Long Term Care Insurance

Long Term Health Insurance BenefitsLong Term Care: sometimes abbreviated with the acronym “LTC” is care that consists of help with the Activities of Daily Living or ADL and/or cognitive impairment. ADL is a real term that is used to describe daily activities that are necessary to live from day to day. There are 6 standards of ADL’s including: Bathing, Dressing, Toileting, Eating, Transferring, (for example, getting up from the chair in the den and moving to the kitchen and sitting down at the dinner table) and maintaining Continence. Besides the necessity of the Activities of Daily Living is the necessity of cognitive thinking. When someone has cognitive impairment they are said to behave in such a way as to be a danger to themselves or someone else (for example, being left at home alone and wandering off and walking on the highway.) LTC differs from medical care in that LTC is the process to maintain and cope in the diminished state of the individual. For example, a patient that has suffered a stroke causing paralysis cannot expect to recover from paralysis…the patient can only hope to maintain and cope with their present situation. Medical care is considered temporary and is the process of restoring the patient to their former state. For example, a patient that has cancer hopes to go into remission and return to their former state and unencumbered.

This Long Term Care section of WCBurke.com is designed to help you understand the risk exposure, the solutions and the effect a LTC patient has on family, friends and financial plans and finally a call to action to make facing the uncertainty of the future a little bit more peaceful.

Long Term Care Insurance Overview

A. Why is LTC planning more important than ever?

Long Term Care is care for people whose health has declined to the point where they need someone to help them with two or more “activities of daily living” which includes dressing, bathing, eating, taking medication, toileting and transferring (getting in and out of a chair or a bed.) The other indication that someone is in need of Long Term Care is that they have become cognitively impaired. (Read more…) Cognitively impaired may be defined as the impairment to judge accurately, reason and act prudently in everyday actions. The impairment is considered severe enough to cause possible injury or damage to oneself or others in bodily harm or loss of property. LTC may include a long term care facility such as a nursing home, assisted and independent living facilities, adult day care as well as home health care. Why has Long Term Care insurance become so important? See below:

1. Cost. The average cost of a nursing home in the U.S. in 2011 was $193 per day and $213 per day for a private room. Assisted living costs $3,261 per month and home health care goes for about $20 an hour that according to Genworth Financial.

2. Increasing longevity. We are now living longer. According to “World Life Expectancy” life expectancy in the U.S. once we turn age 65 in 2011 is 85 years old for males and 88 years old for females. We are living longer than ever and just because we are living longer doesn’t mean we will not end up in a Nursing home…it could mean we stay alive in a nursing home a lot longer.

3. Underwriting may not be favorable. According to one nationally known personal finance radio talk show host age 60 is the optimal time to buy LTC Insurance (LTCi.) In a perfect world this seems reasonable unfortunately, as we get older passing underwriting requirements becomes more difficult. The LTCi carriers report about a 30% decline rate if you wait until you’re 57 years of age. The most procrastinated tasks is acquiring insurance. You don’t wait to watch your house to catch fire before calling to insure your house against a fire…it’s too late then.

4. It’s a bad economic choice unless you’re extremely wealthy or extremely poor. To work hard and save your money over the course of 40 or 50 years and then to be hit with a stroke or Alzheimer’s Disease could wipe out your savings. A stay of 5 years in the nursing home would set you back about $300,000 if you paid out of pocket, $600,000 if both spouses are in need. A simple $2,000 per year premium for a LTC policy for 10 years would be $20,000.

5. “But what if I grow old and never need LTCi?” A common objection although you never complain about having to spend $20,000 on fire insurance when chances are good you will never has a fire. Chances of needing LTCi are 3 out of 4 seniors age 65 and over, 75%. Chances your house will burn down: .08%

6. “Well doesn’t Medicare cover Nursing Home and Home Health Care?” No, very little if any is paid for by Medicare. Medicare as well as all health insurance is designed to get from a position of sickness or injury back to normal everyday life. LTCi is designed for people who will usually not return to a normal wellness state. LTC basically allows you to live with as much comfort as possible for the long term (until death.) People receiving LTC are not expected to make a comeback in terms of a normal productive life. The only type of coverage for this is LTCi.

7. “But how about Medicaid? I heard that once you can get on Medicaid your LTC is paid for by the state.” Medicaid is only available for those who live in poverty. Here is what’s necessary to receive Medicaid payments for LTC.  1) Your assets have not been transferred to someone else (like your children or someone else) in the past 5 years from the date you actually need LTC. 2) The spouse needing LTC (referred to as the “Institutionalized Spouse”) will have all their monthly cash flow such as a pension and Social Security income going straight to the nursing home before Medicaid kicks in. In addition, the stay at home spouse officially called the “Impoverished Spouse” or the “Community Spouse” must show that there is no more than $113,640 (in 2012 and adjusted annually for inflation) in assets, a maximum of $1,500 of cash value life insurance, one automobile, some personal effects such as jewelry and furniture and of course only one house which is is the primary residence. 3) The institutionalized spouse will be limited to facilities that accept Medicaid. What if the nearest facility is 100 miles away from the impoverished spouse’s home? 4) Medicaid is not an entitlement program, but rather a loan. At the passing of the impoverished spouse assets including the home will be sold to satisfy the amount of services Medicaid paid for also known as Estate Recovery. 5) In most states, Medicaid only covers the cost of nursing homes, not home health care, adult day care or assisted and independent living facilities.

8. “I’ll let my children take care of me like I did for my folks” Really? Have you had that conversation with your adult children? Sure they might feel obligated but what a sacrifice to ask of them. Who wants to ask their children to care for them? What about your adult child’s spouse and their own children? I know their are some living like this because there is no other choice but this is no way you want to be remembered. Take action now! Maybe your children can help pay for LTCi; if they can afford it great. Asking them to help pay your LTCi is much easier than asking if you can move in with them and have them take care of you.

B. What is LTC?

Long Term Care can be described as services and/or facilities that accommodate the elderly and the disabled which include home health care, adult day care, assisted living facilities and nursing home facilities. (Read more…)  Home health care, as the term implies, is care you receive at home in the way of trained staff who are usually Certified Nursing Assistants.They are trained to help you with various tasks when needed such as cooking, bathing, dressing, etc. Adult Day Care is a daytime facility where supervision is provided for adults with cognitive impairments. This is ideal for a spouse, sibling, child or family member of a patient who is employed or has other daytime obligations and cannot be available throughout the day to care for a loved one. Assisted Living facilities are apartments that include a small degree of supervision. The facilities usually have a large community dining room so that residents can have an option of enjoying meals without having to cook. These apartments have special communication systems that allow the residents to speak to the front office in case of an emergency. Nursing Home facilities are for those who need 24 hour care including Skilled Nursing staff. Fortunately, these services cater to everyone needing care but particularly for those who experience a gradual decline in their health. Typically, an elderly person or couple, because of health and mobility problems, may have difficulty maintaining the household duties of cooking, cleaning and taking care of themselves. They would be a candidate for home health care. At some point, they may need 24 hour assistance whereby they could then go to the nursing home to receive more appropriate care for their condition.

