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