Please note – reference to company-specific research does not necessarily indicate a preference towards that company; the links are included because some companies provide especially valuable research on this issue.

1. How much does long-term care cost now, and how much will it cost when I might need it?
2. What does the government pay for long-term care?
3. Why do you need long-term care insurance?
4. What if you never go to a nursing home?
5. What are the odds you’ll need it?
6. When should you apply for long-term care insurance? Who is eligible to apply?
7. So how healthy do you need to be? What conditions will make you ineligible?
8. Does your age affect eligibility?
9. How do you apply for long-term care insurance?
10. What does long-term care insurance cost?
11. What discounts are available?
12. What if you already have health problems and don’t qualify for long-term care insurance?
13. What if I never use the insurance? Isn’t that a lot of money to spend?
14. My parents (or spouse!) don’t want to talk about this. How can I raise the issue?
15. Are there options to guarantee I’ll get some money back whether or not I use it?
16. Are there income tax deductions for the premiums?
17. What if my spouse can't get long-term care insurance?

 

 

 

 

 

1. In New England today, long-term care costs over $70,000 a year per person.

Those costs are expected to rise 5 percent per year over the next 30 years; at that time projected costs are between $300,000 and $600,000 per year. The costs of course depend on where you receive care; part-time home care will cost less than assisted living, but round-the-clock home care will probably cost more than a nursing home!

Here are links to reports on the costs of care throughout the US:
Survey of Assisted Living Costs across US, updated annually:
MetLife Market Survey of Assisted Living Costs 2003

Survey of Nursing Home and Home Care Costs across US, updated annually:
MetLife Market Survey of Nursing Home and Home Care Costs 2003

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2. What does the government pay for long-term care?

Long-term care insurance guarantees you’ll get the care you need where you want it, whether that’s at home, an assisted living facility, a nursing home, or other settings. The government makes no such guarantee. Medicare has complicated restrictions on what it will cover for long-term care, and it rarely pays for more than a month.

On Medicaid, your only option is usually a nursing home that will accept you as a Medicaid patient, a place that might not be your first choice and could be far away from home. Additionally, states continue to run out of money for Medicaid and are restricting it even more.

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3. Why do you need long-term care insurance?

1. Because risks are part of life, and life continues to get longer.

Thanks to medical science, we’re living longer than ever before, but with that comes the greater possibility you’ll need long-term care. But long-term care insurance isn’t just for old age. It also protects us from the unexpected. Christopher Reeve, who played Superman in the movies, was in good health, but a split second was all it took for him to need round-the-clock care for the rest of his life. Long-term care insurance ensures that if something similar happens to you, you’ll receive the best care available.

2. To help your family.

There’s more to long-term care than financial considerations. Rest assured – your family is going to help you out, whether or not you want them to. I expect you will want them to help, even if they don’t take care of you full-time. If you’ve had a family member or friend who’s needed care, you know it’s really hard on the family. They take time off work, their health deteriorates, their own families suffer, and it’s stressful on everyone. Much as they love and want to help you, it’s hard. With long-term care insurance, you’ll all have help available and that can help your loved ones as much as you.

Here’s an article on the stresses of caring for loved ones:
How TLC Makes You Sick
http://www.msnbc.msn.com/id/5039765/site/newsweek/

3. To protect the financial lives of you and your family.

You’ve worked your whole life to build up that nest egg. Is paying for long-term care expenses really how you want to use it?

Long-term care costs are already very expensive and continue to rise (see Q.1. above). Long-term care insurance allows you to protect your nest egg from those expenses, so you can do the things you want to do, like help out your children and grandchildren, travel or give to your favorite charity.

Without insurance, you are also putting your partner’s financial security at risk. If you need to spend hundreds of thousands of dollars on long-term care for either of you, how would that affect your spouse or partner’s income and lifestyle? Insurance can guarantee that your assets and income stay intact.

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4. What if you never go to a nursing home?

We haven't met anyone yet who wants or plans to go to a nursing home. Most families do whatever they can to keep a loved one OUT of a nursing home. But this insurance is not just for nursing home care. Most people use it to stay out of a nursing home as long as possible. Having the insurance gives you a much greater ability to stay at home or to go to assisted living - options that many people like, and that you pretty much have to pay for yourself.

