Long-Term Care Insurance

by Joan DiGiovanni.

When did it happen that I became middle aged? I am startled to think of this, so much so that I took a moment to look up the definition of ‘middle age’ (perhaps I should have just looked in the mirror). According to the Oxford English Dictionary, it is the “period between youth and old age, about 45-60 years old.” Unfortunately, that confirms it.

Issues that were once only my parents’ concern are now my very own. Long Term Care (LTC) insurance is one such topic that I knew nothing about but wondered if it is something I need now or ever will. I was referred to Tobe Gerard a long term care insurance specialist in the Boston area; Tobe sells insurance but only long term care and has been in the business for 30 years. She was kind enough to spend some time with me recently to help me understand it.

According to Tobe, one way to look at LTC insurance is that it is a way to protect your retirement savings from being depleted and gives you peace of mind should you find yourself with a long term illness. This insurance transfers the risk from you to the insurance company in exchange for a premium. The average age today of someone buying LTC insurance is somewhere between 55-64. Keep in mind, the premiums are less expensive the younger you are and if there is a change in health and you do not have coverage, the insurance may not be available.

Generally LTC insurance covers care that your private health insurance company, Medicare or Medicaid do not. LTC is typically needed when an individual is unable to perform the basic activities of daily living (ADLs) such as dressing, bathing, eating and walking. With many chronic illnesses, long term care is necessary and no one wants to either burden a family member or deplete their life’s saving. LTC insurance coverage includes costs associated with assisted living, adult daycare, home care, nursing homes and hospice.

When considering LTC insurance, first consider your assets. If you have over $70,000 in assets and you are over 50 years old, it might be time to look into this insurance. If your assets are limited, then Medicaid and community-based programs may be more appropriate.

Once you decide LTC insurance makes sense for you, Tobe recommends a 4-pronged approach to determine your coverage:

1. Determine what the per-day cost for care would be adequate in the area you plan to live. Checking with nursing homes and assisted living facilities in that area would provide a good baseline for cost.
2. Factor inflation into the calculation; this is determined by your age when purchasing the policy.
3. Consider the elimination period—it is the period of time where you are paying out-of-pocket expenses before the policy takes effect.
4. Determine the period of time that the policy will pay benefits to you; you can choose any time between 2 years and Lifetime. Sometimes this is decided based on your budget and what is affordable, while other times it is based on your genetic predisposition to certain chronic illnesses such as Parkinson’s or Alzheimer’s.

Ironically, we do not give a second thought to purchasing insurance for our homes and cars but when it comes to protecting our quality of life most often in our final years, the issue is often overlooked. Working with a knowledgeable long term care insurance specialist like Tobe will make these decisions a lot easier. And although I am still on the younger side of that ‘middle age’ spectrum, now is the time to weigh my alternatives.

Have you or your parents purchased long term care insurance? If so, consider sharing your experience.

©Circle of Life Partners™

“The User’s Guide to Health Care Reform” from AARP Bulletin

Are you confused about the new health care reforms?  The AARP recently published one of the clearest, most elucidating guides to the slew of disorienting health care reforms.  Of course, I’m not old enough yet to be a member of AARP, but my elderly spouse lent me his copy. Outlining the impact of reforms on eight different personal anecdotes (such as “If You’re Now on Medicare” and “If You Receive Employer Insurance” or “If You Run a Small Business”)  this special section in their AARP Bulletin explains what the new health care laws mean for you and your aging parent.

Starting in 2011, a person who is covered by traditional Medicare insurance can get an annual physical and many preventive services free.  This common sense legislation allows seniors access to care that may delay or even prevent the onset of debilitating diseases. While higher income families will pay a higher premium, the prescription drug coverage gap, called the “doughnut hole,” will begin to close.  And, many employers will begin to offer long-term care insurance through payroll deductions, which after five years entitle you to cash benefits toward the cost of services including home health aides.  I’ll invite an expert to blog more about this long-term care benefit soon.

Learn more by reading the AARP bulletin here.

Has health care reform been a topic around the dinner table with your parents?

©Circle of Life Partners™

Money Management & the Cost of Getting Old

Do you know how much money your parents will need to cover health care costs over the rest of their lives?

The New York Times recently reported research by the Center for Retirement Research at Boston College (www.crr.bc.edu) on health care costs.  The typical married couple at age 65 will spend $197,000 on insurance premiums, out-of-pocket costs, and home care, assuming neither spends time in a nursing home; if they do, lifetime health care costs may exceed $260,000.  And these are just average estimates; true out-of-pocket costs could reach or exceed $311,000 without nursing home care, and up to $570,000 with nursing home costs.  What’s the likelihood of one of your parents needing nursing home care?  The researchers estimate that about one-third of people turning 65 in 2010 will need at least three months of nursing home care, one-quarter will need more than a year, and about 9% will need more than five years of care. Unsurprisingly, 85% of Americans do not have the financial resources to cover these expenses.

So, how should your parents plan for old age? Among the recommendations is the purchase of long-term care insurance, to be discussed in a follow-up post.  Do your parents have long-term care insurance?

photo credit: http://crr.bc.edu/

©Circle of Life Partners™

Don’t Give Up on Me!

I wrote Don’t Give Up on Me! from an outline of the 50 things I wish I had known before entering the last decade of my parents’ lives.  It’s a fast-paced, show-and-tell book that brings you ringside during those very crazy years, helping you to understand not just the what but also the how of providing support.  How do you wrestle the checkbook or the keys away from mom?  How should you and your parents navigate the medical system to get the care they need?  What happens if one shows signs of dementia?  How can grandchildren be supportive? What legal documents really matter? What influences longevity? Is the doctor always right?

Today, there are thousands of websites and dozens of books that offer information, but Don’t Give Up On Me! is a great place to start, the place to find the initial and critical pieces of information on caring for your parents.

I hope you will read my book and join forces with me to share your knowledge with others.  All profits will be used to fund programs that serve our elders and support their caregivers or care partners.

©Circle of Life Partners™