Long-Term Care Insurance

Introduction

These days, more people are living longer than ever. There are even more people who are living beyond 100 years of age. The news quite frequently talks about people over the age of 100 either celebrating birthdays or was the oldest person of an organization or group that just passed away. And now, the baby boomers, who are known as the largest generation so far, are aging and living much longer overall.

According to longtermcare.gov, people over 65 will require some type of long-term care services throughout their lifetime. It also stated that people between the ages of 18 to 64 account for 40% of those who will receive long-term care. With these facts, society will have big problems when it comes to taking care of the growing, aging population.

An Overview of Long-term Care Insurance (LTCi)

Due to these situations, it's imperative to obtain long-term care insurance(LTCi).
Long-term care insurance (LTCi) is an insurance policy sold in the US, Canada, and the UK that assists in paying for associated costs for long-term care. It covers expenses outside of health insurance, Medicaid, or Medicare.

People requiring long-term care are typically not traditionally sick. However, they are not able to do at least two of the activities of daily living (ADLs). The ADL's activities of daily living are basic activities people do on a daily basis that is required for independent home or community living. There are different variations of the ADL's activities of daily living. However, most agencies agree on five basic categories which include the following:

•Personal hygiene

- oral care, nail care, bathing/showering, and grooming

•Eating

- able to feed oneself even if the person is unable to prepare the food.

•Dressing

- the ability to dress or undress oneself and to make decisions about appropriate clothing to wear

•Maintaining continence

- the physical and mental capacity to utilize a restroom by being able to get on and off the toilet seat and to clean oneself

•Mobility/transferring

- able to move oneself from seating to standing, walk by oneself from one location to another, and to get in and out of the bed.

How It Works

The LTCi allows a maximum daily amount from the insurance company who will reimburse you for eligible care costs. The pool of money available over the policy's lifetime can be established according to the benefit period quoted in years. For instance, $100 can be the maximum daily benefit for a benefit period of three years. This translates into a money pool of $100 x 3 years x 365 days equalling $109,500.

There is also the Benefit Increase Option (BIO) which is the way benefits will grow in the long run. Common options are the 3% Step Rated Compound BIO or the Tailored BIO.

The eliminations period (deductible) is the number of days of long term care that the person pays for out of pocket before getting reimbursement from the beginning of the policy. All policies cover home care, care in a nursing facility, or care received in an assisted living facility.

You will no longer be required to pay the insurance company once they reimburse you for covered costs. In some policies, you can obtain cash benefits in lieu of reimbursements. The cash amount available is usually a percentage of the benefit paid daily on a monthly basis. The cash benefit can be utilized in any way the policyholder desires. Furthermore, some additional built-in features may be available.

The Benefits of LTCi

In addition to the obvious benefit of long-term care providing great financial relief in handling costs associated with long-term care, the following includes other benefits:

•Amazing tax incentives

People may be eligible to get an income tax deduction if they pay premiums on a long-term care insurance policy. The deduction amount depends on the covered person’s age. Proceeds, credit, or deductions may also be available.

When it comes to businesses, the business type determines the premiums’ business deductions. Additionally, corporations’ premiums are usually 100% deductible for employees unless the premiums are included in the employee’s taxable income.

•Less stressful for the person and his/her loved ones

Loving parents will feel uncomfortable relying on their children or other family members for supporting through out-of-pocket, long-term care expenses. Thus, ensuring you have long-term care insurance will eliminate that uneasy feeling.

What does LTCi Cover

This insurance covers facility/home care of personal non-medical and medical-related care, assisted-living home or community, skilled nursing, and adult day care services.

