1. Welcome

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

3. 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

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

5. 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

6. Are You Covered for Long-Term Care?

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

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

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

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

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

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

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

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

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

16. 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

17. Medicare Coverage 8 The deductible and co-payment amounts shown are for 2002. They are adjusted annually for inflation.

18. Inpatient Hospital Care The costs shown are for 2002. They are adjusted annually for inflation.

19. What Does Medigap Cover? 9

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

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

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

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

24. 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

25. Medicaid

26. Qualifying for Medicaid COMMUNITYSPOUSE INSTITUTIONALIZEDSPOUSE

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

28. Long-Term Care Insurance

29. Insurance Company Individual

30. Types of Care Nursing home care Home health care

31. 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

32. Levels of Care SkilledCare CustodialCare Intermediate Care

33. Why Should You Consider Long-Term Care Coverage?

34. 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

35. 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

36. Tax Advantages How much of your premiums qualify? Age before year-end 2002 annual limit 40 or younger...............$240 40 to 49.....................$450 50 to 59.....................$900 60 to 69.....................$2,390 70 or older...................$2,990 Source: Commerce Clearing House, 2002

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

38. Attributes of a Good Policy 14

39. 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

40. Why Consider It Now? Premiums increase with age

41. Why Consider It Now? Pre-existing conditions

42. Consider the Benefits DignityChoiceIndependence

43. Recent Developments in Long-Term Care

44. 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

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

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

47. Where Do You Go from Here?

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

49. Thank You