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5. What are the odds you’ll need it?

Over half of all Americans will need long-term care. On October 22, 2001, The Wall Street Journal reported that more than 50 percent of all Americans are expected to need some form of long-term care in their lives. Further studies show that for people who reach 65, that number rises to 60 percent, and of those currently in long-term care, 40 percent are under 65. Americans are living longer, and diseases that used to cause death don’t. While that’s good news in many ways, it also means that your chances of needing care may well increase.

But long-term care insurance isn’t about statistics. It’s about peace of mind. It’s knowing that you and your family will be okay — financially, emotionally and otherwise—no matter what life has in store for you.

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6. When should you apply for long-term care insurance? Who is eligible to apply?

The short answer is: When you’re healthy enough to be eligible, and financially sound enough to pay the premiums without changing your lifestyle. Here’s the longer answer:

People often say to us, “I plan to get long term-care insurance in two or five years or when I’m 50 or 60 or 70.” If people think they can, they will always put off buying long-term care insurance indefinitely because they don’t want to pay for it or pay for it longer than necessary. Some also think long-term care insurance is a form of financial planning and that they’ll get to it when they can, are in the mood or have enough money.

Though long-term care insurance has significant financial implications, it doesn’t fit into the “financial planning” category. It’s actually a form of health insurance. This insurance can protect your financial and retirement plans. But like any health insurance, you need to be healthy enough to get it. This may seem unfair—maybe you think insurance companies should cover everyone. But that’s not how it works. That is how Medicaid works, but Medicaid is government aid, and if you rely on it, you have far fewer choices about your care.

Personally, I believe that once you’re financially secure and putting money away for retirement, college, etc., you should also be considering long-term care insurance. Most of my clients are in their 50’s – increasing numbers are in their 40’s and of course many are older. Obviously, serious health problems increase with age, and there are way too many people diagnosed with multiple sclerosis, cancer, etc, before they get to 50 to be complacent about it. If your family has a history of illnesses such as MS, you could consider it when you’re younger – it’s available from the age of 18.

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7. So how healthy do you need to be? What conditions will make you ineligible?

Some problems that make you a poor candidate for life insurance – such as high cholesterol – will not hurt your eligibility for this insurance. You don’t have to be in perfect health—many of our clients have health concerns, such as high blood pressure, smoking, diabetes treated with diet or oral medications (or even with insulin if very well-controlled), arthritis, depression, heart and back problems, osteoporosis and prior surgeries for joint replacements such as knees and hips. These and many more conditions are risks for long-term care, and the insurance company will want to know about them before it decides to cover you. If you have health problems, you may be pleasantly surprised at how companies will interpret them— whatever your problem is, don’t assume the worse - ask us about it.

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8. Does your age affect eligibility?

If you’re between 18 and 84 and in good health, you should have good choices. Premiums are higher if you’re older, so it’s always better to apply when you’re younger.

If you’re over 84, you probably will NOT be able to get regular long-term care insurance, but you may have other options – contact us (link) for information. Under age 84 - if you already have symptoms of Alzheimers’s, Parkinson’s, poorly-controlled diabetes or prior strokes, you’re unlikely to get regular insurance. But again, there may be other options to help preserve your assets — call or email to get more information about this.

So, what does this all mean? It means the answer to “when?” is NOW—if you’re in decent health. We’re constantly surprised by how many healthy people assume they will be healthy forever and don’t see long-term care insurance as an urgent issue. Changes in health can make you ineligible for this insurance—even if you won’t need long-term care help for years!

You probably know people in their 40’s and 50’s – sometimes younger or older – who had sudden health changes such as cancer, a mild or serious stroke or an accident requiring surgery, rehab or physical therapy. Any of these conditions would make you temporarily or permanently ineligible. It doesn’t mean you’ll need care tomorrow, but your eligibility for insurance will be badly hurt.

You can certainly improve your health by taking good care of yourself, but sometimes it’s not enough. If you want to ensure you will have the best choices, get the information and apply now—while you can.