C. What is Long Term Care Insurance (LTCi)?

Long Term Care insurance is designed to help pay for long term care needs for those who  need it. The purpose of insurance no matter what type of insurance is to reduce the risk of exposure to financial loss. Long Term Care can be quite expensive.  The average annual cost for a nursing home is $70,000. It is clear that it wouldn’t take long to put a serious dent into one’s retirement funds if they were confined to a nursing home for  several years. By the way, for those who stay in the nursing home the average length of   time in the facility is 3 years. According to statistics 3 out of 4 seniors over the age of 65 will at some point in their lives utilize some form of long term care. With costs that high and the odds quite favorable for need of long term care it makes sense for most people to  insure against this exposure.

D. Who pays for Long Term Care?

Funding long term care expenses in the U.S. usually comes from 3 main sources: private self-funding, funding from insurance companies, and funding from Medicaid. For those who are extremely wealthy the need to outsource the risk of long term care may not be as pressing as for those who are less wealthy. Though a strong solid argument could be made that it doesn’t make good economic sense to self-fund the risk of long term care it would not put the wealthy in financial jeopardy. (The fact that some who are multimillionaires who maintain the risk to LTC exposure is not something that concerns them are the very same people who choose to purchase fire insurance on their home valued at more than $500,000 or more in replacement costs. The odds of needing LTC at age 65 are 75% while the odds of burning your house down is less than 1%.)  (Read more…)

The second source of funding for long term care would be Medicaid. “I sure like the idea of Medicaid paying for my long term care instead of me. That sounds pretty good.” There is something about this sentiment that appeals to many cost conscience seniors, however a deeper look at the facts may tell a different story. For example, contrary to what much of society thinks, Medicaid is not a free gift or an entitlement.  Medicaid is actually a loan which the government is expected to be paid back. Once a Medicaid beneficiary is deceased the government does what is called an Estate Recovery. Before your heirs get any part of your estate Medicaid will collect the amount you used during your lifetime before your heirs get any left from your estate. This includes anything of value such as your home, valuable jewelry, paintings and other family heirlooms. Another bummer about Medicaid is that not all long term care facilities take Medicaid beneficiaries. What if the only facility that takes Medicaid patients and has an available bed is 100 miles away from your  residence where your spouse still lives? What if you personally don’t like the  looks and feel of the closest LTC facility which is 100 miles away? This is probably not what you had in mind when you envisioned your golden years. Finally, in order to receive a “loan” from Medicaid you must first “spend down” your assets to a bare minimum. Once you have spent your assets down (and what if your spouse is healthy and alive living in your old residence?) only then will Medicaid come through. With the bleak outlook on the future of Medicaid with the funding challenges our country faces, do you think the situation will improve or get worse?

The third choice of funding LTC is obviously through insurance. That’s why you’re on this website and I hope we can help you!

E. Reasons why people purchase LTC

Here are seven most common concerns about long term care and the reasons people  buy long term care insurance:

1. Not to be a burden – Do not want to be a financial or emotional burden on others. It used to be a  way of life for seniors to be taken care of by their adult children when  they got too old to   take care of themselves. Things have changed in the last 40 or 50 years. (Read more…)    Today for the majority of families both parents have careers          working outside the home. Not only that but today fewer children are staying  close to home…they are taking        jobs far enough away from home that taking care of  an aging parent is  impossible.

2. Asset protection – Preserve assets for healthy spouse, inheritance for children or  donation to charity. Let’s face it, you’ve worked too hard to see what you’ve worked for to be drained on the expensive cost of LTC.

3. Peace of mind – Knowing I am protected instead of worrying about   what could  happen. The number one fear of seniors? Wondering if they are going to be taken care of in terms of health and finances in their old age. It’s something to be concerned about and LTCi takes away those fears.

4. To maintain Independence and Control – I want to maintain personal control in the    choices I make. It doesn’t get any more humbling than to ask your children to take care of you… to feed you, help bath and dress you.

5. Making quality care available – Being able to select a quality facility in a location of my own choosing. Choices are good… no options are bad.

6. Aversion to welfare (Medicaid) – Not wanting to be dependent on the government for care. Have you ever stood in line waiting to renew you driver’s license? Enough said!

7. To preserve their standard of living. It’s not a comfortable feeling when you must drop down from a standard of living you’re accustomed to.

F. History of LTC and LTCi

Long Term Care Insurance provides the funds to help pay for Long Term Care. Long Term Care services include, Home Health Care, Adult Day Care, Independent Living and Assisted Living facilities and Nursing Homes.

Prior to the late 1980’s and Long Term Care Insurance was almost unheard of. Before the 1980’s patients had other methods of paying for Long Term Care including, Medicare, Medicaid and private funds. 

Up until the 1930’s there was very little financial assistance available for the care for the elderly and disabled. Most people cared for their parents and grand-parents in their own home. Everyone in the household pitched in to help. Pity the elderly who had no family to help them. If you had no family you were received by what was called an Almshouse. The Almshouses had other names like “poor farms, poor houses” for the elderly who were known as “inmates” These homes were usually built and operated by religious and ethnic groups in the local communities and eventually began to be called “rest homes” and “convalescent homes.” Besides religious and ethnic groups having rest homes the individual states had a few almshouses that were less than desirable There was somewhat of a social stigma for those who lived in state run almshouses and the states tended to use this as an incentive to keep people out of them.

The U.S. started to become an industrialized nation in the early 1900’s. This led to an increased demand in long-term care facilities for several reasons. One, people started having fewer children because more and more people were moving into cities for jobs in industry rather than out on farms for agriculture. When families moved into the towns and cities the need for lots of children to work the family farm began to subside. This meant less help available for the elderly parents. Another reason for the increased demand for Long Term Care facilities was that as children in families got older they set out and traveled far from home to find industrial jobs in other towns and cities. This meant the elderly parents would need help that their children could not give them. A third reason for the increased demand in facilities is the trend toward longer life spans and increased health care needs began early in the 20th century which contributes today to the reason that people need Long Term Care more than ever before in the  history of the U.S.

In 1935 Franklin Roosevelt signed the Social Security Act which gave every older aged American a regular sum of cash each month to help fund their retirement. Unfortunately those who lived in nursing homes supported by the state could not receive Social Security income. This led to more private nursing homes being built.

In the 1950’s the law was changed that now allowed the elderly receiving state assistance could now also receive Social Security income. In addition another law was passed that regulated those that ran nursing homes, including the state must require that caregivers have a set standard of training in the aid of the elderly. When Medicare and Medicaid was enacted in 1965 the Department of Health stopped the funding for the state run nursing homes leaving patients with huge bills that would be impossible to pay back. The maintenance and upkeep of Nursing Homes began to be neglected and were referred to as “dilapidated” in senate hearings. The result was the dramatic decreased in the quality of care.

A law was passed in 1972 which brought changes in the way of nursing home reform. One of the reforms gave nursing homes reimbursements for patient expenditures from Medicaid. Nursing homes got another improvement in 1985 when federal regulations of nursing homes standardized quality care and funding.

