Wednesday Workshop – Don’t Be Spooked by Long-Term Care

Wednesday Workshop – Don’t Be Spooked by Long-Term Care

Wednesday Workshop- Don't Be Spooked by Long-Term Care1. What is Long-Term Care Insurance and what does it cover?

Long-Term Care refers to services that individuals who are chronically ill or suffering from a disabling condition or cognitive impairment. These services are generally needed for an extended period of time and may not cure the person, but allow them to carry on daily living activities. Some of these conditions include: Alzheimer’s disease, dementia, Parkinson’s disease, Paralysis or disabling conditions from an accident, etc…

In case of a disabling accident, Long-Term Care insurance cover you if you are in need of 2 of the 6 defined ADL’s (activities of daily living). These include feeding, toileting, transferring, bathing, continence and dressing. Depending on the type of care needed, whether it is in a full-time nursing home, assisted living facility or the increasingly more popular care at home services by a certified nurse, Long-Term Care insurance covers these types of expenses.

2. Why do I need Long-Term Care Insurance?

Most people decide and are basically legally required to have insurance on their care, house, rental, boat because those items are their most valuable assets. But the retirement nest-egg that people have been saving up for their whole life is a risk if there is a Long-Term Care event. Costs in Florida  for nursing home coverage can run over $200/day. Assisted living facilities average up to $3000/month and home health care can be as much as $20/hour. Most people may not be aware, but Medicare does not cover these costs. They are basically covered 100% out-of-pocket. It wouldn’t take long for this amount to seriously effect someone’s retirement plan if an Long-Term Care event occurs and lasts over the course of 1-5 years. In that sense, I like to refer to Long-Term Care insurance as “Retirement Insurance” that preserves your assets and future as you enter the sunset years of their life.

In the past, as parents got older, their children would take care of them and move into their parents house or the parent(s) move into theirs. But with a fairly transient society now, where kids have moved far distances away from their parents and both spouses of kids typically working, the chances of moving in with your children to take care of you is not that feasible anymore. As families change, we need to explore more options if we need Long-Term Care.

3. What is the likelihood I will ever use Long-Term Care insurance if I had a policy?

With advances in medicine and healthcare in general, people are living longer and with that, so are the chances of needing Long-Term Care increases. In fact, the largest growing population segment in the country is 85 and older. In Florida, this especially holds true with so many services and attention given to the senior citizen based population. The American Society on Aging has projected that after the age of 65, Americans have more than a 70% chance of needing some form of Long-Term Care. There expenses are not covered by private health insurance or Medicare and  once again, add that to the fact that Long-Term Care costs continue to rise at a rapid pace and it’s easy to see that having insurance in place is needed to avoid damaging effects an otherwise sound financial security plan for retirement.

Ironically, even as the need for Long-Term Care insurance has risen and continues to rise, many companies have dropped out of the Long-Term Care insurance industry, recently. In fact, just over 10 years ago, there were over 20 companies that carried Long-Term Care insurance, now there are about 10. Of  those companies remaining, the top two, including Northwestern Mutual, account for roughly half of the sales in Long-Term Care. With all of these changes in the industry and more expected in the future, it’s important to pay attention to the financial strength and reputation honoring claims of the companies you consider with respect to Long-Term Care.

4. If I do have a claim, how is it administered?

Once a need for Long-Term Care is established, a claim is filed with your insurance company and depending on the actual need and benefit that you signed up for, you get to choose how you receive care. With Northwestern Mutual, the main requirement is that it is the facility or home care provided for is certified and licensed by the state. These include care at your home by registered nurses, physical therapists, certified home health aides or nursing assistants, and certified social workers. Assisted Living Facilities, nursing homes and care at home facilities are typically the most common places that are covered by Long-Term Care insurance. A good rule of thumb is if the injury or illness will last beyond an initial 12 week elimination period, then Long-Term Care can and should be considered.

5. I’ve heard it’s very expensive, how affordable is it?

It can be very affordable if you plan at an early enough age, more affordable than most people think. For example, let’s pick John Smith who is planning to retire around the age of 65. In his planning stage, he decides to set himself with Long-Term Care insurance in his mid-fifties. He can get a mid-level benefit of $6000/month of coverage which results in a maximum allowable benefit of over $200,000 for less than $130/month. If John is married and his wife, Mary, applies for Long-Term Care insurance at the same time, they will both receive a 30% discount through Northwestern Mutual.

Because the government also sees Long-Term Care as a necessary and eventual event, there are also some great tax advantages to Long-Term Care and benefits associated with Long-Term Care insurance. Things like tax-free benefits, in some cases, tax deductions on premiums or use of an HSA account pay premiums.

6. If someone wants to inquire further about this type of insurance or have a one-on-one consultation, or any other questions, what should they do?

They can reach out in one of two ways. They can either contact the Alzheimer’s Care Resource Center by dialing (561) 588-4545 or they can call Jeff Lukosavich, a representative of Northwestern Mutual, at (561) 846-2394. Thank you!