ISSUE #18
Long Term Care Insurance

Along with our longer life span, we also face a higher risk for several chronic medical conditions late in life. These include Alzheimer’s disease, arthritis, diabetes, stroke, heart disease, lung disease and cancer, each of which may require long term care.

1. Long Term Care -- Unlike acute medical care, which is provided by physicians and hospitals to treat the symptoms of a disease, long term care refers to help with the activities of daily living. Many chronic conditions can prevent you from bathing, dressing, feeding, walking or toileting on your own.

2. Levels of Long Term Care -- Depending on the severity of your condition, your needs may range from personal assistance in your own home to skilled care in a nursing home. You may depend on family caregivers, if they are nearby and able to help. Otherwise, you will need professional long term care services.

3. The Cost of Long Term Care -- Long term care is expensive, and it is not covered by Medicare or most health insurance policies. In most states you can expect to pay between $40,000 and $65,000 a year for skilled nursing home care and somewhat less for care in an assisted living facility. Depending on your medical condition, you may need long term care for several years.

4. Paying for Long Term Care -- You can pay for long term care with your personal savings, long term care insurance, or Medicaid. If you plan on using your savings, you need to set aside enough to cover a stay of a year or more. If you plan on using insurance, you need to apply before you develop a serious medical condition. Medicaid pays basic nursing home costs only for people who are financially indigent.

5. Long Term Care Insurance -- Several insurance companies offer long term care insurance (LTCI) policies. While the idea of purchasing LTCI to cover possible long term care needs may sound attractive, you should analyze this option very carefully. LTCI is an expensive and complex product. It is often difficult to understand all of the features and to compare various policies to see which one will best meet your needs.

6. Coverage -- Most LTCI policies will cover nursing home care, assisted living and home health care. Some are more restrictive. LTCI policies set limits on daily benefits, and they have lifetime coverage limits, unless you purchase unlimited coverage. Carefully examine the coverage that is offered and make sure you understand what medical conditions are required to trigger benefits.

7. Options -- Most LTCI policies offer several options. An important one is the cost-of-living adjustment. Long term care costs are rising and are expected to be much higher in the future. A cost-of-living feature raises the coverage amount each year to help offset price increases. LTCI policies also offer elimination periods, which are waiting periods before benefits begin. A longer elimination period lowers your premium.

8. Underwriting -- LTCI coverage requires medical underwriting. The insurance company examines your medical records and then quotes a premium based on your risk of needing long term care. Healthier and younger applicants pay less for LTCI. If you wait until you have developed a serious chronic health problem, it will be too late to purchase LTCI.

9. Company Strength -- If you purchase LTCI, you are counting on that policy to be in force when you need it, which may be several years in the future. Look carefully at the financial strength of each insurance company. Companies are rated by A. M. Best and Standard & Poor’s. A low premium from a weak insurance company may turn out to be a disappointment.

10. More Information -- Do your research before you make a purchasing decision. The National Association of Insurance Commissions offers an excellent booklet called “A Shopper’s Guide to Long-Term Care Insurance.” You can order it for free at www.naic.org or by calling 816-783-8300. Many state insurance commissioners also provide consumer information on their websites.

11. Professional Guidance -- Exercise caution when working with insurance agents. Some are very knowledgeable and can help you compare products. Others are focused on a quick sale. Consider working with an independent agent, who represents many insurance companies, rather than a captive agent, who works for only one company. Your financial planner and your attorney are also good sources of guidance. Take your time and study your options before you make your decision.

This publication has been prepared as an educational resource to help the reader identify areas of potential concern. The publisher is not engaged in rendering legal, accounting or other professional services. The information contained in this publication should not be acted upon without first obtaining the advice of a professional adviser. 2004 © Florida Philanthropic Advisors, LLC. Material may not be used without permission.

You may wish to access NEW information this month at: www.ashland.edu/estate and “click” on “Planned Giving” in the left hand column.

Our planned giving director, Paul Ditlevson, can be of tremendous service in helping you integrate your giving goals with your overall estate plan. He can also help you prepare to visit your attorney. You can reach Mr. Ditlevson by calling 419-289-5090 or by email to pditlevs@ashland.edu or regular mail at 401 College Avenue, Ashland, OH 44805.