In the 1970’s Medicare was changed to exclude coverage for long term care coverage and traditional health insurance never did cover long term care. As a result, getting the necessary help for the elderly and disabled, people sold homes, property and other assets in order to qualify for entry into nursing homes.

G. How much does LTC cost?

1. Facilities and Services

2011 Long Term Care Costs in the U.S.A.

Homemaker Services Hourly Rates Minimum Hourly Rate

$9

Maximum Hourly Rate

$34

Median Hourly Rate

$18

Median Annual Rate

$41,184

Six-Year

Annual Growth  2%

Home Health Aide Services Hourly Rate (Licensed) Minimum Hourly Rate

$10

Maximum Hourly Rate

$34

Median Hourly Rate

$19

Median Annual Rate

$43,472

Six-Year

Annual Growth  1%

Adult Day Health Care Daily Rates Minimum Daily Rate

$15

Maximum Daily Rate $160 Median Daily Rate

$60

Median Annual Rate

$15,600

Six-Year

Annual Growth  N/A

Assisted Living Facility Monthly Rates (One Bedroom/Single Occupancy) Minimum Monthly Rate $674 Maximum Monthly Rate $9,500 Median Monthly Rate

$3,261

Median Annual Rate

$39,135

Six-Year

Annual Growth  6%

Nursing Home Daily Rates (Semi-Private Room) Minimum Daily Rate

$85

Maximum Daily Rate $826 Median Daily  Rate

$193

Median Annual Rate

$70,445

Six-Year

Annual Growth  5%

Nursing Home Daily Rates (Private Room) Minimum Daily Rate

$89

Maximum Daily Rate $826 Median Daily Rate

$213

Median Annual Rate

$77,745

Six-Year

Annual Growth  4%

2011 Long Term Costs in Georgia

Homemaker Services Hourly Rates Minimum Hourly Rate

$13

Maximum Hourly Rate

$23

Median Hourly Rate

$17

Median Annual Rate

$38,896

Six-Year

Annual Growth  1%

Home Health Aide Services Hourly Rate (Licensed) Minimum Hourly Rate

$13

Maximum Hourly Rate

$24

Median Hourly Rate

$18

Median Annual Rate

$40,040

Six-Year

Annual Growth  2%

Adult Day Health Care Daily Rates Minimum Daily Rate

$40

Maximum Daily Rate $90 Median Daily Rate

$59

Median Annual Rate

$15,340

Six-Year

Annual Growth  N/A

Assisted Living Facility Monthly Rates (One Bedroom/Single Occupancy) Minimum Monthly Rate $1,000 Maximum Monthly Rate $5625 Median Monthly Rate

$2,400

Median Annual Rate

$28,800

Six-Year

Annual Growth  1%

Nursing Home Daily Rates (Semi-Private Room) Minimum Daily Rate

$114

Maximum Daily Rate $224 Median Daily  Rate

$160

Median Annual Rate

$58,400

Six-Year

Annual Growth  4%

Nursing Home Daily Rates (Private Room) Minimum Daily Rate

$129

Maximum Daily Rate $238 Median Daily Rate

$175

Median Annual Rate

$63,875

Six-Year

Annual Growth  4%

2. The Other Costs of Long Term Care (Indirect Costs)

As you might imagine there are many indirect costs to Long Term Care; more than just the costs of the facilities and services. When a loved one comes to the point of needing LTC life the family goes through a dramatic change. Please read the following report below:

A Report by:

Genworth Study: Beyond the Dollars

Published: 9/30/2010

The True Impact of Long Term Caring: Research findings on the circle of care and the impact on the many people within it.

Survey Reveals the True Costs of Providing Care

Since 2003, Genworth has published its annual Cost of Care Survey to help people                     realize the financial cost of long term care services across the country. The 2010 report                     features data collected from nearly 13,000 long term care providers – home care           providers, adult day care facilities, assisted living facilities and nursing homes – revealing     the costs of differing levels of care in more than 436 regions throughout the U.S.

In April of 2010, Genworth conducted a survey to arrive at an assessment of the true impact of long term care for recipients, their caregivers and their families. Genworth has now published Beyond Dollars: The True Impact of Long Term Caring. Beyond Dollars reports the results of the survey of more than 800 consumers with personal involvement in a long term care event lasting more than 30 days. [see below] for the full methodology.

On these pages are the quantitative data, along with the compelling stories, thoughts and  perspectives of the individuals who participated in this survey, provided in their own words.

Beyond Dollars

Each of us has defining relationships in our lives. With our parents. Our siblings. Our spouses. Our children. Our colleagues. We even have relationships of sorts with our accomplishments. Our achievements. Our successes. And we have relationships with our own futures. We think of them as relationships because they mean something to us – and we are committed to them. And all these relationships can be affected when we take an active role in someone else’s care.

The Ripple Effect

We may understand that there is a financial impact to helping provide care, but there is more to the equation, and it goes far beyond dollars. There is a ripple that can touch a primary caregiver, a secondary caregiver, their families and their futures. While a loving and selfless act, accepting or taking responsibility for another individual’s care can have a dramatic impact on our own lives, and on our families’ lives. No matter how willing we are, no matter how heartfelt our promises are, our caregiving commitments can affect marriages, family dynamics, work commitments, financial stability and other building blocks of our own futures.

Will You Have a Role in Someone’s Care?

Thinking through the impact of your responsibilities as a caregiver is a first and important step.

Whether you are a primary or hands-on caregiver, or someone who orchestrates the care provided by others – whether you provide some financial support or weigh in on important decisions – it’s important to recognize the potential impact of care giving on all aspects of your life. Planning ahead for ways to mitigate costs or share caregiving responsibilities is worthy of every family’s consideration.

The Circle of Care – Definitions

  • Care Recipient – An individual who requires care on a short-term or long-term basis based on physical, mental or medical needs.
  • Primary CaregiverSomeone who is responsible for providing assistance to the Care Recipient. This person often provides hands-on care and financial assistance.
  • Secondary Caregiver – This person contributes financially and/or physically to a lesser degree than the Primary Caregiver.
  • Community Support – Additional support services that may provide assistance.

These often include friends, neighbors, religious organizations, non-profits and other community service groups.

Care is often provided by and impacts a wide contingency of people who are important to us.

When someone has a short-term or long-term care event, there are often people within a “circle of care” who jump in to help out. At the center of this circle is the care recipient, the individual who is in need of assistance.

Surrounding that person is an evolving circle of care that includes a primary caregiver, who most often provides the majority of hands-on care. In addition, they often contribute significant financial support. Primary caregivers and their families are the most directly impacted by their involvement in providing care.

The secondary caregiver is involved in care to a lesser degree. Whatever the level of engagement, this person fully understands all the dynamics of the care the recipient receives. Even though they are not at the forefront of care, the financial and emotional impacts of a long term care event can be surprisingly similar to those that affect the primary caregiver and should not be underestimated or overlooked.

Also impacted are the primary and secondary caregivers’ families – siblings, spouses, children and in-laws.

The broader community also provides care through religious organizations, community non-profits, friends and neighbors, and others.

