Long Term Care Insurance

Long-term care (LTC) insurance primarily pays for supervision or assistance with everyday tasks (such as bathing or dressing) when you have a physical impairment, or need supervision of these activities when you have a cognitive impairment such as dementia caused by Alzheimer’s disease. LTC takes place at home, in a community program, in an assisted living facility (ALF) or in a nursing home. LTC services are often provided by family members or nurses’ aides, and do not require the skilled care that nurses and doctors are licensed to provide.
LTC insurance benefits may be part of a life insurance or annuity policy, or contained in a freestanding LTC policy. Note: This section focuses on LTC insurance benefits contained in freestanding LTC policies. Insurance policies that also provide life insurance or annuity benefits are not explained. These policies are complex financial products that require professional assistance, and may have income-tax or estate-tax implications. You should consult a trusted financial advisor if you are considering combining life and annuity benefits with LTC benefits.
If you are considering LTC insurance, you should research the best set of benefits for your needs, as well as the best company to provide those benefits. You should also consult your accountant or tax advisor to understand any tax issues that might affect you, especially if you are considering a life insurance policy or annuity with LTC benefits, or an LTC insurance policy you pay for with a large, one-time premium.
We can help you sort through many of these issues, help you understand how these benefits work, compare the benefits and features of several policies from different companies, and help you understand when you need advice from a professional. To make an appointment for consultation Please call: (818) 665 6166

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Ways to Buy LTC Insurance

You can buy LTC insurance several different ways:
  • As an individual (the same way you buy any other insurance)
  • As a member of a group or faith-based organization
  • As an employee or family member of an employee

Types of LTC Insurance Policies

Three types of LTC policies are available in California, named according to where benefits are paid. They are:
  • Home Care Only
  • Nursing Home & Residential Care Facility Only
  • Comprehensive

Long Term Care Insurance Provides the Aged Options

With the increasing life expectancy, more people will likely spend a year or longer in some sort of adult care facility. In fact, according to a 2006 Kaiser Foundation study, over five million people ages 18-64 need some type of long-term care (LTC) in their lifetime.
Many people forget LTC insurance because of the price tag. But with a small adjustment to your standard of living today, you can guarantee yourself a more comfortable tomorrow. At UniFirst Insurance, we will connect you to get you the right coverage at a price that won’t break your bank.
Long Term care insurance, also known as LTC insurance provides coverage should you need assistance with activities of daily living (ADLs), such as bathing, dressing and eating. It also covers supervision for those who are mentally impaired. It includes care received in a nursing home, assisted living, adult-daycare facility or at home from a health aide.

Who Should Buy Long-Term Care Insurance?

LTC insurance is not for everyone. If your net worth is extremely high (above 1.5 million, excluding your home), you should be able to afford to pay out of pocket for long-term care. Conversely, if you expect to qualify for Medicaid by the time you’re 65, the government will subsidize the cost of care.

When Should I Buy Long-Term Care Insurance?

Sooner is better. If you’ve just celebrated your 50th birthday, you don’t need to run out and get LTC insurance tomorrow. But it’s time to start weighing your options.
Long term care is expensive. It can eat into the money you intended for your children or you set aside for retirement.
Get insured today so you’ll never have to worry about the expense of caring for yourself long term. Your relatives will appreciate the self-provision and your family will love you for it.

Long term care insurance important for retirement planning

People who are in the market for long term care insurance may want to consult resources such as the government’s Medicare website before they settle on a policy. Long term care is generally not paid for under the Medicare program, while Medicaid only pays for some of these services.
The website goes on to estimate that in 2009 alone, about 9 million Americans over age 65 will require long-term care services, with that number expected to rise to 12 million by 2020. People over age 65 are said to have a 40 percent chance of eventually entering a nursing home, about 10 percent of whom will spend five or more years there.
Medicare also notes that those who do prepare for possible long term care needs will find that their insurance covers things like home care, community programs such as adult day care, visiting nurses and assisted living, as well as nursing home stays.
People who are middle-aged are said to usually be able to find the lowest price for long term care insurance, while those in their 70s and 80s could be deemed too high a coverage risk by some carriers.
When it comes to retirement planning, long term care insurance is a crucial component that should not be overlooked – even for individuals who may already be retired.
Writing in her “A Wealth of Knowledge” blog on the PBS website, Michelle Singletary recently advised a 76-year-old reader to consider long term care insurance because the monthly cost of premiums could be far lower than the costs of future care needs.
“When considering this type of insurance, think about the assets that you would have to spend down should you need long-term nursing home care. If you have assets, or want to keep them for your heirs, buying this insurance is definitely something to consider,” writes Singletary.
An investment in long term care insurance can help allow for more financial stability during one’s retirement years.
After all, Medicare does not cover many important expenses that people will face, such as nursing homes – which have only seen their costs rise dramatically in recent years. Even those who do not require a nursing home may still need a home health aide, whose services would also be covered under long term care insurance.

