LTC Insurance: The Basics

LTC Insurance Costs, Benefits & More

It may seem that people decide to invest in Long Term Care Insurance for many different reasons. However, at Schneider & Shulman Associates, our years of experience have shown us that those many reasons can be reduced to just one: They love their families and they understand that, though they could live without Long Term Care Insurance, the consequences to their families could be disastrous. So what are those consequences?

 

The Consequences of Living Without Long Term Care Insurance

Cost to You: The cost of long term care can be very expensive. According to a 2007 Genworth financial report, the average cost of a private room in a nursing home is $205 per day, or nearly $75,000 per year. In some regions, long term care costs can easily cost twice that amount, and home care can be just as expensive. The average hourly rate for a certified home health aide is $32.37. At that rate, bringing an aide into your home just three times a week for three hours at a time would cost $291 per week, which is more than $15,000 per year. And who pays the bills for all this expensive care? You do. Most government programs do not cover the costs associated with long term care.

Cost to Your Family: If you have close family and become ill, you may think you do not have to worry – after all, your family will surely take care of you.

But at what cost to themselves?

Caregivers are usually adult children, often with families of their own to raise. Caring for an aging parent will cost family travel expenses, lost income when they have to take time off work and lost inheritance when they use your retirement portfolio to pay for your care.

Lack of Control: If you suddenly find yourself in need of long term care but without the means to pay for it, you may receive some help from the government. But that means the government gets to decide where you’ll live, what long term care you’ll receive and how. You’ll no longer have the luxury of choosing the course of your own life.

Emotional Strain: The illness of a family member is a stressful event no matter what. In fact, many caregivers become ill themselves in the process of caring for a loved one. And if mounting long term care costs are also part of the equation, families can truly be torn apart over their inability to pay for a loved one’s long term care.

 

The Benefits of Long Term Care Insurance

Savings: You can purchase a long term care insurance policy that offers lifetime maximum benefits in the millions of dollars for a premium of just a few dollars a day.

Choice: With long term care insurance, should you need to make a claim, you get to decide where, when and how you receive your long term care. If you’d prefer to stay at home, you can choose to receive in-home care. If you’d prefer to move to an assisted living facility, that’s your choice. When you control the money, you control your life.

Peace of Mind: Perhaps no benefit is greater than this. With a long term care insurance policy in place, you can feel confident that your needs will be taken care of no matter what and your retirement portfolio will remain intact. Best of all, your family will be free to supervise your care, rather than provide it. In this way, you can continue to enjoy their company, and they yours, for as long as you live.

So now that it’s clear how important long term care insurance is, how should you pick a policy? The best way is to call Schneider & Shulman Associates. We can lead you through the following criteria, show you all your options and help you pick the best policy to meet your family’s needs.

 

What to Look for in a Long Term Care Insurance Policy

Financial Strength: A long term care insurance policy is for the “long term,” so make sure to buy from a financially sound company. You may not receive benefits from a long term care insurance policy for 10 to 20 years, so you want to go with a company that will still be around. Schneider & Shulman Associates represent only the most financially viable companies.

Adequate Daily or Monthly Benefit: The cost for long term care services may easily exceed $200 per day in most parts of the country, more in metropolitan areas, such as New York City. It is important to be aware of the costs in your area when selecting a benefit level.

evaluating long term care insurance

 

Inflation Protection: Over time, the cost of services increases. long term care services are no different. For example, a nursing home that charges $200 per day today will charge $460 per day in 14 years, assuming a 5% growth rate. Inflation options need to be selected at time of issue and do not underestimate the power of compound interest.

 

Comprehensive Coverage: There is no way to predict whether you will need long term

care services in a nursing home, an adult day care facility or at home. Comprehensive coverage gives you the peace of mind of knowing your policy will provide benefits in a variety of settings.

Stable Premiums: long term care Insurance carriers have the right to raise premiums. The policies are “guaranteed renewable,” which means they cannot be cancelled as long as the premiums are paid on time, and carriers cannot single out individuals for rate increases. However, they may raise premiums for a “class” of policyholders. Be careful of carriers that are priced substantially below the competition.

So what happens if you need to make a claim on your long term care insurance policy?

 

How LTC Benefits Are Paid

Should you ever need to make a claim on your long term care insurance, benefits will become available once you meet the following conditions:

1. You are unable to perform two of six basic activities of daily living (ADLs): bathing, toileting, continence, dressing, eating and transferring.

OR

You show signs of severe cognitive impairment, such as those associated with dementia.

AND

2. Your doctor certifies that your condition is expected to last at least 90 days.

AND

3. You pay for long term care services for the number of days in your waiting period.

 

 

What Kind of Care Will You Receive?

Types of Long Term Care

Skilled Care: This is medically necessary care provided by licensed professionals, such as nurses and therapists, working under the supervision of a doctor.

Intermediate Care: This also requires supervision by a physician and skilled nursing care, but it is needed only intermittently.

Custodial Care: This covers nursing home services. Benefits cover mainly room and board plus payments for assistance with the activities of daily living (ADLs).

Home Health Care: Depending on the policy, benefits for home health care may range from homemaking and chore services to occupational therapy and laboratory services.

 

What if You Have a Problem Receiving Benefits?

Contact your Schneider & Shulman Associates representative right away. We are able to resolve any problems quickly and easily. It’s why we’re here!