Let’s look at the impacts – financial and emotional –on caregivers and families in the Circle of Care.

The Care Recipient Perspective

Care Recipient

“It’s just hard between us. My wife still has to work to keep up insurance. We thought this would be a time in our lives that we could sit back and travel, spend more time with the grandkids, but it’s not to be.”

“I think my son and daughter worried that I would want to move in with them so they could take care of me. Fact is, I didn’t. It was the elephant in the room for the longest time. I have always valued my independence. That doesn’t change with age. But I inevitably ended up needing their help. I am grateful and don’t know what I would have done without them, but it definitely altered their way of living and mine.”

“My wife had to be available 24/7. She also became my chauffeur and needed to help me shower and dress – to help me move at all, really. It impacted her freedom and her lifestyle.”

“My husband had to take time off from his job to help me, more than we expected. And he was frustrated that I had so much pain and felt like he wasn’t helping enough. I hated asking for so much assistance.”

When someone experiences a debilitating health event –short-term or long-term – that may require them to be dependent on others, to dip into savings or stop working, the effects can be significant. There are obvious consequences and new circumstances; other impacts are unseen, but real nonetheless.

About Care Recipients:

  • 34% Are mothers receiving care from their children
  • 12% Are fathers receiving care from their children
  • 9% Are spouses receiving care from their spouse

Financial Impact

  • 88% Said their household income was reduced by an average 34% due to their long term care event
  • 60% Reported a need to cut back on family expenses after a long term care event
  • 63% Reduced their savings by an average 61%

Emotional Impact

  • 42% Felt stress with their spouse
  • 35% Reported stress with their children

Care needed due to:

  • 45% a specific illness
  • 42% age-related frailty
  • 23% cognitive impairment
  • 13% rehabilitation from an accident

Care Arrangements

  • 49%  Of care recipients had not considered the possibility of needing long term care
  • 29%  Of care recipients required care for 3 years or more
  • 37%  Of care recipients were moved into a family member’s home for a period of time

The dollars to pay for care must come from somewhere. Most often, savings and retirement contributions are hardest hit, threatening families’ ability to live comfortably in the future. There are four primary areas of financial strain upon care recipients and caregivers associated with providing care for an individual:

  1. Out-of-pocket expenses for care, medications, transportation, etc.
  2. Home modifications such as ramps, railings, bathroom modifications and other adaptations needed to allow the care recipient to live more comfortably at home
  3. Facility care for those who can no longer reside at home or who need a place to go during the day when the primary caregiver is not available
  4. Income lost due to missed work or inability to work

Out-of-Pocket Costs

  • $14,000 Average amount care recipients spent out-of-pocket for their own care (excludes cost of facility care)
  • $8,000 Average amount family members spent for out-of-pocket expenses (excludes cost of facility care)

“If my sister could take Mom in for just one month, perhaps she would be more understanding of the day-to-day responsibility. I want to take care of her and wouldn’t have it any other way. But sometimes I just get burned out and feel spread too thin. I wish my sister could simply give me a little relief from time to time, just for me to take a breather.”

“Since my mom lives with us, we now have someone else in the house, plus caregivers 12 hours a day. For the first 38 years of our marriage, it was just my husband and I…This has required a change for both of us.”

“We have absolutely no time alone in the house to be intimate… I tend to let my daily grooming slip and look scruffy –which can kill romance.”

“Anger at my brother and sister for not helping more with our dad… Stress with my wife over how much of ‘our time’ this was taking up.”

“We expected things to change… But the reality of caring for someone 24/7 changes life the way you know it. It’s nothing like I imagined.”

“My children were resentful that I had siblings who did not help me.”

“It has changed my life and all routine in my life entirely… It’s difficult to attend normal social and professional meetings, and I am now limited to how many I can participate in.”

The Primary Caregiver

Being the main caregiver has significant effects on the emotional and financial well-being of an individual and their family. Juggling time, career, family and finances are the most prevalent stress points, but they are only part of the personal and emotional issues that make providing long term care (LTC) “expensive” on many levels for the Primary Caregiver and their family.

“Taking care of someone can be very expensive and time consuming. It changes your whole life when you care for someone 24 hours a day.”

About Primary Caregivers:

  • 53 Average age
  • 42% Care for a mother
  • 14% Care for a father
  • 13% Care for a spouse

Length of time they provided care in their home:

  • 32% Less than 1 year
  • 26% 1 – 2 years
  • 18% 3 – 7 years
  • 24% 8+ years

Financial Impact to Primary Caregivers

  • 83% Contributed financially – an average $8,800 for out-of-pocket care expenses (excludes cost of facility care)
  • 57% Had to dip into their own retirement funds and/or savings
  • 29% Borrowed money, took out a reverse mortgage and/or sold their home
  • 63% Reported lost income – an average of 23% of household income
  • 61% Reduced their savings by an average of 63%
  • 40% Reduced family vacations
  • 45% Cut back on their own family expenses
  • 57% of primary caregivers provide care for more than 16 hours each week
  • 31% of primary caregivers provide care for more than 30 hours each week
  • 42% reported that the care recipient resided in their home for a period of 3 years or more.

Career Impact – A career is usually more than simply how we pay our bills. In many instances, our careers are tied to our self esteem and help define who we are socially as well as financially.

Over a third of surveyed caregivers reported direct negative consequences to their own careers resulting from their responsibilities to a care recipient. Many of these family members worked fewer hours with repeated absences. And nearly 20% reported a direct loss of career opportunities.

  • 44% Had to work fewer hours
  • 48% Lost a job, changed shifts and/or missed career opportunities
  • 38% Incurred repeated absences from work
  • 17% Found themselves repeatedly late for work

Savings and Retirement Contributions Impact

On average, among those reporting a reduction in their savings plans…

  • Contributions to savings accounts were reduced by 73%
  • 401(k) contributions were reduced by 65%
  • Retirement contributions were reduced by 80%

Family and Relationships Impact

  • Experienced an increase in stress with their spouse 44%
  • Reported stress with siblings 27%
  • Experienced an increase in stress with their children 23%
  • Reported reduced time with children 20%
  • Reduced savings for college education by 58%

42% reported that the care recipient resided in their home for a period of 3 years or more

44% experienced increased stress with their spouse

63% reported lost income –an average decrease of 23% of household income

“Caring for my mother has left me with much less time to spend with my son. With three generations living together, there’s a whole new set of rules to live by and a new set of frustrations for everyone.”

“My husband did not show much compassion, which I did not understand. I still think about it to this day.”

Comparing the Impact to the Primary and Secondary Caregivers

“ In theory, I believed I could take care of my Mom, keep up with her home, and take care of my family, my kids and myself. In reality, I’m running Mom to her doctor appointments and my kids to school and sporting events or sleepovers. I am constantly torn, feeling guilty that I’m not doing enough for anyone, including taking care of myself these days.”

While the impact to the primary caregiver is widely recognized, the effect on the secondary caregiver(s) is not often acknowledged, but still significant.

