Five Simple Rules

A few simple rules can lead you to a decision that’s right for you, your family and your future

No one can accurately predict whether or not you personally will need ongoing care related to a chronic illness or disability at some point during your life. What you can do, however, is make an informed assessment of the likelihood a need might arise, then use this assessment as a basis to decide:

Making an informed decision is easier than you might think

Simply take some time to consider the five rules outlined on the pages that follow. Then, if you decide long-term care insurance might be important to your future, ask your licensed representative to recommend a policy based on your unique needs and goals.

Rule 1 - Be realistic about your potential risks

No one likes to think about the possibility of needing long-term care. But understanding the potential risks is important to making an informed decision.

Here are the key facts to consider:

Needing assistance in later years is a normal part of the aging process. In fact, approximately 60% of individuals who are over the age of 65 will need some type of long-term care services.

Needing assistance earlier in life is also a possibility. While most people who need long-term care are age 65 or older, a person can need long-term care at any age. 40% of people currently receiving long-term care are adults 18 to 64 years old2—and nearly one quarter of the 700,000 stroke victims each year in the United States are under 65.

Costs are high, and they are rising. As a general guideline, costs on a national basis now average over $217 per day for a private room in a nursing home and $21 per hour for visits from home health aides.4 Inflationary pressures are likely to increase these costs significantly in the future.

Rule 2 - Understand where the money might come from

Keep in mind that health insurance doesn’t typically cover costs for ongoing care related to a chronic illness or disability. If you choose to buy long-term care insurance, you’ll be doing so as a means of reducing reliance on these other potential sources of money:

Your savings or the sale of assets -  Although it’s always possible to pay expenses out of your own pocket, you should consider the potential impact—both financial and emotional—that depleting your savings or selling other key assets could have on you and your family.

Medicare - Medicare mainly covers skilled care after you have been hospitalized for at least three days, and it generally does not cover personal or home-care services. Medicare was not designed to pay for extended long-term care and should not be counted on as a resource.

Medicaid - Medicaid is designed to pay for nursing home care for those who are very poor. To qualify, individuals must use up (or “spend down”) their assets and meet a strict income test—usually $2,000.5 In other words, Medicaid is available, but only when a person is destitute.

Rule 3 - Assess the goals you are trying to achieve

For most people there are four main goals associated with the purchase of a long-term care insurance policy:

Protecting Assets - As the costs for long-term care continue to rise, there is an ever-increasing risk that a person might impoverish him or herself by attempting to pay for long-term care out of pocket.

Depending on your own financial situation, you could potentially find yourself depleting assets that you had planned to rely on during your retirement or pass on to your heirs.  If you are married, selling off assets could leave your surviving spouse with a nest egg that is too small to generate the amount of income he or she might need to live comfortably.

Protecting Choices - Assets are not the only things you may want to protect. Long-term care insurance also helps protect choices. If choice is important to you, long-term care insurance may be a good idea even if asset protection is not your primary goal.

Staying at Home - A long-term care insurance policy that includes coverage for home care can make it possible to stay at home in situations where you might otherwise need to move to a nursing home or other care facility.

Assisting Family Caregivers - A long-term care insurance policy can help reduce the burden on your loved ones in many different ways. Although benefits vary from one policy to the next, most policies provide coverage that can:
•    Decrease the chance you’ll ever need to ask other family members for financial support.
•    Provide reimbursement for loved ones who take time off work to help provide informal care.
•    Help pay for assistive devices, caregiver training and other services that can help make life easier for family members who assist in providing care.

Rule 4 - Plan for any eventuality

As you evaluate the appropriateness of any long-term care insurance policy in relation to your goals, it’s important to consider the types of care that policy might cover.

Long-term care services are generally categorized by where they are provided:

Home Care

Covered services include:

• Home Health Care
• Personal Care Services
• Homemaker Services
• Adult Day Care

Facility Care

Covered services include:

• Nursing Home
• Adult Foster Care / Board and Care Facility
• Assisted Living / Residential
• Health Care Facility
• Bed Reservation
• Respite Care
• Hospice Care

Keep in mind that coverage can vary considerably from one policy to the next. Since it’s virtually impossible to predict which services you might need, it’s prudent to choose a policy
that covers a broad range of possibilities with a minimal number of limitations and exclusions.

Rule 5 - Remember to plan for inflation

Just like most everything else we buy, the price of long-term care will probably go up in the future. Therefore, coverage should be purchased based on the cost of services when they might be needed, not on what they cost today. Here are two key ways you can plan for inflation:

• Consider choosing a policy that always pays a fixed percentage of your actual expenses (rather than a predetermined dollar amount) for covered services.
• Look for built-in features that give you choices to increase your protection over time (including policies that guarantee your right to purchase additional coverage at a later date regardless of changes in your health).

Alternatively, you can consider adding an inflation rider to your policy that automatically increases your coverage for a pre-set amount at a pre-set interval.

Make a decision now that’s right for you

We hope you’ve found this guide helpful in reaching an informed decision about long-term care insurance.

If you believe a long-term care insurance policy might be important to achieving your unique goals, we encourage you to learn more by meeting with your licensed financial professional. The younger you are when you purchase a long-term care insurance policy, the more affordable it’s likely to be—and the less likely you’ll be to have medical problems that might disqualify you from coverage.

So don’t delay—talk to your representative now.