Think about long-term care before it’s too late

If wrinkles must be written upon our brows, let them not be written upon our hearts. The spirit should not grow old.—James A. Garfield

Senior Moments would like to remind every reader to take the “long term care test.” There’s only one question: If I ever need long-term care, as I know more than sixty per cent of Americans do during their lifetime, how in the world am I going to pay for it? Do you have an answer? Read on.
What will happen if you become disabled during your lifetime? In fact, what will happen if your parents become disabled during their lifetimes? If someone is wealthy, or very poor, the answer is not difficult. Those who are wealthy will pay for their own care; those who are poor will be eligible for government assistance. Who is left? “Financing long-term care is a uniquely middle-class problem,” states the White Paper on Reforming the Delivery, Accessibility and Financing of Long-Term Care in the United States, published by the National Academy of Elder Law Attorneys (NAELA).
For those in the middle-income range, long-term care insurance (LCI) may be the best option to ensure that an unexpected or prolonged disability won’t deplete financial resources. Since we lack a crystal ball, an individual’s future need for long-term care is very uncertain. Should you insure against it? If so, should you purchase the insurance when you are young? When young, you can qualify for it (your health is good) and you can afford it. (The premiums are not high. They are usually based on the type of coverage you purchase and at what age you buy it.) However, when you’re young, you need the money for so many different things, and the need for long-term care seems very far away.
Please pay attention here. Nearly every time I’m asked for advice regarding long-term care, it’s too late to purchase LCI. Either the individual is already in a nursing home, or soon will be, or is too old or too ill to be eligible for such insurance. Thus, the only remaining alternatives are self-financing or government assistance, almost always through the Medicaid program. The average nursing home stay is nearly three years and, according to the Genworth 2014 cost of care survey costs an average of $98,368 per year in Maryland. .
Over the past several years, LCI policies have improved and many now offer coverage for community-based services and home care. Policies are more highly individualized to meet a person’s goals, needs and budget. Also, people are buying LCIs as they realize such insurance can be a good alternative to Medicaid. Additionally, there are tax benefits in Maryland for first-time purchasers of LTC insurance.
There are hybrid products available that turn into life insurance or annuities if you never use them for long-term care. It’s a great long-term care insurance world these days. However, policy provisions and options can cause a lot of confusion. What is actually paid for and what is not? LCI policy benefits are usually triggered by the satisfaction of two sets of requirements. The first is the insured’s inability to perform a specified number of “activities of daily living” (ADLs). There are six ADLs: bathing, dressing, eating, transferring, toileting and continence. To trigger policy benefits, a patient must usually be unable to perform at least two. Look for a policy that requires the loss of the fewest number of ADLs. More subtly, look to be sure the policy doesn’t leave out some of the six. Doctors say that bathing and transferring (e.g., moving from bed to chair) are often the first ADLs to be lost by an individual. The policy should definitely list those two; otherwise it is essentially requiring the loss of more than two ADLs.
The second requirement is generally a cognitive impairment or a medical condition requiring long-term care. A cognitive impairment can range from simply forgetting what day it is to not remembering how to get home after taking a short walk. Study the policy carefully to determine exactly how these terms are defined. Also, what kind of doctor or professional must certify that such a condition exists? Look carefully for loopholes that may allow a company to refuse benefits; look for overly broad language that only seems to make it easy to qualify for coverage.
Examine the policy for preexisting conditions that are not covered and such things as geographical limitations. What if you move to another state to be closer to relatives? Is your policy still effective? If not, can it be transferred?
LCI policies generally have an elimination period. This is similar to a deductible in other types of insurance. It’s a waiting period during which the insured pays for his or her long-term care costs until the policy benefits kick in. I’ve heard of this period being as short as 20 days or as long as a year. Choosing a longer term for this period may reduce your premium amount.
Finally, be sure to check the financial ratings of any company trying to sell you an LCI policy. The insurance will only be as good as the company that sells it. You can review the company’s ratings on the internet or at the local library.
Thank you for reading. Stay well. See you next week.