A Strategy Guide to 50 Plus Health Care
Long term care is a complicated issue. According to the U.S. Department of Health and Human Services (HHS), at least 70 percent of people over age 65 will require some long term care services at some point in their lives.
5 Common Long Term Care Myths: Myth 1: I'm Too Young to Need Long Term Care Long term care is not just for the elderly. Nearly 41% of long term care is provided to people under age 65 who need help taking care of themselves due to diseases, disabling chronic conditions, injury, developmental disabilities, and severe mental illness.
Myth 2: My Family Will Take Care of Me Even if family members can find the time to provide caregiving to a family member, it often comes at a tremendous personal and financial cost. Caregiving can cost the average caregiver in lost wages, pension benefits, and Social Security. While having a family take care of you might be an option, it might be difficult to do without additional assistance.
Myth 3: Medicare or Medicaid Will Cover My Bills Medicare is generally available for people over age 65 and the disabled. It only
© ResearchPress. 2012. All rights reserved. All material, text and images are the exclusive property of ResearchPress®. Any attempt to re-purpose this content is prohibited without consent of ResearchPress®. America's Health Care...A Strategy Guide to 50-Plus Health Care is a publication of ResearchPress®. Although frequently revised, this booklet contains information that is subject to changing federal and state law. ResearchPress® provides this booklet for guidance only; it is not a substitute for the advice of licensed insurance professionals and legal counsel.
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pays limited amounts for skilled care following a hospital stay and it is not intended to cover care that assists people with activities of daily living for long periods of time. Read more about Medicare at visit www.medicare.gov. Medicaid (Medi-Cal in California) is a state-based program supplemented by Federal funds that provides health services to the poor and impoverished. Medicaid might cover you if you meet your state's poverty criteria and receive care that meets your state's guidelines. Many people attempt to "spend down" their assets to state required levels or try to transfer their assets to family members to become eligible for Medicaid. States now have the authority to examine a Medicaid applicant's past 5 years of finances and impose penalties.
Myth 4: Health Insurance Will Cover My Bills Health insurance rarely covers ongoing chronic care needs. Most health plans, are intended to cover skilled, short term medical care as you recover from an illness or injury.
Myth 5: I Can Save Enough on My Own Paying from personal savings is one way to cover long term care expenses. However, you should consider the cost of long term care services before relying on this method. Here are the current national averages for long term care services: When averaged nationally, the cost of a six-hour visit by a home health aide is $120. That's $28,800 per year for a home health aide visiting six hours per day, five days a week. In 2011, the national average cost of a semiprivate room in a nursing home was $75,555 annually. According to the U.S. Department of Health and Human Services, the average length of stay in a nursing home is 2.4 years. That is more than $181,000 per average stay. Paying for long term care out-of-pocket may be an option for you if you can afford these expenses. Few of us have that luxury. Unfortunately, independence often depends on oneâ€™s financial situation. America's Health Care
A Very Common Scenario Are You Prepared? John and Mary Jones are a typical household. They have a house that is worth $250,000. They have two cars, a boat, and $200,000 in savings. Unexpectedly, John suffers a stroke that leaves him unable to work and requires long term care. They will have pay for John's care out of their savings. If John required skilled nursing care at $60,000 per year, their savings would be exhausted after 3.3 years and it would leave Mary with no money for the remainder of Johnâ€™s care. After spending down their assets and selling the second car and the boat, John could apply for Medicaid. To qualify for Medicaid, they can keep one car, one house, and a few other non-cash assets. Once John was accepted for Medicaid, a lien would be placed on their remaining assets (house) for future collection. What could be passed on to their children is what is left after the liens were satisfied. Medicaid also has a "look back" period where they look to see if any assets have been transferred to avoid paying for Medicaid care. Currently the "look back" period is 50 months (30 months in California) and the federal and state governments can extend this at any time. Of course it would be a different story if they had long term care insurance protecting their assets. Do you think if John could go back to the day before his stroke and buy insurance, he would have? The problem is that we don't know when it will happen. Our health changes suddenly and that is why we have short-term insurance (HMO, PPO). Are you going to be like those who say "if only I had..." or are you going to be prepared? America's Health Care
The Long-Term Care Insurance Partnership Program What is the Long-Term Care Partnership Program? The Long-Term Care Partnership Program is a Federally-supported, stateoperated initiative that allows individuals who purchase a qualified long term care insurance policy or coverage to protect a portion of their assets that they would typically need to spend down prior to qualifying for Medicaid coverage. Once an individual purchases a Partnership policy and uses some or all of the policy benefits, the amount of the policy benefits used will be disregarded for purposes of calculating eligibility for Medicaid. This means that they are able to keep their assets up to the amount of the policy benefits that were paid under their policy or coverage. For example, in a state that chooses to participate in the Long-Term Care Partnership Program, once you've used part or all of your maximum lifetime benefit (MLB), your assets would be protected up to the amount paid under the policy. Approximately 70 percent of Americans over the age of 65 will need some level of long term care services in their lifetime with 40 percent needing care in a nursing home. The average length of stay in a nursing home is 2.6 years. Older persons aren't the only ones needing long term care. Over 40% of Americans receiving long term care are between the ages of 18 and 64. No one really knows at what age he or she may experience a paralyzing accident, suffer a stroke, or be diagnosed with Parkinsonâ€™s or Alzheimerâ€™s disease or some other debilitating condition.
