I recommend Long Term Care (LTC) insurance policies for many of my clients. 70% of people turning age 65 can expect to use some form of long-term care during their lives (Source: U.S. Dept of Health and Human Services). As we age, the likelihood of someone facing an illness or injury that requires outside care is great. Care can be financially devastating without adequate coverage for such an event. Many people who have LTC policies are not aware of the wide range of benefits available, and as such, underutilize their policies.
There are several common threads that run through most of the policies I have seen. For example, most include these two “benefit triggers,” which initiate policy coverage:
• An inability to perform at least two activities of daily life. These are usually listed as bathing, eating, dressing, toileting, continence, and transferring (getting in and out of bed, wheelchair, etc).
• Cognitive Impairment (such as Alzheimer’s and forms of dementia) affecting memory and orientation to people, places, and time; that may result in threats to safety.
When either of these types of impairments will last for more than a very brief period of time, a benefit request should be submitted.
Another common thread is the elimination period, which acts like a deductible or waiting period before benefits are payable. For some plans, this elimination period needs to be satisfied only once for the duration of the policy. Some plans do not require these days to be satisfied in a consecutive manner, but instead as a total of non-consecutive days in a certain period, such as 90 days during a 2-year period. It is important you understand the waiting period on your plan, and have financial and other support resources to assist during the time period before benefits begin.
Even before the elimination period is satisfied, however, most policies contain benefits to help with care needs. Many policies provide assistance coordinating caregivers; to include developing a plan of care and suggesting possible providers of care, as well as monitoring the care and support services one is receiving.
This coverage may allow you to remain in your home, versus living in a facility. A policy may cover expenses incurred to train an informal (unpaid) caregiver, such as a family member, to care for the covered insured in his or her home prior to the beginning of a health situation. A policy may also cover, prior to the satisfaction of the elimination period, the purchase or rental of supportive equipment that allows the covered person to remain in their home; such as an adjustable bed, a ramp for movement from one part of the residence to another or even pumps for intravenous injections. Some policies contain a home care benefit that actually provides coverage for home health care aids, adult day care, and hospice care without an elimination period. For these potential benefits alone, it is critical the insurance company providing the coverage be contacted from the very beginning of a health issue warranting some form of care assistance.
Beyond this, many people just find comfort in knowing there is someone available to turn to with knowledge about the issues they are facing, and the ability to help with those issues.
Forty percent of people currently receiving long term care services are ages 18-64 (U.S. Dept. of Health and Human Services 10/08). Examples could include but are not limited to automobile accidents, sporting accidents, injuries around the home, and long-term illnesses such as cancer or heart related problems.
Most people who talk themselves out of LTC coverage do so because they convince themselves “it will never happen to me” or expect someone in their family to care for them. Many don’t realize long term care is generally not covered by health insurance and there is only very minimal coverage provided by Medicare. In general, long-term care protection makes sense for people with a net worth of $100,000-$2 million. Those with less will exhaust their assets and qualify for Medicaid; those with more can fund their own care.
Although some employers offer group coverage, individual policies are not inexpensive. A 55-year-old single individual purchasing long-term care insurance protection can expect to pay $2,065-per-year for $162,000 of current benefits which will grow to roughly $330,000 of coverage at age 80 (Source: March 2013 American Association for Long Term Care Insurance). Medical underwriting is required to obtain coverage, and many people wait until they no longer qualify to seek coverage.
A Long Term Care Insurance Policy can provide much needed protection for your financial future. Review your policy to make sure you understand it fully. If you have any questions about your coverage or this type of insurance or wish to obtain a quote, please contact our office at 770-931-1414 for a complimentary consultation.
Roger S. Green is a registered Representative with Cetera Advisors LLC, member FINRA/SIPC, with Green Financial Resources, LLC located at 3700 Crestwood Parkway, Duluth, GA 30096. Neither Green Financial nor Gwinnett Technical College is affiliated with Cetera Advisors LLC. Hear more “Your Green”, Saturdays at 3PM, on WNIV 970 AM or live at http://www.faithtalk970.com. Visit Roger’s website at http://www.rogersgreen.com.