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What is Long-Term Care Insurance?
It is designed to help pay for long-term medical and non-medical services that would otherwise be paid out-of-pocket. Some policies cover nursing home care, while others include coverage for an entire range of services such as care in an adult day care center, assisted living, medical equipment, and formal and informal home care.
Long-term care policies pay benefits for you and anyone else you designate, such as your spouse, parent or child. Depending on the policy, it will either pay a fixed amount or reimburse you for services provided.
Do I Need Long-Term Care Insurance?
Similar to home, health and auto insurance, long-term care insurance is available to help protect you, your family and your assets.
Family members are under pressure to help care for a growing number of elders, and resources to pay for long-term care are declining. When an elderly adult becomes sick and does not have any insurance, the burden to pay for medical care often falls on family – and that cost can be high.
If you or your spouse, parent or child eventually needs long-term care services, the financial burden for the rest of your family may be steep.
Matthew Byrne with special guest Jerry Snyder
Welcome and thank you for joining us. You have tuned in to Navigating Health Insurance. I am your host Matthew Byrne. Our call-in number today is (818) 668 5442 and our topic is going to be long-term care insurance. The misunderstood topic and a very important critical element to creating a good risk management profile. So what is long-term care insurance? First of all, a few thinks it is not. Long-term care insurance is not health insurance. It is not life insurance. It is not property and casualty home or auto insurance. Long-term care insurance is about helping you pay for a nursing home care should you need it in your golden years, okay. So long-term care insurance is about helping you offset the cost of going into a nursing facility whether that be an assisted-living community, a skilled nursing facility, a more acute care such as an Alzheimer's ward. Well, a long-term care insurance policy is where you pay a small amount of money to the insurance company per month or per year in exchange for a large amount of benefit. For example, you might pay a thousand dollars a year for a policy that pays up to $200,000 of maximum benefit. In nursing home fees, typically, the average American span is two and a half years in a nursing home. Many Americans, in fact over 95% of all Americans do not have any long-term care insurance at all. Many are under the impression that there are retirement plan from work who will have some long-term care benefits. It almost in call cases does not. Most people think Medicare can take care of long-term care insurance. Medicare does not cover a
You get a 100 days lifetime long-term care benefit through Medicare, really if you get a hip replaced and need 20 or 30 days to rehab it and you need a facility to go through, that is really what the Medicare component of long-term care is trying to solve and once you have exhausted your 100 days, they are gone forever. So a really important and critical step is to look at, what different long-term care insurance providers are out there? How might my long-term care fit and what are my needs and what do I expect and what sort of kind of care do I anticipate. You can pay as little as $30,000 a year for long-term care and as much as $60,000 or $70,000 a year for
long-term care. More elite facilities with acute care like an Alzheimer's ward can even be doubled at so the amount you will need to protect yourself in your golden years from the cost of long-term care is pretty critical. That should be_03.17_ insurance in general. You are listening to Navigating Health Insurance. My name is Matthew Byrne. I am your host. We cover or host in a variety of topics. Everything from health insurance to life insurance, to accident policies and today we are talking about long-term care. Our call-in number is 818 668 5442. Feel free to call in if you have a question or you would like to participate in our show. You can listen at this show live or just go to Blog Talk Radio and you can find recorded versions. Our ID is spiralight. Our show is called Navigating Health Insurance. Feel free to call me directly at my toll free number. If you would like to speak with me in person, I love talking to my show listeners and if you have a need or want to ask a question, I would love nothing more than to help you do that so you can call me directly at 866 577 3620 or find us on the web at MyHealthQuoter.com.
