Health Insurance

Many people are unwilling to purchase long-term care insurance (LTCI) until much later in life, in their 80s rather than in their 50s, say but a host of recent articles have been turning up in everything from senior care trade publications to small local dailies, which will cover on the subject of the LTCI industry trying to welcome the burgeoning senior baby boomer market. LTCI is one area that most do not want to entertain and yet aging and long-term care always will be an issue.

So What Is To Be Done? There are some who speculate that it is actually in the insurance company’s favor to have these premium payments rolling in. But to them we would like to point out that even with that being salient, LTCI; although possibly in wolf’s clothing, is still a sheep, due to the fact that the consumer will pay less if insurance is purchased when they are still in their younger age and (hopefully) healthy.

So When Should You Start Looking into Your LTCI Options? Over time, a LTCI recipient actually pays less; not just incrementally, however, it is based as a whole because the premium is not only based on the age at which you buy. it is typically locked in from the beginning. In order for you to better understand, here is an upcoming article by Gilbert Guide;s CEO, Jill Gilbert, in Active over 50 magazine: If a healthy 55-year-old woman purchases an LTCI policy at about $1,500 a year, by the time she is 85, she she will have spent $45,000 for thirty years of coverage. which is a marked increase.

So, this means that waiting to buy an identical policy at 75 increases the annual cost to about $7,500; this means that the oldest policyholder in this comparison ends up paying $75,000 for only ten years of coverage;a whopping 400% increase from the 55-year-old woman! Find out how long-term care insurance can help you? Get a free long-term care consultation and quote.

Many of us will gladly take Mom to her doctor’s appointments, administer medications, and check in if the need arises without a second thought. But with millions of loyal children caring for aging parents out of their own pockets, a little financial relief is welcome. Few family caregivers are aware that you can get paid;however small the amount may be, to care for Mom and provide homecare services.

Because of the long working hours, a lot of adult children are forced to leave their full-time jobs or even scale back their hours spent on the clock, leading to a significantly reduced cash flow. Fortunately, if being a caregiver is causing a noticeable financial strain, there are homecare reimbursement programs that can help alleviate some of the burden. Keep in mind, however, that you must practice patience when applying for these programs, make sure that your application is up-to-date and all the necessary attachments are included before you send it so that delays aren’t any longer than necessary.

Long-Term Care Insurance (LTCI) Reimbursement

Long-term care insurance, which functions as an indemnity program, only pays the insured the amount that was contracted at the outset, and regardless of homecare services that are received,will only pay that specified amount. LTCI, which covers nursing home, home health care, adult day care services, assisted living facilities, and hospice care, offers payments to in-home family caregivers, though the insurance must include in-home care and/or homecare services coverage. In certain instances, LTCI requires that family caregivers complete a basic training program on homecare services and/or caregiving for elderly patients.

Even though almost all LTCI contracts include skilled intermediate and custodial long-term homecare services, you shouldn’t rely on this type of insurance to be your only fallback when it comes to paying for in-home health care. Though, for clarification, you should contact your LTCI company directly for details on its family caregiver reimbursement policies as well as what is needed to qualify. Medicaid Cash and Counseling Program A state-administered program, Medicaid is only available to low-income individuals and families who meet certain federal and state law eligibility requirements. In other words, if you have limited income and resources, applying for Medicaid relief is advisable; however, you must be able to meet specific eligibility criteria. Persons over the age of 65 with limited income and resources immediately become eligible as well as those who are terminally ill or live in a nursing home.

Fortunately, if the person you’re caring for is either eligible for or is currently enrolled in the Medicaid program, you may be able to receive direct payments from its Cash and Counseling program, though it is available only to family caregivers in select states, including but not necessarily limited to Alabama, Arkansas, Florida, Illinois, Iowa, Kentucky, Michigan, Minnesota, New Jersey, New Mexico, Pennsylvania, Rhode Island, Vermont, Washington, and West Virginia. In some cases, the person you’re caring for may have too high an income, excluding him or her from the Medicaid program; some states, such as Georgia, Maine, Nebraska, North Dakota, Oklahoma, and Oregon, have accounted for this oversight and offer similar programs (the National Family Caregiver Support Program is one).1 Medicaid, aware that family caregivers are often the best care providers for Mom or Dad, will now send a check directly to the recipient to reimburse for homecare services made, though this amount depends upon various assessments of overall needs and the average cost of in-home health care for that particular state. This money can also be used by family caregivers to purchase supplies, medical equipment, or even to pay for ADLs (activities of daily living).

