1. Family Caregiver Education
Long Term Care Insurance

2. Texas 65+ Population 2007: Over 2 million
2025: 4.3 million (and estimated over 70 Million NATIONWIDE)

3. Terminology
Long term care (LTC): medical or personal services needed when you can’t care for yourself
LTC insurance: specific policy to cover expenses & help preserve retirement savings

4. LTC……
Helps a person perform normal daily activities; which are bathing, dressing, taking medications, transporting to/from doctor, etc..
May not permanently improve or correct physical problems, but can make these ADL’s easier with help.

5. Changing Times
Longevity – people are living longer due to health care improvements
Family structure is changing
Gender of who lives longer is changing

6. Common Misconceptions! Many people think…
Government will pay
Health insurance will pay
Risk is less than 25% they will need some type of ST Rehab or LTC before reaching age 90.

7. Is Anybody Ready? AARP survey (age 45-54)
61% say Medicare covers nursing home costs
Only 15% accurately estimated the cost of nursing home care in their area
Insurance industry estimates
6% have purchased a LTC policy
Average purchase age: mid-60s

8. LTC Helps With… Health Medical Social needs Personal care
Chronic/prolonged illness & disability
Cognitive disorders

9. LTC Can Take Place At… Home Nursing home Assisted living
Adult day care
Continuing care retirement center

10. How is LTC Paid For? Medicare: Skilled care - temporary basis
Supplemental Health Insurance: will not cover
Personal resources/savings, or family commitment
Reverse Mortgage – if eligible or suitable
Medicaid – very few qualify for state financial aid
Medicare = 9%
Personal = 37%
Medicaid = 47%
Supplement = ?
Private (not defined) = 3%

11. Other Payment Options
Accelerated death benefits: cash now from life insurance contracts if terminal
Cash Value from whole life insurance if any has accumulated
Long term care insurance to transfer financial risk of LTC need to an insurance company, much like auto and homeowners insurance
Accelerated: cash now while the policyholder is still alive
Viatical: sell rights to death benefit and get a percentage of the face value of the policy. The viatical company pays the premiums and collects the face amount upon death of insured.

12. LTC Insurance Complex Relatively new Evolving
Like health insurance, premiums are NOT guaranteed to NOT increase

13. What Does It Protect? Your Assets Your Family Your Lifestyle
Your Independence/dignity

14. Who is a Good Candidate? Sufficient assets to protect
Can afford now & later
Unwilling/unable to pay out-of-pocket for long time
Not disabled or poor health
Want independence & control without depending on family members

15. Who is NOT a Good Candidate?
Few assets or low income
Those unable to afford premiums
IF already disabled or poor health
Can self-insure IF you are willing to put all of your assets at risk

16. What Does LTC Cost? Rough estimates
$4k to $5k per month for nursing home or assisted living facilities 24/7 care
Premiums for LTC insurance:
$2,500 per year at age 65 for:
$120 daily benefit, $60 home care
90 day elimination, 6 benefit years
5% simple inflation protection

17. What Affects the Premium?
Age
Health
Daily benefits
Length of benefit period
Elimination period
Extra Riders;
IE: Inflation, Etc…
Compound inflation is figured on the new benefit each year.
Simple inflation is figured on the original benefit amount.

18. What Triggers Benefits?
Must need help with at least 2 of the ADLs; or Cognitive Impairment
Doctor Statement to prove needs
Contract Waiting/Elimination Period
Must be satisfied, and
Insurance premiums must be current

19. Standard Exclusions
Alcoholism or drug addiction, if before policy issued
Illness from act of war or service-related condition
Intentionally self-inflicted injury
Conditions from riot, felony or any other illegal activities

20. How Do LTC Policies Work?
Not standardized
When you’ve seen one, you have NOT seen them all!
Make sure you read the “Outline of Coverage” before buying!

21. What Features Can Vary? Coverage options: Nursing home Home health
Hospice
Respite
Payment methods:
Expense-incurred
Indemnity
Expense-incurred: based on actual expenses
Indemnity: a fixed amount

22. Features That Vary (2) Tax implications: Elimination period:
Tax-qualified
Non-tax qualified
Most are Tax Qualified now!
Elimination period:
0, 30, 60, 90 or 120 days
Some have new elimination for each period of care if more than 6 months gap

23. Features That Vary (3) Pre-existing conditions:
6 months or longer, if excluded
Duration of coverage for each level of care might vary, depending on contract provisions

24. Policy Requirements Outline of coverage 30-day free look of contract
Guaranteed renewable, as long as premiums are paid
31-day grace period to pay premium or reinstate policy
65-day grace period: to pay premium
Reinstatement: if loss of capacity causes policy to lapse

25. Mandated Optional Benefits
Nonforfeiture Benefit – Shortened Benefit Period equal to at least what was paid, if policy lapse due to non payment of premium – STATE MANDATED
Inflation protection must be offered, but at additional cost
Third party notice of lapse to protect against unintentional lapse, MANDATED
Nonforfeiture: guarantees a percentage of benefits if policy is cancelled
Inflation protection: 5% annual benefit increase, compounded
Third party notice: designates 3rd party to get notice

26. Optional Benefits: Some At Additional Cost Depending On Policy
Respite Care Benefit for Caregiver
Caregiver Training & Homemaker service
Durable Medical Equipment Benefit
Bed reservation for nursing home
Alternative care/Care Coordination
Home Modification Benefit
Spouse Shared Benefits/Paid up survivor

27. How to Choose Consider current/future needs Consider finances
Compare benefits, (read outline of coverage)

28. Shopping Tips Take your time Know the agent & company
Understand the policy
Don’t buy duplicate policies
Never sign a blank application
Never pay in cash

29. Texas Department of Insurance
Assets, liabilities, etc.
A.M. Best rating

30. This module of the Area Agency on Aging Family Caregiver Education program includes information provided by the Texas Department of Insurance , North Central Texas Area Agency on Aging, and professionals in financial planning and elder care planning.
Includes information provided by Tena Burrell, Certified Senior Advisor