The costs and complications of long-term care insurance

About 70 percent of seniors over age 65 will require long-term care at some point in their lives, according to the U.S. Department of Health and Human Services. And the cost of caring for an elderly family member who needs nursing care can be financially overwhelming.
Long-term care (LTC) insurance policies can cover an array of assisted-living expenses. Eligible expenses range from caregiver help with bathing and eating to home renovations, including automated stair lifts and motion sensors for monitoring of patients.
Although LTC insurance can be a vital financial planning tool for seniors, it can be costly and complicated. Just under 5 million Americans had long-term care policies at the end of 2009, according to insurance industry research and consulting association LIMRA.
Here are some of the complications and worries America’s aging population could face when it comes to LTC insurance.

Expensive premiums

A joint study from Avalere Health and the Kaiser Family Foundation cite expensive premiums as the biggest factor in consumers deciding not to buy LTC insurance.
Premium costs accelerate after age 60. In the Avalere-Kaiser study, average yearly premium costs tripled from $1,512 for a 40-year-old to $4,515 for a 70-year-old.
Insurance companies can raise premiums for existing policyholders to even higher levels, provided that government regulators approve. After increasing LTC insurance rates between 13 percent and 18 percent in 2008, insurer John Hancock asked authorities to allow further premium hikes averaging 40 percent in 2011.
Costly premiums might explain why many LTC policyholders are more financially stable than the general population. Half earn more than $75,000 a year (compared with about a third of the general population 50 and older), while only 16 percent earn less than $35,000 annually, according to the Avalere-Kaiser study.

Inflation costs

Another cost complication is that LTC benefits often are payable many years after coverage was first purchased. Over 20 years, inflation might push average daily nursing home charges to $500 a day when the original policy only covers up to $150 a day. To make up for that difference of $350, an insured person could face $127,750 in out-of-pocket charges for a one-year stay in a nursing home.
Keep in mind, buying inflation protection for your policy increases benefits over time to compensate for the increased cost of care. But it’s unaffordable for many. Half of individual LTC policies sold in 2006 came with 5 percent compound inflation protection, according to the Avalere-Kaiser study. Yet only 44 percent of applicants earning less than $25,000 a year (those who might be least able to pay high out-of-pocket costs) bought any inflation protection at all.

Confusion about coverage

LTC policies often are far too complex for average consumers to accurately compare benefit provisions on their own. Below is a tiny sample of choices that applicants face:
  • Daily policy maximums from $50 to $300.
  • Maximum benefit payment periods, typically from three to five years.
  • Benefit payment waiting periods, usually 90 days or more.
Consumers also must decide on the best combination of eligible charges from a range of products that competing insurance companies offer.
How and when claims are paid also can differ significantly. To fulfill benefit payment waiting periods, many insurers only count “service days,” days when the insured actually receives paid care, instead of calendar days, according to a 2006 AARP Public Policy Institute report. Other companies credit every calendar day that a claimant was qualified to receive benefits toward the waiting period, regardless of when care was delivered.

Exclusions and limitations

LTC policy definitions and other legal wordings can severely restrict claim payments.
Many LTC policies exclude benefits for home care services provided by spouses, children, other relatives or anyone who lives in the insured person’s home, according to the AARP report.
Another example is the definition for assisted living centers, which, according to the AARP report, can include a host of complex conditions — disqualify facilities with fewer than a certain number of beds, for example.

Fear of vanishing benefits

Major LTC insurance player, Penn Treaty Network America, filed for bankruptcy in October 2009. This past November, MetLife announced that it would stop selling LTC insurance policies in 2011 (although it will continue to honor policies it already has sold).
Because of this lack of stability, seniors might fear paying premiums for many years without ever collecting any benefits if the company goes out of business exits the LTC insurance market or raises premiums to stay afloat.

