Should You Consider Long-Term Care Insurance?

Without proper planning, long-term care can be the greatest threat to our assets today, and we’re not just talking about nursing home costs. In fact, most people will never be in a nursing home, over 80% of long-term care is extended care at home or in the community like assisted living or even adult day care. Did you realize that most long-term care is not in a nursing home?

Another huge misunderstanding about long-term care is that it doesn’t just happen to older people. 40% of people needing it today are working-age adults between the ages of 18-64 due to accidents—many of them automobile and sports related like Christopher Reeve—and conditions like MS, brain tumors, and 1/3 of the people who have strokes in the US are under 65!

(Editor’s Note: Even if the prospect is over 65, this statement is still important because the prospect may have children or other younger family members to ultimately share as a referral.)

Long-term care is very expensive and runs about $60,000–$140,000 a year depending on where you live for either an eight-hour shift at home or a semi-private day in a nursing home with drugs and miscellaneous supplies. This cost will at least triple in the next 20 years! The life span of an Alzheimer’s patient is an average of 8 years, but can be as many as twenty, and if you and your spouse need care, you can see how these numbers explode.

Unfortunately, most long-term care expenses are paid for out of people’s pockets B out of their savings they are accumulating or have accumulated to enjoy their retirement.

Why? Because long-term care isn’t covered by Medicare and other familiar forms of insurance like group or individual health insurance, Medicare supplements, retiree health plans, HMOs, VA plans, or disability income plans.

And, the odds of government helping you are so low. You have to be down to $2,000 (varies by state) in assets in your state before the welfare program, which is called Medicaid will help. So you have to be really poor to get that kind of help. Did you realize how limited the option for Medicaid or any type of government assistance is now? There are penalties for just giving your assets away (See LTC Report, "Ten Reasons Why It Might Be A Bad Idea To Transfer Assets To Qualify For Medicaid")which means you lose control of them, and even if you did qualify, choices are so limited—you can’t make your own decisions anymore.

On top of all this, the odds for needing long-term care are greater than 50%, much higher than losing a house by fire or being in a car accident and often at a far greater cost that losing our whole house. (This won’t be nursing home for most of us, but home care can cost just as much or more than nursing home care.)

In other words, you don’t look out your bedroom window and see 1 out of 2 houses burning, and yet you wouldn’t think of not having a homeowners’ policy, even if your mortgage is paid off, would you? Or of not having car insurance even if you weren’t legally required to?

What we are talking about here is something that is very expensive, very likely to happen, and is not going to be paid by anything else until your resources are almost gone. Do you see any reason why you wouldn’t want to protect yourself and your family if you could? (Prospect answers “no”). Great! What time next week would be convenient to get together for me to customize a program for you and give you specific information? (Give choices of times and days.)

Sources:

1. LTC can be the greatest threat to our financial security without proper planning. Miller, Jessica. “The Changing Face of Long-Term Care”, CARING Magazine, August 1998
2. Over 80% of LTC is not in a nursing home-mostly at home. O’Shaughnessy, Carol, Congressional Research Service, testimony to Senate Aging Committee, June 28, 2001
3. 40% of people needing LTC are ages 18-64—gives examples Ibid.
4. “MetLife Market Survey on Nursing Home and Home Care Costs, 2002”, MetLife Mature Market Institute, Released April, 2002
5. Costs to triple in 20 years.
   Heffler, Stephen, et al, "Health Spending Projections For 2001-2011: The Latest Outlook", Office of the Actuary, Centers for Medicare and Medicaid Services, Health Affairs, March/April 2002, p. 208 (5.8% projected growth rate for home health and nursing home care 2001-2011)
6. Lifespan of Alzheimer’s patient averages eight to 20 years. Alzheimer’s Association 2002
7. Most LTC expenses out-of-pocket expenses or welfare 2000 statistics, Centers for Medicare and Medicaid Services, 2/02
8. Odds of needing LTC are greater than 50% (probably will be home care, not nursing home)
   Who Buys Long-Term Care Insurance? 1994-1995 "Profiles and Innovations in a Dynamic Market”, Health Insurance Association of America/LifePlans, Inc., p. 2 (Confirmed by LifePlans, Inc., 1/02)