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the 411 on longterm care insurance is it right for you? WRITTEN BY Elizabeth A. Walker
LET’S FACE IT. NOBODY WANTS TO TALK ABOUT LONG-T TERM CARE insurance. It ranks up there with updating your will and life insurance. But many people will need some assistance in the future, so it’s important to understand the basics and then decide if long-term care insurance is a protection to pursue. What is long-tterm care insurance? Long-term care means an individual
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aide coming to the home to skilled care in a nursing home. Long-term care insurance
needs assistance with some activities of
(LTCI) can help cover the cost of that
daily living (ADL). ADL include bathing,
care, allowing you to protect your assets
dressing, using the toilet, mobility, and
against the risk of paying for long-
eating. Assistance ranges from a health
term care.
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life ) ) ) long-tterm care
And it’s a viable risk. According to the U.S. Department of Health and Human Services, 12 million adults age 65 and older will need long-term care services by 2020. When should I get long-tterm care insurance? “The best time to apply is when you are healthy, in your 40s or 50s,” said Louise White, owner of a State Farm Insurance franchise in Landisville. “The earlier you get it, the less you have to pay and you have the greatest number of options available to you.” Isn’t it long-tterm care for, well, old people? Hmm, you’d think so, but not necessarily. The U.S. Department of Health and Human Services notes that 40 percent of people receiving long-term care right now are between the ages of 18 and 64! You may be perfectly healthy today, but tomorrow could bring the diagnosis of
monthly benefits are adequate for the
a chronic illness or a tragic accident.
demographic area, said Andrew R.
predict what costs may be in the future. So how do you know that the
O’Connor, Certified Long-Term Care
insurance you purchase today will cover
What happens if I have LTCI and never
Advisor for Mutual of Omaha Life
your costs in the future?
use it?
Insurance Company. He also said
Most policies do not have a cash value,
“Inflation protection is important to
individuals should check the company’s
keep up with rising healthcare costs,”
said White, although some products may.
rating, which is a sign of the company’s
O’Connor said.
It’s like other insurance coverage—you
ability to pay claims. A company should
don’t know if you’ll need it, but it’s there
be rated at least an A-.
to cover the bases in case you do. If
“Ask what discounts are given if you
You can purchase a simple or compound inflation rider, said White. It works the same way as simple or
you’re not sure, “just get the basics and
are married, in preferred health, married
skip the bells and whistles,” White said.
when applying, a two-person household,
“If you only have a certain amount to
or a current Medicare supplement client,”
benefit and 5 percent inflation. With a
budget for LTCI, then only spend that
he added.
simple inflation rider, the daily benefit
amount.”
Make sure the plan’s daily and
Let’s use an example of a $100 daily
will increase 5 percent of the base benefit What about inflation?
What should I look for in a plan?
compound interest.
Like everything else, healthcare costs continue to rise and it’s impossible to
each year. So the first year’s benefit would be $100, the next year $105, the next $110, and so on.
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) ) ) long-tterm care
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With a compound inflation rider, your daily benefit will increase based on the
with your own assets.”
Long-term care insurance is a hefty
White said most people should
topic to sort through. It would be easy
total benefit. On the first anniversary of
consider long-term care insurance, unless
to flip the page to the next, undoubtedly
a policy with a $100 daily benefit, the
they are very wealthy and have enough
more interesting, story. Instead, talk to
benefit increases 5 percent to $105. On
assets to risk paying for long-term care.
your insurance agent or financial advisor
the second anniversary, the benefit
On the other hand, long-term care
to see if long-term care insurance should
calculation would be $110.25, or $105
insurance might not be in your best
be part of your financial plan. Also
plus 5 percent. The next year, it would be
interest if you have a low income and few
check with the human resources director
$110.25 plus 5 percent and so on. Over
assets to protect.
at work—more and more companies
time, a compound rider results in greater coverage. Do I really need to consider LTCI? Long-term care insurance isn’t
A common misperception is that
are starting to include long-term care
Medicare or Medicaid will cover the cost
insurance as part of their benefit
of long-term care. Medicare will only
packages.
pay for skilled nursing care if you need it
Long-term care insurance may
for a short period of time. Medicaid will
or not may be right for you. By
necessarily inexpensive. It’s difficult to
only pay for long-term care if you meet
doing the research, you’ll find the
think about purchasing more insurance
its qualifications, which include paying
peace of mind you need to face the
with priorities like college tuition and
down your assets first.
future. ) ) )
mortgage payoffs, not to mention beefing up that retirement fund. Consider it part of your overall financial-planning package. “Coverage is based upon what the family wants to accomplish,” said O’Connor. “One way is to fully cover long-term care costs or to cost share
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Own Your Future Pennsylvania has partnered with the U.S. Department of Health and Human Services to offer individuals between 45 and 65 a free long-term planning kit. The Pennsylvania kit includes a Pennsylvania Resource Guide that provides helpful Pennsylvania-specific information. To obtain your free kit, go to www.longermcare.gov/campaign. You can also call 866.752.6582.
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©2006 Nationwide Mutual Insurance Company and Affiliated Companies. Nationwide Life Insurance Company. Home office: Columbus, Ohio 43215-2220. Nationwide, the Nationwide Framemark and On Your Side are federally registered service marks of Nationwide Mutual Insurance Company. Not available in all states.
FREE Gym Membership for MEDICARE BENEFICIARIES We will pay for your gym membership at participating fitness centers! Learn how you can exercise the great benefits of Sterling Forever Fit. Membership at participating gyms is automatic for people enrolled in any Sterling Medicare Advantage health plan. Call today 1-866-217-3666 TTY available at
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A Medicare-approved, Medicare Advantage Private Fee For Service plan. Anyone entitled to Medicare Part A and enrolled in Medicare Part B may apply. A Medicare Advantage Private Fee For Service plan works differently than a Medicare Supplement plan. Your doctor or hospital is not required to agree to accept the plan’s terms and conditions, and thus may choose not to treat you, with the exception of emergencies. If your doctor or hospital does not agree to accept our payment terms and conditions, they may choose not to provide health care services to you, except in emergencies. Providers can find the plan’s terms and conditions on our website at: www.sterlingplans.com. (or the direct link to the provider terms and conditions of payment can be found online at: https://secure.sterlingplans.com/providers/pdf/tandc.pdf). H5006_01_2308(9/07) winter 2008|
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