1. Building a Long Term Care Strategy
Financial Planning Association – Northeastern New York Chapter

2. What is long term care?
Defined as the assistance or supervision you may need
Long term care can be received at home, in the community or in a nursing home or assisted living facility.
Services needed because you are not able to perform some (2 or more) of the basic Activities of Daily Living (ADLs)
ADLs = Eating, Bathing, Toileting, Transferring, Continence, and Dressing

3. How much could long term care cost?
A Helping Hand: Your needs will depend upon the nature of your physical or mental condition at any point. At the early stages family members and friends may be able to meet your needs, both physically and financially.
Adult Day health care: Getting out of your home and into a social environment can make a huge difference in your wellbeing. Adult day health care (ADC) provides social, structured and supervisory support services in a community-based, protective setting during any part of the day, but less than 24-hour care. Some ADCs also provide personal care, transport, medication management, meals and therapy.
Homemaker services: You probably want to stay in your home as long as possible. These services make it possible. They include household tasks you can’t manage alone, running errands for you, and cooking and cleaning services.
Assisted living/residential care facilities: This could be the option for you if you need assistance with activities of daily living but at a lesser level of care than that provided in a nursing home. This is an intermediate level of long term care.
Home health aide services: Like homemaker services, these services help you stay at home. They include hands-on personal care, such as help with bathing and dressing.
Nursing home care: These facilities can provide you with a higher level of supervision and long term care than assisted living/residential care. These facilities offer residents personal assistance, room and board, supervision, medication, therapies, rehabilitation and skilled nursing care 24 hours a day.

4. Address the Need for Long Term Care in Your Retirement Strategy
Your life today is all about options
Building a retirement strategy is about living the way you want to live, including in the event of a long term care need
At least 70% of people over 65 will need long term care services and support at some point.

5. Two Key Questions to ask yourself
1. “What is my written plan?”
2. “How will I pay for this?”

6. What are your options? Self-funding Private Family Support
Public Programs
Insurance
Or a combination of these options.
Self-Funding
Another idea is for you to assume the primary financial risk for the cost of long term care by allocating a portion of your savings for this need. In considering self-funding, think about potentially needing care in your older years. This strategy includes a review of the cost of care in your area, which should consider inflation and living expenses for you and your family. This can be the information baseline for the savings you will need to set aside for long term care.
Public Programs – Many people think the government will pay for long term care expenses. Medicare generally covers skilled nursing home care after a hospital stay of at least three days, and its coverage for other long term care services is very limited. Care must be received in an approved facility. Medicaid does contribute towards long term care but requires recipients to use their income to pay for care and most of their assets to qualify, so the savings you’ve worked hard to build up may have to be spent down.
Private/Family Support
People may look to family members or friends to provide care, but they may be afraid of being a burden on their family. When making this decision, there are some important considerations, from where these individuals live, to whether they have he time and ability to provide care. In addition, the physical, financial and emotional impacts of providing care are also important factors to keep in mind.
Long Term Care Insurance
It is designed to help reimburse the cost of skilled or custodial long term care, whether it is provided at home or in a facility..

7. Perceptions and Misconceptions
“I already have health insurance. I’m covered.”
“My family will take care of me.”
“If I need special care, I’ll pay for it from my retirement and my savings.”
“I probably won’t need long term care.”
“I’ll never end up in a nursing home.”
I’m too young to think about being old.”
“I already have health insurance. I’m covered.” There are other non-medical needs associated with aging that health insurance won’t cover, like help getting dressed, bathing, cooking and eating – even getting in and out of bed. Nor will health insurance cover home modifications.
My family will take care of me.” Almost half (46%) of family caregivers spent more than $5,000 each year in caregiver costs while 33% spent more than 30 hours per week on caregiving. Be sure to have a realistic conversation about the impact of providing care.
“If I need special care, I’ll pay for it from my retirement and my savings.” The median annual cost of home health care exceeds $45,000. In two or three years, that could have a significant impact on your savings.
“I probably won’t need long term care.” You or someone close to you probably will. At least 70% of people over 65 will need long term care services and support at some point.
“I’ll never end up in a nursing home.” Possibly not, but you still need to plan for other possible eventualities. Even home care is costly, and aging in the home could require expensive modifications like downstairs bed and bath additions, outside ramps, and so on.
“I’m too young to think about being old.” Old age, like life, is something that happens when you’re looking away. Positivity is a virtue, but so is preparation. An unexpected accident or chronic illness can happen any time, and planning ahead is important at any age.

8. When you think about your financial security during retirement, which of the following is most important to you?
Handling unexpected medical expenses
Having enough income to sustain my lifestyle in the future
BUT…….

9. Another consideration is the impact that a long term care event will have on your family. How would an unexpected long term care event affect people you love?
Important to bring up to family members: “It’s not all about you” It’s all about them – the spouse or partner who could be saddled with making crucial decisions about how you live the rest of your life with no idea what your wishes are.
Discussing plans and critiquing plans. Without a durable power of attorney, you may have to go to court to gain guardianship over a loved one if he or she becomes incompetent. Guardianship is necessary so you can handle their affairs for them. Going to court can be expensive, time-consuming and stressful.

