Will Long Term Care Insurance Last?

A recent article in Investment News, a publication for investment advisors, examines the possibility that long-term care (LTC) insurance may go the way of the dinosaur. The article notes the recent mass exodus of insurance companies offering the product.
Over the last three years, Unum Group, Guardian, MetLife (MET), and Allianz have all exited the business. And Prudential (PRU) said in March it would stop issuing individual LTC insurance.

The problem for insurance companies is that they had little idea of what they would actually need to pay out since they had so little experience. Insurance companies collect premiums for years before the vast majority of the insured will become old enough to need the care. That problem is compounded by the low fixed-income returns insurance companies are making on the premiums.

Insurance companies that have stayed in the LTC business have had large rate increases. That naturally drives healthier plan members to drop coverage, making those who remain in pool more likely to need care. This happens year after year (the healthier leave and the sick stay) leading to an insurance phenomenon known as the “death spiral.” Eventually, the product or insurance company collapses under its own weight.

Is LTC insurance right for you?

For years, I’ve been somewhat agnostic on long term care insurance because of the uncertainty over premium increases. My first advice is that, if you can self-insure, don’t buy it. Yes, assisted living is expensive, but don’t forget the costs you will save by not traveling, needing a car, etc. On the other hand, I also think you don’t need such coverage even if you have little money set aside. Save the premiums and live a nicer lifestyle. If you ever need assisted living, just understand that Medicaid may not provide the most luxurious care.

If you do buy LTC insurance, buy a plan that allows fixed premiums over, say, 10 years that then fully pays all premiums. That way, the insurance company can’t raise your rates later. Consider partial self-insurance by buying longer wait periods and even skipping the inflation rider. Make sure it’s from a highly rated insurance company (although my confidence in ratings agencies such as S&P and Moody’s (MCO) is shaken).

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Obama Leads Poll on Support on Long Term Care Insurance

In a tight presidential race, voter sentiment on religion, race, jobs or contraception could tip the balance. Or “the decisive issue just might be a health problem that jeopardizes almost every American family,” says Jonas Roeser, Senior Vice President of Marketing and Operations for LTC Financial Partners LLC (LTCFP), one of the nation’s most experienced long term care insurance agencies.

“Almost 3 in 4 people over 65 will need long-term care at some point, according to the U.S. Department of Health and Human Services,” he says. “But most don’t have a plan to pay for this care, meaning their close relatives could be hit hard in the pocketbook. That includes just about everybody.”

So far the candidates have been mute on the long-term care insurance (LTCI) issue, and it’s high time for them to speak out, according to Roeser. So, to gain attention, his organization launched a straw poll on March 26. It asked just one question:

* Which candidate (President Barack Obama or the Republican choice) is more likely to promote new federal incentives to help Americans afford private long-term care insurance?

About a third, 33 percent, picked President Obama, while two-thirds, 67 percent, picked the Republican candidate, whoever it might be. “If this reflects the feelings of the broad population,” says Roeser, “it could be a wake-up call for President Obama and his people. And it could be something the Republicans can make hay with.”

President Obama might have been seen as the champion of long-term care insurance, since his Affordable Care Act included a public option for LTCI, the CLASS Act. But in October, 2011, HHS Secretary Kathleen Sebelius announced that her department was halting implementation of CLASS since a way could not be found to make it self-sustaining. “Now we need to rely entirely on the private sector,” says Roeser, “but the government can still help by introducing new tax breaks or other incentives to make it easier for people to protect themselves.”

Both candidates have an equal opportunity to work with Congress to make it happen, Roeser asserts. “Both can and should state their intentions now and frequently during the campaign. Doing so can be good for the country, and who knows? It just might determine who makes it into the White House.”

The straw poll will be kept open right up until the presidential election on November 6, tracking change in voter sentiment. “It will be an interesting horse race,” says Roeser. “Will the Republican candidate stay way ahead, or will President Obama close the gap and maybe win by a nose?”

Votes may be cast at either of two locations: http://www.ltcfp.com/2012poll or http://ltcguild.ning.com/page/election-poll . After voting, the visitor may view the latest, updated percentages and find other information about the LTC issue.

The straw poll is supported by the Long Term Care Insurance Guild, the social network for LTCI and allied professionals.

