Long Term Care Insurance – What’s the Best Age to Start Planning?

When it comes to planning for a sound financial future, young professionals building a career have much to think about. And, it’s only natural to think of long-term care as something essentially for one’s parents or grandparents. Nothing could be farther from the truth and regrettably many people put off gaining an understanding of the topic until it is too late. The analogy is waiting for a hurricane to hit your city before devising a plan to protect your home and family.

What Is Long-Term Care? Quite simply, long-term care refers to a broad range of medical and personal services and assistance that is provided over an extended period of time. Most people associate needing long-term care as a result of aging or a cognitive impairment such as Alzheimer’s disease. But, many younger people require long-term care services following accidents. Typical ones you hear about are motorcycle accidents or falling off the roof while cleaning gutters.

The mention of long-term care also generally brings to mind images of a nursing home. Again, a false impression, as most long-term care today takes place in ones own home or a facility other than a skilled nursing care facility.

Who Pays for Long-Term Care? Generally speaking, any health insurance you may have on either an individual basis or through your employer only pays for doctor and hospital bills. As a result, most of the costs for long-term care are not covered by these plans. And, when you reach retirement age and qualify for Medicare, it’s important to understand that Medicare pays little of the cost (if any) for long-term care.

So, who pays? Most often the individual receiving the care or their family members pay. Like medical expenses, long-term care can be equally costly – especially if you have to pay the entire cost from your own savings. Some 30 years ago, insurers began offering a form of protection called long-term care insurance designed to pay for qualifying care. Today, some eight million Americans – ranging in age from their 20s to their 90s own long-term care insurance protection. That number grows yearly.

What Does Insurance Cost? The cost of long-term care insurance is determined by certain factors. These include your age when applying for protection, the amount of benefit you are eligible to receive and whether you opt for protection that pays for care in your own home.

The younger you are, the less long-term care insurance protection costs. But, while insurance premiums generally increase about nine percent for each year you wait to apply, here is the most important fact younger people fail to recognize; one must health qualify for long-term care insurance. Your good health today can qualify you for significant yearly savings (similar to how good driving habits will reduce your car insurance). Perhaps more important, a change in your health — even one that is not life threatening — can cause you to pay as much as 20 percent more each year or make it impossible for you to qualify no matter how much you are willing to pay.

Long-term care insurance protection can be far more affordable than young people think. Leading insurance companies offer discounts to married couples that can reduce the cost by 40 percent yearly when both partners obtain coverage. An increasing number offer discounts for unmarried adults who are living together.

Some other ways to significantly reduce the cost is by adding a deductible period (referred to as an Elimination Period in long-term care insurance protection), choosing a limited benefit period (say one that pays benefits for three years versus one that provides unlimited coverage.

Can Insurance Be Tax Deductible? The short answer is, it can be — especially if you own your own business. Recognizing that government programs do not adequately pay for long-term care insurance, federal and a growing number of stet tax codes now offer tax incentives to encourage Americans to take personal responsibility for their future long-term care needs.

Business owners can deduct the cost of long-term care insurance protection for themselves, for their spouse and their tax dependents on a favorable basis. Owners may be able to deduct 100 percent of the cost and a knowledgeable long-term care insurance professional can tell you how to qualify.

Does Your Employer Offer LTC Protection? Long-term care insurance policies are increasingly being offered as an employee benefit. In many cases these policies offer outstanding benefits and affordable protection. Some employers will even pay for a base-level of insurance protection and allow employees to purchase additional levels at discounted rates. If your employer offers you a minimal level of long-term care protection at no cost. be certain to take advantage of this no-cost benefit.

Younger individuals who would qualify for good health discounts as well as spousal and partner discounts should compare policies offered by the employer with those available from an independent insurance professional. You may find you are able to obtain higher levels of protection for less cost.

Getting More Information: When you are ready to get prices for protection or determine if any existing health conditions will prevent you from obtaining insurance coverage, contact an experienced local long-term care insurance professional.

To find a comprehensive online directory of over 3,000 insurance professionals who can assist with your long-term care insurance needs, visit the Consumer Information Center of the American Association for Long-Term Care Insurance.

The American Association for Long-Term Care Insurance is the national trade organization providing consumers with relevant and current information designed to help you make smarter decisions. The Association does not sell insurance products but works with several thousand insurance and financial professionals nationwide. To find a comprehensive online directory of over 3,000 insurance professionals who can assist with your long-term care insurance needs, visit the Consumer Information Center of the American Association for Long-Term Care Insurance. Insurance and financial professionals should visit the Association’s Producer’s Resource Center. Jesse Slome is Executive Director of the Association.