For you to find out if your loved one is eligible or for more information on the Cash and Counseling program, please call the National Program Office at 617-552-2809. Making the Arrangement with Mom Official Since money is involved, it’s recommended that family caregivers draw up some sort of short, typed contract that outlines the terms of the caregiving situation in depth, including the frequency and pay rate, homecare services and job description that will be provided, and how various expenses will be reimbursed (if applicable). Hiring an attorney or other legal professional will help all family caregivers involved create a legal document that prevents sticky situations from arising.

It’s also important to remember that this payment is viewed as income by the government, so all family caregivers must report their earnings each year as taxable income. Though the money received for providing homecare services is negligible, it will help to offset many of the costs associated with providing Mom (or Dad) with a loving, stable, and comfortable home.

For those who are not familiar with the term, underwriting means the acceptance of risk in return for payment. In long term care, this happens once an applicant becomes a policyholder, paying the insurance company to accept the risk that may require them to pay out claims on the applicant’s behalf. Many people wonder what the application process and the underwriting process for long-term care insurance are about and how it all works. I’ll discuss all of that in this article. Why is it that underwriting is necessary? The answer to this question has to do with how insurance functions.

Think of insurance as a pool of money into which different parties have made deposits. These funds can then be used to pay for the financial losses of individual depositors who have had to make a claim due to unforeseen circumstances. In the case of long-term continuous care, the funds could be used to pay for custodial care for the individual policyholders who may have developed a need for this type of care.

One primary objective of underwriting is to spread the risk among the pool of policyholders as equitably as possible in a manner that is also profitable for the insurance company. The premiums in which each of the policyholder needs to pay are directly affected by how much money the insurance holder expects to have to pay out for claims. This can only mean that the insurance company has to manage the risk that it will have to give money out of that central pool of funds. The more money they have to pay out, the higher the cost of the insurance for everyone. Risk management, once again for those who are not familiar, involves analyzing the potential risks for each of the applicant (and the associated costs of those risks) in order to set premium rates for policyholders and mitigate the potential financial losses for the insurer.

How are long-term care insurance premiums calculated? To manage the payout risk, each insurance carrier employs underwriting procedures to make sure that applicants with high-risk medical histories are not allowed into the insurance pool, which would thereby drive up the cost for everyone else. Obviously, while the risk involved is taken by the insurer directly informs the premium rates that policyholders must pay, there are different levels of risk which are reflected the different premium rates. This is actually how a long term care insurance company determines the premium rate that you will pay, which I will discuss further in a future article. What underwriting procedures are employed? One of the first thing of underwriting that all carriers use is the application form where the applicant lists his or her relevant personal health history and authorizes the insurance company to examine their medical records.

More often, the carrier will schedule a phone health interview that lasts for about fifteen to twenty minutes. One of the main purposes of this telephone call is to assure the carrier that the applicant should not have any cognitive problems that would become evident in the way the phone conversation is conducted. After this, the carrier will then request a copy of the medical records from the applicant’s primary care physician to verify that person;s overall health. If the applicant has been treated by a specialist for any serious illness in recent years, a copy of those medical records may be requested as well. This is where the whole process can sometimes bog down for a few weeks if the doctor’s office does not process the record request quickly. However, once the carrier receives the medical records, a final underwriting decision usually follows very quickly.

A vital ingredient in any successful long term care insurance plan is to have a cheap policy without having to give up on good coverage. If you receive quotes from several highly rated insurers and yet found out that these premiums are still too much to handle, there is no need to panic and assume that long term care insurance costs too much. You can just adjust the benefit amounts of the original quotes to bring the premiums more in line with your expectations, thus ensuring an affordable policy.

Know the Costs of Long-term Care Where You Live

One of the many ways to lower premium costs is to make sure that you know what the actual costs of care are in your area. There are lots of statistics used when discussing long-term care costs and these are always based on national averages. The actual cost of home care, nursing homes and assisted living facilities in your particular area may be much lower. You can find out about local long-term care costs by either downloading the latest Genworth Cost of Care Guide or by calling a few local home care agencies and long-term care facilities to ask for comparison rates.

