Episode: Segment 3
Segment 3 of interview
Announcer: You're listening to Aging Info Radio, with your host, Sue Zawacki.
Sue: I'm here with Matt McCann. We're talking about long-term care insurance. He is your specialist, has been writing policies, working with families since 1998. Matt, there's some employers that offer programs, or so I've heard, that actually offer long-term care insurance. What do you know about these?
Matt: Well, first off, a lot of people think they might be covered and they don't, because they confuse long-term disability or even short-term disability with long-term care. When we talk about a disability policy, which most employers do offer, you're replacing a portion of your income in the event you can't work. It doesn't pay for any care. It's just an income replacement tool. Now, not enough, but some employers do offer group long-term care insurance. The advantages of these plans, not usually price, but it's simplified underwriting, because they reduce the health requirements that it otherwise takes to get a policy.
But most group plans in long-term care are poorly designed. Because they are designed by what we call "benefits brokers," the people that really do health insurance and life insurance, and other types of employee benefits programs, and they don't really understand long-term care. So typically, they don't include inflation protection, or they have things like guaranteed purchase options, which means you can increase benefits, but the price keeps on going up and up.
Sue: Now, when you say "inflation protection," is that the same as a rider? You're referring to protection as the inflation rider?
Matt: Yes, which is something that we just automatically do with most clients. That means, not your premium, but your benefits go up by a certain percent. Most common is 3%. So every year, your benefits keep on going up and up. But it's factored in the cost of the premium, so your premium doesn't keep on going up and up.
Sue: Well, it's great that some employers are offering something. But I don't think this is very common.
Matt: No, it's not. Certainly, I just enrolled a major college in the area. There are employers big and small that do. But most don't, because they don't understand it, the benefit brokers don't understand it, and quite frankly the employees don't understand it.
Sue: Don't understand it. I think there's a lot of people that don't recognize how valuable long-term care insurance is and how needed, if there is a family situation where someone is even injured or becomes with a chronic disease.
Matt: You know, Sue? It's a good point. People think, "Oh, it's something that just old people need, or you have to be sick." No. You can be just old, sick, and feeble. You can have an accident. I had a client go on claim, because on his 60th birthday he went skydiving and his parachute opened late. So he fell hard with a dual knee and hip replacement. I mean, he recovered. But he needed eight, nine months of rehab. So the policy came in really helpful there.
Sue: Now, do the policies that are offered, are they for a period of 2 years, 5 years, 10 years? How are they... They're all written differently?
Matt: Yeah. They basically create a pool of money. Forget time period. It's a pool of money product with most companies. You select, first, a monthly benefit, how much the insurance company is going to pay towards your care on a monthly basis, and then an initial pool of money and both grow with inflation. So someone may say, "Gee. I want $3,500 a month," or whatever the amount is. The idea is to take a catastrophic situation and make it manageable. It's not to buy the biggest policy in the world, and we all fund our future retirements a different way.
These are questions that I ask, and anyone who attempts to help someone needs to ask, but most people don't. We design them custom to the individual. So we have an appropriate benefit that people can live with for the rest of their life.
Sue: I think it's so important too that people recognize private duty home care, or private or home healthcare can also be covered in long-term care insurance. So if you need someone to come into your home to assist with the activities of daily living, and your spouse is working and they can't do it, then you either reach out to family or you have a long-term care insurance policy.
Matt: Most long-term care in America is not delivered in nursing homes. Most long-term care is delivered in home, adult daycare, or assisted living. Policies cover all that. You, the insured, get to determine how to use the benefits. So those determinations are not some pencil-pusher at an insurance company. You and your family get to decide how to use the benefits once you qualify for benefits.
Sue: To qualify, you usually have two ADLs. Correct? You have to be...
Matt: In order to qualify, you need assistance with at least two of the six major activities of daily living, or you require supervision due to a cognitive impairment.
Sue: Well, there's so much to learn about long-term care insurance, and I'm here with Matt McCann, recognized as a leading long-term care insurance specialist. Matt's number is 866-751-7957. Coming up next, we're going to talk about the cost. A lot of people think long-term care insurance is really expensive. You're going to find out next right here, from Matt McCann on Aging Info Radio.