Consider offering long-term care insurance

by The HR Specialist: Compensation and Benefits on May 29, 2012 9:00am
in Centerpiece,Employee Benefits Program,HR Management,Human Resources

As baby boomer workers grow older and employees of all ages worry about their economic security, it might be time to consider offering long-term care insurance as a voluntary benefit. More employers are, even as the number of carriers offering the insurance shrinks.

According to new research by health care benefits management firm HighRoads, 51% of large employers make long-term care (LTC) insurance available to employees, up from 48% two years ago.

LTC insurance helps defray costs for people who need assistance with daily living. It covers skilled and custodial care in insureds’ homes, adult day care centers, assisted living facilities, nursing homes or hospice facilities.

Most employers that offer LTC in­­surance do so on a voluntary basis. That is, employees pay the premiums, so it costs employers nothing to provide.

HighRoads found that more than 90% of the employers that offer LTC do so as an additional benefit to their employees. The rest offer LTC insurance as part of their overall health care strategy or because a union contract requires them to offer the benefit.

Note: Some large employers roll LTC coverage into group health plans, a move that offers tax advantages to both the employer and the employee. However, this “qualified plan” coverage is relatively expensive, and the number of firms offering it as an employer-­provided benefit has been falling, according to HighRoads.

Growing need, fewer carriers

According to data from surveys conducted by the Health Policy Institute at Georgetown University, more than 10 million Americans annually need long-term services and support to assist them in life’s daily activities. That number is growing as the population ages and people live longer.

Yet options for obtaining LTC coverage have been shrinking.

The number of companies selling LTC insurance peaked in 1989 at 143, and has been declining ever since. Now, fewer than 50 insurance companies write LTC policies. Blue Cross/Blue Shield organizations are among the most active providers.

“It is a serious issue when insurers no longer are willing to provide this” coverage, says HighRoad’s CEO, Michael Byers. “Millions of Americans will be left without a safety net should they become disabled.”

LTC insurance is attractive to many employees because they worry that they won’t be able to pay for care on their own. (See “Long-term care insurance by the numbers” in box below.)

The high cost of long-term care doesn’t only affect the individuals who need it. It’s bad for employers’ bottom lines, too. Employees’ long-term care­­giv­­ing responsibilities cost U.S. employers $25 billion a year.

How to decide on LTC coverage

LTC insurance isn’t right for every employee. Experts say about 10% of eligible employees can be expected to sign up for voluntary coverage.

Premiums are age-rated, so younger employees pay relatively less. A 30-year-old in good health might pay $90 per month for usual coverage, while a similarly healthy 60-year-old might have monthly premiums of more than $150.

If you decide to offer LTC insurance, work with your broker, who has access to information about a variety of plans. These guidelines can help you make a good choice:

• Find a carrier with a strong track record. The LTC market shakeout has left mostly well-established in­­surance companies. Still, this is insurance for the long haul; you want a carrier that will be in business for decades.
• Don’t focus too much on premium cost. Your employees will have to de­­cide if they can afford LTC insurance. Your task is to assess the real value of the coverage. Look for the highest-quality coverage per premium dollar.
• Benefits communication is key. Plan to spend lots of time explaining the value of LTC insurance, the life circumstances that make it im­­­­portant and why coverage may be beneficial. Your broker can provide information to help employees assess whether LTC insurance makes sense for them.

Because LTC insurance is a voluntary benefit, don’t oversell it. Give em­ployees the information they need to make informed decisions about their needs.

Long-term care insurance by the numbers

According to the American Association for Long-Term Care Insurance:

• On average, a year of care in a nursing home costs $80,850. Costs can easily top $100,000 per year in expensive metropolitan areas such as New York and Boston.
• Those costs can wipe out nest eggs. For about three-quarters of individuals entering a nursing home, the first year of care exhausts their life savings.
• 92% of all LTC claims are for three years or less.  Just 4.5% of individuals need long- term care for six years or more.
• LTC insurance covers more than nursing home care. In fact, four people use it to pay for in-home health care for every one person who needs nursing home care.
• The average age of a new LTC insurance policy holder is 58.