Adjust Your Benefit Period

Another way to lower long-term care insurance premiums is to use a shorter benefit period. Many consumers feel that non-limited benefits are necessary for good coverage. A recent study published by the American Association for Long-Term Care Insurance in their 2009 Sourcebook revealed that only eight percent of those who buy a three-year benefit period exhaust the policy and still need care. Only a little over one percent of those with a five-year benefit period will see their claims closed due to policy exhaustion. This can only mean that lowering the benefit period can be a practical way to lower insurance costs without sacrificing vital coverage.

Reexamine the Elimination Period

One way to bring down long-term care insurance premiums is to increase the elimination period (the number of days after your care begins that precedes the insurance company’s first payment of claims).

Take note that almost 90% of individual continuous care insurance policies uses a period of elimination between ninety and one hundred days based on the same 2009 Sourcebook referenced above. If you have initial quotes used a thirty-day or sixty-day elimination period, you may have the ability to significantly lower the premiums by choosing a ninety-day elimination period instead. There are other ways that an experienced long-term care specialist can help make this kind of insurance more affordable for you. If you ask for suggestions on bringing down your premiums, the specialist will be happy to work with you to craft a long-term care insurance policy that is effective and affordable.

Recently, I wrote about selecting a daily benefit for your long term care (LTCI) policy. Making sure that you start your policy with a daily benefit amount that matches the current cost of continuous care is vitally important. But there are a couple of additional steps you’ll need to take if you really want to ensure that the buying power of your policy benefits do not erode over time. Inflation constantly chips away at the true value of LTCI benefits. This means that a daily benefit that is adequate this year may be seriously insufficient when you actually need the care several years from now. That is the reason why LTCI policies typically offer some form of inflation protection to help ensure that your policy benefits will continue to keep pace with rising costs of the industry.

What are my options for inflation protection? Inflation protection options offered to policyholders can differ greatly from one carrier to another. But there are two options which are commonly used by the majority of insurance companies: a 5% compound option and a 5% simple inflation protection option. Compounding interest will have a dramatically greater effect on the amount of total benefits available to you over a long period of time. Most of the investors know that in order to see the true effects of compounded interest, you need to be patient, as it can take several years to become readily apparent. This is also true of inflation protection in LTCI policies.

How do I decide which choice will work best for me? Generally speaking, the longer you wait to access the policy benefits, the more compound interest will benefit you. A lot of people seem to access their policy benefits after the age of eighty. For example, a person who is fifty years old could have thirty years or more before needing care. On the other hand, a person who is 65 may not see as much benefit from compounded interest. Another factor to consider is the how fast the cost of care has increased in the state where you plan to retire. There are some states in the South that have historically had much lower costs of long term care than other parts of the country. Other states, particularly those in the Northeast, have had regular and significant increases in the cost of care. One great place to start is with Genworth Financial’s interactive map, which shows the state averages for costs of care across the United Sates. The figures include nursing home, assisted living, home health care and home care costs. One cost-effective option is to raise the daily benefit along with simple inflation protection. This gives your benefits an initial head start and pushes the break-even point between simple and compound interest farther out on your timeline.

The Bottom Line: Weigh Your Options First. Since compounding costs more than simple inflation protection, it’s a good idea to ask for quotes on both to see how each choice affects your premium. A good LTCI consultant will be happy to work with you as you choose the inflation protection that will work best for you. There are no fast and hard rules in this area of policy design, but a healthy dollop of common sense and reason will usually help you make the best decision for your unique situation.

One variation on Managed Care plans that acts as a Medicaid alternative is the nationwide PACE program. The San Francisco-based On Look program that provides the housing, long term care and programming for the area’s senior population led to the development of the larger PACE program. The program aims to keep seniors who normally would require placement in a skilled nursing health care facilities a choice to stay in the wider community by providing a breadth of interdisciplinary services. By utilizing adult day care programs, PACE integrates medical and social services.

Those who managed to enroll in PACE programs have their care overseen by a multidisciplinary team, which can include doctors, nurses, social workers, nutritionists, occupational and speech therapists, as well as health and transportation workers. For you to be able to enroll in a PACE program sometimes requires the payment of a monthly premium. For a listing of PACE programs nationwide, click here.

What It Covers: Take note that PACE enrollees recieve all health care services through PACE, including doctors’ services, hospitalization, therapies, pharmaceuticals and equipment along with:

Adult day health care.