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Long Term Care Insurance – Act Now Before it is Too Late

We generally do not think about long-term care until and when we experience it in our lives. Oftentimes it takes the form of a loved one (typically a parent) who becomes suddenly disabled and the family (typically the children) steps in to assist. That assistance soon begins to take more and more of our time, affecting our jobs, our own families, and ultimately our lives. When this happens we all become fast studies in the field of long term care and, unfortunately, when there is inadequate planning, it is often too late. We are transformed from loved ones into long term care providers. Out relationship, with respect to our disabled loved one, changes forever and the stress that results can easily strain a family to the breaking point. If anyone has ever had a parent become disabled you know what I am talking about.

A misconception is that long-term care is covered either by health insurance or by Medicare. Health insurance does not pay for long-term care and Medicare, Part A, will only cover the first 20 days of long-term care 100%, but only under certain very restrictive conditions. Beyond the first 20 days, Medicare requires you pay the first $133 (2009) of expenses per day and this limited coverage only lasts for 80 days. Then you are on your own.

The sad fact is that long-term care, when properly planned for, can be a manageable process that leaves the family relationships in tact and allows us to instead act in an oversight capacity, rather than in a hands-on custodial care capacity. Stress is significantly reduced, our jobs do not suffer, and our direct family unit stays in tact as well.

Long-term care refers to assistance needed by anyone for a chronic illness. A chronic illness is long-term illness that will not go away, such as Alzheimer’s, Parkinson’s, emphysema, arthritis, diabetes, heart disease, a stroke which affects physical activities permanently, and sudden accidents which leave you permanently disabled. Long-term care may require skilled medical care or non-skilled medical care (custodial care).

Skilled medical care is often performed by licensed medical professionals such as physicians, registered nurses, licensed practical nurses and physical, occupational or speech therapists in a home, community or institutional setting. It also includes assistance with administering medicines. Skilled medical care is usually required when there is an acute condition that restricts an individual’s ability to perform certain physical tasks. It may also be required where a debilitating condition turns into a chronic (permanent) condition which can no longer be ignored.

Non-skilled care, or custodial care, is generally needed where a physical condition impairs someone from performing what are called activities of daily living. Such activities include eating, bathing, dressing, toileting (assistance to and from the toilet), continence (bowel movement control issues) or transferring from a bed to a chair etc. Most often, non-skilled care is informal, meaning performed by family members. In fact, about 80% of all long-term care is informal, while 20% is provided by paid, trained professionals. The reason for this is that most families do not plan properly for long-term care, meaning they do not have the financial resources to pay someone to assist the family in providing long-term care services.

Non-skilled care typically includes homemaker services and personal assistance. Homemaker services refer to assisting the patient with home-related activities. It may include preparing meals, managing money, shopping, housework and the like. Personal assistance services involves assisting the patient in the performance of activities of daily living, It includes feeding, bathing, dressing, transferring the patient to and from the bed and a chair, help in the bathroom and perhaps even changing bed pans and the like. When our patient is heavy or tall, these tasks require the assistance of a loved one who has the physical strength to meet the challenge. If no such loved one exists, one must somehow be found. Oftentimes this requires paying for the services of a provider who has the physical strength needed. This costs money.

Inadequate planning means that whatever financial resources are available will be used to help assist our disabled family member get through each day. Often retirement assets are diverted to pay for long-term care services. This means there will be less money for retirement needs. Eventually, our retirement assets dry up and the only other option is transferring our loved one to a Medicaid facility. Some are very good, but more often than not, our loved ones will not receive the care we all feel they deserve. It’s a no-win situation and everyone in the family unit is negatively affected. Who wants to put their parent in a Medicaid facility due to financial limitations? I know I wouldn’t. But it happens. It happens every day and with the graying of our baby boomer population, it is going to become a common occurrence to those who did not plan properly.

What can you do? The key is to properly plan for your long-term care needs while you are in your 40′s or 50′s by securing the services of a Certified Financial Planner or long-term care insurance agent. It is in these age groups that long-term care insurance is most affordable. Premiums for a 45 year old can be as low as $1,000 per year. The cost goes up dramatically as you get closer to 60 years of age. A 65 year-old can pay as much as $8,000 per year for long-term care insurance. Proper planning means designing a long-term care policy that meets you minimum needs. Some policies pay a daily benefit for 2 years, 3 years, 5 years or for life. Obviously the longer the term, the higher the premium. A typical long-term care policy usually carries a three-year benefit payout term, includes an inflation adjustment component and a reimbursement daily benefit. The daily benefit needed depends on the cost of care where you live. A daily benefit in the northeast of $150-250 is not uncommon. Most policies reimburse on a days of service basis. This means services must be provided in order to receive a reimbursement. Most policies also include an elimination period of between 30 days and 90 days. With a 30 day elimination period the patient must pay for long-term care services for the first 30 days, unless the care qualifies for Medicare.

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