Haims column: Figuring out long term care insurance for relatives
I was recently at a restaurant in Basalt when someone approached me and shared her story of assisting her father. She explained that she had read my previous column in the Post Independent about long term care insurance (LTCI) and wished she would have known about this type of insurance years ago.
She explained that her father is in his late 60s, in great shape, and lives alone. When her mom passed away, the family had spent a great amount of savings paying for both home care and a nursing home. Knowing that her father at some time may also need some care, she and her sister sat with their father and discussed how medical assistance might be provided when he needs it.
As his wife is no longer around to be a care provider, and the daughters live in other states, the family decided to develop a plan for when their father may need assistance. The daughters knew that he alone could neither afford the costs of an assisted living facility nor private home care. So the daughters chose to help pay for an LTCI policy for their dad.
The LTCI policy they bought will provide $300 per day, has a 90-day elimination period, and has inflation protection. She explained that while the sisters share the cost of the $425 a month premium, had they known about this option when their mother had been ill, five years earlier, they may have paid $150 less a month.
WHO MIGHT NEED LTCI?
Unfortunately, many of us incorrectly assume that health insurance and/or Medicare will assist in providing long-term medical solutions. This is a common misconception that may end up causing great amounts of stress and anxiety.
Many people assume that Medicare will provide long-term care. Medicare provides limited benefits that are mainly for brief rehabilitation stays in nursing facilities and limited medical-oriented homecare visits. Medicare does not provide for nonmedical homecare.
If you or a loved one desires to remain in the comfort of home or at an assisted living facility (ALF), you may want to consider LTCI. While some ALFs accept Medicare, the number of rooms they offer are often quite limited and book up very quickly. Therefore, to ensure that your desires or the desires of your loved ones are met, financing care at home or an ALF must involve a financial plan. That “plan” most often happens in one of two ways: self-financing via assets and savings or via an LTCI policy.
I read an AARP article that stated, “Most LTC experts say the ideal candidates for long-term-care coverage are those who can comfortably afford the premiums and can handle premium increases, which are becoming quite common.” According to AARP, “If the premiums are likely to consume more than 10 percent of your income, you probably can’t afford the coverage.”
Caring for a loved is not something most people are prepared for as it can be all-consuming. The 2016 Genworth Cost of Care Survey I referenced last week estimates $3,861 a month as the national average cost for private duty home care. This is based on 44 hours a week of care — about 6.25 hours a day. Last I checked, there are 168 hours in a week. Who’s covering the rest of the hours and at what cost — emotionally and monetarily?
LTCI policies are not one size fits all. They are highly customizable and vary greatly in what is covered or not covered. When considering the purchase of an LTCI policy, you need to educate yourself and find out the specific offerings and exclusions that make up the policy.
Here are some policy details you should research:
• What is the daily coverage amount?
• Will the daily coverage amount be indexed with inflation?
• What is the maximum coverage amount? (usually tied to a number of years)
• What is the length of the elimination period? (the number of calendar days before policy benefits are payable to you)
Unless you have family who have already addressed the many details involved in aging, and shared their information and experiences with you, it’s likely that you may be unprepared. Neither high school nor college teaches people about the intricacies of aging.
In my college experience, I don’t recall any course that provided education about how to financially plan for retirement and pay for assisted medical care. If you or your parents are not prepared, you all just might find a lifetime of savings and assets may quickly be exhausted by the cost of paying for an ALF, nursing home or private home care.
We all will need to consider what tools we can put in place to assist us in living the life we choose as we age.
Judson Haims is the owner of Visiting Angels Home Care in Glenwood Springs, Basalt, Aspen and the surrounding areas. His contact information is, http://www.visitingangels.com/comtns, 970-328-5526.