Is Insurance the Answer to Long Term Care Planning?

A recent USA Today article states that there is an increase in seniors
living over the age of 90. According to author Haya El Nasser “The
number of people living to age 90 and beyond has tripled in the past
three decades to almost 2 million and is likely to quadruple by 2050”.

Seniors who live longer generally have some sort of disability or need
help at some level of living. Sandy Markwood, CEO of the National
Association of Area Agencies on Aging, indicates that the focus
needs to be on being able to help these seniors live at home as long
as possible as nursing home cost could rise to average $72,000 a
year.

Long Term Care at any level, in the home, assisted living or nursing
home can add a tremendous cost to seniors and their families.

Government Programs Only Pay For About 16% Of Long Term Care

Government programs such as Medicare, Medicaid and the Veterans
Administration will cover the cost of long-term care under certain
conditions. Medicare will cover rehabilitation from a hospital stay or
limited care at home if there is a skilled (medical) need. The Veterans
Administration will cover the cost of nursing home care indefinitely if
the veteran is at least 70% service-connected disabled. The VA will
also cover other forms of home-based or community-based care if
there is a medical need.

Medicaid will cover both medical and non-medical related long-term
care but in order to qualify for Medicaid an Ohio resident has to have
less than $1,500 in assets and income that is insufficient to pay the
cost of care.

Funding Long Term Care with your Life Insurance Policy

Drawing cash from life insurance or changing a life insurance policy
should only be done after reviewing with an expert advisor. Loss
of the policy and death benefit could prove to be a detriment. If,

however you have accumulated cash in a life insurance policy and no
longer need the coverage you may consider using the cash for long
term care or purchasing a LTC rider to your current policy.

New insurance products are being developed to cover both life
insurance and long term care insurance. ElderLawAnswers reports:

“A new law makes the purchase of products that combine annuities
or insurance policies with long-term care insurance more attractive.
These "hybrid" products are gaining in popularity due to a law that
went into effect January 1, 2010, making distributions from life
insurance and annuities tax-free when used to pay for long-term
care. The same law also allows owners of annuities or life insurance
policies to exchange their old policies for long-term care insurance or
hybrid policies without being taxed.”

Combination sales which include life insurance, annuities and
traditional long-term care coverage are becoming popular with
insurance companies and may prove a method of financing long
term care. Investigate closely, however to find what exactly will be
covered. Some policies do not cover home care costs or complete
costs of nursing homes.

Long Term Care Insurance Funding for All Long Term Care Needs

The first long-term care policies were offered about 40 years ago.
These were primarily nursing home-only policies designed to take
over when Medicare rehabilitation ran out. They were not the
comprehensive benefit policies we see today.

Long Term Care Insurance policies today are greatly diversified in
their coverage. Home care, nursing home costs, adult day care,
physical therapy, skilled and non-skilled nursing care are some of the
services covered. Policies vary in price and what they cover. There
is also a very restricted qualification of physical and mental heath to
get a policy. Purchasing a policy at a younger age makes it easier to
qualify and also provides cheaper premiums. It is best to consult with
a long term care insurance professional about the type of policy that
fits your needs and budget.

Veterans Aid and Attendance Pension Benefit

Though not an insurance policy, the VA Pension Benefit should be
mentioned as a way to pay for long term care needs. A veteran or
spouse of a veteran who served during a period of war can receive
money, up to $2,019 a month, to pay for long term care medical
expenses, home health care, and assisted living cost. A qualified
Veteran Consultant can help you determine if you qualify for this
benefit.

Pre-Need Burial Insurance

One might ask what Pre-need burial insurance has to do with long
term care. The purpose of preneed life insurance is to set aside funds
for your funeral, before the need arises.

It is an insurance policy that covers the cost of the predetermined
expenses of a funeral, cremation or burial. It gives the purchaser the
opportunity to preplan the services and peace of mind in having it
paid for. This is usually an insurance policy that pays at time of death
for these expenses. There are many insurance companies that offer
these packages as well as funeral homes.

NOTE: If a person anticipates needing to apply for Medicaid after
all is said and done, it is unwise to start spending down assets until
having at least a consultation with a Medicaid specialist. In order to
retain the maximum assets for the community spouse, application
needs to be made first.

The saddest cases of long term care needs we hear are:

“Mother can no longer live alone and she has no money to go live in a
care facility.”

“ Is there someone that can come help me take care of my wife? We
live on our Social Security and I can not pay what home care costs.”

“Father died last night and we have no money to bury him, what do
we do?”

It is important to make the necessary arrangements to cover long
term care and end of life costs. There is no government program
that will cover all those needs. The National Care Planning Council at
www.longtermcarelink.net strives to educate people about long term
care services and encourages the planning that needs to be done to
prepare for future costs and needs.

The National Association of Professional Geriatric Care Managers at
www.caremanager.org has lots of good information as well as a list
of professionals around the country who specialize in long term care
planning and follow-through with families.

Debra Roidl, MSW, CMC
Care Manager, Certified