So you are listening to Navigating Health Insurance, it is a weekly show and today's topic is long-term care insurance, so again let us just reset. Long-term care insurance allows you to pay a small amount of annual premium to an insurance company who will then in return when you do need to go on to a long-term care assisted living facility, they will pay all or part of your expenses associated with that. Most long-term care plans have what we call an elimination period. An elimination period is the amount of time that you must kind of self-insure that transaction until the insurance will kick in so for an example, a 30-day elimination period means let us say, you need to go onto a nursing home tomorrow and it is $4000 a month. You would have to pay the first month if you had a 30-day elimination period. Let us say you had a 90-day elimination period and over $4000 a month, you need to pay the first $12, 000 and then your long-term care insurance would kick in. There are key considerations about long-term care insurance, so we have talked about the elimination period. It is also how many years or how much time are you insuring for. The average American as we said spends about two and half years on long-term care facility so if you want to insure two years, three years, maybe it would be real safe and do four years. I recommend three years. I do not want you to over insure. I do not want you to have too much coverage because if you do not ever need it or use it, it kind of goes to waste, but three years seems to be a good amount. In that way, if you do need it, you are gonna have a little bit more than the average and what the average stay looks like and so I think three years is a good mark. The other thing you wanna look at is okay, how many dollars a month do I want the long-term care insurance company to pay.
Let us say, you want them to insure you for $2000 a month, well that means you could stay in a $24,000 a year facility. If you say I want $4000 a month and that means that you could stay in a $48,000 a year facility. Anything above that, anything more than $4000 a month will be paid for by the insurance company. The $4000 and anything more than that will be paid for by you so it does not mean you cannot stay in a $6000 a month facility. In fact, you are welcome to so, but you are gonna have the insurance company cover four grand of it and you are going cover the other $2000 of it. So the first thing is what is my elimination period? The second thing is how many dollars a month of protection do I want to buy. The third thing is how long do I want that protection to last, two years, three years, four years and then typically a long-term care insurance policy is stated in the form of the total pile of money, the total pot of gold. Is it $250,000, is it $150,000, is it $450,000 so as your policy issues, you will notice, oh well I have, today I have $200,000 of total protection, but if you provide an inflationary protection mechanic to your policy, which I highly recommend then your policy's total bucket of money will also grow over time. For example, I personally have a $200,000 bucket of money that has a 3% simple interest inflationary protection rider. That policy 20 or 30 years from now is like $477,000 worth of protection.
So you know, you want that money to grow at or above inflation if at all possible. That is not only a good idea, it is a critically important idea if your policy is going to qualify for the partnership program. I am going to talk about partnership in a minute, but that is very important. Medicaid spends down protecting your family assets making sure that your health, your long-term care policy is partnership compliant is mission critical. More and more about that later on in the show. Again, my name is Matthew Byrne, you are listening to Navigating Health Insurance. We are weekly program, you can listen to us live and participate by calling (818) 668 5442, or you can listens the recorded versions by visiting blog talk radio and typing in Navigating Health Insurance or I believed our screen name is spiralight. So join us either way or feel free to call me directly at my desk. I love to talk to you and just hear what is going on and answer any questions that you have. My number is (866) 577 3620 and I am your host Matthew Byrne. Today's topic is Long-term Care Insurance. So we have talked about elimination periods, which is how long you have to pay before the insurance kicks in. We have talked about collected deductible. We have talked about how many years at the time you would like the protection to last. Do you want it to last for two years, three years, four years? The average American spends two and half years in a long term care facility so act accordingly. We talked about how Medicare does not cover long term care but 100 days at your maximum benefit for long-term care from Medicare. So if you are turning 65 and thinking, oh well, find me a nursing home, Medicare will pay for that, right? Wrong, they will pay a 100 days' maximum. And it is usually to rehab you know some sought of minor or short term condition.
