As America ages the number of people who require Long-Term Care services and supports continue to increase. Those with Long-Term Care Insurance are receiving benefits in even larger amounts. According to the American Association for Long-Term Care Insurance (AALTCI) (www.aaltci.org) the nation’s Long-Term Care Insurance companies paid $9.2 Billion in claim benefits in 2017. That equals $25.2 million a day in claims that otherwise would be paid out of the retirement assets of each family.
In 2016 the AALTCI reported that the industry paid $8.65 billion in claims. Each year more people are benefiting from these policies that people tend to purchase prior to retirement as part of their overall retirement plan.
“When you live a long life the risk of needing services referred to as ‘long-term care’ increases significantly,” said Jesse Slome the executive director of the AALTCI.
“Without insurance to pay some or all of the cost, the caregiving responsibility often falls on elderly spouses or adult children caring for their aging parents,” Slome explained. “Long-Term Care insurance provides more than just money,” Slome adds. “It’s as much about having control and choices, while protecting your retirement plans and lifestyle.”
Slome says consumers have a number of choices for planning today. In additional to traditional plans so-called “hybrid” or “asset based plans” exist which combined life insurance or annuities with added long-term care benefit. Shorter duration plans also exist which provide smaller benefits but have more expanded underwriting criteria including consideration for those who are older who otherwise would be ineligible for new coverage (https://www.ltcnews.com/articles/new-ltc-policy-options-available-hybrid-long-term-care-and-short-term-care).
Most states have partnership plans available. These special Long-Term Care policies provide additional dollar-for-dollar asset protection. Find cost of care in your state and partnership availability: https://www.ltcnews.com/resources/state-information.
The financial costs and burdens of aging impacts you, your family, your savings and lifestyle. A new study published in Health Affairs shows the financial impact Long-Term Care is having on the American family. Americans spent nearly $163 billion on nursing care facilities and continuing care retirement communities in 2016 (https://www.ltcnews.com/articles/long-term-care-spending-hits-163-billion).
This doesn’t account for the amount of paid care at home, adult day care and assisted living. Nor does it count value of unpaid caregivers which are usually elder spouses, daughters or daughter in-laws.
“Caregiving is hard on family caregivers since they have their own careers and family responsibilities. Paid care is expensive. Long-Term Care Insurance provides consumers with choice and asset protection. This is why so many people want to address this issue before they retire,” said Matt McCann, a national specialist in Long-Term Care Planning.
The ability to stay at home is the focus for many people as they wish to avoid a nursing home to start with.
“LTC insurance claims data shows that only about 15% of claims start in a nursing home, and more than 60% start at home; this makes sense. What is surprising is only about one in five (20%) of LTC insurance claims end in a nursing home. More than half end at home. The balance is made up of assisted living and other alternative residential care options. People with even a modest amount of LTC insurance are able to stay home longer and more effectively when the "informal" caregivers - spouse, partner, adult children - can take a break, said Bill Comfort, owner of Comfort Long-Term Care, a LTC specialty agency with offices in St. Louis, MO, and Durham, NC.
Some consumers think these policies are expensive, however the plans are very affordable according to experts.
“The biggest miss-conception concerned consumers have is affordability. Long-Term Care insurance is affordable if one understands the continuum of chronic care,” said George Mellendorf, President of LTC Solutions.
He says since most claims are for care at home the plans can be designed to be very affordable.
“People often share with me what it means being a son, daughter, or in-law, and having the responsibility to their own family, career, and dealing with a parent who needs care and attention. They share with me they don’t want to place this burden on their own family,” said Brent Donarski who has been working in long-term care industry since 1988.
“Long-Term Care Insurance is really easy to understand. The challenge is, many insurance agents and financial advisors, don’t fully understand all the product offerings or the underwriting process. People I speak with find it easy to understand and more affordable than they originally thought,” Donarski said.
Consumers want flexibility and affordability with their plans once they see it is affordable.
“My clients often tell me that purchasing a Long-Term Care policy provides them with the flexibility to address their future long-term care needs the way they want to. They are able to rest assured that their care preferences will be met without burdening their families or dramatically impacting their assets. This is tremendous peace-of-mind for them, and it’s often very affordable,” said Cassandra Watson a national Long-Term Care specialist based in Sarasota, Florida.
The policies are being used and are paying out more and more benefits each year. Experts suggest shopping for a Long-Term Care policy is best prior to retirement as you are in better health and can enjoy lower premiums and more options.
Jesse Slome says getting help from an experienced agent is important. He indicates there are three questions to ask an agent before agreeing to work with him or her:
First, how many years have they been selling Long-Term Care insurance? “It takes at least three years for people to really understand the industry,” he says.
Second, how many people has the agent sold Long-Term Care insurance to? Fewer than 100 policies isn't enough. "People think insurance is insurance, but this is like brain surgery. I don't want to go to a brain surgeon if I'm his second patient," Slome says.
Third, find out how many insurers the agent works with. "Agents are only going to recommend the companies with which they can earn a commission," he says. Look for an agent working with a minimum of three or four companies.