Medicaid Alabama Launches Latest Long Term Care Plans

Three new long-term care options for elderly and disabled Medicaid recipients were announced Friday in Mobile at a news conference by Alabama Medicaid Commissioner Dr. Bob Mullins Jr.
Two of the options are statewide initiatives. The third, known as PACE, short for Program of All-Inclusive Care, will be limited, for now, to recipients in Mobile and Baldwin counties ages 55 and older who meet certain criteria.
All three options are aimed at offering more long-term care choices for those who may not have been able to afford high long term care insurance costs in the past.
Mullins spoke prior to the grand opening of Mercy LIFE on Springhill Avenue, an inclusive-care facility where those who qualify for Medicaid and Medicare, and meet other criteria, have begun participating in PACE.
Mercy LIFE is the first in the state to become designated for PACE.
Twenty-three patients have been accepted into the Mercy’s PACE program thus far, and there are plans to enroll as many as 200 in the next few years.
The PACE participants at Mercy typically live at home, but visit Mercy several times a week to see a doctor, eat daytime meals, stop by the chapel, have laundry done or play board games. Mercy also offers rehabilitative services.
“It’s one of the few programs that has been shown to increase quality of life without increasing costs,” said Dr. J. Eugene Lammers, new medical director at Mercy LIFE, which stands for Living Independently for Elders. “It works.”
The reason it works, said Lammers and Mullins, is because people tend to do better when they live at home or with family.
“The ultimate goal,” Lammers said, “is to keep them in the community where they want to be.”
The two other programs announced by Mullins Friday include would:
• Help some patients with physical disabilities who are living in nursing homes to transition back home and receive care there.
• Assist patients who depend on a ventilator to breathe get treatment closer to home.
PACE provides comprehensive services and support to Medicaid and Medicare enrollees by enlisting a team of health professionals who create care plans.
PACE funding is capped, but providers have flexibility to deliver services by need.
The state pays about $55,000 a year for a Medicaid patient to live in a nursing home. For PACE, the state will pay about $41,000, a significant savings, Mullins said.

How to Plan for Long Term Care in Pennsylvania

About nine million people over the age of 65 will need long-term care this year, according to Medicare.gov, and that number is expected to rise to 12 million by the year 2020. Fortunately, thanks in part to the increasing demand as the baby boomer generation moves toward retirement, people with long-term care needs have more options today than in years past.

What Is Long-Term Care?

Long-term care is an umbrella term that refers to a wide range of medical and non-medical services for elderly individuals, as well as for those with disabilities or chronic illnesses. In most cases, long-term care helps people meet day-to-day health and personal needs like dressing, eating and bathing.

Long-term care comes in many different forms, including:
-In-home care: People who receive in-home care can continue living at home while getting the help they need from care providers who come and go on a regular basis according to the individual’s needs. Depending on the situation, in-home care may be limited to everyday tasks like bathing and eating, or may include more specialized health care services.

-Assisted living facilities: An assisted living facility is a group housing arrangement that provides on-site services for elderly and disabled individuals. Residents often have their own apartments and live relatively independently with easy access to the care they need.
-Nursing home care: Nursing homes are similar to assisted living facilities in that they provide on-site care to residents, but the level of care provided by nursing homes tends to be far more intensive. Typically, nursing home residents are older individuals who require constant care.

Costs of Long-Term Care

With increased options comes a greater need for careful planning — but, unfortunately, most people are unprepared. According to a survey conducted by Lincoln Financial Group, only 44 percent of Americans have taken steps to plan for their long-term care and compared long term care quote.

In Pennsylvania, the median cost of in-home care is $19 per hour for homemaker services and $20 per hour for home health aide services, both of which are slightly above the national average. Meanwhile, the median cost of assisted living in Pennsylvania is close to average at $39,015 per year, and the median cost of nursing home care is well above average at $99,280, according to MarketWatch.com.

Legal Help

Although the task of planning and preparing for long-term care may seem overwhelming, there are a wide range of resources and options available to help create a plan that works for your circumstances. To discuss the type of care you want and create a plan for financing it, contact a certified elder lawyer experienced in helping clients plan for their long-term care.

3 in 4 Need More Long Term Care Saving Tips

Sales of long term care insurance (LTCI) policies gradually picked up following the much celebrated 3 in 4 Need More campaign, a long term care (LTC) program that was mounted by leaders in the LTC industry to inform Americans about the importance of planning their future health care needs to protect their finances.

However, a vast majority of uninsured folks were taken aback after checking their requested LTC quotes.

Before scrutinizing the reason that discouraged some people from moving forward with a policy, it’s better to savor the positive outcome of the event which is the fact that LTCI companies have managed to increase their sales after the program kicked off.  This is a clear sign of a big reduction in what would otherwise be a gazillion Medicaid beneficiaries.

Another good thing that came out of the event is that more people started requesting LTCI quotes.  Once a person shows interest in this insurance product, he has taken the fist step in acquiring an LTCI policy.

Now the problem at hand is the backing out of some individuals from a potential LTCI coverage.  This is almost like turning down a brand new house and lot or a luxury car just when you’ve gotten so close to it already.

Perhaps these individuals who, after seeing the figures in their requested LTCI quotes, concluded right away that no way are they going to pay that much money.  Someone must have missed out on explaining to them that those quotes were only supposed to give them an idea of how much a potential coverage will cost them.

Upon receipt of their LTCI quotes, consumers should peruse each and compare all the variables.  Everything in their quotes is still subject for negotiation.

Remember what elder care specialist Dr. Marion Somers said on television?  “You pay what you negotiate for.”

3 in 4 Need More LTC Advice

The youngest member of baby boomers will turn 65 in less than 20 years.  Hopefully he or she has already secured an LTC plan as the cost of care is predicted to rise fourfold around that time.

Just because they were able to survive the financial burden that came with their parents’ LTC, it does not follow that their own health care needs will be just as manageable.  Everybody has to keep in mind that the cost of care is never constant.  What comes in five figures today may be in six next year.