So it might be 20 days here, 30 days here, a handful of days here or there in and out of the facility as you rehabilitate yourself back to home or back to your place of residence. We also talked about, typically a long term care policy has a total pot of money, it is, there is kind of big war chest, the pot of gold there. An inflationary protection is critical because it will allow that money to grow with inflation over time because you know $200,000 of long term-care protection today does not really make a lot of sense when you think about what does $200,000 buy you 20 years from now. I do not know about you, but I am almost certain that the sun will set tonight, but I also certain that inflation is going to rise especially with some of the hurdles and problems we are tackling in our society and in Washington, so make sure that your policy has an inflation protection rider. Another reason why that is critical is there is something called the partnership program. This is a fantastic thing. It is really trying to stimulate and reward people who have the foresight and the financial wherewithal to go ahead and buy a long-term care insurance policy, because right now as it stands in our state __11.13___ it is very typical for most states, you need to spend that. Let us say you say, gosh! Mommy is to go to long term care facility or you know your spouse is starting to show signs and that might be a good fit for them. They would probably be safer and happier and more cared for if they were in a long-term care facility. We will have to make your elimination period or the deductible let us say 90 days and you paid for that facility for 90 days, your long-term care insurance premiums or your coverage will kick in. But if you do not have long term care insurance, your kind of thing, well, Medicaid. Medicaid is for the indigents, it is for the people who do not have the financial wherewithal to be able to afford certain things.
You would need to spend down your love ones' assets, whether be a grandmother, a parent, or your spouse, whoever needs the long term care facility, you need to spend down their assets all the way down. So all of their valuables, all of their heirlooms, all of their homes and properties, all of their 401(k's), all of their retirement income, all of their investments everything needs to be spent down, I believe the number in most days is less than $2,000 okay and once you are there then you would be Medicaid eligible. Medicare is about providing senior health insurance. Medicaid is about providing financial support for people who need helped medically. So to qualify for Medicaid, you need to spend it down. So if you mom has a house that is paid off and you are trying to get her into a nursing home, that house would need to be sold and you need to spend that. the proceeds on that house to pay for your mom's care in a long-term care facility before Medicaid would kick in. Typically the Medicaid facilities are not as nice, they are not as not plush, they do not have as good amenities as some of the more private placement long-term care facilities. Such an important consideration you know; a. Will you be able to qualify for Medicaid; b. How many assets will you need to spend down just to do so, to qualified for Medicaid, and three will a Medicaid benefit be sufficient facility for you. Will they have enough amenities and enough resources and enough quality of care to meet your expectations for a long-term care facility? You know my parents always joke, they say, "You know, we do not want to go to a facility. We do not want to go to a home", they always say, you know it is funny because I was joking with them I say, not like one over the cuckoo's nest any more, it is not Indian Joe and Nurse Hatchet or Ratchet, or whatever her name was.
Long-term care facility is a very loving caring place and all of the people who worked there certainly do it out of the kindness in the heart and the grace of God, but not all facilities were created equally and it is Medicaid facility cannot, it provide you the things you want and need in the facility or would you be more happy and more well taken care of self-insuring it or buying a long-term care insurance policy to help you offload some of the cost of that. Now the partnership program is really great because what it says is that if you buy $200,000 worth of long-term care insurance, that will exempt an equal amount from your estate, so for example if you parents have a $200,000 home that is paid for and you have $200,000 long-term care policy that your parents have that $200,000 worth of assets is exempt, you do not need to spend it down, you do not need to liquidate your assets or your loved ones' assets to draw them down to the Medicaid level of roughly under $2000. You can keep the house, keep $200,000 in the 401(k). Keep your investments. If the sum does not exceed $200,000 and your long-term care policies has $200,000 protection, it exempts an equal amount of money. So not only do you have the protection of having the insurance company pay for your care instead of you paying for it. But you also get to exempt assets from your spend-down. So you want to have a partnership compliant long-term care policy, very critical, okay? My name is Matthew Byrne. I'm your host today. We're talking about long-term care insurance. I've got a caller on the line. I want to go ahead and include them and plug them in. This is Matt Byrne. I just wanted to say hi and welcome to the show. Can you hear me okay?
And your name sir?
Matt, Jerry Snyder on this end.