Will long-term care insurance let me be cared for at home?

Long-term care insurance covers costs associated with not being able to care for you that aren’t normally covered under health insurance policies or Medicare. Long-term care policies, according to the U.S. Department of Health and Human Services, can cover costs and services like:
  • Adult day care centers.
  • Assisted-living facilities.
  • Hospice care.
  • Nursing homes.
  • Home equipment like ramps, stair glides or medical alert systems.
  • Transportation to medical appointments.

Does long-term care cover at-home care?

Some may not like the idea of a nursing home and would prefer to remain at home under the care of a caretaker or nurse. The good news is that long-term care insurance typically covers at-home care, depending on your policy and its limits.
Most policies allow you to choose coverage that fits your needs. For example, Physicians Mutual provides a home health plan designed to cover the costs connected with staying at home. Other policies provide comprehensive coverage, which includes home care and assisted-living facilities. You also can opt for a facility-only policy or a home-care-only policy.
Each policy has different exclusions, but long-term care insurance does not usually cover care from volunteers or family members, or services that are covered under an existing policy.

What are the pros and cons of at-home care?

If you’re considering a home-care-only plan for long-term care insurance, it’s important to weigh the pros and cons. A few benefits include:
  • Greater independence. Many elderly policyholders are hesitant to give up the independence of living at home. Home care allows them to remain at home while receiving medical care and assistance.
  • Affordable policies. Long-term care policies that are at-home-only are usually more affordable than comprehensive policies, according to a 2006 report by the AARP Public Policy Institute.
  • Additional services. Many policies pay for equipment that allows policyholders to live at home with greater independence, as well as transportation from home to medical appointments and training for friends who want to help care for you, according to the U.S. Department of Health and Human Services.
Some of the drawbacks of home-care-only policies include:
  • Eligibility requirements. Most policies place strict eligibility requirements for home caretakers, as well as the agencies that can be used. Moreover, caretakers who are family members cannot receive payment under some plans, even if they are putting in many hours, according to the AARP report. Other plans restrict coverage to family members who live with the patient.
  • Fewer options. Some choose home-care-only plans thinking they’ll never end up in a nursing home. But in the event that you’re no longer able to be cared for at home, a home-only policy can be quite limiting.
Most long-term care plans offer the coverage you need to be cared for at home. However, it’s important to consider factors like your budget, your condition and the plan’s exclusions before choosing a home-care-only plan for long-term care insurance.

Long-term care partnership plans help those too poor for long-term care, too rich for Medicaid

Long-term care often is a budget buster for individuals and insurance companies. Expenses accumulate daily and may go on for years, even decades. Many people do not carry long-term care insurance at all, and those who do frequently contend with lifetime coverage limits or time interval limits (often three years) just to be able to afford the premiums.
When long-term care coverage runs dry, out-of-pocket costs begin to pile up. Retirement savings and personal assets get eaten up, until Medicaid finally kicks in. But there’s another route, if you plan ahead and happen to live in the right state: buying a long-term care partnership plan.


Growing need for long-term care

As people continue to live longer, long-term care is expected to become more common and more expensive. The number of people worldwide with dementia, for example, is expected to double every 20 years from 35 million in 2010 to 65.7 million in 2030, according to Alzheimer’s disease International.
Roughly one in 20 of those about to turn 65 can expect to spend $100,000 or more in out-of-pocket expenses, according to “Long-Term Care Over An Uncertain Future: What Can Current Retirees Expect?”, a study that appeared in the winter 2005-06 issue of medical journal Inquiry.

Long-term care and health care reform

Some might wonder why lifetime limits still exist on long-term care insurance, if health care reform abolished lifetime limits on health benefits. However, lifetime limits still are allowed for supplemental insurance policies, according to the federal health care reform law. It’s only major medical plans that must do away with lifetime limits, and most major medical policies do not include long-term care.
Health care reform did, however, provide new coverage assistance for long-term care. The Community Living Assistance Services and Supports (CLASS) Act, one of the lesser-known parts of the health reform law, is the first national long-term care insurance coverage program. It’s available to most workers and self-employed individuals, though not retirees. Working individuals can have premiums deducted from their paychecks. If they end up needing long-term care, the payouts can be used for housing modifications, maid services and transportation — expenses not covered by most health insurance plans. What’s more, individuals cannot be excluded because of health issues.

