Planning for Longevity A Seminar on LongTerm Care Insurance

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Planning for LongevityA Seminar on Long-Term
Care Insurance
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Growth of Population 65 and Over
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82
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34.6
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3
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2
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1999
2050
New York Times, May 2000
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What is Long-Term Care?

• Long-Term Care involves a wide variety of
  services for people with prolonged physical
  illness, disability or cognitive disorder
  Services are aimed at helping people with chronic
  conditions compensate for limitations in their
  ability to function independently.

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Types of Long-Term Care Services

• Nursing facility care.
• Alternate care facilities
• Assisted living.
• Alzheimers and community-based residential.
• Home health care.
• Community care options
• Adult day care.
• Respite care.
• Options are expanding all the time.

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Long-Term Care is Expensive

• Nursing facility
• Currently ranges from 40,000 to 100,000
  annually.
• Home health care
• Average cost per visit in 1997 was 77.
• Nurse 98
• Home health aide 54
• Assisted living
• Average annual cost 25,300.

Wall Street Journal, 3/31/99. Key Data on
Home Care, LTC News and Comment, February 1998 -
Source National Association for Home Care.
Can Aging Baby Boomers Avoid the Nursing Home?
American Council o Life Insurers, March 2000
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Skilled Nursing Facility Care Costs
NH 199
VT 100
177
175
100
100
MA 230
133
142
178
RI 224
166
136
100
127
CT 232
100
149
101
142
151
NJ 192
130
133
141
125
115
115
117
110
105
156
127
DE 129
126
126
118
92
118
MD 151
137
144
100
103
102
DC 184
413
130
90
127
120
Kiplingers Retirement Report, January 1999
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Odds of Individuals Needing Skilled Nursing
Facility Care After Age 65
48 or almost 1 in 2
Baby Boomers Need to Plan for the Future,
PR Newswire, December 8 1998 - Source American
Health Care Association.
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Odds of Individuals Needing Skilled Nursing
Facility Care After Age 80
Over 90 or 9 in 10
American Association of Retired PersonsNational
Nursing Home Study
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Long-term care is more than just nursing home
care. Of 12 million people needing long term
care services, only 1.5 million were residents in
nursing homes.
The National Underwriters Long-Term Care Handbook
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Major Financial Risks
Risk Odds Average Claim

• Homeowners 1 in 88 2,000Insurance Claim
• Auto Collision 1 in 47 8,000Insurance Claim
• Needing Long- 1 in 2 126,000Term Care (cost
  of 2.5 years skilled nursing facility care)

Journal of the American Society of CLU ChFC,
September 1996. The Looming Crisis, American
Health Care Associations web site, September
1998.
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Who Pays for Long Term Care?
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MediCARE Doesnt Cover the Majority of Long-Term
Care

• Short-term skilled nursing facility stays only.
• No custodial care.
• 40 of home care reimbursement requests are
  ineligible.

U.S. News World Report, 8/11/97
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MediCAID, What Does it Cover?

• A federal-state health insurance program for the
  poor. It pays for two-thirds of all nursing home
  residents.

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Medicaid What Can You Keep While Growing Poor?

• House.
• Furniture (2,000).
• Car (4,500).
• Burial plot and funds (1,500).
• Small amount of cash andpersonal assets
  (2,000).

Figures vary by state
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Personal Finances ... You Pay!

• Does long-term care insurance make sense?
  Probably not for those wealthy enough to set
  aside 200,000 to cover four years of care, while
  still leaving enough to support a spouse or some
  other dependent.

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Private Insurance A Solution

• A Long-Term Care policy is an affordable and
  attractive form of insurance.

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Reasons People Consider Long-Term Care Insurance
1. Personal financial independence.
2. Protect savings/assets.
3. Afford health care services.
4. Protect spouses lifestyle.
5. Choose services I prefer.
6. Government may not cover future needed care.
7. Stay off welfare.
8. Pass on inheritance.
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When is the Right Time to Consider Long-Term Care
Insurance?

• Are you between the ages of 50-70?
• Are you recently retired or have you begun
  planning for retirement?
• Are you reasonably active and healthy?

Each situation is unique and should beevaluated
separately.
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Is Your Financial Situation Appropriate for
Considering Long-Term Care Insurance?

• Do you have 100,000 assetsnot including the
  value of your home?
• Will your retirement income and Social Security
  provide at least 30,000 annually?
• Have you planned for your health insurance
  portfolio in retirement?

Each situation is unique and should beevaluated
separately.
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What Should I Look For In aLong-Term Care
Insurance Policy?
Plans that offer

• Flexibility and choice.
• Complete solutions.
• Optional benefits.

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What Amount Should the Daily Benefit Be?

• At least as high as the averaged daily cost of
  skilled nursing facility carein your locality.
• Check with Department on Aging for your
  localitys average daily cost.

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What About Inflation?
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• Simple vs. compounded interest.
• Inflation protection becomes more important the
  younger you are at purchase.

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What Benefit Period Should You Choose?

• Options 750 days, 1,500 days, or lifetime.
• Of those needing nursing home care
• 22 could stay 1-3 years.
• 13 could stay 3-5 years.
• 21 could stay more than 5 years.

San Francisco Chronicle, 2/24/97
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When Should Benefits Begin?

• Elimination periods typically 0, 30, 60, 90
  days.
• Longer elimination period reduces premium.
• May choose 0 days for home health care only.

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How Do I Qualify forInsurance Coverage?

• Based on health history and lifestyle.
• Face-to-face interview possible.
• Health conditions that are controlled, stable,
  and dont affect lifestyle generally are
  acceptable.

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How Do I Choose a Long-Term Care Insurance
Company?

• Research companies.
• Contact your State Department on Aging.
• Shoppers Guide to Long- Term Care Insurance.
• Consumer publications.

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Planning for Longevity

• Long Term Care InsuranceA Responsible Choice