| Thank You Janet L. Heitzig, CLU, ChFC, CLTC for sharing this ariticle with us. Janet L Heitzig, CLU, ChFC, CLTC Principal Financial Group 14755 N Outer 40-Ste 110 Chesterfield, MO 63017 Phone 636-449-0734 Fax 1-866-488-0903 Securities and advisory products offered through Princor Financial Services Corporation, 800/247-4123, member SIPC, Des Moines, IA 50392. Senior Strategies, L.L.C. is not an affiliate of Princor. e-mail Heitzig.Janet@principal.com Princor Registered Representative, Financial Advisor, Financial Representative, Principal Life Insurance Company. |
"Planning for Eldercare" January 22, 2008
| Return to Article Page | Veterans Benefits Book |
Long Term Care --
An Impending Crisis for the Elderly
If we were to ask an older person what his or her most important concerns or
wishes for the future are, we would probably get a variety of different answers. But
according to surveys frequently conducted among the elderly, the most likely
answers we would receive would include the following three principal concerns or
wishes.
Although the elderly are definitely concerned about the need for long term care it is
not high on the list of concerns. To address these concerns or wishes and maintain
the quality of life wanted in the elder years, it simply takes a little preplanning.
Unfortunately, as a rule, that is not happening.
event that could happen to them. This is because the need for care typically
removes any level of security an older person may have with the three major
lifestyle concerns mentioned above.
With the need for long term care the older person:
No other late-life event can be as devastating to the lifestyle the elderly are so
concerned about maintaining. No wonder many seniors, who are receiving
eldercare, withdraw, become angry and suffer from severe depression.
Ironically, older people painstakingly scrape together $100-$200 a month to buy
Medicare supplement insurance to cover a risk about equal to their yearly
premiums. Or they will go without and sacrifice food, recreation and activities in
order to hold on to the last few dollars in their savings accounts.
Yet very few elderly spend money or time to plan for the event of long term care. It
seems a paradox that someone would be more concerned about buying insurance
for a home fire when the risk of needing eldercare is 600 times more likely. Or what
about the cost of insuring for an auto accident when the risk of long term care is
120 times more likely and is potentially 20 times more expense? Or why the
overwhelming concern to buy Medicare supplement insurance when without it
Medicare would still cover the bulk of their health needs after deductibles and co-
pays? We're not recommending going without insurance coverage we're simply
using it as an example of how people refuse to deal with the issue of long term care.
No one knows why people beyond age 65 are not more concerned about preparing
for long term care. Perhaps they have seen it in their family or among friends and
seen the effect that it has. Or because of the unsavory aspect of receiving long
term care, perhaps the elderly prefer to ignore it rather than embrace the need for
it. Perhaps they mistakenly think the government will take care of them. Or they are
assured that family and friends will provide the care when needed, but don't know
how difficult it really is for loved ones to provide that care when the time actually
comes. Whatever the case, without proper planning, the need for eldercare can
result in the single greatest crisis in any elderly person's life.
In addition, this lack of planning will always have an adverse effect on the older
person's family. It usually results in great sacrifice or financial cost on the part of
the spouse or children. Or for those with no immediate family, long term care can
be a burden to extended family members.
We urge our readers who are planning for retirement or in their retirement years
and who have not prepared for long term care to do so. As Benjamin Franklin so
aptly put it "an ounce of prevention is worth a pound of cure."
The National Care Planning Council is an organization dedicated to helping the
American public plan for long term care. To find out more about this organization
please go to www.longtermcarelink.net.
| Return to Article Page | Veterans Benefits Book |
Long Term Care --
An Impending Crisis for the Elderly
If we were to ask an older person what his or her most important concerns or
wishes for the future are, we would probably get a variety of different answers. But
according to surveys frequently conducted among the elderly, the most likely
answers we would receive would include the following three principal concerns or
wishes.
- Remaining independent in the home without intervention from others.
- Maintaining good health and receiving adequate health care.
- Having enough money for everyday needs and not outliving assets and income
Although the elderly are definitely concerned about the need for long term care it is
not high on the list of concerns. To address these concerns or wishes and maintain
the quality of life wanted in the elder years, it simply takes a little preplanning.