It is only by planning early that one can emerge victorious in his battle against LTC costs.  An individual does not have to wait for a specific age before he can start planning his health care needs.  In fact many people as young as 40 have secured a plan already so by the time they reach the age of retirement, they can simply spend their time on vacations, get together with loved ones and friends, and many other interesting activities.

Perhaps a little rehash on the topics that were tackled in the 3 in 4 Need More campaign will further increase the country’s insured population.

How to Buy Long Term Care Insurance

There are three options for people who are shopping for long term care quote and thinking about purchasing long term care insurance and they are: stand-alone long term care policy, fixed annuity with ltc benefits and policy with riders.

They are unique in their own way and the decision is left to the consumers, what kind of policy they think would perfectly suit their needs.

Stand-alone Long Term Care Policy

According to the nonprofit Insured Retirement Institute, there are four risks to a stand-alone LTC policy: They can be expensive, they acquire no cash value, the premiums may increase, and the underwriting can be time-consuming.

One of the biggest issues here is the long term care insurance costs. You may be able to afford paying for your premiums for a year or two but what about for the following years. It is important to think of the future and see if you can afford to finish paying for this and not simply give up on this once you’ve out of cash.

Experts say that it is ideal to have a smaller policy rather than be ambitious and opt for the expensive one but can’t finish paying for it.

Fixed Annuity with LTC Benefits

This option is actually more affordable than the traditional long term care policy and aside from that you are also entitled to other benefits. It gives you  access to your money but with nominal fee, the cost of the LTC rider may be less than an LTC policy, and you can obtain coverage without health underwriting if you’ve been turned down for a stand-alone policy. There are disadvantages too like the steep upfront investment, the rider fee can eat into your annuity’s interest income, and you’ll be locking that money up today at a relatively low rate.

LTC Insurance with Rider

LTC experts suggest that if your need for long-term care is relatively short, meaning a year or two, consider a hybrid life product. But if your need is likely to be longer, you’re going to blow through the policy and be back on your own savings. Then you’re going to regret that you didn’t buy a traditional long-term care policy.”

Genworth’s Annual Cost of Survey for In-Home Care

 According to Genworth’s (NYSE: GNW) 2012 Cost of Care Survey, the cost to receive care in the home remained unchanged from 2011 to 2012 and home care costs have also risen less dramatically over the past five years than for other types of long term care  services.

“Overwhelmingly, Americans prefer to receive long term care in the home and the relatively muted increase in home care costs over the past few years can be viewed as a positive for consumers,” said Steve Zabel, senior vice president of Long Term Care at Genworth. “Consumer demand for home care services has led to a proliferation of home care services providers and more choice for consumers. This competition has kept home care costs relatively stable, especially when compared to the cost of care in a nursing home or assisted living facility.”

Nationally, the median hourly cost for homemaker services and home health aide services is $18 and $19, respectively. While these costs remain flat from the previous year, costs for homemaker services have risen just 1.2 percent annually over the past five years, while home health aide services have risen 1.1 percent a year over the same period of time.

By comparison, the median annual cost for care in an assisted living facility is $39,600 nationally. This represents an increase of 1.2 percent since 2011 and a 5.7 percent annual increase over the past five years. The comparable cost for a private nursing home room rose 4.2 percent from 2011 to 2012 to $81,030, or 4.3 percent annualized over the past five years.

Then and Now: Increased Options Benefit Consumers


Consumers have more long term care options today than ever before as seen by the increasing number of home care agencies. According to the Centers for Medicaid and Medicare, there were approximately 9,200 Medicare-certified home care agencies in the U.S. at the start of 2008. Today, there are slightly more than 11,000, representing an increase of 20 percent. Conversely, during this same period of time, the number of Medicare-certified nursing homes has increased less than one-half of 1.0 percent from just over 15,000 to 15,100. The number of nursing homes is increasing at a slower rate and is no longer the only option.

While consumers’ options have increased dramatically, creating a tangible plan for long term care is a critical step many overlook. According to Genworth claims data, the youngest claimant ever was 27 years old. Although that is not the norm, it underscores the necessity for a care planning roadmap. Consumers can create a long term care plan and learn more about the cost of care in their local market and nationally by visiting Genworth . The site is rich with a range of educational and planning tools such as free long term care quote to help consumers compare costs across geographies, project future costs and share comparisons and calculations with family, friends or a financial professional.

“Understanding long term care insurance costs in your local market and how these costs tend to change over time is vital to developing a plan to cover expected future costs,” Zabel said. “Genworth’s Cost of Care Survey is the most comprehensive of its kind and provides invaluable information on long term care costs that enable family members to conduct informed discussions with loved ones about future long term needs and preferences in order to be more informed consumers of long term care services.”

Now in its ninth year, Genworth’s Cost of Care Survey provides Americans with both national and local long term care cost data, as well as information on cost inflation over time. Resources include an interactive long term care map (also available as a free downloadable iPhone and iPad App) of long term care costs in 437 regions across all 50 states.