LTC Presentation


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Presentation on Long Term Care Insurance (LTC)

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  • LTC Presentation

    1. 1. Senior Health Issues Long Term Care Insurance
    2. 2. Objectives <ul><li>What is long-term care? </li></ul><ul><li>How long-term care insurance works? </li></ul><ul><li>Who may need long-term care? </li></ul><ul><li>How can you pay for long-term care? </li></ul>
    3. 3. What is Long-Term Care? <ul><li>Long-term care (LTC) may be defined as the kind of care an individual needs who is unable to care for himself or herself because of a prolonged illness or disability. </li></ul><ul><li>Range from simple help with daily activities such as bathing, dressing, transferring, continence, toileting and feeding, to highly skilled nursing care . </li></ul><ul><li>Services include: </li></ul><ul><ul><li>Custodial care </li></ul></ul><ul><ul><li>Home health care </li></ul></ul><ul><ul><li>Respite care </li></ul></ul><ul><ul><li>Adult day care </li></ul></ul><ul><ul><li>Nursing home facility </li></ul></ul><ul><ul><li>Assisted living facility </li></ul></ul>
    4. 4. Levels of Long-Term Care <ul><li>Skilled Care : medical care, nursing care, or therapy usually delivered by a nurse or other trained professional </li></ul><ul><li>Personal Care : assistance with activities of daily living ( ADLs ) </li></ul><ul><li>Supervisory Care : monitoring and supervision; a safe or controlled environment; assistance with ADLs ; and usually for individuals with cognitive impairments </li></ul>
    5. 5. Activities of Daily Living Bathing Dressing Eating Using the toilet Transferring Continence Activities of Daily Living (ADLs) Instrumental Activities of Daily Living (IADLs) Cognitive Impairment : loss in intellectual capacity Grocery shopping Laundry Preparing meals Housework Managing medication Transportation
    6. 6. LTC Settings: Informal Care <ul><li>Informal care: unpaid LTC assistance that is usually provided by family members, friends, or local organizations </li></ul><ul><li>Nearly two thirds of Americans are provided unpaid LTC services. </li></ul><ul><li>Providing this care can take a significant toll on the caregiver. Caregivers average 39 hours of help per week. </li></ul>Source: US Department of Health and Human Services, Informal Caregivers of Disabled Elders with Long-Term Care Insurance, 2000 .
    7. 7. LTC Settings: Formal Care Adult Day Care Nursing Home Assisted Living Continuing Care Retirement Community Skilled Care Personal Care Instrumental Activities of Daily Living Assistance Home Care Residential Care Community Based Care
    8. 8. How do Long-Term Care Insurance Policies Work?
    9. 9. Plan of Care <ul><li>Developed with you and your family. </li></ul><ul><li>Represents your needs and preferences. </li></ul><ul><li>Usually provides option for care at </li></ul><ul><li>home, even if facility care is appropriate. </li></ul><ul><li>Put into place only if you agree 100%. </li></ul><ul><li>Modify as your needs change. </li></ul>
    10. 10. Facility Care <ul><li>Policy defines criteria associated with facility </li></ul><ul><li>Licensed nursing home </li></ul><ul><li>Assisted living facility </li></ul><ul><li>Alzheimer’s special care facility </li></ul><ul><li>Hospice care facility </li></ul>
    11. 11. Home and Community Care <ul><li>Skilled nursing care </li></ul><ul><li>Physical, speech, occupational, respiratory and other therapies </li></ul><ul><li>Personal care (home health aide) </li></ul><ul><li>Homemaker services (meal preparation, housekeeping) </li></ul><ul><li>Hospice care </li></ul><ul><li>Respite care </li></ul><ul><li>Adult day health care </li></ul>
    12. 12. Supportive Services <ul><li>Can include some or all of the following: </li></ul><ul><li>Training for informal caregivers to assist with personal care </li></ul><ul><li>Equipment and devices </li></ul><ul><li>Home modification </li></ul><ul><li>Medical transportation </li></ul><ul><li>“ Meals on Wheels” </li></ul>
    13. 13. LTC Policy Enhancements <ul><li>Care Coordination </li></ul><ul><li>Elimination Period </li></ul><ul><li>Premium Waiver </li></ul><ul><li>Inflation Protection </li></ul><ul><li>Nonforfeiture Options </li></ul>