  • Impacted career: 17% Primary Caregiver……….8% Secondary Caregiver
  • Less time for children: 20% Primary Caregiver……….12% Secondary Caregiver
  • Stress with children: 23% Primary Caregiver……….13% Secondary Caregiver
  • Reduced retirement savings: 28% Primary Caregiver……….11% Secondary Caregiver
  • Stress with siblings: 27% Primary Caregiver……….18% Secondary Caregiver
  • Cut back on family expenses: 42% Primary Caregiver……….19% Secondary Caregiver
  • Stress with spouse: 44% Primary Caregiver……….33% Secondary Caregiver

The Secondary Caregiver Perspective

“ It is difficult to explain the money I lost due to the fact that I was employed as an airline pilot. I had to call in sick, drop trips and adjust my schedule to be at home with my father. Eventually, I retired early so I could be at home with him full time to provide for his care. When I was no longer physically or mentally able to provide care for him, I had to move him into a long term care facility.”

“It’s what you do (take care of family). But I have found myself somewhat isolated… Friends don’t call

as often because I have to decline or change plans if something with Dan’s mom comes up… And sometimes I think they just don’t know what to say, so they avoid having to deal with my new way of living.”

“The entire family contributed money so one person wasn’t hit so hard… So we all pitched in to to help.”

“There’s just more tension in our house – now that my husband and my stepson are helping take care of my parents.”

“My husband is her son, but he can’t take care of her… He does help with housework and the lawn work.”

“I will have to work more hours to put more funds into my 401(k)… I will have to retire at a later date than expected… I will have to work additional hours to put more money into my personal savings.”

The secondary caregiver is impacted when a long term care event affects someone close to them.

About Secondary Caregivers:

  • 53 Average age
  • 29% Care for a mother
  • 16% Care for a father
  • 9% Care for their in-laws

Financial Impact to Secondary Caregivers:

  • 36% Of secondary caregivers contributed financially – an average $2,600 for out-of-pocket care expenses (excludes cost of facility care)
  • 42% Dipped into their own retirement funds and/or savings
  • 15% Borrowed money or sold their home
  • 33% Lost up to 20% of their household income
  • 19% Reduced vacation spending
  • 19% Cut back on their own family expenses

The Secondary Caregiver

36% of secondary caregivers contribute financially – an average $2,600 for out-of-pocket care expenses (excludes cost of facility care)

Career Impact –  One-fifth of those secondary caregivers surveyed reported direct negative consequences to their careers resulting from their responsibilities for a care recipient, and of these…

  • 29% had to work fewer hours
  • 42% lost a job, changed shifts and/or missed career opportunities
  • 33% lost vacation/sick time
  • 33% incurred repeated absences from work

Savings and Retirement Contributions Impact

On average, among those reporting a reduction in their savings plans…

  • Contributions to savings accounts were reduced by 40%
  • 401(k) contributions were reduced by 22%
  • Retirement contributions were reduced by 55%
  • Family vacation savings were reduced by 71%
  • Savings for college education were reduced by 76%

Family and Relationships Impact

  • Experienced an increase in stress with their spouse 33%
  • Reported stress with siblings 18%
  • Experienced an increase in stress with their children 13%
  • Reported reduced time with children 12%
  • 33% experienced increased stress with their spouse

While stress with a spouse always ranks at the top of the list, family members are also likely to report stress with siblings over tough decisions.

“Disagreements about mother’s cognitive abilities – how to handle siblings… We worked through them, but they caused added stress… It was hard to find good caregivers, too, and we would argue about who we wanted to care for her.”

Care commitments cost caregivers wages and caused issues with bosses and co-workers.

The Caregiver’s Family

“ I have less time to spend with my husband and my kids. I have less time to spend with friends. I miss being home at nights because I’m having to stay day and night with my parents. It wears me out physically and mentally.”

Family

“My wife did not bargain for such a long stay and is angry at biological family members for not stepping up to offer aid.”

“I sold my house and moved 500 miles from my adult children and grandchildren to care for my stepfather.”

“It’s a struggle for the whole family, as we are losing a big chunk of all our incomes to see that my father is taken care of.”

“My children would take up for their grandma and make a lot of excuses for her bad behavior… They certainly wouldn’t take her into their homes and certainly wouldn’t contribute to any expenses she might have… Getting them to transport her to a doctor’s appointment wasn’t happening, either…They certainly criticized how she was being cared for, but NEVER wanted to be involved in helping with the situation.”

“My mother was putting my children down and disrespecting them somewhat at first, but not too much now, after they (grandparents) realize that they need their help more and more.”

“I have to leave on weekends to see her – not there for sports games or other school-related events for them.”

Spouses and children – even in-laws or other extended family members – of primary and secondary caregivers can be affected by a long term care giving situation. Consider these facts for family members:

The Kinds of Assistance the Family Provides

  • For an immediate family member: Care 87%, Financial Assistance 77%
  • For a step-family member/in-law: Care 74%, Financial Assistance 71%
  • For an extended family member: Care 74%, Financial Assistance 71%

Where the Money Comes From

As a result of caring for a family member, they reported:

  • Dipping into savings/retirement plans: Immediate Family 55%, Step/In-law 57%, Extended Family 50%
  • Selling other possessions: Immediate Family 13%, Step/In-law  12%, Extended Family 13%
  • Selling a home: Immediate Family 11%, Step/In-law  17%, Extended Family 18%
  • Borrowing money from a friend/family member: Immediate Family 12%, Step/In-law  6%, Extended Family 13%
  • Taking out a loan: Immediate Family 6%, Step/In-law 3%, Extended Family 6%
  • Acquiring a reverse mortgage on a home: Immediate Family 2%, Step/In-law  3%, Extended Family  4%

Career and Workplace Pressures

Among those family members reporting adverse effects of the long term care event on their careers, data show that:

  • Had to work fewer hours: Immediate Family 44%, Step/ In-law 39%, Extended Family 32%
  • Lost a job, changed shifts/missed career opportunities Immediate Family 49%, Step/ In-law 36%, Extended Family 48%
  • Had repeated absences from work Immediate Family 40%, Step/ In-law 32%, Extended Family 32%
  • Were repeatedly late for work Immediate Family 19%, Step/ In-law 7%, Extended Family 8%

The immediate family is more likely to contribute financially, but not significantly more than step-family, in-laws and extended family.

“The family has to sacrifice so that I have time, energy, and resources to care for my brother.”

“I see them less. I have not been able to go visit my grandkids as often as I’d like… I have given my children and grandchildren less in terms of birthday, Christmas, etc. gifts.”

“Children are happy for Grandma… She also lives much closer and in a better place.”

The Family

74% of step-families or in-laws provide or contribute to care

71% of step-families and in-laws report providing financial contributions

Family Stress & Pressure as a result of caring for a family member

  • Experienced an increase in stress with their spouse: Immediate Family 40%, Step/In-law 63%, Extended Family 30%
  • Cut back on family expenses: Immediate Family 43%, Step/In-law 35%, Extended Family 32%
  • Reported more stress with siblings: Immediate Family 29%, Step/In-law 16%, Extended Family 19%
  • Had an increase in stress with their children: Immediate Family 22%, Step/In-law 23%, Extended Family 14%
  • Reported reduced time with children: Immediate Family 17%, Step/In-law 20%, Extended Family 25%
  • Ability to save for children’s education was hindered: Immediate Family 10%, Step/In-law 9%, Extended Family 8%
  • Ability to save for retirement was diminished: Immediate Family 27%, Step/In-law 24%, Extended Family 13%

Children

Children need at least as much attention as care recipients over the long term.

