Who can answer all of your questions about Long Term Health care? we’d be happy to.
What is Long Term Care Insurance?
Long Term Care Insurance provides benefits to help pay for prolonged healthcare costs incurred in the home, community, or in Assisted Living or Nursing facilities. This insurance should be purchased by anyone who wants to protect their assets and remain independent in the event that a serious illness or accident leaves them incapacitated. The key is to buy this coverage at younger ages to lock in the lower age rates while you are in good health. Not only are the significant preferred health discounts, but you can't afford to risk having an application turned down at older ages due to complicated health history or ongoing chronic issues.
Quick Facts:
- Did you realize that nearly 50% of all Long Term Care is accessed by those under age 65? Are you and your assets prepared in the event of a car accident or stroke to bring care to your own how without the assistance of your health plan beyond a finite period of days?
- The average length of stay in a Nursing Home is only 2.4 years, however, the average length of an Alzheimer's situation is now over 8 years.
- The average cost of a care per year in a skilled Nursing Home nationally is now approximately $60,000.this is after tax money so we are talking close to $100,000/year to pay for care in 2008. Imagine what it will cost in 2028 or 2038?
Why it's our specialty
Long Term Care Insurance is a specialty of ours. While at Duke University, our President Danny Mensh focused on Long Term Care, health care delivery, and aging issues. Courses and independent study in the Sociology and Long Term Care Resource Departments led Danny to want to create a separate division of the existing agency to specialize in Long Term Care planning. So, its not just about insurance policies with Mensh Insurance.it is dedication to the overall education process in the area of Long Term Care that ranges from health insurance, to Medicare and Medicaid as well as Long Term Care Insurance. Back to top
Who can qualify?
In order to buy a Long Term Care Insurance policy as an individual, everyone must complete a Yes/No health questionnaire. Questions are designed to help the insurance company evaluate whether you have very little or no health history; chronic ongoing illnesses or conditions; or some history but it has been controlled or surgically repaired for a period of time. In addition, if the underwriting department is concerned by some of the responses on the application form, they might write to your Dr.'s to get copies of your records and test results. They might even require a phone interview or face to face meeting with a nurse to further help the insurance company in their review. The biggest problems for the insurance company in their assessment of one's health are below:
- Memory Loss or Alzheimer's' Disease
- Uncontrolled Diabetes
- Uncontrolled Cardiac History
- Recent joint replacement with complications from surgery or someone who needs joint replacement and has not had the surgery yet
However, it should be noted that the below conditions are often received favorably by underwriters:
- Heart Attacks that have occurred over 12 months ago with no further complications
- Cancer with no spread to other areas of the body and at least 12 months removed from treatment is often approved without difficulty
- Controlled and stable Type 2 Diabetes
- Controlled and stable blood pressure and cholesterol
- Spine or joint surgery that has been performed successfully and the individual has resumed daily activities
LTC Insurance underwriting is very different from Life/Disability insurance underwriting so do not assume that a declination is automatic. We are extremely involved with the underwriting and medical review from the outset. Our years of experience can help save everyone time and energy by evaluating the right company and designs for each client's needs. Back to top
Long Term Care vs. Disability Insurance
People ask all the time. what is the difference between Long Term Care and Disability Insurance. Disability Insurance protects income for working adults. These two programs are totally independent from each other and must be separated when putting together a sound financial plan. To see an article on the difference between Long Term Care Insurance and Disability Insurance, click here. Back to top
Choosing a company
Like any insurance policy, the selection process for a Long Term Care Insurance policy is crucial. At Mensh Insurance, we are able to review and evaluate all contract language from the top rated insurance companies in the industry. So, trusted names such as Gen worth, Met Life, John Hancock, Unum, and Prudential, among others, are examined for cost, benefits, and underwriting flexibility for each person's situation. In some cases, one carrier might be far more price competitive for purchasers in their 70's and another company might be far less expensive for those applying in their 40's.
Another example is in the underwriting criteria; some companies are more aggressive and will allow complicated cardiac history and some companies won't even consider such cases. We know what the companies want and can bring that information to your desk or living room. Lastly, since there are no companies with fixed guaranteed premiums it is vital that the company we select has the financial strength to be there for us at claim-time well into the future. Mensh Insurance only represents A.M. Best A rated or better companies. Back to top
Q & A
At what age should I start thinking about Long Term Health Care?
