Frequently Asked Questions
Q: What is long-term care?
A: Long-term care provides assistance for those who require assistance with their ADLs (Activities of Daily Living: transferring, bathing, dressing, toileting, eating and continence) or who suffer from a cognitive impairment and need supervision and prompting. It may be as the result of a chronic illness, a disability, Alzheimer’s or simply the phenomenon of aging. It includes medical and non-medical care and it differs from traditional healthcare which is designed to rehabilitate or cure.
Q: What does long-term care insurance cover?
A: Most policies today cover care received in the home, adult day care, assisted living facilities, memory care units and skilled nursing facilities. Many also cover hospice and respite care. They cover both medical and non-medical services.
Q: Who needs long-term care?
A: Most people think that long-term care is for the elderly. Today, 43% of the 12 million Americans receiving long-term care in the U.S. are between the ages of 18 and 64. The U.S. Department of Health and Human Services projects by age 65 and older 70% of us will need long-term care.
Q: How much does long-term care cost?
A: The cost of care varies from state to state but based on Genworth 2016 Cost of Care Overview, the national median cost of non-medical home is care is $20/hr. The national median for a private room in a nursing home is $92,378 annually but states like Connecticut can be upwards of $144,000 annually.
Q: Will Medicare or disability insurance pay for long-term care?
A: Medicare and disability insurance are designed to pay for treatment that is curative or rehabilitative in nature. Medicare covers up to 100 days of long-term care in a skilled nursing facility if you are admitted overnight in a hospital for 3 nights and require daily skilled care. Disability insurance provides income replacement but does not cover long-term care expenses.
Q: Who pays for long-term care services?
A: The three funding options are:
1. Self-pay by using your income, savings and/or liquidating assets
2. Private insurance,
3. Medicaid governmental assistance or
4. Certain government agencies such as U.S. Department of Veterans Affairs
Self-funding and qualifying for Medicaid requires you to use your income and spend down your assets to pay for care. Private insurance on the other hand allows you to safeguard assets and income which preserves your family’s current standard of living and ability to leave a legacy.
Q: How does Medicaid work?
A: Medicaid is a state and federal welfare program funded through tax revenues. In most states it will only cover care in a skilled nursing facility. In some states it will also pay for homecare or care in an assisted living facility. To qualify for Medicaid, an applicant must meet government asset and income requirements and there is also a five year look back period for gifting.
Q: Who should buy long-term care insurance?
A: People who have assets they want to protect should learn about long-term care insurance options. Insurance is available for adults between the ages of 18 and 85 depending on the insurance company. The ideal time to buy long-term care insurance is when you are still healthy and are between the ages of 45-70. At younger ages the premiums are less expensive and we tend to be healthier. Consumers with assets between $50,000 and $5,000,000, excluding their homes, should seriously consider purchasing long-term care insurance. A long-term care event could impact the family’s standard of living and ability to leave a legacy.
Q: I don’t want to pay for insurance that I may not need. Are there other options?
A: Yes, today’s asset based or hybrid policies are based on life insurance policy that provides long-term care benefits as well. The advantages of these policies are:
· Long-term care benefits paid if you need care
· Income tax free death benefit to your beneficiaries if you should pass and not need care
· Return of premium if you decide you no longer want the long-term care insurance
Q: How do I qualify for long-term care insurance?
A: Your health is the most important factor in determining whether you qualify for long-term care insurance because it is underwritten based on your medical history, family history and current health status. When you apply you must not be needing assistance with your activities of daily living or suffer from a cognitive impairment. The insurance companies take into consideration your tobacco status, medications you take and your physician’s records. Certain medical conditions can prevent you from obtaining insurance.
Q: If I move to another state or out of the country will my policy pay for my care?
A: Yes, policies today are portable which means they can be used anywhere in the U.S. Benefits are usually limited outside of the U.S.
Q: What discounts are available?
A: Discounts are available for married couples/partners and also for those with excellent health.
Q: What are Partnership Policies?
A: Partnership policies are created with certain specifications including certain levels of coverage and required inflation protection. They have MAP or Medicaid Asset Protection that protects dollar for dollar the amount of long-term care insurance purchased from the state if the policy holder eventually goes on Medicaid. There are currently 45 Partnership states across the U.S. and most states have reciprocity.
Q: Can my premiums increase?
A: Traditional long-term care insurance premiums can increase but only on a rate class basis and must be approved by the Insurance Commissioner. Today’s policies are priced much more conservatively and the industry does not expect the premium increases that the older, less expensive policies have seen in the past 10 years. Asset based policies are paid in a lump sum or over a certain period of years and the premium does not increase.
Q: I want to use a live-in to take care of needs when the time comes. Do the policies cover informal care?
A: Policies cover informal care with some requiring bills from licensed homecare agencies and other policies will pay for care even if it’s not through a licensed agency.
Q: Are my long-term care premiums tax deductible?
A: You may be able to deduct part of the premium for a tax-qualified long-term care policy from your taxes as a medical expense. Ask a tax attorney or tax advisor if it is appropriate for you.