    14. 14. Care Coordination <ul><li>Helps identify care needs and how best to meet them </li></ul><ul><li>Trained advisors assess physical, social, cognitive and medical needs </li></ul><ul><li>Develops and suggests plan of care with an outline </li></ul><ul><li>of care needs and suggestions for services </li></ul><ul><li>and providers </li></ul><ul><li>Arrange for services if desired </li></ul><ul><li>Monitors needs on on-going basis </li></ul><ul><li>Helps get the most out of your coverage </li></ul>
    15. 15. Elimination Period <ul><li>Time period between qualifying event and coverage beginning </li></ul><ul><li>Satisfied in “days” not “dollars” </li></ul><ul><li>Policies give choice with options that include specific time periods from 0 to 365 days </li></ul>
    16. 16. Premium Waiver <ul><li>Option to purchase premium waivers for both facility care and home health care </li></ul><ul><li>If you choose to purchase an optional premium waiver, the premium payments are suspended while you are receiving benefits </li></ul>
    17. 17. Inflation Protection <ul><li>Helps benefits keep pace with rising costs </li></ul><ul><li>All tax qualified LTC policies must offer inflation protection </li></ul><ul><li>Group LTC policies do not have to offer each applicant inflation protection </li></ul>
    18. 18. Types of Inflation Protection <ul><li>Compound Inflation Protection . </li></ul><ul><li>Annual increases, with level-funded premium * </li></ul><ul><li>Simple Inflation Protection . </li></ul><ul><li>Annual increases, with level-funded premium * </li></ul><ul><li>Periodic buy-up </li></ul><ul><li>*Level-funded premium means premium does not change even though coverage amounts increase each year for inflation . </li></ul>
    19. 19. Compound Inflation Protection <ul><li>Provides best protection against inflation </li></ul><ul><li>Policies offer 5% annual coverage increase </li></ul><ul><li>Some offer choice of other amounts </li></ul><ul><li>Increases continue for life of the policy </li></ul><ul><li>Some policies have a less costly inflation protection option where the inflation increases end after 20 years or when benefits double </li></ul><ul><li>All coverage amounts increase </li></ul>
    20. 20. Simple Inflation Protection <ul><li>Similar to compound, except increase is the same each year – flat amount </li></ul><ul><li>5% simply means 5% of the original benefit amount </li></ul><ul><li>Benefits increase but premium does not change as a result </li></ul>
    21. 21. Comparison – Daily Benefits <ul><li>5% </li></ul><ul><li>Compound Inflation </li></ul><ul><li>Year 1 = $130 </li></ul><ul><li>Year 5 = $158 </li></ul><ul><li>Year 10 = $202 </li></ul><ul><li>Year 15 = $258 </li></ul><ul><li>Year 20 = $329 </li></ul><ul><li>5% </li></ul><ul><li>Simple Inflation </li></ul><ul><li>Year 1 = $130 </li></ul><ul><li>Year 5 = $156 </li></ul><ul><li>Year 10 = $188 </li></ul><ul><li>Year 15 = $221 </li></ul><ul><li>Year 20 = $253 </li></ul>
    22. 22. Periodic Buy-up <ul><li>Future or guaranteed purchase option without having to go through underwriting </li></ul><ul><li>Limited to a specific maximum, i.e. 5%. </li></ul>
    23. 23. Nonforfeiture Option <ul><li>Optional benefit available for an additional </li></ul><ul><li>premium </li></ul><ul><li>Tax qualified plans must offer a nonforfeiture </li></ul><ul><li>option </li></ul><ul><li>Provides continuation of coverage, on limited </li></ul><ul><li>basis, if you stop paying premiums and let </li></ul><ul><li>coverage lapse </li></ul><ul><li>Most provide coverage equal to greater of 30 x </li></ul><ul><li>daily benefit amount or 100% of premiums paid at </li></ul><ul><li>the time of lapse </li></ul>
    24. 24. Contingent Nonforfeiture <ul><li>Included at no charge in policies issued in 2002 </li></ul><ul><li>and later </li></ul><ul><li>Provides coverage on limited basis if you drop </li></ul><ul><li>coverage due to a “substantial rate increase” you </li></ul><ul><li>decide you cannot afford </li></ul><ul><li>Policy defines “substantial increase” based on age </li></ul><ul><li>and state requirements </li></ul><ul><li>Provides coverage equal to 30 times the daily </li></ul><ul><li>benefit amount or 100% of premiums paid to date, </li></ul><ul><li>whichever is more </li></ul>
