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Lack of Long-Term Care Insurance Coverage

There are few issues that are more compelling than the need for long-term care. As our population ages, and as more and more people live longer in their retirement years, there will be many more people who are going to be forced to confront this issue. The question at the end of the day is, will they be prepared?


Long Term Care (LTC) insurance provides help for people who can’t complete daily tasks called Activities of Daily Living (ADL’s). There are 6 ADL’s that consist of toileting, bathing, dressing, eating, transferring (out of bed or a chair), and maintaining continence. Once you are unable to complete 2 of these 6 ADL’s, you qualify to start receiving benefits from your LTC plan no matter what situation you are in. The policy benefits will also trigger if someone suffers from severe cognitive impairment. Types of LTC services, therefore, vary from helping a robust 50-year-old stroke victim relearn grooming skills to providing 24-hour skilled nursing care for a 90-year-old suffering kidney failure.



When looking into Long-Term Care insurance, there are two Types of Policies:


Traditional Long-Term Care

Traditional Long-Term Care policies are standalone insurance policies that offer to pay for LTC. You recieve a daily, or monthly, benefit that can be used once you qualify for LTC coverage. If you end up not using your insurance policy, you won’t recieve any return of premium or a death benefit as it is standard insurance (just like home/ auto insurance or term-life insurance policies).


Hybrid Long-Term Care

Hybrid Long-Term Care policies are just like Traditional LTC policies, but are combined with life policies to give you a death benefit if the policy is not used. Some people don’t like the “use it or lose it” motto of Traditional LTC policies as they believe they will remain healthy and won’t have to use it. They want to know that they aren’t putting in money to something that they may never use or see. If a Hybrid Long-Term Care policy is not used when you pass, your heirs would receive the full payout of the death benefit. Because of the guaranteed benefit, hybrid plans are the more expensive option.


Most policies cover any of the following places where care can be best provided:

· Nursing home care

· Assisted living facilities

· Adult daycare services

· In-home care



Here are a few key factors, that limit people from signing up for Long-Term Care:

· Lack of information—Many people underestimate the likelihood of requiring LTC services and the potential costs of those services. For people 65 or older, there is over a 70% chance that some form of long-term care will be needed. Of people who use long term care, there is an estimated lifetime average cost of $172k per person.

· Misperception of public and private programs—Many people believe that Medicare, retiree health plans, or Medicare supplement insurance covers LTC services. This is not the case.

· Delayed preparation for/denial of long-term care needs—Many do not think about preparing for long-term care needs until the need arises. At that point, they may be too old or disabled to purchase insurance. When this happens, people are left wishing they would’ve looked into LTC sooner. There are still ways to get some sort of coverage, but it is not considered Long-Term Care as it covers differently.

· Long lag time between purchase and benefit payment—Long-term care insurance must be purchased before it is needed; often, this means a period of many years between purchase and when benefits are likely to be paid. Consumers prefer to spend their current dollars on coverage that provides a more near-term benefit, such as Medigap policies.

· Affordability—Long-term care insurance can be expensive. Many of today’s older consumers with middle to low incomes cannot afford the premiums. But, there are ways to make it work with your budget, by decreasing the monthly benefit or the duration of your coverage. As agents, we can work backwards and set up the policy to fit your budget if you have a number in mind.

· Perception of need—Some consumers decide they do not need long-term care insurance because they have too few assets to protect or have family and friends available to provide care. If you are in this situation, evaluate the toll it can take on your loved ones to have to care for you as on average, a person spends approximately 4 hours a day caring for elderly, in addition to their other responsibilities.



But for every reason why people do not plan in advance for long-term care, there is a reason why they should:

· Advanced planning for future care needs will allow for greater independence and choice as to where and how the care is delivered.

· Advanced planning can mean greater financial security, not only for those who may need care but also for their family and loved ones.

· Advanced planning can ease the financial and emotional toll on one’s family and release them from the burden of providing the care, if and when it is needed.

· Advanced planning will avoid the uncertainty, confusion, and mistakes that could arise in the event of a health care need.

· Advanced planning will promote a continued quality of life, as the person defines it, when care is needed.



Given the likelihood of needing long-term care and the tremendous cost that this care entails, it is important that individuals plan for it—and the sooner the better. Certainly, there are barriers. For example, people tend not to think about becoming older and needing care, or they don’t anticipate that they will ever need care themselves; they resist the idea of becoming dependent. They may find it difficult to raise this issue with their loved ones. Or they may underestimate the time and toll that future caregiving will demand of their family or friends. Some are not aware of the tremendous costs of this care or how it is paid for. Some may think of long-term care simply as nursing home care and assume that the “government” will cover the cost. Some are confronted with conflicting financial priorities. And some people may simply not know where or how to begin the planning.


We understand that Long-Term Care isn’t for everyone. But maybe you want to protect yourself or a spouse from having to be covered by Medicaid, and your only option be to stay in a Medicaid facility. Unfortunately, there are “spend down” requirements for some to qualify for Medicaid and there aren’t many ways around the system, because of a 5-year lookback period where they can track what you did with your money. Long-Term Care insurance helps ensure that you won’t have to spend down and protects your assets like a vehicle or second home, or something of intrinsic value like a family farm or plot of land.


If you are wanting to learn more, or get a quote, don’t hesitate to reach out and we can help you understand everything you need to know about LTC insurance. We are here for you, to help you decide what is best for you and your specific situations. This holiday season is a great time to look into coverage or just learn more about it as you may be reflecting on the past year, looking ahead to the following year, or maybe you are seeing family and discussing coverage needs of parents before it is too late.


Whether it is for Long-Term Care, Medicare, Life insurance, or Health coverage, we are always here to help and answer any questions. Have a great Christmas and holiday season. Take time to cherish loved ones, and celebrate the true reason of Christmas.

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