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Published: Feb 28th, 2017

Long-Term Care Insurance Helping Avoid Nursing Homes

LTC Insurance Helping Avoid Nursing Homes

Nobody wants to go to a nursing home, and a new study completed by the American Association for Long-Term Care Insurance shows people with LTC insurance can stay in their own home. Most newly opened long-term care insurance claims begin at home according to the latest data reported by the AALTCI, a national consumer education and advocacy group.

The report says that 54% of new long-term care insurance claims started with homecare.  An increase of 3% from the last study completed by the group in 2012. 14% of new claims started in assisted living facilities. 32% of claims started in nursing homes. 

"Most long-term care insurance claims begin and end in the home."

 Jesse Slome, executive director of the AALTCI.  

The AALTCI analysis of claims found that nearly 56 percent of claims also ended in the home.

"People want to be in their home with family and loved ones and having some long-term care insurance in place can help pay for the cost of home care services."

Jesse Slome 

Many people think of long-term care as being nursing home care. The fact is a recent Boston College study confirmed that nursing home stays were much shorter now than in the past. Many experts cite the availability of assisted living, adult daycare, and homecare as reasons why fewer people need nursing homes. The AALTCI study confirms that for people with insurance, they have the ability to avoid a nursing home. In fact, some experts call LTC insurance as nursing home avoidance protection.

"Individuals continue to mistakenly think of long-term care insurance as nursing home insurance," explains Jesse Slome. "I sometimes refer to LTC insurance as nursing home avoidance insurance because often having this insurance protection in place allows the individual to be cared for in their own home."

Jesse Slome 

In 2018, American families received over $10.3 Billion in Long-Term Care Insurance benefits. This helps families protect their savings, reduce stress and burden on family members and give them a choice of quality care in the setting they desire. Most people purchase Long-Term Care Insurance in their 40s and 50s to take advantage of low premiums. Often, because of better health, consumers can receive preferred healthy discounts as well. This advance planning provides the resources to pay for care services and meet the challenges of aging. 

These policies work fairly simply. To receive benefits from your long-term care insurance policy, you meet two criterias the Benefit Trigger and the Elimination Period. A benefit trigger is usually a person who requires help with at least two of the six activities of daily living, known as “ADL’s” or you require supervision due to a cognitive issue like Alzheimer’s or dementia. The ADL’s are:

  • The six ADLs are recognized as:
  • Bathing. The ability to clean oneself and perform grooming activities like shaving and brushing teeth.
  • Dressing. The ability to get dressed by oneself without struggling with buttons and zippers.
  • Eating. The ability to feed oneself.
  • Transferring. Being able to either walk or move oneself from a bed to a wheelchair and back again.
  • Toileting. The ability to get on and off the toilet.
  • Continence. The ability to control one's bladder and bowel functions.

Most policies include help as being either “hands-on” assistance or “stand-by” assistance (meaning you can still perform the ADL but you need a person there just in case).

 The elimination period is a deductible based on days. The standard is 90 days.

Today’s Long-Term Care Insurance provides many options that didn’t exist decades ago. There are tradition plans which provide outstanding value and options. These options include shared spousal benefits, case management, inflation options and more. Consumers in 45 states can choose a traditional plan which is partnership certified. This provides them with additional dollar-for-dollar asset protection. Asset-based plans, which are either life insurance or annuities with a rider for long-term care, provides outstanding value with a death benefit. Many states have short-duration plans which are geared for those who are older but still have at least average health.

Today’s Long-Term Care Insurance policies are also rate stable. These policies, unlike legacy products marketed and sold decades ago, are priced under new regulations. In addition, these policies are priced based on an extremely low-interest-rate environment. This gives consumers additional peace-of-mind.

One of the most overlooked options are traditional plans which are partnership certified. 45 states have partnership plans which provide what is called “asset disregard.” In the event you spend all the benefits from your LTC policy, they will disregard the amount paid by insurance when they calculate the Medicaid benefit. A state partnership plan allows a person to still qualify for Medicaid without spending down a majority of their assets. The purpose of the Long-Term Care Insurance Partnership program is to make the purchase of smaller policies even more meaningful by linking these special policies (called Partnership qualified policies) with Medicaid for those who exhaust their benefits but continue to require care. 

Often the only difference between a partnership qualified policy and other long-term care insurance policies sold in a state is the amount and type of inflation protection required by the state. Generally, with these traditional plans, if you are lucky enough never to need care you won't receive anything back to your estate. There are asset-based or “hybrid” plans which are life insurance policies with riders for long-term care or annuities with riders for long-term care. These are single premium but offer some type of death benefit. There are also what the industry calls “Short Term Care” policies.  Short Term Care policies are much smaller benefit plans but allow more people to in good health to qualify. Also, older people who normally would not be eligible for a new long-term care plan may be eligible for a short-term plan.

LTC insurance is very affordable for most people.

 “The key to long-term care insurance is to apply early while it’s inexpensive.”

 Kevin M. Lynch, assistant professor of insurance at the American College of Financial Services in Bryn Mawr, PA 

There are many ways according to experts to save money when shopping. Experts suggest working with a Long-Term Care specialist and understand you should design a plan based on your unique needs and budget which includes your future retirement plan and where you plan on living when you retire.

The good news is, according to this report, you can expect to be able to avoid that nursing home. An LTC policy will help provide these choices without financial devastation and burden to your family.