10. Care Coordination Complex challenges. Simple claim process.
Assistance to help you find eldercare resources and providers in your area. Care Coordination can help you identify services and providers that may help you stay home and maintain your independence as long as possible.

11. Types of Traditional LTC Plans
NYS Partnership and Non-Partnership
Shared Care Solutions
NYS Partnership Plan – One of the key reasons people purchase long term care insurance is to help protect their assets.
Total Asset Protection – If you have a lot of assets to protect, Total Asset protection is something you should consider. You can exhaust your policy benefits and all of your assets will be fully protected – including your home and its contents – when you apply for Medicaid Extended Coverage.
Dollar for Dollar asset protection – If you have fewer assets to protect or if premium costs are a concern, Dollar for Dollar asset protection is something you should consider. You will be allowed to keep one dollar of your assets for every dollar of benefits paid by your policy.
Insureds who move out of the state of NY continue to be eligible to receive benefits under their policies. In addition, New York Partnership is now a participant in the federal partnership reciprocity standards. New York Partnerhip policyholders are therefore eligible for dollar-for-dollar asset disregard in any other state participating in the partnership reciprocity standards.

12. Alternative LTC Products
Where do they fit in?

13. Cost Differences Competitive Positioning Doesn’t Change
Women Charged More Than Men
Most Pricing Anomalies Occur at Age Extremities
Stick to Basic Life Insurance Product Selling Strategies

14. Coverage Options Long-Term Care and Chronic Illness Riders
Known Cost, Known Benefits
“Free” Accelerated Death Benefit Riders
Unknown Cost, Unknown Benefits
Hybrid Products (Linked Benefits)
Different Purpose, Different Design

15. Underwriting Requirements
Cognitive Impairment Test
Mortality vs. Morbidity
Simplified Issue
Contractual Provision

16. Key Questions to Consider
What types of services do the benefits cover?
What had to happen for me to go on claim?
How much benefit will I receive, and how often?
What happens once I go on claim?

17. What types of Services do the Benefits Cover?
Custodial services, services that help with the 6 ADLs. (Home health, hospice care, adult day care, etc.).
Informal Care
Qualifications depend on Benefit payment structure
Reimbursement
Indemnity
Cash
Activities of Daily Living = Eating, Bathing, Transferring, Dressing, Continence, and Toileting.
Chronic Illness riders are just an acceleration of the death benefit. IRS exclusively prohibits policies with Chronic Illness riders from marketing themselves as LTC benefits or policies.
LTC policies are a little bit more concerned that your benefits are going towards qualified expenses whereas the chronic illness riders you can use your money however you want to.

18. How much benefit will I receive, and how often?
Dollar-for-dollar versus Discounted Rate
Predetermined percentage of death benefit (2%, 3%, 4%)
Capped at IRS per diem limit and Above

19. *Pulled from Nationwide’s Understanding the Variations in Long-Term Care and Chronic Illness Riders marketing brochure

20. *Pulled from Nationwide’s Understanding the Variations in Long-Term Care and Chronic Illness Riders marketing brochure

21. What do I have to do to go on claim?
Permanency:
Is the qualifying condition temporary or permanent?
Elimination Period:
Exhibiting symptoms or receiving care?
Elimination Period: Essentially functions as the deductible for these policies. Chronic Illness riders, you only have to exhibit qualifying symptoms (2 of 6 ADLs or severe mental impairment) for 90 days…. Whereas with a LTC rider you have to be receiving care for 90 days.
For a LTC rider, you will have to be paying out of pocket for those 90 days. Whereas with a chronic illness rider, you may not have been receiving care yet but you could have been experiencing symptoms. Man, Chronic illness riders are really coming out ahead…But let’s go to the next one.
Permanency:
Before 2014, August 2014, all Chronic illness riders required that a condition be permanent in order to receive benefits, in regards to claim benefits from that policy. Now in 2014, the interstate compact has changed that, so some carriers have come out with Chronic Illness riders that do not require condition to be permanent. But all LTC riders conversely aboard benefits for temporary conditions . Now one thing we found is that doctors are very hesitant to say that condition is going to last for the rest of the insured’s life. (Plug in an example).

22. What happens once I go on claim?
Effects on the policy
Who will manage the policy?
Some policies are going to waive all charges…..others are going to waive only the charges for the rider….And others will not waive any of the charges, where the insured will keep getting premiums throughout
These differences will affect the lapse protection.

23. Available Solutions with Living Benefit Riders
Term Insurance
Conversion Options
Permanent Insurance
Annuities

24. 4 Reasons to Consider Hybrid Life/LTC Options
1. Your premiums are locked in.
2. Any LTC coverage not used remains in a death benefit pool.
3. LTC payments go to the proposed insured – not the caregiver
4. There is inflation protection you use no matter what.

25. The toughest conversations are often the most important ones.