Jerry, great. Jerry is someone I invited to join us on today's show and I just wanted to make sure I have the right person before I introduce him. Jerry Snyder is from Retirement Strategies. He has been one of the people who I say has probably forgotten more about long-term care insurance that most of us will ever know. Jerry is located and based at the Dublin, Ohio at Retirement Strategies and has helped hundreds of people navigate the complexities of a long-term care insurance policy. So I want to invite Jerry on to get his perspective, pick his brain a little bit and maybe get the high level points that we want to make sure we checked through as we decide a) Do I need long-term car insurance? b) How much? and c) When is the good time to do that? So Jerry, thanks again for joining us. We appreciate you on this show today.
You bet. And I thank you made my shoes pretty big there but I will try to fill those.
I'm sure you're capable, more than capable. So Jerry, when is the good time to shop for long-term care insurance? I mean when do you think people should start the process of looking at that?
You know Matt, as you know, I've been in this area planning for maybe 25 going on, maybe 30 years now, I hate to admit that and when we first started talking to clients about this, it was a very new concept of course and for quite some time, our actual average age of a person that implemented a plan of this nature was probably in their early 70s. Now over the course of the last couple of decades, however, that has changed dramatically. People who looked at it at that point either decided to implement or not. We're kind of playing catch up with people at that point who hadn't had an exposure to it. But more directly to your question now in our current era, we see people taking an interest in it early 50s. I think real good timing is mid 50s to mid 60s or late 60s, not to say that people younger and/or older than that might have a real need or interest in looking at it, but as far as more of the masses, I think it's in that, early 50s to mid, to late 60s. And the reason why primarily is because once somebody in that age group, and that's the age group for these individuals who are dealing with their parents, once they go through a situation in their own families, they really learn about what
long-term care is all about and what the financial stress and emotional stress of that issue is all about, then they also take personal interest in not wanting to repeat that in their own circumstances.
Gotcha. Tell me a little bit about the Medicaid spend-down and kind of what that threshold is and how people need to be careful as they look at offloading and divesting some of those assets to qualify for the Medicaid support?
Exactly. Of course that is kind of still the safety net in our country for helping people that need long-term care. It is presumably established to help those that strictly can afford it. A lot of others who might be able to afford it are taking advantage maybe of some of the laws that permit gifting away assets and things of that nature to kind of intentionally qualify for Medicaid assistance. But the qualification financially depends on whether somebody is single or whether they have a partner, a spouse presumably. The Medicaid counselors, if you will, who are determining qualifications are going to be looking at income as well as assets in an individual, so there are two tests, an income test and an asset test. If someone is single, they pretty much have to spend down everything on their own care before Medicaid would be approved or come to their aid. An individual is only permitted to keep a very, very small monthly amount. In Ohio, I think that amount is still around $40 a month. All other income must go to their own care. And of course, in this discussion, we're presuming that that person is in a skilled nursing home, getting very intensive kind of round-the-clock care and skilled care and so they don't need much money. They're getting their room and board if you will and healthcare paid for so they don't need much of their own money so they are required to spend down just about all of their income.
From an asset standpoint, only $1500 are they permitted to keep and pass on to the second generation. So whether it's CDs, whether it's IRAs or other retirement accounts, whether it's even their own house, cars, personal property, etc, all that has to be liquidated and spent down before Medicaid would approve that single individual. Now if there is a spouse involved, and I'm going to presume that one spouse is in a facility that I just described, but the other spouse can stay as what we call a community spouse or stay in their own independent living, be at their home, condominium or apartment, the system does not want to bankrupt that independent spouse. They don't want to cause them to become indigent, so they do permit them to keep a certain amount of income and a certain amount of assets and there are exempt assets for that independent living individual. This is a very complicated aspect of planning and I definitely recommend that somebody deal with an elder law attorney that's experienced in this type of planning. Although we know quite a bit about how that functions, generally, when we're dealing with a client, we also bring in an elder law attorney. But back to the qualification, the independent spouse can keep their house of course, a car, certain amount of personal property, a very little bit but some life insurance, they could have a prepaid funeral and some other assets of that nature before they were subject to the spend-down rules. Essentially, an independent spouse can keep all the money that they have earned and participated in. So they could keep their own social security if they have a pension plan of their own, they could keep that. But if they needed to rely on some of the other spouses' income, there can be limits and I usually use approximately $2500 a month that they're permitted to keep, whether that's their own resources or part of their spouses that's confined. And then approximately, about $110,000 of other assets so for most people, it does require still quite a bit of spend down even for that independent spouse.