Unfortunately, as a rule, that is not happening.
event that could happen to them. This is because the need for care typically
removes any level of security an older person may have with the three major
lifestyle concerns mentioned above.
With the need for long term care the older person:
- Loses independence
- Has experienced a loss of good health
- Uses up remaining assets and income
No other late-life event can be as devastating to the lifestyle the elderly are so
concerned about maintaining. No wonder many seniors, who are receiving
eldercare, withdraw, become angry and suffer from severe depression.
Ironically, older people painstakingly scrape together $100-$200 a month to buy
Medicare supplement insurance to cover a risk about equal to their yearly
premiums. Or they will go without and sacrifice food, recreation and activities in
order to hold on to the last few dollars in their savings accounts.
Yet very few elderly spend money or time to plan for the event of long term care. It
seems a paradox that someone would be more concerned about buying insurance
for a home fire when the risk of needing eldercare is 600 times more likely. Or what
about the cost of insuring for an auto accident when the risk of long term care is
120 times more likely and is potentially 20 times more expense? Or why the
overwhelming concern to buy Medicare supplement insurance when without it
Medicare would still cover the bulk of their health needs after deductibles and co-
pays? We're not recommending going without insurance coverage we're simply
using it as an example of how people refuse to deal with the issue of long term care.
No one knows why people beyond age 65 are not more concerned about preparing
for long term care. Perhaps they have seen it in their family or among friends and
seen the effect that it has. Or because of the unsavory aspect of receiving long
term care, perhaps the elderly prefer to ignore it rather than embrace the need for
it. Perhaps they mistakenly think the government will take care of them. Or they are
assured that family and friends will provide the care when needed, but don't know
how difficult it really is for loved ones to provide that care when the time actually
comes. Whatever the case, without proper planning, the need for eldercare can
result in the single greatest crisis in any elderly person's life.
In addition, this lack of planning will always have an adverse effect on the older
person's family. It usually results in great sacrifice or financial cost on the part of
the spouse or children. Or for those with no immediate family, long term care can
be a burden to extended family members.
We urge our readers who are planning for retirement or in their retirement years
and who have not prepared for long term care to do so. As Benjamin Franklin so
aptly put it "an ounce of prevention is worth a pound of cure."
The National Care Planning Council is an organization dedicated to helping the
American public plan for long term care. To find out more about this organization
please go to www.longtermcarelink.net.
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"Planning for Eldercare" February 20, 2008 Long Term Care Insurance
Why buy long term care insurance?
1. It will help you keep your independence and dignity and allow you to make choices. When the
time comes for paying for your long term care needs, you may end up spending your savings and
then relying on Medicaid for assistance. Medicaid typically pays for a semi-private room in a
nursing home, but not all nursing homes take Medicaid. In many states it is not easy to get
Medicaid to cover home care or pay for assisted living. Many people want to stay at home, but
with Medicaid may not be able to. Insurance allows you to have a choice of where you want to
live.
2. If you are married and you have a need for long term care, your spouse may be forced to pay
for an outside caregiver. The cost is likely to come from your combined income and assets. This
may leave your spouse with minimal funds in the future. Insurance solves this problem and allows
the healthy spouse to keep the assets.
3. Many healthy caregiving spouses won't spend their money and choose to "tough it out" on their
own without help. If care of a disabled spouse drags on too long, this can have a devastating
effect on the physical and emotion health of the caregiver. Insurance will pay for professional care
for the disabled spouse and allow the caregiver spouse needed rest.
4. If your children promise to take care of you when the time comes that you need care, insurance
will help them do that. Probably neither you nor your children have thought of the prospects of
moving you from place to place, changing your dirty diapers, cleaning up after "accidents" in the
bathroom or helping you with bathing and dressing. Insurance will pay for aides to help your
children with these tasks.
5. If you are single and a need for long term care arises, insurance can pay for and coordinate
that care. With insurance you won't have to feel you would be a burden for family or friends.
6. If you have the desire to leave assets behind when you die, insurance will help preserve those
assets from the cost of long term care.