    25. 25. Other Coverage Options <ul><li>Bed Reservation </li></ul><ul><ul><li>Applies to all facility care (per stay or per year) </li></ul></ul><ul><ul><li>Just for hospital stay or other reasons </li></ul></ul><ul><li>Caregiver Training </li></ul><ul><ul><li>Lifetime limit usually applies </li></ul></ul><ul><li>Informal Caregiver Benefits </li></ul><ul><ul><li>Approaches vary greatly </li></ul></ul><ul><ul><li>Usually limited by daily and lifetime amount </li></ul></ul>
    26. 26. Other Coverage Options (continued) <ul><li>Alternate Plan of Care </li></ul><ul><ul><li>Helps coverage stay flexible for changing LTC environment </li></ul></ul><ul><ul><li>Approaches vary </li></ul></ul><ul><ul><li>Will not allow home care benefits for a Facility Care Only Policy </li></ul></ul><ul><li>Restoration of Benefits </li></ul><ul><ul><li>Restores full lifetime maximum if you go a specified number of days, i.e. 180 days, without needing or receiving LTC </li></ul></ul>
    27. 27. Other Coverage Options (continued) <ul><li>Dual premium waiver </li></ul><ul><ul><li>If both have coverage for 5-10 years, waive premiums for both when either receives benefits </li></ul></ul><ul><li>Surviving spouse premium waiver </li></ul><ul><ul><li>If both have coverage for 5-10 years, surviving spouse does not pay any more premium if other spouse dies </li></ul></ul><ul><li>Spouse/Shared Care </li></ul><ul><ul><li>Approach 1: Share a single “benefit pool” </li></ul></ul><ul><ul><li>Approach 2: Each spouse has own benefit pool and they also have an extra “benefit pool” which they can share </li></ul></ul>
    28. 28. Consumer Protections <ul><li>Guaranteed renewable </li></ul><ul><li>Free look period (“right to review”) </li></ul><ul><li>Third-party designee for added protection against lapse </li></ul><ul><li>Grace period </li></ul><ul><li>Continuation/conversion for group policy </li></ul><ul><li>Appeals/reconsideration </li></ul>
    29. 29. Who may need Long-Term Care?
    30. 30. Who may need Long-Term Care? <ul><li>The simple answer may be EVERYONE. </li></ul><ul><li>Individuals need long-term care when a chronic condition, trauma, or illness limits their ability to carry out basic self-care tasks, called activities of daily living , or instrumental activities of daily living . </li></ul>
    31. 31. Lifetime Risk of Needing LTC Sources: Long-Term Care Insurance, Baby Boom or Bust? Conning & Company, 1999. B.C. Spillman and J. Lubitz, 2002. Risk for needing LTC is 60 percent Risk for needing nursing home care is 43 percent
    32. 32. Risk of Needing LTC by Age (during a 12-month period) Source: Urban Institute, Long-Term Care: Consumers, Providers, and Financing . 2001.
    33. 33. Risk of Needing Nursing Home Care by Age (during a 12-month period) 1% 5% 23% 0% 5% 10% 15% 20% 25% Age 65 to 74 Age 75 to 84 Age 85 and older Source: Urban Institute, Long-Term Care: Consumers, Providers, and Financing . 2001.
    34. 34. Cost of Long-Term Care <ul><li>Nursing home care: $62,000 per year average </li></ul><ul><li>Assisted living care: $30,000 per year average </li></ul><ul><li>Part-time home care: $19 an hour average </li></ul>Source: 2008 Met Life Market Survey of Nursing Home and Home Care
    35. 35. LTC Insurance Advantages <ul><li>Policy could pay substantially if insured meets policy </li></ul><ul><li>requirements. </li></ul><ul><li>Not limited to coverage for “Medicare‑approved” stays </li></ul><ul><li>or levels of care. </li></ul><ul><li>Usually covers skilled and intermediate levels of care, </li></ul><ul><li>and must cover some levels of custodial care. </li></ul><ul><li>Premiums on certain policies may be tax deductible. </li></ul><ul><li>May cover home health and adult day care. </li></ul><ul><li>Utah requires coverage for Alzheimer’s disease, and mental or nervous disorders that are organic in nature. </li></ul>