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9. How do you apply for long-term care insurance?

Normally we have at least two meetings with people. At the first meeting we find out about your situation, and discuss long-term care in general. At the second meeting, we review specific plan recommendations. If you’d like to go ahead and apply, you can do so at this time or thereafter. We will help you complete the forms.

Unlike life insurance, you do not need a medical examination, blood tests, etc. to apply. The application includes information on your health history and lifestyle. Depending on your age and health, the company may order your medical records. Most will also have a nurse call you for a telephone interview about your health. Occasionally—usually with older applicants—there may be a face-to-face interview, mostly to assess your cognitive condition. All of this usually takes 30-60 days.

A deposit is usually required when you apply. If you plan to pay your premium annually, you normally pay the annual premium at the time of application. You can pay annually, semi-annually, quarterly, or monthly and make modifications if your situation changes over time. The deposit is fully refundable if you are not accepted, or if you decide not to keep the policy. You will have 30 days from the time of receipt of the policy to carefully read it and make sure it is OK. If you reject the policy within 30 days, you owe the company nothing.

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10. What does long-term care insurance cost?

This is the $64,000 question, of course. This is not a one-size-fits-all insurance, so the premiums aren’t standard either. There really are many plans and premiums. We will help you match your situation and concerns with the best and most affordable plan available.

Because long-term care costs run higher in New England than in many other areas of the country, you need to buy more insurance to cover those costs. While we will help you to match your budget with a good plan, we also don’t want you to buy a policy that won’t meet your needs. There are few things worse than paying good money for an insurance policy for years, then at crunch time – when you have a claim - finding out it won’t pay what you need it to.

Most of our clients pay at least $1,000 per year per person. The younger you are the less you will pay in the long run. There are return of premium options available in case you never have a claim. Contact us to discuss your situation.

 

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11. What discounts are available?

Here are the common ones:
1. Spousal/marital/partners discount: From 10–50%. There may be a discount if you’re married even if your spouse does not apply. The discounts may also be available to same-sex committed couples and to others living together (such as siblings who share living expenses).

2. Health discount: Usually 10-15%. Most companies have a “Preferred” and a “Standard” rate. Companies differ in what qualifies for Preferred Health rating. Some companies have substandard rates also, but most do not.

3. Family discount: You may get a discount if several non-married relatives get coverage with the same company.

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12. What if you already have health problems and don’t qualify for long-term care insurance?

This is often a problem. Many people don’t take this problem seriously until they’re older and have developed health issues. A word of advice: Don’t wait!

But if you already have health problems, there are options:

1. Different companies have different health guidelines. You may be refused coverage by one company but be able to get it with another. So, please contact us (link) if you’ve had bad news from another company. We normally contact companies with the health information you provide (your name or other personal information is not given, of course). The company will give us an opinion on whether you can apply and how they may view you, but this is never a firm commitment. They cannot make a final decision until they have all the information.

Here’s an interesting and true example that shows how different companies can be. One company we represent never accepts an applicant who has ever had Stage III cancer, regardless of the time since treatment. One of our clients had Stage III cancer over 10 years before with no recurrence whatsoever. He applied to another company, who accepted him at Preferred Health rates!

2. If you can’t qualify for regular long-term care coverage, there may be other possibilities. We represent companies that have annuities that can help you preserve assets, even if you’re already receiving care. This is called an “impaired risk annuity” and the more serious your health condition is, the less it will cost you!

Here’s an example. If your family member has Parkinson’s Disease and is in a facility, you may be looking at several years of care and hundreds of thousand of dollars in expenses. You may be worried that her substantial assets will be completely spent on care, and you’ll need to apply for Medicaid if her money runs out. We recently saw a family whose father has gone through $500,000 and is now on Medicaid – they never thought care would last that long, but it did.

With an impaired risk annuity, you decide how much monthly income you want to receive and you pay the insurance company a lump sum, which guarantees payments as long as you live. You can also include a refund provision.

If you live in New Hampshire, Maine or Massachusetts, please call or e-mail for more information on these options.

