What is long-term care?

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Nearly 70% of Americans age 65 or older will need some type of long-term care during their lives, according to LongTermCare.gov, a website of the U.S. Department of Health and Human Services. Long-term care takes many forms but is essentially help someone may need with “activities of daily living,” such as bathing, eating or dressing — whether it’s needed due to injury, health conditions or cognitive disorders such as Alzheimer’s. Long-term care also sometimes refers to assistance with everyday tasks like taking medication, housework or managing money, called “instrumental activities of daily living.”

Long-term care is not medical care, so it’s not typically covered by Medicare or other health insurance, except in limited cases. Long-term care services can be received in a nursing home, assisted living facility or adult day care. You can get it in your home, from a home health aide or homemaker service. It can include in-home skilled nursing care from a registered nurse, licensed practical nurse or licensed vocational nurse.

How much does long-term care cost?
Long-term care costs vary greatly, with care in the home generally costing less than services in a nursing home or assisted living facility.

Here’s a look at national monthly median costs for different types of long-term care:
• Homemaker services, $4,700
• Home health aide, $16,380
• Adult day care, $4,410
• Assisted living facility, $6,500
• Nursing home, semi-private room, $7,756
• Nursing home, private room, $8,821

Bear in mind that by the time you’re likely to need these services, the prices will have increased. Long-term care costs rose between 1.71% to 3.64% a year, on average, between 2004 and 2019.

How much does long-term care insurance cost?
Long-term care insurance is a large expense that doesn’t necessarily make sense for every household. Many families could afford a short nursing home stay if it was needed, but would struggle if they had to pay for years. A third of seniors may never need any long-term care, but 20% will require services for longer than five years, according to LongTermCare.gov.

The most suitable demographic is 50- to 55-year-olds with a net worth of $1 million to $3 million according to one certified financial planner in Ohio. For those folks, “the cost of the premium is less than 0.5% to 0.99% of net worth.”

Learn what to do if your net worth drops.
“People with deeper pockets can probably afford the cost without much damage to their asset pool. People with lower assets probably can’t afford the cost and might take the risk of becoming Medicaid recipients,” says John Power, a certified financial planner in Walpole, Massachusetts. Medicaid covers long-term care services but it has strict income and asset eligibility requirements set by each state.

The cost of the long-term care premium depends on many factors, including age, health and the amount of coverage. Higher benefit amounts, longer coverage periods and options like inflation protection all add to the cost.

There can be considerable price variation among different insurance companies selling similar policies. Premiums for a couple, both age 55, ranged from $3,000 to $6,300 at the start of 2020. Despite the price differences, some of the cheaper and more expensive plans provided “virtually identical insurance protection,” according to a cost survey from AALTCI.

The average annual premium is $2,675 for a single woman, $1,700 for a single man, and $3,050 for a couple.

To avoid overpaying for a policy, it’s important to work with a knowledgeable insurance broker or financial professional and compare quotes from several companies. It can be helpful to discuss the topic with a financial planner in the context of retirement planning to make sense of it all.

For a quick premium estimate to use as a reference point in your insurance shopping, you can check online long-term care insurance calculators from large insurance carriers like Genworth or Mutual of Omaha.

What to consider for your long-term care policy?
Where to get a policy? You can buy LTC policies from an insurance agent, financial planner or insurance broker. You might also find coverage through an employer, or possibly a state partnership program.

Long-term care insurance is complicated. If the employer has a group rate, that is probably the best deal. It is recommended to seek the advice of an insurance specialist who understands product differences.

About a third of employers offered long-term care insurance in 2018, up from 22% in 2017, according to The Society for Human Resource Management’s 2018 Employee Benefits survey. Some offer it as a voluntary benefit while others cover some or all of the premium cost.

You may even be able to buy it through a family member’s employer, if your own doesn’t offer it. Many employers that offer the benefit allow spouses, parents, grandparents — and sometimes siblings — of their employees to buy coverage through their programs, according to a recent article from the Society for Human Resource Management.