    36. 36. LTC Insurance Disadvantages <ul><li>You must purchase an optional inflation protection rider for the policy to keep pace with inflation. </li></ul><ul><li>Excludes coverage for specific conditions such as mental illness and nervous disorders, alcoholism and drug addiction, and preexisting conditions. </li></ul><ul><li>Stringent health underwriting, which means the company can turn an individual down at application if the applicant is not healthy. </li></ul><ul><li>Premiums tend to be very expensive, especially at older age. </li></ul><ul><li>Rate increases should be anticipated. </li></ul><ul><li>Most cover a stay for a specific period of time and/or up to a specific dollar amount. </li></ul><ul><li>Benefits may be taxable. </li></ul><ul><li>With numerous benefit options to select from and each option offering multiple choices there are hundreds of benefit combinations under one policy. </li></ul><ul><li>It will not cover all costs associated with LTC needs. </li></ul>
    37. 37. Who Should Buy Long-term Care Insurance? <ul><li>You have significant assets and income that you are concerned about protecting. </li></ul><ul><li>You don't have significant assets and income, but you don't want to rely on  the Medicaid  program. </li></ul><ul><li>You want to remain independent and not have to rely on family or friends for  care. </li></ul><ul><li>You wish to guarantee you and your spouse will receive care, in the setting of your choice. </li></ul>
    38. 38. Who Should NOT Buy Long-term Care Insurance? <ul><li>Already needs LTC </li></ul><ul><li>Limited income and assets </li></ul><ul><li>Qualifies (or near qualifying) for Medicaid </li></ul><ul><li>Age makes premium not affordable </li></ul><ul><li>Has family willing AND able to provide care (considering “unknowns” of the future) </li></ul><ul><li>Current health condition makes them not insurable </li></ul>
    39. 39. Why People Buy Long-term Care Insurance Source: HIAA and Long Term Care Group, 2002.
    40. 40. Why People Do NOT Buy Long-term Care Insurance <ul><li>The leading reason people do not buy LTC insurance is the cost. </li></ul><ul><li>“ Costs too much” sometimes means, “I don’t see the value of this product relative to its price.” </li></ul><ul><li>Consumers sometimes consider policies that provide more coverage than they need – so it costs too much.Considering other, less costly, coverage options is a good idea when “shopping around.” But be careful not to purchase a policy that will not cover the majority of or your needs. </li></ul>
    41. 41. FINANCAL ADVICE <ul><li>In today's economy its smart to consult a FINANCAL ADVISOR when it comes to investments that involve a home or large amounts of personal assets. </li></ul><ul><li>Use caution when giving out </li></ul><ul><li>financial advice </li></ul>
    42. 42. Options other than LTC Insurance <ul><li>Medicaid </li></ul><ul><li>Sell Home </li></ul><ul><li>Accelerated Death Benefit </li></ul><ul><li>Life </li></ul><ul><li>Viatical </li></ul><ul><li>Single Pay </li></ul>
    43. 43. Medicaid Payments <ul><ul><li>Look-back period for all asset transfers is five years </li></ul></ul><ul><ul><li>Start of the penalty period is the date of eligibility </li></ul></ul><ul><ul><li>Limited benefit eligibility to persons with home equity less than $500,000 </li></ul></ul><ul><ul><li>Requires applicants with annuities to name the state as remainder beneficiary </li></ul></ul>
    44. 44. Medicaid <ul><ul><li>Nation’s largest health care program! </li></ul></ul><ul><ul><li>Comprehensive health and long term care for 58 million Americans, old and young ( 190,000 in Utah ) </li></ul></ul><ul><ul><li>Cover more than 1 in 4 US children </li></ul></ul><ul><ul><li>1.5 million births annually (37% US total) </li></ul></ul><ul><ul><li>2/3 of nursing home patients (growing #) </li></ul></ul><ul><ul><li>43% of all federal funds to the states </li></ul></ul>
    45. 45. Sell Home <ul><li>Home can be used to pay for LTC by selling it </li></ul><ul><li>Option not for everyone </li></ul><ul><li>Considerations: </li></ul><ul><ul><li>Unable to pass home to heirs </li></ul></ul><ul><ul><li>Proceeds may be insufficient to cover LTC expenses </li></ul></ul><ul><ul><li>Market conditions </li></ul></ul>
    46. 46. Accelerated Death Benefit <ul><li>Death benefit cash advance, maybe tax free </li></ul><ul><li>Qualification due to poor health condition </li></ul><ul><li>Amount of $ based on contract provisions and health condition (2% of face amount for nursing home, 1% for home care) </li></ul><ul><li>Considerations: </li></ul><ul><ul><li>More limited benefits than typical LTC insurance </li></ul></ul><ul><ul><li>Reduced or no death benefit for survivors </li></ul></ul><ul><ul><li>May need to maintain premium payments </li></ul></ul><ul><ul><li>May affect Medicaid eligibility </li></ul></ul>Use of Life Insurance