According to the National Council on Aging, the average LTCi policy had the included features:

• 99% of the policies issued covered homecare and nursing home expenses
• $159 daily benefit amount for nursing home care
• $152 daily benefit amount for care expenses at home
• 93-day policy deductible period
• 3.8year benefit duration for a nursing home
• 75% of policyholders have inflation protection
• The average annual premium of $2,772

Costs of Assisted Living Expenses without Insurance

According to an accounting firm, PwC, each person has a current lifetime long-term care costs of $172,000. The median is $107,000. Data retrieved from the 2018 Genworth Cost of Care survey, long-term care facilities have an average, semi-private room monthly cost of $7,441 and average, private room costs of $8,365. Other reports from this study include homemaker services at $48,048, home health aid at $50,336, adult day health care at $18,720, an assisted-living facility at $48,000, a nursing home's semi-private room at $89,297, and a nursing home's private room at $100,375

Growing Demand of this Type of Insurance

TheSCANFoundation.org states that there will be an increase from about 12 million today to 27 million Americans in 2050 needing long-term care. People born between 1946 to 1964 (baby boomers) be the age of 65 between 2011 and 2029 of which there will be 10,000 American turning 65 years old every day. The last baby boomers will turn the age of 65 by 2030. As far as the total US population in 2030, 72 million people or approximately 19% of the population will be Americans who are at least 65 years old. The last baby boomers will be 85 years old by 2050 in which time approximately 20% of the total population (i.e. about 89 million) will be at least 65 years of age. Furthermore, the US population percentage for ages 85 and older that will most likely require supportive services has an expected growth of 25% by 2030 and 126% by 2050. Arizona is one of the states with the greatest projected population growth of those at least 85 years old from 2010 to 2030 at a rate of 119%.

With the dramatic growth of life expectancy over the last century in the US, life expectancy is expected to continue increasing. People born in 2010 has an average, projected life expectancy of 79 years of age which was approximately 52 years of age in 1910.

Women's life expectancy is usually higher than in men. Thus, for women born in 201, the average, projected life expectancy is about 81 years old. Men's average, projected life expectancy is about 76 years old.

For those with chronic conditions, Americans born between 2000 and 2030 will have an increase of 46 million people with a longer life expectancy which is an increase of 37%.

When it comes to Alzheimer's disease, 5.2 million people at least the age of 65 have it as of 2012. By 2025, the increase of Alzheimer's among people at least 65 years old will increase to 6.7 million people(a 30% increase). By 2050, there will be a triple increase in the number of people having Alzheimer's disease from 11 million to 16 million.

What Trigger the Start of these Benefits

Benefit triggers are what start these benefits. These benefit triggers will be the ADL's activities of daily living which include bathing, continence, dressing, eating, toileting, and transferring. Cognitive impairment is also included in most long-term care policies. This coverage is for those suffering from Alzheimer's disease or another dementia ailment.

The Features and Options

For decades, a common solution is purchasing a long-term care insurance policy. However, many insurers have been facing higher claims payouts and lower interest rates which caused insurers to stop providing policies or raise premiums. These traditional policies along with their increases in expenses are usually referred to as "use it or lose it" brands. With these policies, people may pay premiums for years while not requiring coverage and possibly won't get cash back. But now, people have options and various features available when they set up a plan.

In this new era of this type of insurance, policies often combine products that offer either an annuity component or life insurance. They also may enable premium returns.

There are three common types of these newer policies that have some advantages and disadvantages, and they are as follows:

•Hybrid Long-term Care Policies

- the merging traditional long-term ar insurance with life insurance and offering a premium return. One advantage of this policy is offering a benefit whether the individual passed away, discontinued the policy and wants the premiums back, or need long-term care. The disadvantage of this policy includes a higher bar for coverage qualification and how the premiums are paid.

The premiums for the hybrid plan are normally paid over a short time period, such as 10 years, or the premiums are normally paid in a lump sum. The cost can be prohibitive due to the person paying LTCi coverage, life insurance, and the return-of-premium feature. Additionally, due to this option bundles as two products in one, people require the qualifications for both coverage types to obtain a policy.

•Permanent Life Insurance Policies having Long-term Care Riders

- a death benefit percentage is enabled for long-term care costs. There is some payment flexibility that allows annual payments over a lifetime or lump sum premiums. Also, the costs are usually lower than other combined coverage types. The drawbacks, however, include possible stringent reimbursement terms and no option to return premiums. For example, a physician attesting that the patient is permanently unable to perform basic activities could significantly limit the benefits received. On the other hand, the hybrid or traditional claim to be paid most of the time requires a doctor's validation that the person can't perform certain daily living activities or that the person is cognitively impaired. Also, individuals must qualify for both the LTC rider and the life insurance similar to hybrid policies.

