The Prudential Insurance Company of America, Newark, NJ. 751 Broad Street, Newark, NJ IFS-A Ed. 03/08 Long-Term Care Long-Term Care Your Options, Your Choice, Your Independence pleple

The Prudential Insurance Company of America, Newark, NJ. 751 Broad Street, Newark, NJ IFS-A Ed. 03/08 What is Long-Term Care? and Where Does it Happen?

3 In most cases aging is a process, not an event  Home Care: Home Health CareHome Health Care Adult Day CareAdult Day Care  Facility Care: Nursing FacilityNursing Facility Assisted Living FacilityAssisted Living Facility

4 What is Long-Term Care (LTC)?  Long-Term Care refers to a wide range of health care services designed to help individuals who, because of a Physical or Cognitive Impairment, need assistance with basic Activities of Daily Living.  Activities of Daily Living: - Dressing - Toileting - Eating- Continence - Bathing- Transferring

5 Contributing Factors to Increased Need for Long-Term Care  People living longer lives  Advances in science and medicine  Managed care and impact on shortened hospital stays  Family members unable to care for family  Changes in independence of modern retirees

6 Long-Term Care is not just a “Senior Issue”  43% LTC received by individuals under age 65: Risks of Needing LTC. Premera, Blue Cross, Children Under Age %

7 Why is the Government Getting Involved in Long-Term Care Planning?  Fewer workers to support future retirees 77 million baby boomers77 million baby boomers  According to the Social Security Administration (2006) In 1945, the ratio of workers to beneficiaries was 41.9 to 1In 1945, the ratio of workers to beneficiaries was 41.9 to 1 In 2005, the ratio fell to 3.3 to 1In 2005, the ratio fell to 3.3 to 1 By 2032 the ratio is expected to be 2.1 to 1By 2032 the ratio is expected to be 2.1 to 1  Lower tax base  More retirees Social Security Administration, 2006 Trustees Report, p. 47, 49.

8 Federal Government Actions and Education About Long-Term Care Planning  Health Care Reform Act 1996  Balanced Budget Act 1997  Deficit Reduction Act (DRA) 2005  National Awareness Campaigns  Voluntary Long-Term Care Insurance Plan for Active and Retired Government Employees

9 Changes in the Federal Law Regarding Long-Term Care  DRA 2005 Look Back PenaltyLook Back Penalty Asset TransferAsset Transfer Estate RecoveryEstate Recovery $500,000 ($750,000 option) Equity House$500,000 ($750,000 option) Equity House Transfer Date vs. ApplicationTransfer Date vs. Application Change in the view of annuitiesChange in the view of annuities

10  Awareness Campaigns 5 State Campaigns State Campaigns 2004  Centers for Medicare & Medicaid Service  Partnership Programs and Expansion under DRA  State Income Tax Incentives Changes in the Federal Law Regarding Long-Term Care

11 Long-Term Care: Skilled Care vs. Custodial Care  Skilled Care – Mainly rehabilitative care  Custodial Care - Non-medical care that generally includes simple help with activities of daily living (ADLs) “Nearly 79% of people who need long-term care live at home or in community settings, rather than in institutions.” The State of Aging and Health in America Merck Institute of Aging and Health, 2004, p.4.

The Prudential Insurance Company of America, Newark, NJ. 751 Broad Street, Newark, NJ IFS-A Ed. 03/08 Who Pays for Long-Term Care?

13 Who Pays for Long-Term Care? Health Insurance, Major Medical, HMO, PPO (people under age 65)= Skilled Care* (100 Days or less, generally) * Skilled care is health care given when you need skilled nursing or rehabilitation staff to manage, observe, or evaluate your care.