Diverting resources from children to the care recipient often causes regret, guilt, resentment and confusion for children and their adult family members. Some children bond with their parents’ efforts and pull together as a family. Commonly, however, children may not understand and may feel resentful.

Top 7 Stress Points on Marriages as a result of caring for a family member

  • 40% Tension/stress/frustration
  • 12% Less time for spouse
  • 12% Caring took up too much time to be and do anything together
  • 11% Conflicts/arguments/communication breakdowns
  • 11% Less time for family
  • 8% Money issues
  • 8% Not home enough

Supporting a care recipient requires time, commitment and care beyond physical needs. A spouse may resent the intrusion and withdrawal of attention they are used to receiving.

“I can’t attend to my children like I used to do anymore because of the care I have to give to my mother… The kids seem to act up more in school or their grades are not as good as they once were.”

“Less time for activities. Homework is stressful if there are things going on with Mom, Dad or Grandmother, and we have to hurry sometimes.”

A Care Event in Your Family Can Be a Challenge, But You Can Lessen Its Impact

The impact of long term care events on families is well documented. We have learned through our assessment that there are other financial and emotional costs that may not be as readily apparent. Specifically, there are costs to the long term care recipient, caregivers and extended family.

All of the people in the Circle of Care may experience an impact on:

  • Stress levels from demands on time and serving the needs of others
  • Jobs and careers
  • Relationships with spouses, siblings, children, step-families and in-laws
  • Their incomes and finances

Perception and Reality

With medical advances and healthier lifestyles, people are living longer these days – often 20 or even 30 years into retirement. As we’re doing a better job at living longer, the likelihood of needing care, companionship or help later in life is greater than ever.

Consider the statistics around the potential need for long term care:

Nearly two-thirds of Americans over age 65 will need long term care at home, through adult day health care, or in an assisted living facility or nursing home.*

* AARP Public Policy Institute (2007). “Long – Term Care Trends”

The Double Whammy

For younger couples with two sets of parents, the chances of being affected by a long term care event are high if any of their parents lacks the financial resources for their own care. And if care for one parent significantly impacted a couples’ finances, would they be able to contribute to the care needed for the other parents?

Survey Reveals Top Concerns

A January 2010 Age Wave/Harris Interactive survey sponsored by the Genworth Financial companies revealed that “medical expenses not covered by insurance” is the top retirement concern of people age 55 and older.

More than half of all respondents (55%) reported that their greatest fear regarding a long term care illness or event was being a burden on their family. In fact, they reported being five times more concerned about being a burden than dying.

Although the issue is a top concern, many are still not engaging in open conversations about potential long term care expenses, the costs or the types of care they would prefer or may need in the future. More than 90% surveyed have not talked about critical long term care issues with their spouse/partner, aging parents or adult children.

The First Step In Planning is to Talk to Your Family

Figuring out how to address a long term care need is stressful, but having a direction before there’s a need can help immensely. Having no plan can be overwhelming. When people have to make emotional and financial decisions unexpectedly, judgment and decisions can be less than optimal. And not having the conversation means you don’t have direction from the person needing care. People can find themselves writing on-the-spot checks for care. Spending money for care on a moment’s notice is something no one wants to do, and the quality of those decisions may be compromised.

The broad impact – to finances, emotions, jobs and careers, immediate and extended families – adds urgency to the need for these important conversations – before the need for care arises.

“We all wish we had done it (talked) a year before. We thought the problem would go away, but it just got worse…Making specific plans when you are younger and healthier would benefit any caregiver.”

See below for the full methodology:

In the spring of 2010, Genworth Financial sought to determine the true cost of long tem care services shouldered by care recipients and their support networks. To do this, Genworth contracted with Rockhopper Research, a national third-party research firm, to develop and launch an online blinded survey aimed at care recipients and caregivers. The survey was 15 minutes in length, contained close-ended and open-ended questions, and was placed in field for a duration of two weeks. Additional information regarding survey design is detailed below.

The Beyond Dollars: The True Cost of Long Term Caring survey garnered 818 completed surveys from across the spectrum of those affected by a care giving situation, whether short-term or long-term.

The results of this survey enable Genworth to expand the definition of long term care and build upon the long term care cost index, which the company has been publishing for eight years in its annual Cost of Care Survey. Broadening the index beyond strictly monetary costs, the resultant data includes impacts on relationships, jobs, and levels of stress and anxiety.

To qualify for participation in the survey, participants must have been over 25 years of age and must have been affected by a long term care event either directly, as a care recipient, or indirectly, as a caregiver or knowledgeable family member. Specifically, participants had to answer Yes to the following question:

In the past 12 months, have you or any member of your family over 25 years of age experienced an extended health care event that required either (1) a change in living structure, such as moving in with a family member or moving to a care facility, or (2) daily assistance in your or your family member’s home for 30 days or longer?

The survey methodology called for 800 completed surveys. Of the 818 surveys completed, 125 were completed by care recipients. Participants classified as primary caregivers completed 575 surveys, and secondary caregivers accounted for the remaining 118. Special care was taken to make sure the sample population fell within national demographic profiles. Resultant survey findings were tested at 95% and 90% confidence levels. Significance testing was based on z-Test for percentages and Independent t-Test for means.

The Long Term Care Insurance Policy

A. What’s in the policy?

There are policy features common to most LTCi policies and it’s good to be familiar with these terms in order to make a smarter purchase. You should design a policy to best suits your needs and budget.

Key Basic Policy Terms and Policy Features:

Activities of Daily Living (ADLs): Routine actions such as eating bathing, transferring (bed to chair), dressing, toileting and continence. The inability to perform 2 or 3 of these activities is generally used to determine level and kind of home health or nursing home care needed and to qualify for benefits under long-term care insurance.

Adult Day Care Facilities: Community based centers that provide comprehensive services ranging from health assessment and care to social programs for older persons who need some supervision. They may be operated by hospitals, nursing homes, local governments or private groups. Out of pocket costs vary. Medicare does not cover adult day care.

Assisted Living Facility: A non-specific term referring to any setting that provides living arrangements and assistance for the elderly and/or disabled. Also called Adult Foster Care.

Bed Reservation Benefit: In some long-term care policies, a benefit paid to maintain the insured’s space in a nursing home facility when the insured must be hospitalized temporarily.

Benefit Cap: The lifetime dollar limitation of a long-term care policy.

