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Intro to Long-Term Care


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Long-term care is a growing concern among seniors and Baby Boomers alike. Yet few take the first step to planning for their care. Many don't know where to begin. Use our presentation to understand what LTC insurance covers and learn about alternate strategies to protect your assets, your family and your finances as you age.

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Intro to Long-Term Care

  1. 1. Long-Term CareEverything you need to know to make theright decisions for your future
  2. 2. What is it? Typically provided for anextended period of time Assistance with Activitiesof Daily Living (ADL)Long-term care can be broadlydefined as care provided for thebenefit of those who are unableto care for themselvesSupervision due to a severe cognitiveimpairment, such as Alzheimers disease
  3. 3. Six Types of ADLs• Bathing• Dressing• Eating• Toileting• Transferring• Continence
  4. 4. …for long-term care?• When/if you can no longer perform 2 of the 6ADLs without substantial assistance• When/if you need supervision due to severecognitive impairment (memory, orientation,reasoning)• Expected to last for 90 days• Primary Care Physician
  5. 5. • Historically thought of as nursing homecoverage• Most often in your own home (75% ofclaims are for Home Health Care)• Where you need it --Most policies cover alllevels of care
  6. 6. You will probably live a long life.
  7. 7. You will probably live a long life.
  8. 8. More of a reality NOW than everAdvancements in MedicalTechnology, Treatment,Medications
  9. 9. with living betteris not always synonymous
  10. 10. reFor Long-Term Care
  11. 11. Out of love and necessity, families help.BUT...• Families are smaller, and are living fartherapart• Work and other responsibilities put limits onhow much family is able to help• Inadequate experience in providing care• Physical and emotional demands• Personal dignity
  12. 12. Medicare and Medicaid generallyMedicare• Health insurance whichcovers skilled, notcustodial care• Limited coverage forcare at home (wheremost coverage beginsand often continues)• Less than 100 days intotalMedicaid• Designed for those infinancial need• Level of need and care isdetermined by state• Medicaid is the largestpayer of LTC services(50%)limit your long-term careoptions.
  13. 13. Jeopardizes your goals andmay be costly.Maine Asset LimitsCouple: $110,000Single: $2,000$70,000 per year for aprivate room in a nursinghomeExpected to rise to$190,000 per year by 2030Spend down of assets inorder to qualify for agovernment programshould you need additionalassistance
  14. 14. May prevent invasion of principal.• Pays for covered skilled, custodial and community care• Benefits are paid for covered care you receive• Helps to protect your assets and financial strategies• Transfers the risk -- pennies for dollarsTransfers some of the risks away from you, butLong-term care insurance doesnt replace theneed for care -- it builds on it, allowing thecaregiver to take care of their loved onebetter and longer.
  16. 16. Designed to cover medicalexpenses, not long termcare expenses.
  17. 17. Designed to primarily coverskilled, not custodial care, andonly for a very limited time.
  18. 18. not coverlong-termcare expenses.Designed toReplace Income,
  19. 19. Basic PolicyFeatures & Riders
  20. 20. Benefit AmountBenefitPeriodBenefitsofPoolEliminationPeriod
  21. 21. Daily: $50 to $500The amount of money you(per day or per month) once youdetermine youll needqualify for benefits.Monthly: $1,500 to $15,000
  22. 22. Typically2 to 10 yearsOrLifetimeThe period of time duringwhich benefits will bepaid.
  23. 23. • Example Calculation:36 months x $6,000 permonth = $216,000 total pool ofbenefits• Example Calculation:3 years x $200 per day x 365 days = $219,000 total poolof benefitsTotal amount of money availablefor you to use once you areeligible for a claim.True 3 year plan vs.Pool of benefits
  24. 24. • Period of time (waiting period) between thebenefits triggering event and the timecoverage starts.• Represented in days; ranging from zero to oneyear.Calendar Dayvs.Service Day
  25. 25. Riders• Shared Care• Spouse PremiumWaiver• Spouse SecurityBenefit• Return of Premium• Non-ForfeiturePaymentOptions• Inflationprotection• Waiver of EP forHome HealthCare• Survivorship• Restoration ofBenefitsRidersLifetime paySingle pay10-pay20-payPay to 65
  26. 26. Two ways todesign a planShort & SquatLong&LeanBenefitPeriodDaily BenefitAmount
  27. 27. AlternativeStrategies
  28. 28. ACCELERATED DEATH BENEFITS• Feature or rider included with somelife insurance policies• Life insurance death benefit paid inadvance (tax-free)• Policyholder must have a life-threatening diagnosis or beterminally ill• Generally, you must need long-termcare for an extended period of time,be confined to a nursing home, andneed assistance with Activities ofDaily LivingSINGLE PREMIUM LIFE INSURANCE / LTCi POLICY• Life insurance policies combined withindividual long-term care insurancepolicies• Purchased for sole purpose of long-term care insurance, not for deathbenefit• Single premium (generally) of$50,000 to $100,000• Purchased with cash, CDs, moneymarket accounts or 1035 exchangesfrom other life insurance policies• Distributions from cash values insidelife insurance policy are used to fundlong-term care insurance policies
  29. 29. An annuity is a series of regularpayments over a specified anddefined period of time.Immediate DeferredFunds for annuity come from a single premium payment.There are two types of annuities:
  30. 30. ImmediateLong Term CareAnnuity• If you cannot qualify for LTC insurance, or if you arealready receiving care, you can still purchase anannuity• Available without regard to health• Single premium payment made to insurancecompany in exchange for specified monthly income• Payout schedule varies based on amount of initialpremium, age, and gender
  31. 31. DeferredLong Term CareAnnuity• Long-term care annuity has two funds:– One for long-term care expenses which can be accessedimmediately– Separate cash fund can be used for anything, but is deferred• Most people that cannot qualify for LTC insurance canqualify• If the long-term care fund is not used, it can be passed onto your heirs
  32. 32. HEALTH SAVINGSACCOUNT• Created by the Medicare Modernization Act (MMA)• Offers tax-advantage alternative used to fund long-term careinsurance premiums and accumulate funds to pay for long-termcare expenses.• Can be set up by an individual or employer• Required to purchase a low-cost, high-deductible health insuranceplan• Tax-free contributions can be made to HSA up to an annual limit.Contributions made by an employer are excluded from employeestaxable income. Funds are carried over every year and all gains aretax-free
  34. 34. Home Equity• When an individual needs long-term care theyusually have greatly reduced or paid off theirmortgages.• Value of home has usually risen beyond originalpurchase price.• Home equity is the difference between appraisedvalue of home and what is owed.• There are a number of options to tap into homeequity.
  35. 35. • You receive cash against the value of yourhome without selling it• Can receive lump-sum payment, monthlypayment, or a line of creditNot taxable, and does not count toward income or affectSocial Security or Medicare benefits if payments received arespent within the month they are received.
  36. 36. • You do not have to repay the loan until youdie, sell the home, or move out of the home.• You are responsible for taxes, hazardinsurance, and home repairs.
  37. 37. Contact Blue Goose for more