LTC INSURANCE
add peace of mind to your retirement planning

There are many reasons to buy long term care insurance. For example, you may want to:

• Preserve your independence
• Guarantee your choice of care and caregivers
• Protect your assets and standard of living
• Avoid being a burden to your family
• Leave more assets to your family or other worthy cause
• Add peace of mind to your retirement planning

Long-term care insurance: Is it right for you?

Possibly, but it really depends on your specific circumstances. A well-designed long term care insurance policy may be one of the best financial decisions you'll ever make. It can play a very important role in giving you and your family the "peace of mind" that you will have all the necessary resources to pay for quality care - where and when you need it.

You SHOULD consider buying long term care insurance if ...

• You have significant assets and income that you are concerned about protecting.
• You don't have significant assets and income, but you don't want to rely on the Medicaid (Medi-Cal in California) program.
• You want to remain financially independent and not have to rely on family or friends for care.
• You wish to guarantee you and your spouse will receive quality care, in the setting of your choice.

You should NOT consider buying long term care insurance if ...

• You currently receive or may soon receive Medicaid benefits.
• Your only source of income is a social security benefit or supplemental security income.
• You have limited assets and can't afford the premiums for the life of the policy.

Because today's long term care insurance policies offer a variety of features and benefits, it pays to take your time when choosing your policy. We can help you take a look at what makes up a good policy and the benefit options available to you.

Long-term care insurance: What are the options?

When you are shopping for long term care insurance you will find that there are a lot of policies to choose from. Generally speaking, most long term care insurance policies include similar standard features. There are three main types of policies:

• Comprehensive
• Nursing home only
• Home care only

Not all insurance carriers offer all three. Some insurance carriers have eliminated Nursing Home Only and Home Care Only policies in favor of just offering Comprehensive policies. Most long term care insurance policies offered today are "reimbursement" type contracts where benefits are paid only for expenses that are incurred, up to a pre-determined benefit amount. Indemnity contracts typically pay the entire pre-determined benefit on a daily or monthly basis. The following types of care are standard features found in most comprehensive long term care insurance policies:

• Nursing home facilities
• Assisted living facilities (also called residential care facilities)
• Home healthcare
• Adult daycare
• Respite care
• Care coordination

Discounts Available: If you are in excellent health, or buying a policy as a married couple, discounts offered by some carriers can cut your premiums from 10-30%. Carriers use different methods to determine who qualifies for a preferred rate. Spousal discounts may be available as well. Some carriers will offer the discount to the insurable spouse, even if the other spouse is declined. Some carriers also offer discounts for multi-lives or employer-sponsored discounts.

Not only should you be researching and picking a policy that best fits your needs, you should look at the insurance carrier underwriting the policy. There are four major areas to look at when choosing a carrier:

• Underwriting philosophy
• Pricing policies
• LTC experience
• Financial strength

Long-term care insurance: What are the benefits?

While the standard features are automatically included in a long term care insurance policy, you can control the premiums you pay and the benefits you receive when you select the benefit choices in a policy. Here are the most common benefit choices in policies, and tips on selecting what is right for you:

Daily Benefit: The daily benefit you select is the maximum dollar amount that the insurance company must pay for your care on a given day. Some policies pay this benefit out as a weekly or monthly benefit, which allows you to receive benefits for expenses on specific days that are greater than your daily benefit. The daily benefit choices may range from $40 to $500 per day depending on the carrier. If you are purchasing a reimbursement policy, most companies will allow the amount of the daily benefit that you did not use to be carried over, which extends your benefit period. For example, if your daily benefit amount was $150 and your expenses were only $100, then the remaining $50 would be carried over to be used later. This could therefore allow a three-year plan to last longer than three years! If you purchase an indemnity policy, the carrier would pay you the entire daily or monthly benefit regardless of the cost of your care. However, some indemnity policies require some care each day to receive any benefit for that day. Also, some reimbursement policies have optional indemnity riders allowing you to convert them to an indemnity policy.

Home Care Benefits: This benefit provides for home health care in your home. This can include skilled professionals like registered nurses and licensed therapists , home health aides and personal care attendants, as well as homemaker services. Adult day care benefits are usually included also. The home health care benefit the carrier will pay is usually based on a percentage of the daily benefit. For example, if you choose a 100% home health care benefit, you would receive 100% of the daily benefit you selected for services in your home. The choices vary by carrier, but some other examples are 75% or 50%.

