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					Long-Term Care Insurance
   Prepared by Laurel L. Kubin
    Larimer County Office of
    Colorado State University
      Cooperative Extension
          February, 2003
Long-term Care Insurance Decisions
BIG Decision
Should I purchase long-term care insurance ? ? ? ? ? ? ? ?

Step back and evaluate:
 1. The risk of needing long-term care
 2. Options for funding long-term care
 3. Questions to ask about long-term care coverage
“We didn’t think it would turn out this way.”

 “No one plans to have their health change
  or wants to admit they might need long term
  care someday.”

 “We planned for a shorter and healthier

 “I never expected to live this long!”
  Assess the risk of needing
       long-term care
The long-term care population is diverse in age
and level of disability.

There is a risk across the lifecycle:
      57% over age 65
      40% below age 65
        3% are children
 Who is most at risk?
Individuals 85 years and older
    • Need help with more activities of daily living (ADLs)
    •Experience higher rates of home care and nursing home use
Individuals with chronic health problems
Individuals who lack social support and unpaid caregivers

Prevalence of Long-Term Care Need

Age 65 - 74
      In Community: 11%
      In Institution: 1%
Age 75 - 84
      In Community: 22%
      In Institution: 5%

Age 85+
      In Community: 49%
      In Institution: 21%
The risk is not just a senior issue:

Nearly half of all Americans will need long-term care at
some point in their lives. One in five over age 50 is at risk
of needing long-term care within the next 12 months.
                              American Health Care Assn

While 60% who will need long-term care are 65 or older,
40% are working age adults between 18 and 64.
                                   AARP Research
People Using Long-Term Care
Of the >12 million people needing long-term care, only
1.5 million are in nursing homes. Other choices include
home care, assisted living, and adult day care.

Half of the nursing home stays are less than 90 days.
Three fourths are less than one year

One in four will spend a year or more in a nursing home.
One in 11 will spend five years or more.

Men average two years in a nursing home.
Women average four years in a nursing home.

Only 41% of patients regain mobility after hip fracture

People most likely to regain their ability to walk
independently are under age 85 and live with another person.
Long-term Care Costs
National average for nursing facilities is over $50,000 / year

Some Colorado and Wyoming Assisted Living facilities
charge more than $70,000 / year

Home care charges vary between $10 / hour and $25 / hour
depending on location and type of service.

Plan for inflation. Costs will undoubtedly increase by the
time you need this assistance.
Will YOU need long-term care?
No one knows!
Look at your family health history:
 Family members live into their 80s, 90s, and 100s?
 Family members experience conditions such as
   Alzheimer’s or dementia
   Lou Gehrig’s Disease
   Diabetes with amputation or complication affecting kidney
   Multiple sclerosis
   Muscular Dystrophy
   Parkinson’s Disease
   Transient Ischemic Attack (TIA)
Dealing with the risk:

1. Avoid it: hope for the best and stay healthy

2. Retain it (self-insure): use your own assets to pay

3. Transfer it: buy a long-term care insurance policy

4. Do it all: stay healthy, self-insure as much as you can,
   buy insurance to make up the difference
Consider Your Goals
 Maintain independence?
 Protect your assets? Leave an inheritance?
 Minimize dependence on others?
 Control where and when you receive long-
  term care services?
 Use some or all of your assets for your
  long-term care needs?
Resources to Help You
Community-Based Services: Contact Area Agency on Aging

Resources that help you live at home:
      Homemaker services
      Home chore services
      Assistive devices / Home adaptations
      Friendly Visitor or Companion services
      Home-delivered meals
      Home health care
      Telephone Reassurance
      Family, friends and neighbors
      Adult day care
Options for Financing
Long-Term Care
 Current income from wages, Social
  Security, or retirement income
 Reverse mortgage
 Single premium life insurance
 Medicaid
 Long-term care insurance
Long-term Care Considerations

* Do you have assets of at least $75,000 (excluding your
  home and car) and income of at least $25,000 to $35,000?

* Would the premium be more than 10% of your
  gross income?

* If you have few assets and limited income, you might not
  be able to afford long-term care insurance premiums.
  Relying on Medicaid may be the best option for you.

* Do you have unpaid family caregivers nearby?
Medicare Realities
Medicare ONLY pays for the first 20 days in a skilled
nursing facility after hospitalization.
For the next 80 days there’s co-pay of $100 per day,
with many restrictions.
After these initial 100 days following hospitalization,
Medicare DOES NOT pay for long-term care.

Medicare DOES NOT pay anything for assisted living costs.

Medicare does pay for skilled care and home health aides
only if the patient is homebound and meets other stringent
Sample Long-Term Care Insurance Rates for Age Groups

Rates for $100 per day benefit:

Age            2 years       Lifetime
45             $400          $1,200
55             $550          $1,800
65           $1,000          $3,000
75           $2,250          $7,000
If You Decide to Purchase Long-
Term Care Insurance:
 Determine the amount of daily benefit,
  length of coverage, deductible (elimination)
  period, and level of inflation protection you
 Compare at least three different company’s
 Use the comparison chart to record all the
  information you acquire about each policy
Comparison Chart Questions
 Company’s financial       Premium waived
  rating?                    while receiving care?
 Company’s LTC             Benefit triggers?
  experience?               How are benefits
 Levels of care covered     paid?
 Prior hospital stay       Is adult day care or
  required?                  respite care covered?
 Cover cognitive           Caregiver training
  impairment?                provided?
Additional Questions:
 Bed reservation?           Who are the
 Marital discount?           gatekeepers?
 Preferred health           Guaranteed
  discount?                   renewable?
 3rd party notification?    Inflation coverage?
 Elimination period         Non-forfeiture
  satisfied only once         benefit?
  during your lifetime?      Policy cost?
   Q & A:
** When is the best time to purchase long-term care

 Most advisors recommend age 60, plus or minus 5.

** Are you insurable?
  People who are in good health, non-smokers, with no
  history of osteoporosis or serious illness are more insurable.