Frequently Asked Questions about Long-Term Care

• What is Long-Term Care?

  Long-term care is the type of care you will need if a chronic illness, injury, or frailty, makes it difficult for you to function independently. It comprises a variety of out-of hospital health and social services that are provided to people who are having difficulty taking care of themselves. While over 75% of these services are provided at home, we often associate long-term care with assisted living facilities and nursing homes. A wide range of individuals including registered nurses, nurse's aides, therapists, home health aides, and companions and homemakers provide these services. Many people think about long-term care as a "senior issue", yet 40% of long-term care is provided to individuals under 65.

• Can it happen to me?

  Hopefully you will not need long-term care. Certainly it is convenient to think about it always happening to the "other" person. Your bottom line issue may be "can it happen to me and is it worth betting my financial future on?" The popularity of long-term care insurance has increased dramatically as people in the work force are confronting the realities of taking care of parents, neighbors, and friends. As we get older, the odds of needing care increases exponentially. In fact there is a 70% chance that you or a spouse will need some form of long-term care and a 40% risk that you will enter a nursing home at some point during your lifetime.

• How much does long-term care cost?

  Unfortunately, long-term care costs are quite high. In 2012 the average annual nursing home cost in metropolitan areas was approaching $130,000. Assisted Living Facility costs vary, depending upon the level of services required. Assisted Living Facilities can cost as little as $36,000 annually, to $75,000, and more. Costs for care at home fluctuate, again depending upon levels of care and services required. Homemakers, home health aides, nurses, physical therapists, live-in companions, and 24-hour skilled nursing are all providers in this continuum. While home care costs may average $50,000 annually, they can exceed $120,000. Most people receiving long-term care want to stay at home for as long as possible.

  From a planning perspective, what should be of most concern to you is not what care costs today, but what care will cost in the future. From 2003 through 2012, nursing home costs in our region increased, on average, 5.2% annually. If we used a more conservative 5% inflation assumption, we may expect nursing home costs to surpass $250,000 annually in 15 years, and $500,000 annually in 30 years. While the average length of care is 2.5 years, some individuals with debilitating injuries need care indefinitely. Many people who are cognitively impaired require care for ten years - or more.

  Bearing these costs and facts in mind, how much money does one need to be financially secure? What is financial security? How long could you pay for care before you become financially uncomfortable- or lost everything?

• Who pays the bill?

  Your health insurance is designed to pay for expenses associated with acute medical care. It was never designed to pay for extended home care, adult day care, care in assisted living facilities and custodial nursing home confinement. Ninety-five percent of long-term care services are custodial in nature, and are not paid by health insurance.

  Medicare provides coverage for acute medical care to people over age 65. Nursing home benefits reimbursed by Medicare are for a short period of time, usually less than 100 days. This reimbursement will only be made after a minimum three-day stay in a hospital, and only if care is deemed medically necessary.

  Medicaid pays for most of the nation's long-term care bill. However, your assets will have to be depleted to welfare levels in order to qualify. It is important to note that Medicaid was not originally designed as a middle class entitlement program, and many of the legal means individuals have used in the past to impoverish themselves to qualify for Medicaid will be more difficult to take advantage of in the future. Do you really want to give your money and your home away? How will that make you feel? Do you need to make such a sacrifice?

  If health insurance, Medicare, and Medicaid will not pay, who will? Most likely, you will need to use your own assets and income to pay for long-term care should the need arise. In fifteen years, when annual costs may exceed $170,000 how much of an impact may these costs have on your retirement assets? Will there be enough money left for your spouse and other family members? Will there be assets left for other loved ones, or your favorite charity? Clearly a major financial issue for most of us is one of outliving our assets.

• How does long-term care insurance work?

  When you qualify for benefits, long-term care insurance creates a pool of money that can be used to pay for your care, regardless of when or where care is needed. The choice can be yours. When you enroll, you choose the size of the pool of money available to you over your lifetime. This can be called your maximum lifetime benefit. Sometimes insurance companies express this in the number of years the benefit can be paid. The maximum lifetime benefit may be as small as $75,000- or it can be virtually unlimited.

  You can choose how much money will be deducted from this pool to pay, or reimburse you for your daily long-term expenses. This can be called your maximum daily benefit. The maximum lifetime benefit and the maximum daily benefit will automatically increase 5% annually to keep pace with inflation, though your premium is designed to stay level. Your premium can never be increased because of changes to your age or health.

  To qualify for benefits you must have a cognitive impairment, such as Alzheimer's disease, which is being dangerous to yourself or others. Or you must need assistance with two out of six Activities of Daily Living that are: bathing, dressing, eating, toileting, transferring and continence. In most situations, bathing and dressing are the first activities we need assistance with in long-term care situations. RetirementGuard can help you determine the level of benefit most suitable for you, depending upon your personal objectives, tolerance for risk, and assets that you may wish to protect. Your age when you enroll and the size of the benefit you select determines your monthly premium.

  A properly designed long-term care insurance policy will provide funds to pay for long-term care services you receive at home, in you community, or in assisted living or nursing home facilities.

• How can long-term care insurance help me?

  Long-term care insurance may help you preserve not only your retirement assets and income, but your dignity and the control of your destiny. It may also help you preserve your right to make decisions about your money and about your own care and well-being.

• What are the advantages of enrolling now?

  You guard your assets and maintain your independence.

  Your decision about whether to enroll is an important one - and could become even more important in the future. long-term care insurance may enable you to begin safeguarding your financial assets now. it gives you planning options and flexibility. you can enjoy the rewards that come with financial peace of mind and advanced planning.

  You can save money by obtaining coverage now.

  If you enroll now, you will lock in a premium rate that is much lower than it will be in the future. In fact, if you are age 55, your premium would be two hundred percent lower than if you waited to age 65 to enroll. A detailed Cost of Waiting analysis can be found on the RetirementGuard web site. Click on -Things to Think About. Your premium will never change due to changes in your age or health. Please note that all insurance companies reserve the right to increase long-term care insurance premiums- but you cannot be singled out for increases.

  You insure your insurability.

  Long-term care insurance requires satisfactory proof of good health. Very few people who recently had a heart attack, or were severely injured in an automobile accident, would have predicted those events. Enrolling now may protect you against the possibility that you will not qualify for coverage in the future.

• Who is RetirementGuard?

  RetirementGuard specializes in the design, communication and on-going administration of long-term care insurance employee benefit programs.

  RetirementGuard's mission is to enhance quality of life and peace of mind by developing personalized insurance strategies that can protect assets from the potentially devastating costs associated with long-term care. We believe our clients interests always come first. If we are diligent in serving our clients needs- our success will follow.

  You can contact us toll-free at 888.793.6111