    47. 47. Life Settlements* <ul><li>Insurance policy is sold for present value </li></ul><ul><ul><li>Generally age 65 and prefers a health risk factor </li></ul></ul><ul><li>Use of the proceeds is unrestricted </li></ul><ul><li>Considerations </li></ul><ul><ul><li>Can fund LTC costs or insurance </li></ul></ul><ul><ul><li>Nothing left for beneficiaries </li></ul></ul><ul><ul><li>Tax liabilities </li></ul></ul><ul><ul><li>* Considered viatical settlements under Utah law. </li></ul></ul>
    48. 48. Viatical Settlements <ul><li>Life insurance policy sold to a third party for a portion of the death benefit (proceeds are tax-free) </li></ul><ul><li>Must be terminally ill </li></ul><ul><li>Considerations: </li></ul><ul><ul><li>Available to someone who would not qualify for LTC insurance </li></ul></ul><ul><ul><li>Settlement may be insufficient to cover LTC expenses </li></ul></ul><ul><ul><li>Survivors would not receive any proceeds </li></ul></ul><ul><ul><li>Very few done anymore; trend is to Life Settlements because they are more predictable and plentiful </li></ul></ul>Poor Health Use of Life Insurance
    49. 49. Single Pay Life/LTC Policies <ul><li>Funded through lump sum payment </li></ul><ul><li>Pays for LTC expenses and has a death benefit </li></ul><ul><li>Considerations: </li></ul><ul><ul><li>Large lump sum needed for meaningful LTC benefit </li></ul></ul><ul><ul><li>If care needed in early years, benefit may be insufficient </li></ul></ul><ul><ul><li>Planning for inflation is difficult, requires additional payments </li></ul></ul>Use of Life Insurance
    50. 50. LTC Annuities – Deferred <ul><li>Available to age 85, seven broad health questions most can satisfy </li></ul><ul><li>Two funds: one for LTC expenses, the other is a regular cash fund </li></ul><ul><li>Considerations: </li></ul><ul><ul><li>If LTC fund not used, can be passed to beneficiaries </li></ul></ul><ul><ul><li>Need to plan for inflation </li></ul></ul><ul><ul><li>LTC costs may exceed benefit amount </li></ul></ul><ul><ul><li>Tax implications </li></ul></ul>LTC Annuities No health screen, Older People
    51. 51. LTC Annuities – Immediate <ul><li>Available to someone who is uninsurable or already receiving LTC </li></ul><ul><li>Single premium payment converted into monthly income </li></ul><ul><li>Pay-out schedule is based on age and gender </li></ul><ul><li>Considerations: </li></ul><ul><ul><li>Resources may be limited if inflation is not planned for </li></ul></ul><ul><ul><li>Income stream may be insufficient </li></ul></ul><ul><ul><li>Tax implications </li></ul></ul>
    52. 52. Self Pay <ul><li>Pay for LTC needs as occur with assets and income </li></ul><ul><li>Considerations: </li></ul><ul><ul><li>Need sufficient assets to pay for care </li></ul></ul><ul><ul><li>Do not know when care needs will occur or for how long or what level of care </li></ul></ul><ul><ul><li>Can use funds for other than LTC </li></ul></ul><ul><ul><li>Requires advanced planning </li></ul></ul><ul><ul><li>Cannot control rate of return on investments </li></ul></ul>Assets and Income
    53. 53. Continuing Care Retirement Community (CCRC) <ul><li>Full continuum of services </li></ul><ul><li>Provides housing, health care, and social services </li></ul><ul><li>Entrance fee and monthly payments </li></ul><ul><li>Many types of CCRC contracts </li></ul><ul><li>Considerations: </li></ul><ul><ul><li>May provide little or no home care </li></ul></ul><ul><ul><li>Health screening </li></ul></ul><ul><ul><li>Unaffordable for many </li></ul></ul>
    54. 55. More Information <ul><li>Naylor Insurance & 1-888-222-8115 </li></ul><ul><li>Financial Services 801-638-3141 </li></ul><ul><li>Medicare 1-800-MEDICARE </li></ul><ul><li> </li></ul><ul><li>Medicaid 1-800-662-9651 </li></ul><ul><li> </li></ul><ul><li>Utah Insurance 1-866-350-6242 </li></ul><ul><li>Department </li></ul><ul><li>Health Insurance 1-800-541-7735 </li></ul><ul><li>Information Program </li></ul>
    55. 56. Questions