Buy Long Term Care Insurance When You Are Younger
There is a bonus to buying long term care insurance at a younger age. The yearly premium is
lower and the total premium over the life of the policy is also less. For example, a person in good
health, currently age 45, buying a typical policy with inflation protection, could spend $42,075 in
total premiums to age 78. The yearly premium for this policy is $1,275.
Suppose this same person chooses to wait to buy the equivalent coverage-- adjusted for inflation
-- at age 65. If that same policy were available in the future, he could pay $44,759 in total
premiums over his 13 remaining years to age 78. His premium is also considerably higher and in
this case is $3,443 a year. By waiting, he saves no money in total cost, he will have a much higher
yearly cost and in addition will definitely incur the following risks:
The same policies only stick around about three years and historically, new policies invariably
have higher rates for the same ages as older ones. This means, all else being equal, he could pay
two or three times more in total cost for an equivalent policy in the future.
The policy at age 45 is based on the best health rating and someone age 65 is very unlikely to get
that same rating which means a much more expensive total cost in the future.
By waiting, his health may deteriorate to a point where he can't even qualify for a policy.
Unfortunately, we have seen this happen time and time again to people who wait and all of a
sudden desperately want coverage because of a change in health and can't get it.
He may need long term care before he turns 65. The chances of incurring a disability prior to age
65 are quite high.
We recommend you work with a long term care insurance specialist who understands the policy
provisions and the coverage needed and can help you determine the best policy for what you
want.
You can read more about long term care insurance and locate a specialist in your area at www.
longtermcarelink.net.
How to buy long term care insurance
There are dozens of long term care insurance companies selling hundreds of different types of
policies. It can become very confusing. There are various benefit options for home care and
nursing home care, waiting periods, qualifying periods, inflation riders, and the list goes on. Here
is a checklist of some of the things you need to know before you purchase a policy.
LONG TERM CARE INSURANCE BUYING CHECKLIST
the more "yes" answers you get the better off you are.
1) Is the insurance company rated by A. M. Best (the rating company) with a rating of at least
A, A+ or A++?
2) Is it a large diversified company with deep pockets and selling more than just long term care
insurance?
3) Is the insurance representative an expert in long term care insurance? (Because of its
complexity, almost all LTCi experts only sell LTCi; they seldom sell anything else.)
4) Does the representative have a degree and/or industry financial designations?
5) Does the representative own a personal long term care insurance policy for himself or herself?
6) Is the policy you like tax qualified, and if not, do you understand the ramifications?
7) Are there at least 6 ADL’s (Activities of Daily Living) allowed for in the benefit certification?
8) Does it allow "standby assistance"?
9) Is it a "pool of money" as opposed to a "stated period"?
10) Is it "integrated" as opposed to "2-pool"? (2-pool is not allowed in some states and very few
companies sell these policies anymore but you must be aware of this.)
11) Do you understand how the elimination period works? (This is extremely important.)
12) Does it have prohibitive cost containment provisions?
13) Is there any "capping" of automatic benefit increase riders?
14) Do you understand how the waiver of premium works?
15) Does the assisted living facility benefit pay the same as for nursing home?
16) Are you buying adequate home care coverage?
17) Does the company have a history of premium rate stability without large periodic increases?
18) Does the policy pay for homemaker services and other nonmedical home care services?
19) Does the policy offer an alternative plan of care for services that don’t exist today?
Why buy long term care insurance?
1. It will help you keep your independence and dignity and allow you to make choices. When the
time comes for paying for your long term care needs, you may end up spending your savings and
then relying on Medicaid for assistance. Medicaid typically pays for a semi-private room in a
nursing home, but not all nursing homes take Medicaid. In many states it is not easy to get
Medicaid to cover home care or pay for assisted living. Many people want to stay at home, but
with Medicaid may not be able to. Insurance allows you to have a choice of where you want to
live.
2. If you are married and you have a need for long term care, your spouse may be forced to pay
for an outside caregiver. The cost is likely to come from your combined income and assets. This
may leave your spouse with minimal funds in the future. Insurance solves this problem and allows
the healthy spouse to keep the assets.
