Welcome

Long Term Care Brought to you by our 457 Plan partners: Brought to you by our 457 Plan partners:

Workshop Objectives Provide sound education Provide sound education Illustrate principles and examples Illustrate principles and examples Help you identify your goals and financial objectives Help you identify your goals and financial objectives

Long-Term Care Coverage 76% expect not to need it Source: American Health Care Association, 1998

Long-Term Care Coverage 43% age 65 will need nursing-home care Many will not be prepared for the expense Source: 2002 Field Guide, National Underwriter, 2002

Are You Covered for Long-Term Care?

Long-Term Care Costs Private health insurance Group health insurance Medicare Medigap insurance YESNO

Costs Can Be Prohibitive A VERAGE A NNUAL C OST $56,000 M ONTHLY C OST $4,667 Source: AARP, 2001

Soaring Long-Term Care Costs Source: Health Care Financing Administration, 2002

“Are there any other side effects to this medicine besides bankruptcy?”

Common Misconceptions 1. It will never happen to me 2. My family will care for me 3. Medicare will pay for it

It Will Never Happen to Me 43% age 65 will need nursing- home care Source: 2002 Field Guide, National Underwriter, 2002

It Will Never Happen to Me Average stay 2.5 years 1 10% stay 5+ years 2 Sources: Field Guide, National Underwriter, 2002; 2 Health Insurance Association of America, “Guide to Long-Term Health Care,” 1999

My Family Will Care for Me 1. No medical expertise 2. Expense 3. Physical and emotional demands 4. Lifestyles 7

Medicare Will Pay for It YESNO Short hospital stays Long-term care

Medicare Will Pay for It Part A Hospitalization Post-hospital skilled nursing care Home health care Hospice care Part B Physicians’ services Inpatient and outpatient medical services Outpatient hospital care Diagnostics

Medicare Coverage 8 The deductible and co-payment amounts shown are for They are adjusted annually for inflation.

Inpatient Hospital Care The costs shown are for They are adjusted annually for inflation.

What Does Medigap Cover? 9

Who Is Paying the Cost? OTHER8%PRIVATELONG-TERMCAREINSURANCE9% MEDICARE 12% MEDICAID 44% ELDERLY AND THEIR FAMILIES 27% Source: Health Care Financing Administration, 2002

— American Health Care Association, 2001 “Failure to prepare for the cost of long-term care is the primary cause for impoverishment among the elderly.”

What Are Your Options? Self-insure Self-insure Medicaid Medicaid Long-term care insurance Long-term care insurance

Self-Insure A VERAGE A NNUAL C OST $56,000 M ONTHLY C OST $4,667 Source: AARP, 2001

Self-Insure Future Costs in 10 Years A VERAGE A NNUAL C OST $91,218 M ONTHLY C OST $7,602 Assumes a 5% inflation rate

Medicaid

Qualifying for Medicaid COMMUNITYSPOUSE INSTITUTIONALIZEDSPOUSE

What Is Medicaid Planning? 1. Outright transfers 2. Irrevocable trusts 3. 50/50 strategy 4. Home ownership 11

Long-Term Care Insurance

Insurance Company Individual

Types of Care Nursing home care Home health care

Community Care Adult day care Adult day care Respite care Respite care Assisted living Assisted living Board and care Board and care Continuing care retirement communities Continuing care retirement communities

Levels of Care SkilledCare CustodialCare Intermediate Care

Why Should You Consider Long-Term Care Coverage?

Long-Term Care Benefits 1. Preserve independence 2. Preserve freedom of choice 3. Preserve standards of living 4. Protect assets 5. Avoid welfare 12 Source: American Health Care Association, 1998

Is Long-Term Care Insurance Right for You? Net worth Net worth Potential out-of-pocket costs Potential out-of-pocket costs Premium costs Premium costs

Tax Advantages How much of your premiums qualify? Age before year-end 2002 annual limit 40 or younger $ to $ to $ to $2, or older $2,990 Source: Commerce Clearing House, 2002

Additional Long-Term Care Considerations Women Children of aging parents Families with a history of illness Source: Health Care Financing Administration, 2002

Attributes of a Good Policy 14

Policy Cost Factors Daily benefit amount $ per day coverage Waiting time 0, 30, 60,90 days COLA none, 5% simple, 5% compounded Benefit period 3, 5, 7 years or lifetime

Why Consider It Now? Premiums increase with age

Why Consider It Now? Pre-existing conditions

Consider the Benefits DignityChoiceIndependence

Recent Developments in Long-Term Care

Long-Term Care Partnerships Easier to qualify for Medicaid Easier to qualify for Medicaid Shelter more family assets Shelter more family assets Involve you, your state, and insurance company Involve you, your state, and insurance company

Your Three Options Self-insure Self-insure Medicaid Medicaid Long-term care insurance Long-term care insurance

Careful Planning Is the Best Insurance Evaluate your situation Evaluate your situation Explore different options Explore different options Make good decisions Make good decisions

Where Do You Go from Here?

Do it yourself and use your Plan resources Do it yourself and use your Plan resources Work with others Work with others Procrastinate Procrastinate

Thank You