All individuals should begin to learn about Long Term Care Insurance in their 30's. While there are competing expenses at that stage of life, some review of the available plans and their costs should take place.if for nothing else, a solid understanding will most likely greatly benefit their parents who may or may not be up to speed on LTC Insurance. Certainly, by one's early to mid 40's, policies should be purchased so as to lock in the lower age rate structures, preferred health, and marital discounts.
Can I still qualify for Long Term Health Care Insurance if I have had Cancer?
Believe it or not, those who have successfully completed Cancer treatment without spread to other areas of the body can generally obtain LTC Insurance after one year from their treatment completion date. We have successfully helped many people who have had Breast Cancer or Prostate Cancer secure policies.
How much does Long Term Health Care Cost?
Long Term Care costs continue to increase each and every year. Fortunately, they have not gone up at the same alarming rate as Dr. visits or medical tests etc. However, you must understand that it will cost over $60,000 per year, on average, for just one year in a Nursing Home. It might cost close to that or even more if various levels of care are rendered in your own home by different care providers. Are you prepared for this type of expense?
Can you get Long Term Care Insurance through Your Employer?
A 2007 report showed that over 10,000 employers throughout the United States now offer or endorse some form of Long Term Care Insurance. This is great news as more and more people now have access to Long Term Care Insurance. These plans will typically be issued with marital and group discounts and sometimes are available to employees without medical review. Unfortunately, unlike other employee benefits that can be payroll deducted with pre-tax dollars, LTC Insurance can't be paid in the same fashion. So, without key education from employers, many people simply don't "sign up" for LTC Insurance since they don't understand its value and don't see a tax advantage. This remains a huge challenge and problem for the industry. Stay Tuned to Mensh Insurance.com for legislative updates that might change the tax landscape. Back to top
Benefit Options
Benefit Amount
This is the amount that we select at the beginning that will be available to reimburse for actual care costs incurred in your home, the community, or in a facility. We know that the average monthly cost Nationally is around $5000. So, some will look to insure that amount knowing that there could be additional exposure. Or, some will look to scale back to $3000 or $4000/month to keep premium costs down and rely more on other assets and income.
Benefit Length
We can elect to have our Monthly benefit payable for 2, 3, 4, 5, 6, 7 years or even Unlimited Durations. This means that benefits are payable from the time of claim forward for that period of time. If one goes off claim the balance of the benefit remains available for future use.
In reality here, what is happening is that you are creating a pool of money…the sum of this pool is your monthly benefit amount multiplied by the number of years of benefit. So, if we have $4500/month for 5 years, we actually have a total reimbursement pool of $270,000…one can never have more than their benefit maximum paid in a single month, but, should one’s care costs be less than the monthly benefit maximum, only that exact amount will be paid to the insured. Crucial to remember, though, is that any benefits not used in a single month will remain in the pool and will theoretically lengthen your duration…For example, if we have the $4500/month maximum with a 5 year duration but our average cost for care during a period was $3000/month, the $1500 not used in those months allows for ongoing monthly reimbursements until the pool is exhausted.
Inflation Protection
All individual policyholders must consider an inflation protection feature. The most commonly used today is an automatic built-in 5% compound increase rider. This increases the monthly benefit by 5% on a compound basis for the life of the contract (even while on claim) on each anniversary date with no increase in premium. This feature’s cost is built into the level premium structure. Most people under age 65 will opt for 5% compound inflation protection.
One slightly different twist to Automatic compound inflation protection is from John Hancock and their Leading Edge product. Their compound increase is NOT a fixed 5%, however, it is tied to the CPI rate and will compound based on that figure each year…this number is typically lower than 5% and therefore, the premium cost is lower than the guaranteed 5%.
A second option is a 5% Simple increase option which works the same way but will not build benefits as aggressively over time.
A third option is typically referred to as a Guaranteed Purchase Option. This is a “pay as you go” type of plan where there is no automatic increase built into your policy. However, there will be annual or every third year options from the carrier to increase benefits without medical review. When such an increase is taken, there is an incremental increase in cost based on the new piece of benefit priced at your attained age…that is added to the original base premium. We see this and recommend this for those in their 70’s or for those who simply cant afford to build in the automatic features.
Elimination Period
This is simply the number of days that one self-insures the cost of care before benefits begin. The longer the elimination period the lower your premiums…this is the Deductible feature of a Long Term Care Insurance policy. As most are seeking to accept some risk, the majority will lengthen this period from an offered 30 days to closer to 90 or 100 days depending upon the company. Back to top