Medical care, which is provided by a PACE doctor along with specialists

Home health care and personal care

Prescription drugs

Social services

Respite care

Hospital and nursing home care when necessary

Hospice care

Eligibility and Qualifications

Coverage is available to persons who are:

55 or older.

Certified by their state to need nursing home care

Able to live safely in the community at the time of enrollment

Living in a PACE service area

Note: People who are interested in getting into the PACE program are also eligible for both Medicaid and Medicare. However, PACE enrollment’s primary qualification is one’s health status rather than age or income level.

Trends In Reimbursement

In some countries, Medicaid recipients are often required to enroll in Managed Care programs. The reasoning behind this trend is to keep the cost of services low to the provider by contracting and centralizing all medical needs. It also means consumers are not given a choice. This change is occurring on a county level for now, but as it gains popularity may become more prevalent.

Affordability is one of the key ingredients in any successful long-term care plan. That is why the premium cost is often the most important factor to consumers who are considering the purchase of LTCI. One of the most frequently asked question I hear is: ” Will my premiums ever increase? ” The answer is this: there are lots of scenarios in which LTCI premiums could increase. I will try to expound one in this article and follow up with the second in a future article. The first scenario involves a choice the policyholder makes regarding inflation protection. Most LTCI policies have automatic inflation protection built into the policy design from the beginning; in such cases the premium is designed to stay level for the life of the policyholder. The benefits increase each year, but the long term care insurance premium remains the same.

Inflation Protection: What You Need to Know

There are some insurance carriers that offer a different kind of inflation in which the policyholder starts out with no automatic inflation protection instead, benefit increases would be offered every three years or so. These increases can actually be declined or accepted by the policyholder. This means that your premium would increase every three years for the rest of your life or until you start receiving policy benefits. The only problem with this inflation protection choice is that the policyholder is three years older when each offer of extra benefits is made. The cost of the added benefits is based on the later age, not on the age of the policyholder at the inception of the policy. This can result in a significant increase in premiums in later years. Some consumers simply drop these policies after a while, as they just can’t afford to continue paying long term care insurance premiums that are so much higher than the cost of the original premium.

Long-term Effects of Premium Increases

There are group policies that often offer this kind of inflation protection to stay competitive with individual LTCI policies. Before finalizing their decision, it is very important for consumers to understand the long-term effects that these premium increases can have. Unfortunately, there are lots of policyholders who did not understand the ramifications of this kind of inflation protection when they purchased their policy. They sometimes find themselves locked into a policy that is constantly increasing in price and have few options for switching to a more affordable LTCI product due to their age and/or home health care circumstances. It is true that automatic inflation protection increases that are built into the premium cost from the inception of the policy will initially be more expensive than a periodic increase offer. But in my opinion, in most circumstances, it is better to lock in your inflation protection costs at an early age, and know that your premiums will remain stable, than take the chance on an ever-increasing premium that may eventually be too much to afford.

Lots and lots of companies are now starting to offer long-term care insurance (LTCI) to their employees as part of an overall health care benefits package. And since buying group medical insurance is usually a way to get lower insurance rates, most people automatically assume that the same is true with LTCI policies. However, in most cases individual LTCI policies will be able to offer not only lower premiums, but also better benefits if they are examined in a true “apples to apples” comparison. Group LTCI can be a good answer for those who have severe health problems, as they may be able to qualify under the “simplified” underwriting procedures. The same lenient qualifications also drive up the cost of coverage for everyone else in the group.

This is one reason why individual LTCI policies actually cost less for relatively healthy applicants, the underwriting procedures in use effectively screen out most of those costly severe health cases. One of the ways that group LTCI companies hide or mask the increased cost of their policies is by not including an automatic inflation benefit as part of the premium. They typically tell you that they are providing a 5% compound inflation protection, but they do it as something called a “Future Purchase Option.” This actually means that they will come again every three years or so to make an offer based on an additional 5% compound increase in benefits. This is the least expensive way to buy LTCI initially because the inflation protection is not built into the premium. The problem is that it is the most expensive way to buy LTCI over the life of the policy because you are buying additional protection every three years at a later age. Moreover, you are paying for that additional protection at that later age instead of the age when you originally purchased the policy. So these kind of policies often wind up costing the policyholder twice as much or more over the life of the policy, as if they have just brought the automatic inflation protection built into the policy then. Another method that group policies use to lower premiums by providing less coverage is reducing the home care benefit to 50 to 75% of the daily benefit.