•Annuities with Long-term Care Riders

The terms for this product are similar to fixed annuities terms. Most of the time, the individual buys the annuity with a lump sum payment and receive a monthly benefit. Sometimes, there is no extra cost incurred for the long-term car component due to the funding of the annuity premium.

For instance, the person can purchase a deferred long-term care annuity with a premium. The annuity makes two funds: one for whatever you choose and one for long-term care expenses. As a result, the annuity terms dictate the amount you can withdraw from every fund. The tax implications can also be complicated. Given some annuity products' complex terms, the individual may want a tax professional advice when exploring this option.

AS mentioned before, there are various features available when it comes to insurance features. The following includes five long term care insurance features that are worth purchasing:

1. Shared Care

- this feature is spectacular for couples buying long-term care insurance together. People will have double the benefit by providing them access to their spouse's benefit pool if the person exhausted his/her own benefit and need more care. The costs for this feature are usually 10 to 15% in additional premium. However, individuals may gain savings instead of purchasing bigger benefit pools.

2. The Period of Calendar Day Elimination

This is the period allowing the policyholder to satisfy an elimination period or waiting period. This period could be 30 days, 360 days, 180 days, 69 days, or 90 days. These days are, however, measured by the calendar day or service day. The service day is the only day people actually receive care count toward the elimination period.

The calendar day is the more desired choice most of the time. The clock begins on the first day the doctor deems the patient is unable to do two of the six daily living activities. This is the start of the elimination period. If there is a 90-day elimination period, for instance, the person's policy will start paying benefits on day 91.

Some LTCi policies use the calendar day as the standard feature. Other insurance agencies provide service day elimination periods with the additional calendar day rider option. Some may not provide the option at all. The cost will be about 15% additionally in premiums, but this can assist the access coverage quicker.

3. Elimination Waiver for Home Health Care (No Day Care at Home)

The elimination waiver for home health care which means that the person waives the elimination period for home health care thus making a zero-day elimination period. Usually, those home health care days can count towards the person's satisfaction of the facility elimination period.

Some insurance companies have this waiver as a built-in feature. Others provide it as an optional rider. Furthermore, this feature is able to increase premiums by 15% to 20% but offers people access to care at home sooner when needed.

4. Inflation overage- 3% Compound

- to maintain the rising care cost, good inflation protection maintains the money pool growing annually. Some options of inflation coverage are expensive, but a 3% compound is in the middle and keeps the benefit growing for at least a 3% growth compounding annually. Rates may vary. However, this is a good inflation coverage.

5. Joint Premium Waiver

- this option can be bought with one's spouse and enables the waiving of the premiums when the spouse goes on a claim. This feature assists in taking the pressure off of a spouse still paying premiums and having a cost of an additional 10 to 15% in premiums. Long-term care insurance policies provide a plethora of additional options to produce the long-term care plan that is appropriate for the person.

Conclusion

These days, more people are living longer than ever. There are even more people who are living beyond 100 years of age. Furthermore, the baby boomers, who are known as the largest generation so far, are aging and living much longer overall.

Due to these situations, it's imperative to obtain long term care insurance(LTCi).
Long term care insurance (LTCi) is an insurance policy sold in the US, Canada, and the UK that assists in paying for associated costs for long-term care. It covers expenses outside of health insurance, Medicaid, or Medicare which is very costly as shown above. Nevertheless, the LTCi allows a maximum daily amount from the insurance company who will reimburse you for eligible care costs.

For more information, a free financial assessment, and if you live in the Arizona area, Americas Top Assisted Living Resources is the way to go.

Arizona is one of the states with the greatest projected population growth of those at least 85 years old from 2010 to 2030 at a rate of 119%. As records indicate above, the growth will continue a lot beyond 2030 as well. So, it's practically crucial to look into this insurance type.

With this company, they know the ins and outs in finding the right plan for you. You can chat with a long term care specialist today and give you an instant quote. For decades, a common solution is purchasing a long-term care insurance policy. These traditional policies along with their increases in expenses are usually referred to as "use it or lose it" brands. But now, people have options and various features available when they set up a plan. And these specialists will assist you in deciding which long-term care insurance features is best for you and your budget.