” This information is proudly provided by Business Management Daily.com:

http://www.businessmanagementdaily.com/30974/consider-offering-long-term-care-insurance ”

When should you get long term care insurance?

When should you get long term care insurance? This is a question I am asked frequently. According to consumer research and a report recently released by the American Association for Long Term Care Insurance, many consumers would like the answer as well.

“We believe that the right age to start long term care planning is somewhere between ages 52 and 64” explains Jesse Slome, one of the nation’s leading long term care insurance experts and director of the trade group.  “There’s nothing wrong with starting earlier but there is a very good reason to do so before age 64”

The reason according to Slome is the fact that when individuals reach age 65, they qualify for Medicare health coverage benefits.  “Ask anyone within a year or two of Medicare eligibility and they can’t wait” Slome declares.  “They delay seeing their doctor knowing that once Medicare kicks in, they are basically free to have every little ailment examined and treated”

Most consumers are unaware of the medical information long term care insurance companies will request from individual applicants.  “You finally visit the doctor thanks to Medicare and his or her diagnosis makes you uninsurable or heath-rated so that you have to pay more for insurance coverage” Slome notes.  “It’s those conditions that are not life threatening but that will worsen as you age that long term care insurers are most cautious about”

Here is some food for thought. The Association’s annual research found that some 24 percent of individuals who applied for insurance between ages 60 and 69 were declined last year.  Between ages 70 and 79 the percentage declined rises to almost half, 45 percent.  The organization reported that in 2010 over half (56%) of new buyers were between ages 55 and 64.  The research examined over 153,000 purchasers of individual policies during 2010.

Bottom Line: Long term care costs here in Massachusetts are some of the most expensive in the country. According to the 2011 Genworth Cost of care study, the median annual cost of homemaker services is $51,480 (40 hrs/week) and Nursing Home care is $116,800 (semi-private).  Procrastination is absolutely the most costly enemy when it comes to purchasing long term care insurance. Doing nothing is not an effective planning tool.

I’d be happy to talk about your options

Have you had a conversation with …?

…your professional advisor about responsible LTC planning or are you like the folks in a new survey.

Long-Term Care Insurance: A Piece of the Retirement and Estate Planning Puzzle was released by Prudential in March 2011. This survey is probably more useful to professional advisors than to the general public. Financial advisors are often as guilty of avoiding a conversation about responsible LTC planning as the general public.

This survey suggests that the public is concerned about the possible need for long-term care (LTC) but want to wait until retirement to discuss LTC planning. In other words, the survey makes evident people’s denial of their possible need for LTC and their desire to avoid discussing it.

The survey also shows that half-truths about LTC insurance and LTC planning is everywhere. I am saddened that the survey seems to verify what I have experienced in the marketplace for quite some time. I see and hear misinformation about LTC insurance all the time.

Here’s THE BOTTOM LINE: It’s too bad that denial of the need for care causes many to avoid conversations about responsible Long Term Care planning.

Are you in denial? Contact me for a free guide that can answer your questions.  rob@murphyinsgroup.com

Is Long Term Care Insurance a good buy?

 

What’s being said about Long term care insurance.

I recently talked with several of my clients about why they decided to purchase LONG TERM CARE insurance and here is what I found out.

It seems to me the Number One reason is:

No one wants to be a burden –

Most kids will take care of their parents, if they have to. But, here’s a tough question. Do you want your son to give you a bath? How about your daughter? Having long-term care insurance allows you to spend quality time with your kids while a paid care caregiver takes care of your personal needs.

Many of the married couples I work with are concerned about this —

What happens if I get sick and my spouse is forced into taking care of me as their health also deteriorates? Paying for care out-of-pocket may leave the healthier, surviving spouse with limited funds for care and retirement and no safety-net.

