Planning for Long-Term Care in America

How Medicare Fails the Elderly - NYTimes.com

Here is a New York Times editorial about the fact that Medicare "fails" the elderly by not paying for long-term care services.

How Medicare Fails the Elderly - NYTimes.com.

Now that the CLASS voluntary LTC plan is dormant, will there be a big push to have long-term care included in Medicare?  

CLASS Dismissed: Obama Administration Pulls Plug On Long-Term Care Program - Kaiser Health News

CLASS Dismissed - a easy one for headline writers.

 

Now, what's next?  States are scrambling to plug holes in Medicaid budgets and private long-term care insurance sales aren't growing like they need to.  Will the fact this program isn't going forward be a wake up call to boomers?  

CLASS Dismissed: Obama Administration Pulls Plug On Long-Term Care Program - Kaiser Health News.

What do you think?

5 biggest money mistakes retirees make - CNBC

5 biggest money mistakes retirees make - CNBC.

CMS Funding Changes Hit Nursing Homes | LifeHealthPro

CMS Funding Changes Hit Nursing Homes | LifeHealthPro.

Which is best, calendar day or service day elimination period?

This post, by Lauren Jiles-Johnson, LTCI Partners director of marketing, describes how elimination periods work in LTCi policies and notes facts advisors should consider when recommending the best EP for a client's needs.

The elimination period can be a confusing aspect of long-term care insurance.  First, the name is awkward – most people understand the concept of a deductible in insurance, but an elimination period?  A better term is probably waiting period, because this indicates that there is a period of time before benefits can be paid.

Remember, all tax-qualified LTC policies use basically the same benefit triggers -- failing to perform two of six activities of daily living or having a cognitive impairment that requires someone keeping an eye on you. In addition, a health care professional must certify the disability is expected to last at least 90 days.

However, before a client or their care provider receives benefits, the elimination period (EP) needs to be satisfied.

LTCi policies come with EPs ranging from zero to 365 days.  But the vast majority of buyers -- 76.3 percent—choose a 90 or 100-day EP, according to the 2011 Individual LTC Survey published in Broker World.  Why 90 days?  Well, for one thing, the LTC disability is expected to last 90 days – remember, it’s called long-term care insurance for a reason! Also, in many cases Medicare will cover some care for a period of days. 

When purchasing a long-term care insurance policy, your clients might want advice regarding whether to purchase a calendar-day or service-day EP.  The way those days are counted can make a huge difference in how long a client has to wait for coverage. 

A client with a 90-day EP who purchases $200 per day in coverage would have to pay for the first $18,000 ($200 x 90 days) of his or her care before the policy began to pay. And that is in today’s dollars.  If your client goes on claim 25 years from now, the cost will be much higher.

With a service-day elimination period, only the days when he actually receives care are counted toward the 90 days.  So if he is at home and has a homemaker come in three times a week, the client is only using three days a week toward the EP.  At that rate, it would take 30 weeks, or over seven months, to exhaust the elimination period.  A very ill client could potentially die before accessing his benefits.

In contrast, if that same client has a calendar-day elimination period, the count starts the day the client goes on claim and 91 days later, regardless of whether service was received, the insurance begins to pay.

Clearly, a calendar-day EP means your client receives benefits sooner, so does that make it better?  Usually, although a policy with a calendar-day EP could be slightly more expensive.   Many of the newer products have only calendar-day EPs.  Other newer products have both options, but the price differential is negligible.

Generally speaking, clients will appreciate a shorter elimination period when they go on claim.  Most policies offer a rider that allows for a zero-day elimination period for care received at home.  The client receives coverage from the first day and the count begins toward the EP if he or she needs to move to a facility.  This feature might add an additional 10% or more to the cost. Some policies offer a built-in zero-day EP for homecare.

Your LTCI Partners sales consultant will be happy to help you design the best policy for your client’s needs.  Contact us at sales@LTCIPartners.com.

LTCI Partners Monthly Poll - October 2011

BACKGROUND: In late September, the entire staff responsible for creating the CLASS Act, the government-run long-term care insurance program, was reassigned.

Please comment below for possible publication in next month's newsletter.

Stock vs. Mutual LTC carriers - a difference?

One of the most important buying considerations for long-term care insurance is the financial strength and reputation of the carrier selected.  This article in Investment News discusses how Mutual and Stock LTC carriers battle each other, and includes a quote from Steve Cain of LTCI Partners.

Fighting for market share in the LTC business - InvestmentNews.

For Long Term Care Insurance The Best Age To Apply Is Up To 64 - Insurance - Long Term Care

Often people wait too long to buy long-term care insurance - and are disappointed to find that premiums are much higher than when they investigated buying it years ago. Here is a good article from Jesse Slome of the AALTC.org about when is the 'sweet spot" of buying LTC coverage.

For Long Term Care Insurance The Best Age To Apply Is Up To 64 - Insurance - Long Term Care.