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| Long Term Care |
| At the Will & Trust Center, we have extensive experience in planning for long term care. We work with families to ensure they have the appropriate assets in place to care for themselves, to potentially insure for any shortfalls, and to preserve what is left if neither of the previous options are still feasible. 1. What is Long Term Care? Many people equate long term care with nursing homes. Long term care actually can mean many things, such as care in your own home, an adult care environment, a personal care facility, an assisted living facility, a rehabilitation facility, or a nursing home. What they all have in common is that long term care provides preventative, rehabilitative, therapeutic and maintenance care for individuals with certain functional impairments. 2. What is Long Term Care insurance? Long term care insurance is an insurance policy that will provide long term care coverage in a setting other than a hospital, such as a nursing home, assisted living facility, or at your home. Long term care insurance can help you stay in control of your life and your dignity and be able to afford quality services without using current income or spending down your assets. 3. Why am I suddenly hearing so much about Long Term Care? Advancements in medicine have allowed us to enjoy longer lives, but for many, medicine has not yet been able to improve the quality of life in later years. Many people are able to lead very happy lives for many years but need assistance to handle day to day activities such as dressing, getting around, and bathing. Because this kind of care is so expensive, many people cannot afford it. This has resulted in publicity and education on long term care facilities, Medicaid, and long term care insurance. 4. What are the costs associated with Long Term Care? • The average cost is approximately $49,000 per year, per person. • The cost of a nursing home stay varies widely in the Unites States; it is based mainly on geographic location. • Costs of $60,000 or more are not uncommon. • By 2012, nursing home costs will average over $100,000 per year. • 70% of people who enter a nursing home are penniless within one year. • 50% of couples are penniless within one year of one spouse entering a nursing home. 5. What are the odds of needing Long Term Care? 76% of people believe they will never need long term care; yet approximately 50% actually will. 6. What are the potential effects of Long Term Care on the family? • Many people believe that the effects of long term care are limited to themselves. In reality, long term care issues can, and usually do, affect the entire family. • 65% of disabled elderly living at home rely on their families for care. • 50% of caregivers reported that the care resulted in financial strain on the family. • 40% of caregivers report missing work regularly. • 80% of working caregivers report emotional strain. • 41% of women caregivers quit their jobs or take a leave of absence to care for an elderly patient. • 67% of caregivers reported bouts with Clinical Depression. 7. Does Medicare pay for Long Term Care? • No. One of the greatest misperceptions regarding long term care is that it is covered by Medicare. • Medicare will only cover some long term care costs if various conditions are met. The most important requirement is that the patient is receiving skilled care. Skilled care is defined as continuous 24 hour care provided by a medical professional under the direct supervision of a physician. Even if skilled care is required, Medicare will no longer pay for the care after 100 days. • Less than 1% of nursing home patients receive skilled care. Most patients receive intermediate or custodial care. Intermediate care refers to occasional rehabilitative or nursing care under the supervision of medical personnel, usually not a doctor. Custodial care refers to day to day care including assistance with toileting, eating, bathing, mobility, and dressing. Custodial care is usually handled by nurses and other medical personnel and is the most common type of long term care. • Medicare does not pay for ailments associated with aging such as Parkinson’s patients, Alzheimer’s patients, stroke victims, or other conditions that typically do not improve over time. 8. Does Medicaid pay for Long Term Care? Most people are not eligible for Medicaid. Another common misperception regarding long term care is that Medicaid is prepared to pay for everyone’s long term care. Medicaid is a federal and state program designed to assist poor people. Medicaid will pay for your long term care if your assets are less than $2,000 in liquid assets (cash, CDs, etc.), $3,000 in an irrevocable burial plan, and $1,500 in life insurance. 9. Can't I just give my assets away to qualify for Medicaid? Nice try. Remember, taxpayers pay for Medicaid. The government isn’t happy with people that have tried to give away assets to qualify for coverage. The government enforces a “60 month look back period.” Basically, if you give away anything, you must repay all gifts over the last 5 years - dollar for dollar - by paying for nursing home costs privately, before you can qualify for Medicaid. The government even enforces criminal penalties for those trying to hide assets to qualify for Medicaid. 10. Can't I give my assets to an Irrevocable Trust to qualify for Medicaid? Again, nice try. The look back period applies to transfers to Irrevocable Trusts. 11. Does Long Term Care insurance provide the same benefits as Medicaid? No. Medicaid reimbursement is often less than the actual cost of needed care. Residents in nursing homes with fewer private-pay patients were found to be 30% more likely to experience functional decline. Private-pay patients usually have more options. Waiting lists for Medicaid patients are not uncommon. Think about it. If you owned a nursing home, would you rather take on patients with solid insurance or Medicaid patients? 12. Who should consider purchasing Long Term Care insurance? • You should consider purchasing long term care insurance if you want to maintain control over the quality of long term care service you may need. • You should consider purchasing long term care insurance if you want to pay for long term care without using income or spending down your assets. • You should consider purchasing long term care insurance if you want to ensure you will never need to rely on Medicaid. 13. Should everyone have Long Term Care insurance? • No. If you have no assets to protect, are not concerned with passing an estate to your heirs, and are comfortable relying on the care Medicaid may be able to provide, then you should not purchase long term care insurance. • You also do not need long term care insurance if your assets will earn enough income to pay for your potential long term care costs. 14. What are the requirements to qualify for Long Term Care insurance coverage? • Many people wait to apply for long term care insurance after they have a significant health issue. You must be relatively healthy to qualify for long term care insurance. • Applying for long term care insurance almost never requires a medical exam. • People with certain conditions are automatically disqualified. These conditions include Parkinson’s, Alzheimer’s, MS, and crippling arthritis. Conditions such as cancer, diabetes, and heart disease do not result in immediate disqualification. 15. What are the necessities in a Long Term Care insurance policy? • A good long term care insurance policy should be customized to meet your specific needs. • Daily Benefit: The most important feature in a long term care contract is the daily benefit. Is the contract going to provide you with enough money per day to pay for quality long term care? • Waiver of Premium: This is an absolutely essential component of any long term care insurance policy. With this feature, once you qualify for long term care benefits, you are no longer required to pay the premium. • Inflation protection: Although the daily benefit may be adequate to provide for care today, it will most likely not cover your costs if you need care 10 years from now. Inflation protection is a feature that increases the daily benefit every year, thus ensuring that your long term care policy keeps pace with inflation. • Deductible: Long term care policies “kick in” and start paying for your care after a certain number of days has passed since you qualified for the benefit. This is known as the deductible. Many policies begin paying after 90 days. Be sure you are financially comfortable with the deductible you select. 16. What are other options that can be added to a Long Term Care insurance policy? • Home Health: If the idea of being cared for at home is important to you, make sure that it is a benefit provided for in your policy. • Different Payment Plans: Some long term care contracts can be paid for in several ways. Almost every company offers the option of paying premiums every year. Some companies offer a “10 Pay.” With the 10 Pay option, you pay premiums for 10 years and then never pay again. The policy stays in effect for your entire life. |
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