14  Medicare: Maximum… 100 Days each benefit period Skilled Nursing Facility (SNF)Skilled Nursing Facility (SNF) Skilled Care (acute and rehabilitative) at a SNF only after a consecutive 3-day inpatient hospital staySkilled Care (acute and rehabilitative) at a SNF only after a consecutive 3-day inpatient hospital stay  No Coverage for Custodial Care (except in certain instances where coverage is limited to skilled care)  1 – 20 Days:Full Cost Paid by Medicare  Days:You co-pay up to $109.50/day  101+ Days:You pay full cost Medicare coverage of skilled nursing facility care. CMS (Centers for Medicare & Medicaid Services), 2004, p. 11, 17. Who Pays for Long-Term Care?

15  Medicaid: How to Qualify Couples and SinglesHow to Qualify Couples and Singles Limited ChoicesLimited Choices Premature Asset Transfer ImplicationsPremature Asset Transfer Implications Focus: Nursing Facility CareFocus: Nursing Facility Care Who Pays for Long-Term Care?

16 Congressional Budget Office, Financing Long-Term Care for the Elderly, Washington, DC, April Sources of Funding for Long-Term Care Who Pays for Long-Term Care? Private Insurance - 4% Other - 3% Medicaid - 35% Out of Pocket - 33% Medicare - 25%

17 Long-Term Care: The Average Cost of Care Long-Term Care Facility Costs - A Quantitative Evaluation of US Nursing Homes, Assisted Living Facilities and Home Health Care Agencies. April Prudential Financial Global Market Research Daily Base Rate by Type of Care (Cost vary significantly by location)

18 Caregiving is a Family Issue  64% of all caregivers are working 1  26% have had to take a leave of absence due to caregiving responsibilities 1  Approximately 73% of those providing care to older family members and friends are female, 27% are male 1  About half of primary caregivers provide care with no outside assistance 1  Because caregiving is such an emotionally draining experience, caregivers experience depression at 3 times the rate of others in their own age group, and they are more likely to become physically ill themselves 1  The value of the services that family caregivers provide for “free” is estimated to be $306 billion a year ” Economic Value of Informal Caregiving”, Arno, Peter S. January 2006 Providing extended Long-Term Care rarely brings families together; it often tears them apart when the responsibility is not shared equally.

19 Consequences of Failure to Plan  Family Burden children and grandchildrenBurden children and grandchildren Loss of inheritanceLoss of inheritance  Personal Standard of Living Asset lossAsset loss Surviving spouseSurviving spouse  Quality/Choice of Care to Self Nursing Home vs. Home CareNursing Home vs. Home Care  Preserving Independence Remain in own homeRemain in own home Remain self-sufficient as you ageRemain self-sufficient as you age

20 Some of Your Options for LTC 1. Rely on Family Members and Friends 2. Medicaid (Welfare) 3. Remain Self-Insured Savings, Stocks, Bonds, CDs, Mutual FundsSavings, Stocks, Bonds, CDs, Mutual Funds 4. Transfer Risk to Long-Term Care Insurance

21 Transferring your Risk to Long-Term Care Insurance  What to Consider when Purchasing Long-Term Care Insurance: Financial Strength and StabilityFinancial Strength and Stability Experience: At least 10+ years long-term care industryExperience: At least 10+ years long-term care industry Solid ReputationSolid Reputation Comprehensive ProductComprehensive Product

The Prudential Insurance Company of America, Newark, NJ. 751 Broad Street, Newark, NJ IFS-A Ed. 03/08 Long-Term Care Your Options Your Choice Your Independence Your Move

23 Disclaimer LTC3 SM long-term care insurance policy is issued by The Prudential Insurance Company of America,751 Broad Street, Newark, NJ ( ). This coverage contains benefits, exclusions, limitations, eligibility requirements and specific terms and provisions under which the insurance coverage may be continued in force or discontinued. Prudential is authorized to conduct business in all U.S. states and the District of Columbia. Product availability varies by state. Coverage is issued under policy number GRP (In North Carolina coverage is issued under GRP , In Virginia coverage is issued under GRP ), however policy numbers may vary by state. Prudential and the Rock logo are registered service marks of The Prudential Insurance Company of America. This is a solicitation for long-term care insurance.