People who may qualify for Medicaid in the future can check whether there is a long-term care partnership program in their state. Almost all states have these collaborations between insurance companies and Medicaid. Purchasing a long-term care policy through a partnership program has certain benefits, such as allowing people to shelter certain assets, like a house, from Medicaid’s usually strict requirements to spend down almost all resources to get benefits. You can learn more by contacting your state’s department of insurance.

Some people work with an insurance broker they find online. Some of them can help you purchase a three-year long-term care policy on line.

Daily benefit amount
This is the dollar amount you’ll be entitled to once the policy is triggered. Like many aspects of the insurance, choosing the right level is a balancing act between getting adequate protection while keeping the premium affordable.

The benefit will help pay for in-home or in-facility care. Personal Senior Care Homes is the best option. It allows you to be in an in- home environment and meets your needs for care when needed. This type of residential care is in an actual home in an upper middle-class neighborhood. This is 24-hour care with doctors and nurses on call continually, they monitor all residents. Residents pay lower out-of-pocket cost and have a 1.5 caregiver ration which provides extra personal attention. This additional care is meaningful because residents enjoy more time outdoors and have daily calendar events that they enjoy.

Some LT’s Provide Inflation protection
An inflation rider, typically 3% to 5%, protects against losing buying power over time due to inflation. It adds to the cost of the premium, but nursing home and in-home care costs will certainly increase by the time you may need the services. Personal Senior Care Homes has their own protection program inflation protection because they are small and local, they can assist with rate and stay protection. When you contact Personal Senior Care Homes you can lock in your rate for a future need.

It’s best to select a compound inflation rider of 3% or 5% when the client is in the 40 to 60 age range and when a long-term care need is projected to be 20-plus years down the road. This allows the compound interest to work its magic over a long duration and maximize their long-term care benefit.

Long Term Care products are not designed to be investments, but with features like the inflation rider, over time have a steady increase in the benefit for their plan most likely without an increase in the premium.

Waiting period
The waiting period on a long-term care insurance policy is kind of like a deductible on your home or auto insurance, except it is a number of days rather than dollars. Basically, it’s the period of time before benefits kick in, after the need for care is established. Choosing a longer waiting period, like 60 or 90 days, results in a lower premium.

Some Long-Term Care policies offer “first day benefits,” a pricier option with no waiting period.

During the waiting period, you’ll need to pay for your own expenses. When thinking about this, consider whether family members or friends are likely to be available during the first days that you need care, or whether you have other funds set aside to pay for that initial care. If so, you might be somewhat safe to choose a longer waiting period with a more affordable premium.

Benefit period
Experts say three to five years’ worth of coverage is a good bet. On average, women need services longer than men — 3.7 years for women and 2.2 years for men. Women accounted for nearly two-thirds of all long-term care insurance claims paid in 2018, according to AALTCI.

Personal Senior Care Homes recommends a benefit period of two to four years.

These days, more than half (52.4 percent) of people buying long-term care insurance choose coverage for three years or less, according to AALTCI. Most buyers select a benefit period of two to four years.

Years ago, long-term care policies with lifetime benefits were popular. But many insurance companies hadn’t priced the policies adequately to account for increasing life expectancies, leaving some on the hook for more financial liability than they bargained for. Many carriers subsequently raised their pricing, changed their product offerings or dropped out of the long-term care insurance market altogether.

In today’s world fewer people are dying of heart attacks, and due to advances in medicine more are dying slowly — thus needing potential long-term care benefits. This is why to our knowledge none of the LTC insurers offer ‘lifetime’ benefits any longer.

This is a snap shot of the knowledge we have and the research we have done to emphasize that everyone needs to prepare for the inevitable. In the big picture, long-term care insurance can only mitigate your risks for a small number of variables. There’s no guarantee that you definitely get your money’s worth for the years of premiums that you pay — after all, there’s no guarantee you’ll even get to grow old. But putting a policy in place can ease your worries and might mean you have more options later in life, when you’re at your most vulnerable.

Personal Senior Care Homes recommends Long Tern Care Insurance for peace of mind. We recommend that you contact us directly to tour our homes for the experience of seeing for yourself there is a pleasant and affordable option for your care in West Chester, Ohio.

Please feel free to contact me personally!
Steve Brock 513-870-9228

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