What triggers qualification for LTC benefits?
Generally, if you lose the ability to take care of 2 of the 6 "activities of daily living" (ADLs), that triggers the benefit. These ADLs include bathing, feeding yourself, continence, transference, dressing, and toileting. A severe cognitive impairment, such as Alzheimers Disease, can also qualify one for benefits, and is one of the primary causes of long term care claims.
So, the reasons for planning for Long Term Care are pretty simple. People are living longer, and that means the odds of eventually living with serious illness or injury is greater than it used to be. The cost of care is enormous. It doesn't have to be care in a nursing home, which makes up about 15% of all long term care . Most people will need care at home or in an assisted-living facility, which can also be covered by LTC insurance policies. But even that care can be very expensive with Home Health Care aids costing about $36 an hour, and Home Nurses costing about $72 an hour.
Many of your customers will try to "self insure" for this, and try to keep enough cash in the bank to pay for it themselves. That's a lot of cash to tie up, IF they have that much to set aside. Others ignore the possibility of the problem, or just hope that their kids will have sufficient cash or income to pay for it, if it happens to them. This is scary when you realize that with 2 spouses the chance that one will need special care is 65% (according to Health Insurance Assoc. of America).
Some think that Medicare will pay for it, and others have heard that Medicaid will pay for it. Both assumptions are flawed. Medicare coverage is limited to no more than a 100 days, only is available when skilled care is needed (not custodial care), and must be preceded by a hospital stay (avg. long term care costs paid by Medicare are 2%). Medicare was never designed for long term "custodial care", and neither were Medicare Supplement plans, although some may provide a short term benefit
With Medicaid, to qualify for payment toward long term care, you must have very limited income and assets. You essentially must exhaust all of your assets, other than a home, before any coverage is available. Don't expect to get a private room with Medicaid, semi-private is standard procedure. So, there are tremendous restrictions and limitations on what they can count on from Medicaid. Plus, most state-run nursing homes are not what you
would want for a loved one, or yourself.
Most states, in conjunction with insurance companies, have begun offering "partnership qualified" plans, which can help keep people who buy insurance from spending all of their assets before qualifying for Medicaid benefits. Ask us about these plans.
Click HERE to visit a federal government website on Long Term Care.
What choices do people have?
A lot will depend on the wishes of each individual, and on their economic circumstances. For certain, no one wants to spend all of their retirement money on healthcare expenses, or to burden their children.
People are beginning to look for alternatives to chancing life in a Medicaid-approved facility, or breaking the finances of their children. Give us a call, and tell us about your client. We can make top LTC insurance products available to you, from companies like Mutual of Omaha (United of Omaha), Prudential, John Hancock, Genworth, Lincoln National, and State Life.
For people with considerable assets, we may have even better options for them than the typical Long Term Care policy. Several companies now offer Life/LTC combo plans using asset-based products* as an alternative. These plans use a life insurance chassis to prepare for possible long term care expenses. That has one BIG advantage to typical long term care plans: if you are in the 40-50% of people who will need LTC at some point in the future, it will pay benefits, and if you are in the other group who never needed LTC, it will eventually pay tax-free death benefits! That is a win-win situation for your clients. Another advantage is that the premium cost is guaranteed to never increase, unlike the typical LTC policy, so you don't have to worry about future premium increases. You don't want LTC coverage to become unaffordable just as it is being needed. This option is probably for the client who has $250,000 or more in assets, and could make more sense to them than buying a traditional type of LTC policy.