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The Importance of Planning Planning for long-term care is important because there is a good chance you will need some long-term care services if you live beyond the age of 65. About 70 percent of people over age 65 require some services. The older you get, the greater the chance that you will need long-term care. Planning is also important because longterm care can be very expensive, and Medicare and other health insurance programs don’t cover many long-term care services. The cost of long-term care services is often more than what the average person can pay from personal income and savings. Planning ahead gives you the time to save for your long-term care needs or to find the payment options that work best for you if you need services.
Planning helps you understand: • Services available from your family and in your
community • Special conditions (such as age or income) that may
apply for receiving services • Costs of services • Public or private payment options available to you This information helps you understand your options, and makes it more likely that you will be able to get and pay for the services you need and prefer. America's Health Care
Financial Planning Steps Do you know what your insurance covers? If your existing medical coverage is Medicare, Medicare Supplemental Insurance (the insurance you buy to help pay for services Medicare doesn’t cover), or a health plan (an organization you may belong to that manages your health care), you may have little coverage for longterm care.
Medicare and other health insurance don’t cover the most common types of long-term care services such as personal care. Review the policies you have with your insurance advisor or benefits counselor to learn what is covered and what is not. Can you, or do you want to, pay for long-term care on your own? If you don’t have insurance coverage for long-term care, or if you prefer to pay for it out of your own resources, do you know if you would be able to cover all the costs for services you might need? Assess your income and financial resources, and consider how you feel about using them to pay for long-term care. Your financial resources could include any of the following sources: • • • • • • •
Social Security Pension Savings and the interest income from any savings you have Stocks and bonds Dividends from stock you may own Payments from a retirement account like an IRA or 401k Your home
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It's Not Just About Money When Carl Swanson first heard about long-term care insurance he wasn’t enthusiastic, but his wife, Martha, talked him into it. Recently retired from the oil business in Chattanooga, Tenn., Carl, then 65, was healthy and vigorous, as was Martha, 66. But Martha did not want to be a burden on their son, Gary, or anyone else. Working with an insurance agent, they bought policies that would help pay what was then the going rate for care at a nursing home. Later, when policies with better features became available, the insurance agent contacted the Swansons and helped them upgrade their coverage. The new policies offered excellent coverage for home care, and had inflation riders that increased their coverage by five percent annually to help keep pace with the rising cost of care. When Martha was in her mid-70s, she began having difficulty with everyday household chores, such as using the microwave oven. A visit to the doctor confirmed that these were symptoms of Alzheimer’s disease. Carl cared for Martha at home, and the policy gave him the freedom to drop her off at an adult daycare center for five or six hours a day. After Carl suffered his second heart attack in five years and could no longer handle her care, he placed Martha at one of the nicest private nursing homes in the area, where she stayed until her death at age 82. Today, Carl is 84 and healthy enough to play golf twice a week. He calls long-term care insurance a “blessing” because it allowed him to afford the best care possible for his childhood sweetheart, to whom he was married for more than 60 years. “This long-term care policy has given me peace of mind, security and independence,” he says. This is a story that plays out millions of times a year. Maybe not the same health issues, but certainly, the need for extended care. Unfortunately, most of these case do not end as well. Many are forced to spend their life savings receiving care. While financial considerations cannot be understated, long-term care insurance isn’t only about money. It’s also about peace of mind. Having it ensures you’ll have access to firstrate care when you need it. It also means you won’t have to be dependent on others or be a burden to your children.
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