The California Partnership for Long-Term Care (the Partnership)

It’s a program of the California Department of Health Services (DHS), is an innovative partnership among consumers, the State of California and a select number of insurance companies, plus the California Public Employees Retirement System (CALPERS). These insurers offer a special type of long-term care insurance policy, commonly called “Partnership” policies, that must meet certain requirements set by the DHS. Insurance companies participating in the Partnership program must have their Partnership policies approved by both the Department of Insurance and the DHS. Additionally, only insurance agents who have received special training are able to sell you a Partnership policy and to advise you as to whether the Partnership program works for you. Be sure to confirm that your agent has this special certification to sell Partnership policies.
Each Partnership-approved policy includes insurance benefits to cover the care you may need and automatic inflation protection to ensure that the benefits keep pace with the rising cost of care. Partnership policies also have other important features that are not required in other long-term care insurance policies.

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Insurance policies describe what they will cover, what kind of care they will cover, who can provide the care and conditions that need to be met before a company will pay/reimburse the cost of benefits. Described below are the services required in a long-term care insurance policy approved under current state law. You should be aware however, that California law has changed many times over the years and that insurance policies sold in previous years may have different requirements than are shown here.
Facility Coverage: In California, most skilled, intermediate and custodial care is received in nursing homes that are licensed as “skilled nursing facilities”. All long-term care policies except Home Care Only cover this kind of care.
Home Care Coverage: Every long-term care insurance policy called “Home Care Only” or “Comprehensive Long-Term Care” must include at least the following 6 Home Care benefits and other consumer protections which should make it easier to receive care at home.
1. Home Health Care is skilled nursing care or other professional services in your residence.
2. Adult Day Care is medical or social care in a daytime program in a licensed facility which provides personal care, supervision, protection and/or assistance with ADLs and taking medications. 3. Personal Care is assistance with any of the ADLs including Instrumental Activities of Daily Living (IADLs) such as using the telephone, managing medications, moving about outside, shopping for essentials, preparing meals, doing laundry and light housekeeping.
Under California law, these services may be provided by a skilled or unskilled person as long as they are required in a Plan of Care developed by your doctor or a team of health care workers under medical direction.
4. Homemaker Services is assistance with activities or tasks necessary to or consistent with your ability to remain in your home.
5. Hospice Services are services in your residence designed to provide physical, emotional, social and spiritual support for you, your caregiver and your family when a terminal illness has been diagnosed. Some policies will pay or reimburse the cost for these services in an institutional setting as well.
Under California law, hospice services (like Personal Care and Homemaker Services) may be provided by a skilled or unskilled person so long as they are required in a Plan of Care developed by your doctor or a team of health care workers under medical direction.
6. Respite Care is short-term care provided in a nursing facility, in your home or in a community-based program which is designed to relieve the primary caregiver in your home.

State and Federal Tax Credits 

Congress passed legislation effective in 1997 giving a tax break advantage to people who purchased long-term care insurance that meets certain federal standards. The legislation is called the Health Insurance Portability and Accountability Act or HIPAA.
Under HIPAA legislation, premiums paid for a tax qualified policy, qualify as medical expenses. People who itemize medical expenses on their federal tax return and have total medical expenses greater than 7.5% (percent) of their adjusted gross income may be able to deduct some or all of their premiums for one of these policies. Additionally, long-term care insurance benefit payments from a qualified policy are excluded from income. All policies certified by the California Partnership for Long-Term Care are tax qualified.
NOTE: All long-term care policies that were sold before January 1, 1997 automatically qualify for the new tax breaks. These policies do not have to be replaced with a new tax qualified policy to benefit from these new tax advantages. Consult your tax advisor for more information.
The IRS released the premium limitations for Tax Qualified Long-Term Care Insurance for tax year 2011. The following chart includes the 2011 figures, along with the figures from the 10 previous years.
FTB (California Franchise Tax Board) Tax Credits
For tax years 2000 through 2004, an eligible caregiver with a California adjusted gross income of less than $100,000 could claim a $500 credit per applicable individual against his or her net tax liability. However, this credit is no longer available after tax year 2004. 
Click here to see  Eligible Long-Term Care Premium Limit, By Age Group


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