Navigating Long-term care

While you’re probably hoping to live in your home in good health without assistance as you age, according to the U.S. Department of Health and Human Services, someone turning age 65 has nearly a 70-percent chance of needing some form of long-term care in his or her lifetime. Long-term care is costly, and prices vary by state. Here are U.S. national median annual costs for care provided in various venues, according to the Genworth 2017 Cost of Care Survey:

• Adult day health care: $18,200
• Home health aide: $49,192
• Assisted living facility: $45,000
• Skilled nursing private room: $97,455

Don’t plan on much help from Medicare, since Medicare will pay only for skilled services provided by medical professionals. For Medicare to pay any costs, the beneficiary must have been hospitalized for a minimum of three days, and other requirements. It  does provide government assistance for long-term care. To qualify, you must meet financial requirements, which may impact both assets and income. In most states, Medicaid will cover long-term care only after you’ve spent down your assets.

What Does Long-Term Care Insurance Cover?

Long-term care insurance generally offers coverage for in-home care, skilled nursing facilities and independent, assisted living or memory care at senior living communities. It may also cover hospice care* and community-based services such as adult day care, and include coverage for a care coordinator or case manager. “It’s important that the policy is comprehensive and will provide benefits in the whole range of care venues,” says Nicole Gurley, owner of Gurley LTCI, a long-term care funding brokerage. To trigger eligibility for benefits, you must be chronically ill, meaning the policyholder is unable to complete at least two activities of daily living (ADLs) without substantial assistance for at least 90 days or be cognitively impaired.

Premiums Increase with Age

These premiums can be paid annually, semi-annually, quarterly or monthly for lifetime benefits. A limited number of carriers allow policyholders to make 10 large premium payments or one lump-sum payment to pay off the policy in full. Premium amounts vary, depending on the degree of coverage, policyholder’s gender and the policy’s “elimination period,” the number of days before benefits kick in. Married couples often receive a discount. A person’s age and current health affect the premium rates when applying.

“The sweet spot is 45 to 65,” says Gurley. “Between 40 and 50, you won’t see a big difference in premiums. Between 50 and 60, there is a difference. By the time you get to 70, it’s pricey.”

The older you are, and the more health problems you have, the less likely you are to qualify. “You can age out of long-term care insurance options,” says Gurley. To get a general idea, take a look at the 2018 National Long-Term Care Insurance Price Index issued by the American Association of Long-Term Care Insurance.

‘Hybrids’ Edging Out Stand-Alone Policies

Many people think they can’t afford long-term care insurance or worry that they’ll pay a substantial amount for benefits they’ll never use. As a result, “hybrid” policies have grown in popularity. One type, known as a “life-linked” policy, has long-term care benefits packaged in. One of the advantages of a hybrid policy is that the insurance company will lock in your premium, says Sam Price, an independent life insurance broker and owner of Assurance Financial Solutions.

“The policies can be designed with benefits that a person can use,” says Price, “in the event that the long-term care insurance was never needed. With a hybrid, even if you never need long-term coverage, you still have other living benefits such as money for cancer, stroke and heart attack, along with the life insurance death benefit.”

Seek Qualified Assistance

While hybrids offer more choices, the variety of options makes the selection process even more complex. Consumers should work with an experienced broker, says Gurley, and should look for:

• Someone who specializes in long-term care policies.
• A broker who has sold a lot of policies and works with multiple carriers.
• A broker or company with a process in place to stay in touch with clients.
• A broker who has experience helping clients file claims.

“We speak the language. Clients don’t,” says Gurley. “We think it is important to help clients through the claims process when care is needed.”

You can find additional information at A Shopper’s Guide to Long-Term Care Insurance and LongTermCare.gov.

Author bio:  Deb Hipp is a contributing writer for A Place for Mom (the largest senior living referral service in North America).

* Hospice Care is covered by Medicare. You don’t need long term insurance to get Hospice care.