Gotcha. Great. Thanks. You're listening to Navigating Health Insurance. Our special guest today is Jerry Snyder of Retirement Strategies. You can find Jerry online at www.retirement-strategies.com. Their website has a lot of resources and calculators and information on the state planning as well as long-term care insurance. So today's topic is long-term care insurance. We thank you for joining us. You can listen to this show live each week or listen to a recorded version by going to Blog Talk Radio and we archive all of our shows there. So Jerry Snyder is our special guest today. My name is Matthew Byrne. You can reach me toll-free at (866) 577-3620. If you have a question about this or another topic, feel free to call me anytime. I'm a resource and I'm here to help. Jerry, one more question. We've got about five minutes left before we wrap up the show. I catch on the partnership program earlier. I want you to kind of talk about how this Medicaid spend-down kind of intersects with that partnership program.
Exactly. And I came in on the call a little late but I know you were addressing, I think, the key aspects of the partnership plan but as you had mentioned very appropriately, if you buy an amount, whatever your benefit amount is and aggregate that you had purchased in the way of long-term care insurance, then you can keep that amount of additional assets over and above the spend-down limits that I discussed. So for that $1500 single individual that we talked about, if they bought $100,000 of long-term care insurance under the partnership qualified program, then they could keep not only their $1500 but $100,000 on top of that. And that same concept applies to the married individuals who are independent living. I think it's about $110,000 of assets that independent spouse could keep but again, if an independent spouse but again an additional $100,000 of long-term care insurance spouse had, they could keep $110,000 plus an additional $100,000 and bring it up to $210,000. So you describe that very appropriately and that's kind of how that integrates.
Gotcha. What do you say to people who say, "Well, I want to stay at my home. I want to age in place as long as I can".
Well, that's the beautiful thing about most of these insurance plans that they are very liberal and very universal in the type of benefits and the location of where benefits can be paid. So with most, you're buying a pool of benefit which is determined either by the number of the daily benefit or the monthly benefit they purchased times the length of pay-out period they choose. So that becomes their pool of money and so they can really use that. If you're buying the right coverage from the right company, you can use that and any type of certified or approved facility, whether that's a full retirement center, whether that's an assisted living or a stand alone skilled nursing home, but importantly you could use all of the funds at home if that's where you can receive your care, that could be your home, somebody else's home. I know that your audience probably is aware of some of the adult daycare facilities that are available where you can take an individual who needs care during the day, you, the caregiver could continue to work or do the personal errands that you need to do while that individual is getting high quality care during the day, but bring that individual or family member home in the evening to be in their own home setting at least for that period of time.
Great. Thanks. So if I heard you correctly, some policies will include a home healthcare benefit, respite care benefit and certainly a qualified facility such as an adult daycare facility or skilled nursing facility. Again, thank you for joining us. You're listening to Navigating Health Insurance. This is our weekly talk program where we explore or host different insurance topics, everything from life, to health, to accident and long-term care insurance. Our special guest today was Jerry Snyder of Retirement Strategies. Jerry has an office in Dublin, Ohio and has been doing great work in the long-term care community for many years. You can reach him at (614) 799-8668. As we wrap up our show, I want to say thank you very much for joining us. Check us online at Blog Talk Radio and listen to an archive version or call in next week and if you'd like to talk to me in the interim, you can always call me directly as one of my favorite things is to talk to my audience, answer questions and provide guidance and support. My name is Matthew Byrne. My toll-free number is (866) 577-3620. Hope to talk to you soon and tune in next week. Thank you.
Thank you Matt.
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