This may indeed lower costs, but it is not helping policyholders accomplish what they usually want most: to stay at homecare and remain as independent as possible for as long as they can. Of course, some group policies can be a very good value, but it is always a very good idea to individual policies using identical benefit features to make the comparison fair for long term care.

Becoming familiar with the foundational features and options of a good long-term care insurance (LTCI) policy requires taking enough time to educate yourself before making your final decision. This will help ensure that you get the policy that will best fit your particular needs. The very next step would be to find the right insurance provider that will be right for you. Since there are a number of LTCI carriers to choose from, here are a few suggestions for selecting a company that offers a quality product and is worthy of your trust in the many years ahead.

Among numerous companies that offer LTCI, there are a few that have an outstanding reputation. What I mean is that these companies have already distinguished themselves over a long period of time as financially solid, rate-stable carriers with an excellent customer service record. Unfortunately, we see so many stories in the media these days of other LTCI companies whose record in these areas is being seriously challenged. It’s been reported that some have appeared to excessively deny claims in order to make a profit. Others have had to request hefty premium increases due to a much higher number of claims than they had projected. While some of these stories may hold some facts, what we don’t hear is the good stuff: LTCI companies that really adhere to their claims of the customer being #1.

The June 18, 2007 issue of Newsweek magazine recommended the following four companies as being major carriers that can be worthy of your consideration: Genworth, John Hancock, MetLife, and Allianz Life. Of course, that does not mean that there aren’t other fine companies represented in the LTCI field, but the four carriers identified by Newsweek are among the oldest and financially strongest in the industry. They also have extremely favorable records of customer satisfaction.

Genworth, John Hancock, MetLife and Allianz Life are all fine choices if you are in excellent health. However, if you have health issues that are not serious enough to render you uninsurable, but will most likely disqualify you for ” preferred ” rates, the company you choose can have a significant impact on your premium. The reason for this is that each company has its own underwriting procedures that it uses for rating policyholders. These procedures can be different from one company to the next. For instance, one company will not issue a ” preferred ” rating to someone who uses even a single blood pressure medication while others will allow the use of up to four of these medications and still award the highest rate classification for long term care

Once you have more serious health conditions, the difference in the way individual carriers treat those issues can be even more dramatic. In other words, some health conditions that one carrier may decide to accept may be cause for rejection by another provider. This is where the help of a knowledgeable, experienced agent who can choose from several top companies in the LTCI field, can be a real asset in finding the company that is not only trustworthy and reliable, but also best fits your particular needs and home health care history.

This article, written by Jill Gilbert, originally appeared as ” Five Star is Progress” in McKnight’s Long Term Care News February 2009 edition. The Centers for Medicare & Medicaid Services recently released a new rating system to grade the 16,000 nursing homes in the United States that participate in Medicare or Medicaid. With the goal of streamlining the data already publicly available, the new system assigns nursing homes one-to-five-star ratings based on quality of care data, staffing information and health inspection surveys. The rating system falls short of its primary objective: helping families understand the qualitative data on facilities. The new rating system doesn’t add any new information, and it doesn’t account for patient or family satisfaction. The point is to help consumers compare nursing homes more easily. CMS says consumers should use the star ratings to narrow their choices, then review the deficiencies and citations in detail.

However, there is a problem with this system as the ratings are sometimes misleading or unfair, essentially excluding some facilities from the consumer search to begin with. It is actually an oversimplification of a complex system that will give consumers only a small part of the picture. Looking ahead. Since it was implemented, the rating system has been under scrutiny from the nursing home industry, which is very much concerned about inaccurate representation of facilities, as well as consumer groups, who want reliable, understandable information which they don’t find in the current inspection data. But Rome wasn’t built in a day. The new rating system may not be perfect, but it is progress. We need to remember why CMS created the rating system in the first place: to make the inspection data less confusing and to help consumers make informed choices. Moving forward with innovative solutions is key in any industry, and essential for the skilled nursing industry. Voicing our concerns as providers and consumers will help CMS work out the kinks in the new system.

We need to remember why CMS created the rating system in the first place: to make the inspection data less confusing and to help consumers make informed choices. Moving forward with innovative solutions is key in any industry, and essential for the skilled nursing industry. Voicing our concerns as providers and consumers will help CMS work out the kinks in the new system.