government program should you need additional assistance
Consider the true costs:
May prevent invasion of principal.
• Pays for covered skilled, custodial and community care• Benefits are paid for covered care you receive• Helps to protect your assets and financial strategies• Transfers the risk -- pennies for dollars
LONG-TERM CARE
INSURANCE…
Transfers some of the risks away from you, but
Long-term care insurance doesn't replace the need for care -- it builds on it, allowing the caregiver to take care of their loved one better and longer.
MY OTHER INSURANCE PLANS?
What About
Medical
PlansDesigned to cover medical expenses, not long term care
expenses.
MedicareDesigned to primarily cover skilled, not custodial care, and
only for a very limited time.
not coverlong-term care expenses.
Designed to Replace Income,
Disability
Plans
Basic Policy Features & Riders
Basic Policy
Features Benefit Amount
BenefitPeriod
Benefitsof
Pool
EliminationPeriod
Benefit
Amount
Daily: $50 to $500
The amount of money you
(per day or per month) once you determine you'll need
qualify for benefits.
Monthly: $1,500 to $15,000
Benefit
Period
Typically 2 to 10 years Or Lifetime
The period of time during which benefits will be
paid.
Pool of
Benefits
• Example Calculation: 36 months x $6,000 per month = $216,000 total pool of benefits
• Example Calculation: 3 years x $200 per day x 365 days = $219,000 total pool of benefits
Total amount of money available for you to use once you are
eligible for a claim.
True 3 year plan vs. Pool of benefits
Elimination
Period
• Period of time (waiting period) between the benefits triggering event and the time coverage starts.
• Represented in days; ranging from zero to one year.
Calendar Day vs. Service Day
Riders• Shared Care• Spouse Premium
Waiver• Spouse Security
Benefit• Return of Premium• Non-Forfeiture
Payment Options
• Inflation protection
• Waiver of EP for Home Health Care
• Survivorship• Restoration of
Benefits• Indemnity
Riders
Lifetime paySingle pay
10-pay20-pay
Pay to 65
Two ways to design a plan
Short & Squat
Long &
Lean
Bene
fit P
erio
d
Daily Benefit Amount
Alternative Strategies
LIFE
INSURANCE
ACCELERATED DEATH BENEFITS• Feature or rider included with some
life insurance policies• Life insurance death benefit paid in
advance (tax-free)• Policyholder must have a life-
threatening diagnosis or be terminally ill
• Generally, you must need long-term care for an extended period of time, be confined to a nursing home, and need assistance with Activities of Daily Living
SINGLE PREMIUM LIFE INSURANCE / LTCi POLICY• Life insurance policies combined with
individual long-term care insurance policies
• Purchased for sole purpose of long-term care insurance, not for death benefit
• Single premium (generally) of $50,000 to $100,000
• Purchased with cash, CD's, money market accounts or 1035 exchanges from other life insurance policies
• Distributions from cash values inside life insurance policy are used to fund long-term care insurance policies
ANNUITIESAn annuity is a series of regular
payments over a specified and
defined period of time.
Immediate Deferred
Funds for annuity come from a single premium payment.
There are two types of annuities:
Immediate Long Term Care
Annuity• If you cannot qualify for LTC insurance, or if you are
already receiving care, you can still purchase an annuity
• Available without regard to health• Single premium payment made to insurance
company in exchange for specified monthly income• Payout schedule varies based on amount of initial
premium, age, and gender
Deferred Long Term Care
Annuity
• Long-term care annuity has two funds:– One for long-term care expenses which can be accessed
immediately– Separate cash fund can be used for anything, but is deferred
• Most people that cannot qualify for LTC insurance can qualify
• If the long-term care fund is not used, it can be passed on to your heirs
HEALTH SAVINGSACCOUNT
• Created by the Medicare Modernization Act (MMA)• Offers tax-advantage alternative used to fund long-term care
insurance premiums and accumulate funds to pay for long-term care expenses.
• Can be set up by an individual or employer• Required to purchase a low-cost, high-deductible health insurance
plan• Tax-free contributions can be made to HSA up to an annual limit.
Contributions made by an employer are excluded from employee's taxable income. Funds are carried over every year and all gains are tax-free
HOME EQUITY/REVERSE MORTGAGE
Home Equity
• When an individual needs long-term care they usually have greatly reduced or paid off their mortgages.
• Value of home has usually risen beyond original purchase price.
• Home equity is the difference between appraised value of home and what is owed.
• There are a number of options to tap into home equity.
Reverse
Mortgage
• You receive cash against the value of your home without selling it
• Can receive lump-sum payment, monthly payment, or a line of credit
Not taxable, and does not count toward income or affect Social Security or Medicare benefits if payments received are
spent within the month they are received.
• You do not have to repay the loan until you die, sell the home, or move out of the home.
• You are responsible for taxes, hazard insurance, and home repairs.
Reverse
Mortgage
