Long-Term Care Questions & Answers

  1. What is long-term care (LTC)?
  2. Why is LTC a problem?
  3. How much does LTC cost?
  4. What are the risks?
  5. Isn’t LTC planning for when I get older or retire?
  6. Why not self-insure?
  7. My family should take care of me, right?
  8. When I am on Medicare, doesn’t it pay for LTC?
  9. Doesn’t Medicaid pay if I run out of money?
  10. Why consider buying LTC insurance?
  11. What determines the cost of the insurance?
  12. What are the options in a LTC insurance plan?
  13. What triggers the insurance to pay?
  14. What if I never use the insurance?
  15. How strong are the insurance companies who offer LTC protection?

1. What is long-term care (LTC)? Care received for an injury or a chronic long term illness, resulting from a cognitive (mental) or functional (physical) impairment. Care settings include home health care, adult day care, assisted living, nursing home and hospice care.

2. Why is LTC a problem? Living a long life is a near certainty due to modern medicine and lifestyle. Advanced aging often results in frailty and the need for care and assistance. For example, in 1980 there were 15,000 centenarians and by 2000, there were 77,000.

3. How much does LTC cost? In the Baltimore region, home health care ranges from $15K - $100K, depending on hours needed. Assisted living runs $3500 - $6000/month and nursing homes run $6K-8K/month. Alzheimer’s care can easily run $100k/year.

4. How much does LTC cost? After age 65, 1 in 2 women and 1 in 3 men will need some form of long-term care. An even greater consideration is the negative impact on families and their financial security if they need care.

5. Isn’t LTC planning for when I get older or retire? No, LTC insurance premiums are much lower at younger ages during working years and therefore much more affordable. Postponing this issue not only makes it more expensive but also jeopardizes qualifying for coverage, since good health typically declines over time.

6. Why not self-insure? Most of us will need our retirement portfolio to produce retirement income. Paying for both LTC expenses and the income needs of a spouse simultaneously is usually much too difficult. It may cause the unintentional invasion of principal, the untimely liquidation of assets, and jeopardize the financial viability of the surviving spouse.

7. My family should take care of me, right? There is a large difference between providing care and supervising care. When we stop to really think about what we are asking, it’s obvious what is preferable. Providing care to chronically ill people makes healthy people chronically ill. A compelling reason to buy LTC insurance is to prevent being a burden to the family.

8. When I am on Medicare, doesn’t it pay for LTC? Medicare pays for skilled services such as rehabilitation if there is expectation of recovery and measured improvement. LTC by nature requires unskilled services to provide care for chronic conditions. If pre-ceded by 3 nights in a hospital, Medicare will pay for a skilled nursing facility at 100% for days 1-20 and all but $137.50/day in 2010 for days 21-100.

9. Doesn't Medicaid pay if I run out of money? Medicaid exists as a safety net for the poor, primarily in nursing homes, if they qualify under the stringent rules regarding assets, income, and medical need.

10. Why consider buying LTC insurance? Owning LTC insurance provides financial control and peace of mind. It’s about protecting one’s family, friends and future financial security. It utilizes the services, cash, and resources of an insurance company so that loved ones are not negatively affected.

11. What determines the cost of the insurance? Rates are determined by age at application, spouse participation (2 policies can result in 30-40% discount), amount of coverage purchased, and health qualification.

12. What are the options in a LTC insurance plan? There are 4 basic selections:

  • monthly benefit (e.g. $3000, $4500, $6000 etc.)
  • benefit duration, which determines the pool of money to draw from
  • elimination period, the days you pay for care before the insurance begins to pay
  • inflation – an annual automatic increase in benefit levels (e.g. 3%, 5% or CPI compound)
Working with a professional insurance advisor will help you make the choice that’s right for you in selecting the appropriate insurance company and level of coverage.

13. What triggers the insurance to pay? A licensed health care professional (doctor, social worker etc.) certifies you need care such as:

  • assistance with 2 of 6 activities of daily living (bathing, continence, dressing, eating, toileting and transferring from bed or chair) with the expectation that the need will persist for 90 days or more.

    • OR
  • B) cognitive impairment such as senility or Alzheimer’s.

14. What if I never use the insurance? You will have the peace of mind that comes from knowing that you are protected, like auto, homeowner’s and health insurance. The consequences of paying premiums and never needing the coverage are far less than going without the coverage, depleting a lifetime of savings, and negatively affecting a family or charitable legacy.

15. How strong are the insurance companies who offer LTC protection? We work with a handful of companies who have earned strong financial ratings, have a breadth of experience in underwriting and paying claims, and have significant reserves to pay current and future claims.