Benefit Period: The benefit period you select is the maximum amount of time that you will receive benefits. When you select a benefit period, it is expressed in years. This can range anywhere from one year to unlimited years (lifetime coverage). Usually, the benefit period is multiplied by the daily benefit you chose to equal a lifetime maximum, or pool of money to pay for your care. For example, if you purchased a three-year benefit period with a daily benefit of $100, this would give you a pool of money (lifetime maximum) of $109,500 (1,095 days X $100).

Deductible/Elimination Period: The deductible is also known as an elimination period. This is similar to the deductibles you are used to in other types of insurance you carry. The elimination period is the length of time you must pay for long term care services before the insurance policy begins to pay benefits. Examples of deductibles available are: 0, 20, 30, 60, 90, 100, 180, 365, or even 730 days. When you choose your deductible you are agreeing to pay for any charges during those days. Generally, the longer the elimination period, the lower the premiums. But remember, the lowest premium is not always the best purchase.

Inflation Protection: When you purchase long term care insurance, you will want your policy to stand the test of time. The costs of long term care are expected to increase just like they have done in the past. In fact, over time, the costs of long term care can double or triple what they are today. Depending on the state that you live in, you will have several choices of inflation protection options. The two most common inflation protection options in long term care policies are 5% compound and 5% simple inflation protection. These options increase your benefits over time, but your premiums are designed to stay level for the life of your policy. If inflation for long term care runs five percent annually, a nursing home that now costs $110 per day could be charging more than twice as much a day in 14 or 15 years. Without this protection, your policy could cover less than half of your care costs at that time.

Long-term care insurance: How much does it cost?

You may have heard that long term care insurance is expensive. It can be, but may not be nearly as expensive as the actual cost of long term care. A good rule of thumb is that the annual premium you pay is less than the cost of just one month of long term care! The good news is that you have some control over what it will cost. If you plan ahead of time, and purchase long term care insurance when you are younger and when you are in good health, the premiums for long term care insurance can be very affordable. You also control the cost by the benefits that you choose.

The cost of a long term care insurance policy depends on the following factors:

1. Your health
2. Your age
3. Your marital status
4. The carrier, policy and benefits you choose
5. Any discounts you may receive

The old saying that you get what you pay for applies here. Long-term care insurance is the one insurance product that you do not necessarily want to get the best price on. Most major, reputable carriers price their products similarly. If you find a carrier charging considerably less, that should cause you some concern as to future premium stability.

The Cost of Waiting: Many people think that they will save money spent on premiums if they just wait to buy long term care insurance. This is not necessarily true. The longer you wait, the more you may pay in premiums over your lifetime. Each year that you wait:

• Increases the annual cost of the insurance because you have to buy a higher daily benefit due to the fact that the cost of long term care has gone up.
• You are a year older so your premium will increase.
• You remain at risk in the event you have a health change and cannot qualify for coverage

Level Premiums: Many policies are sold as being "level premium" for the life of the policy. Unfortunately, many consumers mistakenly believe that this means that the cost of the policy will not increase. In reality, all insurance companies reserve the right to increase premiums but the increase affects an entire class of policyholder.

Some companies raise premiums more than others and this information is not readily available. Check with us to find out about the premium-rate increase histories of both the company and the specific policy you are considering.

"Martha Rothaus represents many different insurance companies and takes the time and effort to find the right policy for the right client.... And her concern for the client doesn't stop once the policy is written. She continually folows up to make sure her clients are satisfied and to deal with any questions, problems or concerns they may have."--Michael Stahl, President, Bell Care Nurses Registry

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Martha Rothaus is a certified long term care insurance specialist (CTLC) and senior advisor (CSA) serving Greater Miami, Dade and South Florida. As an independent agent, respected broker and trusted financial planner, Rothaus Insurance will assist you in making informed, objective decisions about the tax and other advantages of long term care reimbursement and LTC cash indemnity insurance policies in health care, nursing care management and retirement planning.  For a FREE LTC CONSULTATION, click here.