3. Many healthy caregiving spouses won't spend their money and choose to "tough it out" on their
own without help. If care of a disabled spouse drags on too long, this can have a devastating
effect on the physical and emotion health of the caregiver. Insurance will pay for professional care
for the disabled spouse and allow the caregiver spouse needed rest.
4. If your children promise to take care of you when the time comes that you need care, insurance
will help them do that. Probably neither you nor your children have thought of the prospects of
moving you from place to place, changing your dirty diapers, cleaning up after "accidents" in the
bathroom or helping you with bathing and dressing. Insurance will pay for aides to help your
children with these tasks.
5. If you are single and a need for long term care arises, insurance can pay for and coordinate
that care. With insurance you won't have to feel you would be a burden for family or friends.
6. If you have the desire to leave assets behind when you die, insurance will help preserve those
assets from the cost of long term care.
Buy Long Term Care Insurance When You Are Younger
There is a bonus to buying long term care insurance at a younger age. The yearly premium is
lower and the total premium over the life of the policy is also less. For example, a person in good
health, currently age 45, buying a typical policy with inflation protection, could spend $42,075 in
total premiums to age 78. The yearly premium for this policy is $1,275.
Suppose this same person chooses to wait to buy the equivalent coverage-- adjusted for inflation
-- at age 65. If that same policy were available in the future, he could pay $44,759 in total
premiums over his 13 remaining years to age 78. His premium is also considerably higher and in
this case is $3,443 a year. By waiting, he saves no money in total cost, he will have a much higher
yearly cost and in addition will definitely incur the following risks:
The same policies only stick around about three years and historically, new policies invariably
have higher rates for the same ages as older ones. This means, all else being equal, he could pay
two or three times more in total cost for an equivalent policy in the future.
The policy at age 45 is based on the best health rating and someone age 65 is very unlikely to get
that same rating which means a much more expensive total cost in the future.
By waiting, his health may deteriorate to a point where he can't even qualify for a policy.
Unfortunately, we have seen this happen time and time again to people who wait and all of a
sudden desperately want coverage because of a change in health and can't get it.
He may need long term care before he turns 65. The chances of incurring a disability prior to age
65 are quite high.
We recommend you work with a long term care insurance specialist who understands the policy
provisions and the coverage needed and can help you determine the best policy for what you
want.
You can read more about long term care insurance and locate a specialist in your area at www.
longtermcarelink.net.
How to buy long term care insurance
There are dozens of long term care insurance companies selling hundreds of different types of
policies. It can become very confusing. There are various benefit options for home care and
nursing home care, waiting periods, qualifying periods, inflation riders, and the list goes on. Here
is a checklist of some of the things you need to know before you purchase a policy.
LONG TERM CARE INSURANCE BUYING CHECKLIST
the more "yes" answers you get the better off you are.
1) Is the insurance company rated by A. M. Best (the rating company) with a rating of at least
A, A+ or A++?
2) Is it a large diversified company with deep pockets and selling more than just long term care
insurance?
3) Is the insurance representative an expert in long term care insurance? (Because of its
complexity, almost all LTCi experts only sell LTCi; they seldom sell anything else.)
4) Does the representative have a degree and/or industry financial designations?
5) Does the representative own a personal long term care insurance policy for himself or herself?
6) Is the policy you like tax qualified, and if not, do you understand the ramifications?
7) Are there at least 6 ADL’s (Activities of Daily Living) allowed for in the benefit certification?
8) Does it allow "standby assistance"?
9) Is it a "pool of money" as opposed to a "stated period"?
10) Is it "integrated" as opposed to "2-pool"? (2-pool is not allowed in some states and very few
companies sell these policies anymore but you must be aware of this.)
11) Do you understand how the elimination period works? (This is extremely important.)
12) Does it have prohibitive cost containment provisions?
13) Is there any "capping" of automatic benefit increase riders?
14) Do you understand how the waiver of premium works?
15) Does the assisted living facility benefit pay the same as for nursing home?
16) Are you buying adequate home care coverage?
17) Does the company have a history of premium rate stability without large periodic increases?
18) Does the policy pay for homemaker services and other nonmedical home care services?
19) Does the policy offer an alternative plan of care for services that don’t exist today?