Benefit Limit – Long Term Care Insurance policies have some sort of benefit limit such as daily or monthly. Some policies have simply what’s called a pool of money that has no daily or monthly restrictions. When the money in the pool is used up, that’s it…the coverage is terminated. When you purchase LTCi you will want to know what LTC costs where you live. That will determine what benefit amount you will decide. For example if you want to make sure you buy enough LTCi to fully fund your LTC then you will want to access several facilities in your area along with inquiring about home health care costs. If you find that Assisted Living Facility costs $48,000 per year (my parents paid this amount in 2008 in Alpharetta, Georgia.) then you will want to make sure your purchase a monthly benefit in this example is equal to $4,000 per month. Also understand if your maximum benefit is $4,000 per month and you spend $4,500 on LTC expenses in a month you will only be reimbursed $4,000. Some folks misunderstand and think if they have enough LTC coverage to last 3 years at $48,000 per year but it is dispersed at $4,000 per month then that is ALL you get each month.

*Tip: It makes sense to “self-insure” your LTC to some extent and will save you some money. For example, if you know costs in your area are $6,000 per month you might purchase LTCi to cover $5,000 per month and fund the difference out of your retirement savings (as long as you have carefully calculated and allowed for the expenditure in your planning.)

Benefit Maximum: Either a certain number of days or a dollar amount expressing what a policy will pay for a given service. This is the “most” that the policy will pay.  It may pay less due to other policy limitations.

Benefit Period: In a long-term care insurance policy, the maximum length of time specified in the contract during which benefits will be paid. Periods available vary considerably from policy to policy and insurer to insurer, ranging from as short as one year to a lifetime. In some cases, especially for longer benefit periods, a maximum dollar limit may also apply. For example, the policy might provide for a lifetime benefit period capped at $500,000 maximum benefits. When $500,000 in benefits have been paid, benefits cease even if the insured is still living and receiving long-term care.

Care Coordination Benefit: A benefit in newer long-term care policies that pays consultation fees for a professional, such as a registered visiting nurse or a medical social worker, to periodically assess and make recommendations about the insured’s care program. For example, consultation might begin at a specified time after the insured has been confined to a skilled nursing facility. The purpose is to adjust services when and if the individual’s care needs change. Also called personal care adviser and personal care advocate benefit.

Chronic Care: Continuous, long-term care for persons suffering from chronic conditions. May be contrasted with acute care.

Cognitive Impairment: A defect in or loss of all or part of an individual’s memory, judgment, perception, reasoning or other intellectual functioning as medically diagnosed. Often one of the triggers for benefit payments under a long-term care insurance policy.

Cognitive Impairment Reinstatement Provision: A provision in some long-term care policies that allows a policy that has lapsed because the insured did not pay the premium to be reinstated for full benefits if the premiums are paid within six months after the lapse. Typically, the insured’s physician must certify that the insured suffered a cognitive impairment that presumably caused the individual to fail to pay the premium on time.

Coinsurance: A cost-sharing requirement which provides that a beneficiary must assume a portion or percentage of the costs of covered services. Coinsurance amounts are usually stated either in dollars or as a percentage of the reasonable charge for services.

Convalescent Care is another term often used for short-term custodial care and refers to a “recovery” period after an illness or injury when some assistance may be needed that does not require skilled care.

Co-Payment: Used interchangeably with coinsurance. Co-payment is usually a set dollar amount rather than a percentage.

Custodial Care: In the context of long-term care or Medicare, refers to assistance requiring the lowest level of skills, helping with activities of daily living, but not with medical care. Can be provided by people who have no medical training, sometimes by aides trained in caregiving skills and frequently provided informally by family members or other unpaid volunteers. Custodial care services, which may be performed in a nursing home, the individual’s home, or some other setting, are the most common type of services required by the elderly and the disabled.

Custodial Care Facility: A care facility providing the lowest skill level of care, primarily assistance with activities of daily living and minimal skilled nursing care, the latter usually limited to supervision of medicine-taking.

Custodial Nursing Care: Also called Maintenance Nursing Care or simply Maintenance Care; it is care which is primarily done for the purpose of meeting an individual’s daily personal needs such as bathing, eating or taking medications. It may be provided by persons without special training or skills. If given in a hospital or nursing home, the care will usually be under the direction of a doctor. Also called custodial care.

Daily Benefit Amount: In a long-term care policy the specific amount of insurance the policy pays for each covered day of long-term care as defined in the policy. The insured may choose from a wide range of daily benefit amounts and, under some policies, different amounts for different types of care, such as a higher daily benefit for nursing home care and a somewhat lower benefit for home care. Options available vary widely among insurers and policies.

Death Benefit: In some long-term care policies, a benefit payable to the insured’s survivors or estate if the insured dies before a specified age. Often 65 or 70. The benefit amount is a refund of premiums the insured paid minus the amount of any benefits the insured received while living.

Deductible: The amount of health care expense that a Medicare beneficiary must first incur and pay out-of-pocket annually before Medicare will begin payment for covered services. Medicare deductibles include the Part A hospital deductible; the Part B deductible for all covered services under Part B; and the blood deductible.

Elimination Period – Sometimes called a waiting period, this is a period of time between   when you first have an onset of illness or injury during which no benefits are paid until                the end of a period of time, the Elimination Period, when benefits are paid on claims.       It works like a deductible with auto insurance. The first amount of expense is borne by            the owner of the insurance. How long an elimination period should you choose? The         answer is the amount you can pay on your own before it gets painful. Remember, when           you first need LTC you could be paying as much as $5,000, $6,000 or $7,000 per      month…how long can you keep paying that out of your own savings? The average elimination period that is most common is 90 days, although it is possible to get a period as little as 30 days and as            many as 365 days.

*Tip: Some carriers have what is known as a Waiver of Elimination Period for Home        Health Care. This allows you more efficient use of your coverage. If you begin to receive                 only home health care as opposed to nursing home or facility care your elimination              period is waived yet the “elimination period clock” is ticking from the first day of home          health care service. This period of time is counted for your elimination period even                 though you are receiving benefits.

Employer-Sponsored LTC Insurance: Long-term care insurance made available by an employer to its employees, similar to other types of group insurance. Many employer -sponsored LTC plans may also be offered to employee family members including spouses, parents, parents of spouses and children, depending on the particular plan and the insurer.

Extended Care Facility: An institutionalized setting outside of a hospital that provides 24-hour skilled nursing care as prescribed by a physician.

Free Look Provision: An insurance policy provision required by most states, allowing the policyowner to inspect the policy for a specified period of time, often ten, 15, 20 or 30 days and to return the policy to the insurer, if desired. for a refund of the entire premium.

Guaranteed Renewable Policy: A policy that guarantees the insured may renew the policy up to a specified age, or for life, as long as the insured pays the premiums. The insurance company may increase the premiums on guaranteed renewable policies for all policies of that particular type, but may not increase the premium for any individual policy.

Home Health Care: A type of medical care that is gaining popularity as people attempt to stay out of nursing homes. It is growing rapidly as technology provides equipment that is more portable and personnel receive additional training. As the name implies, services are performed at an individual’s home, as opposed to an outside facility. Generally may refer to any level of care and a wide range of skilled and non-skilled services, including part-time nursing care, various types of therapy, assistance with activities of daily living and homemaker services such as cleaning and meal preparation. For Medicare purposes, this term refers specifically to intermittent, physician-ordered medical services or treatment and should not be confused with definitions contained in long-term care policies. Also called Home Care.