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13. What if I never use the insurance? Isn’t that a lot of money to spend?

Yes it’s a lot of money to spend if you never need it. Consider your car, homeowners, term life and health insurance. You could ask the same question about those. Most people pay their premiums and hope they never have a big claim. Wouldn’t you rather not use your insurances?

There are policies that ensure you'll get some benefit or your premium money back, whether or not you ever need long-term care. For example, you can add a return of premium rider. Or you can get a combination life insurance/long-term care policy, or an annuity with a long-term care rider. Any of these options can guarantee you'll get your money back one way or another. Ask us for more information.

Most people are not aware of the real risk and consequences of needing long-term care. Once they are, they usually conclude the insurance is money well spent. If they have a family member who has needed care for years and spent all or most of their money, they’re only too ready to get insurance so this won’t happen to them.

It’s interesting how often we talk to people who have developed serious health issues and would give anything to get this insurance, but they are no longer eligible. Many of these people have done very well financially and thought they were “all set” and could afford to pay these costs, but once it happens, they’re really upset to be spending their money on care they thought they’d never need.

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14. My parents (or spouse!) don’t want to talk about this. How can I raise the issue?

That’s a really good question, and a tough one. As people age, some get more realistic and want to make plans for their “physical retirement” while others get more resistant to the idea that they may someday need help. One really good approach is to assure your parent that you’re going to be there. You’re not going to send them to a nursing home and forget them – that’s often their fear.

Let them know that you’re going to be there for them, but that all of you can use help with this. Let them know that planning and insurance can help keep them at home as long as possible – it will give them more, not less, choices. You can remind them of their friends or family members who have needed help, and go through the realities of how much or how little you’ll be able to do for them and still maintain somewhat of a normal life. But be realistic and try to instill a sense of urgency; many older people cannot qualify for insurance because of health problems, so if they’re in fairly good health, they need to explore options now.

If you have a spouse or partner whose head is in the sand, some of the same things may apply. You can also point out that if either of you needs care, the other person’s quality of life can be seriously affected financially and in many other ways, so you’d like them to look into this.

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15. Are there options to guarantee I’ll get some money back whether or not I use it?

There are several:

1. Some companies offer a “return of premium” option. There are different rules, but the bottom line is that you will get your premium money back either through a claim or a refund.

2. There are “combination” policies. For example, you can get a life insurance/long-term care insurance policy that will pay you either for long-term care or upon death.

3. There are annuities with long-term care riders, so you will get all of your money back one way or another.

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16. Are there income tax deductions for the premiums?

It depends. Most policies sold today are "tax-qualifed." Premiums may be deductible; benefits are not normally taxable

Businesses: Premiums paid by a C Corporation for employees - and often for spouses - are fully deductible by the corporation, so this is a great way to save on taxes now and protect assets now and later. For other businesses, deductibility depends on your business structure, and possibly on your age.

Individuals: Premiums are considered a medical expense and may be deductible if your total medical expenses exceed 7.5% of your adjusted gross income. The deductible premium amounts are limited according to your age. These are the figures for 2008. The amounts are adjusted each year, and are per person, so this can be a sizable deduction for a couple:

40 and younger	$310
41 - 50	$580
51 - 60	$1,150
61 - 70	$3,080
Older than 70	$3,850

Health Savings Accounts (HSA's) - long-term care insurance premiums can be paid out of funds in an HSA.

State Taxes - some states including Maine allow deductions or credits for LTC premiums on their income tax returns.

If you live or work in New Hampshire, Maine or Massachusetts, please call or email with questions, or contact your tax advisor. Please note that Prime of Life Insurance is not a tax advisor

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17. What if my spouse can’t get long-term care insurance?

This can easily happen because one of you may qualify health-wise while the other doesn’t. We have many couples in this situation and they normally go ahead with coverage for the one who is eligible. Ask yourself, if one of you couldn’t get auto insurance because of a bad driving record, would you cancel insurance for the other? While it’s ideal to have both people covered, having insurance for at least one is far better than no coverage for either of you. Sometimes one of you may have a temporary health problem, and once it’s resolved, the second partner may be eligible.

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