Another concern — is the ability to maintaining independence –

If you are unable to pay for your own long-term care expenses, you must first spend down your assets before you can qualify for government assistance (Medicaid). With Medicaid you will lose the choice of home care or assisted living facility, instead it will be nursing home care in a Medicaid approved nursing home. Additionally, Medicaid typically only pays for a semi-private room and not all nursing homes accept Medicaid patients.  Purchasing a LTC insurance policy provides more choices and more importantly a plan of action. You can choose where you would like your care delivered. Most of my clients have told me they want to stay home. Without proper planning, that might not be an option.

And, Peace of Mind –

This is a big one and comes up a lot in conversations with clients. For single folks, who have a limited support system, LTC insurance will make sure that you are taken care of. LTC insurance will provide protection for your assets and nest egg. The right Long Term Care Insurance policy will preserve your assets from the high cost of long-term care.

Who Should Consider Buying Long-Term Care Insurance?

If you are over 45 years old and have assets to protect, (a home and some money saved for your retirement) you should be researching and comparing different LTC insurance companies right now.

If your family has a history of illnesses such as Alzheimer’s, cancer, brittle bones, cardiac problems, stroke, etc. you should be researching and comparing different LTC insurance companies right now.

If you are healthy you should be researching and comparing different LTC insurance companies right now. Hugh Discounts are available.

If you get sick or injured the decision can be taken away from you and no long-term care insurance companies will insure you. Without your good health, options are limited to the point that you would be left paying for long-term care out of your own pockets.

HERE’S THE BOTTOM LINE Long term care insurance isn’t right for everyone. Some can’t afford the premiums other can’t pass the health qualifications. BUT– Everyone needs a plan for the day their health changes and help is needed.

Call or email and I’ll be happy to give you some additional tips on LTC planning

rferrini@robferrini.com

781-762-5626

 

Saving Money on LONG TERM CARE insurance

If you are 50 or older, most financial professionals agree that planning for the future potential risk of needing long-term care is a smart move. It’s an even smarter move to save money on that protection and, with a bit of checking today, experts report that you can save anywhere from 10-to-40 percent each year.

According to Jesse Slome, executive director of the American Association for Long-Term Care Insurance, the national trade organization, some 50 insurers currently offer long-term care policies on an individual basis or through employers. “Each company sets their own pricing for protection and each has price variances that based on your age, your marital status and your health.” The difference can be quite substantial.

Your health plays an important part in determining what you will pay for long-term care insurance. Leading insurers offer preferred health discounts, similar to good driver discounts offered by car insurance companies. These preferred health discounts generally are 10-to-20 percent of the yearly cost and cannot be taken away even if your health changes at a future date.  

A recent study by the American Association for Long-Term Care Insurance revealed that 54 percent of applicants between ages 40 and 49 qualified for this discount. “Less than a third (31%) of applicants who wait until they are 60 will qualify for this savings.”

Discounts offered to married couples today generally range from 15-to-40 percent each year when more than one individual buys coverage at the same time. A partial couples discount may even be offered if only one partner is covered.

Another way to reduce the cost of long-term care insurance is to add a deductible period to the policy.

Most people are familiar with the concept of deductibles on their car, home and even health insurance.

Adding a deductible, often called the Elimination Period to your long-term care insurance protection can reduce the yearly cost by 20 percent.

An eight-page booklet published by the American Association for Long-Term Care Insurance, provides more detailed information on ways to reduce the cost of long-term care insurance.

To request a free copy of “Ways To Save” call or email me, Rob Ferrini of Ferrini Insurance Associates at 781.762.5626 or rferrini@robferrini.com

Becoming “Long Term Care Aware”

Today, many people don’t understand what long term care is, don’t understand the odds that they may need it some day, don’t know how much it can cost, and don’t know the options available to them.

What is long term care?

Unlike medical care, long term care is not primarily intended to cure a medical condition and restore normal functioning. Instead, it focuses on coping with a person’s reduced level of functioning over an extended period of time, sometimes indefinitely. Commonly, that means needing help with what are called Activities of Daily Living, such as bathing, continence, dressing, feeding, toileting, and transferring.

Should I be concerned, I’m not old enough…or am I?