Home Health Care Agency: Either a private commercial venture or a state-operated organization that is licensed to provide health care and/or homemaker services to individuals who need assistance but need not be institutionalized. Those who actually provide the services are commonly referred to as home health aides who may or may not have to be specifically trained and licensed or certified in particular states. Newer long-term care policies often pay for such services performed in an insured’s home.

Homemaker Services: A variety of non-skilled at-home services, including shopping, meal preparation, laundry services, housekeeping and similar activities provided either by employees of private home health agencies or state agencies. Some long-term care policies pay a benefit for such services.

Inflation Protection is an option offered on some long-term care policies which can increase the maximum daily and lifetime benefits to combat inflation. The protection is generally 5% per year, but varies from policy to policy as to whether the increase is calculated at simple or compound interest.

Intermediate Care: In the context of long-term care and Medicare, refers to a level of nursing services performed intermittently, rather than around the clock, by professional medical personnel, usually a registered or licensed practical nurse or other medical practitioners such as licensed therapists.

Intermediate Care Facility (ICF): A care facility providing skilled nursing care on an as -needed basis rather than on a 24-hour basis, as well as custodial care associated with the intermediate level care. An Intermediate facility may not provide Skilled Care and, therefore, may not be certified by Medicare since that is the only level of care which they will pay for.

Home Health Care – most qualified long term care insurance policies will cover home  health assistance, or assistance received in assisted living facilities or adult daycare center. This is very important to include in your LTC planning. If only 9% of seniors decease in the nursing home then the majority of seniors are fortunate to live in their own  home in relative peace during the remainder of their years. Thus having Home Health Care covered in your policy is important to allow you to live at home. I’d like to think that LTCi should be renamed, “Staying out of the nursing home insurance.”

Inflation Protection – this is a very important feature and should receive serious                                                                   consideration when purchasing LTC. Inflation protection increases the monthly or daily benefit you choose. In the late 90’s nursing home costs were about $60 to $70 a day.   Today costs are in the neighborhood of $160 a day or more. If you purchased a plan in  the 90’s you would be way short if you made a claim today. Common inflation protection rates are from 3% up to 5%, some are compound interest some are simple interest. My advice is to purchase compound interest. If the cost of the inflation protection feature  gives reason to pause, consider this. If your premium is $200/month for insurance you can plan on 5% growth on your overall benefit. As of 2012 there are not many places you can put your cash and earn a GUARENTEED 5%. This is an investment in being assured quality care in the future.

Long-Term Care Rider: An attachment that may be added to some life insurance and  other types of insurance policies to allow some or all of the death benefit or other primary benefit to be used to help pay for long-term care costs under situations defined in the  policy.

Maximum Daily Benefit: The amount designated in a long-term care policy up to which it will pay benefits per day for nursing home care. It also determines the amount per visit payable for home health care.

Waiver of Premium – some long term care allows you to stop paying future premiums once the policyholder is on a claim.

Non-forfeiture or Non-forfeiture Benefits: many long term care policies provide a return of some or all premiums (tax-qualified polices can not offer a full return), or the chance to acquire a reduced paid-up policy if you drop the policy. A provision in some long-term care policies offering a guarantee that certain policy benefits will remain available even if the insured stops paying premiums. One type of non-forfeiture is a paid-up policy providing the same benefits for a shorter period or lower benefits for the same period as the original policy. Return of premium benefits are another form of non-forfeiture.

Nursing Home: A non-specific term that refers to any of several types of facilities designed to provide one or more levels of care for persons who need assistance. It may include skilled, intermediate, and/or custodial care facilities.

Nursing Home Care: care provided in a skilled nursing facility where all three levels of  care (skilled, intermediate and custodial) are provided. In order to be licensed, nursing homes must meet appropriate standards for the state in which they operate. They may or may not be Medicare approved.

Paid-Up Policy: In long-term care insurance, it is generally the operation of a  non-forfeiture feature under which the insured’s coverage continues for some period based on the amount of premiums paid when the policy lapses. Methods for providing the paid-up policy may include full benefits for a shorter benefit period or partial benefits for the  full original benefit period. Some policies also have a provision which pays up the policy under specified conditions upon the death of an insured spouse.  Some companies offer limited or single payment premium modes that result in paid up policies when a specified  number of annual premiums have been paid.

Reinstated Benefits: When a policy has lapsed due to nonpayment of premiums, benefits may be reinstated at the company’s option. It is common for the company to determine proof of insurability before it will do so.

Renewable – virtually all personal insurance policies are guaranteed renewable. As long as you pay the premium on time, the term of your policy cannot be cancelled.

Restoration of Benefits: means once you are benefit-free (as defined in your particular policy) for a specified length of time, usually six months, those benefits already paid out are restored. Not all long-term care policies offer this benefit.

Return of Premium Benefit: A type of nonforfeiture benefit included in some long-term care policies that provides a cash value accumulation and return of premiums in the future to insureds who receive no policy benefits or minimal benefits while the policy is in force. Exact provisions vary from policy to policy, but generally provide a greater                return the longer the policy is in force and usually deduct the amount of any claims paid before returning premiums to the insured.

Skilled Nursing Care: In the context of long-term care or Medicare, refers to the highest level of professional medical care, characterized by 24-hour supervision by a registered or licensed practical nurse as ordered by a physician. For Medicare, must be performed in a skilled nursing facility as specifically defined by Medicare, a requirement that may or  may not apply under a long-term care policy depending on the insurer.

Skilled Nursing Facility (SNF): A facility licensed by the individual state, and one that may be certified by Medicare, providing care that requires the highest level of medical  skills with continuous, 24-hour attention from a registered or licensed practical nurse, under a physician’s orders and/or supervision. May also provide Intermediate or   Custodial care and makes care available from other medical practitioners and for  emergency services.

Spousal Discount: A premium reduction, usually from 10% to 25% of the premium that  some insurers provide when both a wife and husband purchase long-term care policies.  Insurers offering such discounts sometimes do so for two people who permanently reside  together whether or not they are spouses.

State/Private Insurer Long-Term Care Partnerships: Arrangements between some states and certain private insurance companies to provide long-term care insurance. Subject to the specific legal requirements for each state, these partnerships help protect the assets of  insureds who typically must become nearly impoverished before qualifying for Medicaid (Medi-Cal in California) assistance for long-term care costs. In general, the state  approves the long-term care policies offered by insurers who agree to include state – mandated provisions. Insureds who purchase the approved policies may protect one dollar in assets for every one dollar in benefits paid by the private insurance coverage.  The purpose of these plans is to shift some of the burden for long-term care from Medicaid programs to private insurance while at the same time allowing insurance purchasers to keep assets they would otherwise have to spend in order to qualify for Medicaid when the private insurance benefits are exhausted.

Waiver of Premium Provision: Any provision included within or as a rider to an insurance policy providing that, when specified conditions exist, the policy will continue in force without further premium payment. When the specified conditions no longer exist, the insured person resumes paying premiums.