Anyone of any age can need long term care. However, the likelihood that any individual will need long term care increases in the Golden Years. According to the federal Agency for Health Care Policy and Research, it’s estimated that some 42 percent of Americans who reach the age of 70 can expect to utilize some type of long term care1.

But, I don’t want to end up in a nursing home?

Years ago, “long term care” usually meant “nursing home care.” Not anymore, most long term care is provided in the person’s home, either by family or friends (called “informal caregivers”) pressed into duty by the circumstances, or by paid health care professionals who visit the home to provide care. Long term care is also delivered in assisted living facilities or community-based facilities like adult day care centers. Finally, the most intensive care is still delivered in skilled nursing homes or special care facilities like Alzheimer’s units.

How much can it cost?

That varies depending on the type of care, the type of facility  the care, and the where the individual lives. However, nursing home costs have historically provided a benchmark. A recent survey commissioned by Genworth Financial’s Long Term Care Division showed that the average nationwide cost of a year of skilled care for a private room in a nursing home facility is $74,8062. Depending on where you live, those costs could be very different. Nursing home care in Greater Boston averaged $110,284 a year (private room), while cost in Louisiana averaged $43,774 a year. At those rates, it’s easy to see how long term care costs could deplete the assets accumulated over a lifetime.

But I have health insurance…

It’s a common misconception that long term care is covered by health insurance. In fact, most health care insurance policies do not cover long term care costs. Generally, neither does Medicare, except under very specific circumstances, and following a qualifying hospital stay. And Medicaid, the Federal program for the needy, won’t help until one has exhausted almost all their assets.

How can I make sure I’ve prepared properly?

Here are some ways. You can consult with your financial planner; you can contact me, at  rferrini@robferrini.com, I am an insurance agent who specializes in long term care insurance or you can educate yourself through independent research and online resources. Here are two great sites to get you going www.longtermcare.gov and www.mylifemyfamily.org

However you choose to do it, you owe it to yourself and your family to make yourself “long term care aware.”

1 “Investing in Retirement-Long Term Care-Shelter from the Storm: Why more people in their 40s are buying nursing home insurance.” Barron’s 03/22/04

2 Genworth Financial 2007 Cost of Care Survey, conducted by the independent research firm of CareScout and issued March 31, 2007

Questions about Long Term Care Insurance

What is long term care?

— Long term care covers a wide range of supportive services provided to whose who are unable to care for themselves due to illness, disability, or severe cognitive impairment. It includes help with daily activities including BATHING, EATING, DRESSING. It can best be described as what you do when you first wake up each morning.

How much does long-term care cost?

— Nationally, a year in a nursing home averages just under $75,000, the average cost in Massachusetts is over $100,000 annually. Assisted living and home care is also expensive. A home health aide visiting three times a week for 6-8 hours –to help with bathing and dressing and other activities of daily living care can cost $20,000 -$30,000 per year.

Can I afford long-term care insurance?

— If your assets, not including you home are less than $75,000, purchasing long-term care insurance may deplete your assets before care is needed. A good rule of thumb is to spend no more than 7% of your gross income on long term care insurance.

When is the “right” time to buy long term care insurance?

— Right before you need the coverage — but seriously, unfortunately you can’t get coverage if your not healthly.  So, the short answer is…as soon as you can afford it. Long term care insurance premiums are a function of age, and health. The older you are when you but a policy, the more expensive it will be. Moreover, as time passes, the probability of qualifying for coverage diminishes. Today, close to 40% of applicants over 60 can’t qualify for coverage, according to on insurance carrier.
How can I keep my premium cost down?

— Premiums are based on your age at application, relative health and the amount of coverage you receive. The younger and healthier you are the lower your premiums will be. Limiting benefits, increasing elimination periods and applying for coverage with your spouse or partner will also reduce premiums. Many insurance companies offer additional discounts for good health.
How do I know the coverage I buy today will be sufficient in 15 years or more?

— Inflation protection is a critical option that increases coverage  annually on either a compound or simple basis. This feature is essential for full protection against rapidly rising costs

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