Long Term Care Insurance Helping People Avoid Nursing Homes
Nobody wants to go to a nursing home, and a new study completed by the American Association for Long Term Care Insurance shows people with LTC insurance can stay in their own home. Most newly opened long-term care insurance claims begin at home according to the latest data reported by the AALTCI, a national consumer education and advocacy group.
The report says that 54% of new long-term care insurance claims started with homecare. An increase of 3% from the last study completed by the group in 2012. 14% of new claims started in assisted living facilities. 32% of claims started in nursing homes.
"Most long-term care insurance claims begin and end in the home," said Jesse Slome, executive director of the AALTCI. The AALTCI analysis of claims found that nearly 56 percent of claims also ended in the home.
"People want to be in their home with family and loved ones and having some long-term care insurance in place can help pay for the cost of home care services," Jesse Slome also pointed out.
Many people think of long-term care as being nursing home care. The fact is a recent Boston College study confirmed that nursing home stays were much shorter now than in the past. Many experts cite the availability of assisted living, adult daycare, and homecare as reasons why fewer people need nursing homes. The AALTCI study confirms that for people with insurance, they have the ability to avoid a nursing home. In fact, some experts call LTC insurance as nursing home avoidance protection.
"Individuals continue to mistakenly think of long-term care insurance as nursing home insurance," explains Jesse Slome. "I sometimes refer to LTC insurance as nursing home avoidance insurance because often having this insurance protection in place allows the individual to be cared for in their own home," Jesse Slome adds.
The policies, which people typically purchase as part of their retirement planning in their 40’s and 50’s pay substantial benefits to policyholders. The nation’s long term care insurance companies paid $8.65 Billion in claim benefits in 2016 alone.
These policies work fairly simply. To receive benefits from your long-term care insurance policy, you meet two criterias the Benefit Trigger and the Elimination Period. A benefit trigger is usually a person who requires help with at least two of the six activities of daily living, known as “ADL’s” or you require supervision due to a cognitive issue like Alzheimer’s or dementia. The ADL’s are:
The six ADLs are recognized as:
• Bathing. The ability to clean oneself and perform grooming activities like shaving and brushing teeth.
• Dressing. The ability to get dressed by oneself without struggling with buttons and zippers.
• Eating. The ability to feed oneself.
• Transferring. Being able to either walk or move oneself from a bed to a wheelchair and back again.
• Toileting. The ability to get on and off the toilet.
• Continence. The ability to control one's bladder and bowel functions.
Most policies include help as being either “hands-on” assistance or “stand-by” assistance (meaning you can still perform the ADL but you need a person there just in case).
The elimination period is a deductible based on days. The standard is 90 days.
Consumers have many different planning options today than is years before. The traditional plans, which include state “partnership” policies which are available in most states provide typical insurance benefits (monthly benefit, pool of money, shared benefits for couples, inflation protection, case management and other services). Partnership plans provide additional dollar-for-dollar asset protection.
Most states, including Texas, have partnership plans which provide what is called “asset disregard.” In the event you spend all the benefits from your LTC policy, they will disregard the amount paid by insurance when they calculate the Medicaid benefit. A state partnership plan allows a person to still qualify for Medicaid without spending down a majority of their assets.
Texas created the Long-Term Care Partnership Program as an incentive for Texans to plan for their long-term care needs. The partnership is a joint effort between private insurers and the state. Insurers must follow state and federal guidelines to sell partnership policies. Partnership policies have an asset disregard benefit, inflation protection, and tax qualification benefits.
Often the only difference between a partnership qualified policy and other long-term care insurance policies sold in a state is the amount and type of inflation protection required by the state. Generally, with these traditional plans, if you are lucky enough never to need care you won't receive anything back to your estate. There are asset-based or “hybrid” plans which are life insurance policies with riders for long-term care or annuities with riders for long-term care. These are single premium but offer some type of death benefit. There are also what the industry calls “Short Term Care” policies. Short Term Care policies are much smaller benefit plans but allow more people to in good health to qualify. Also, older people who normally would not be eligible for a new long-term care plan may be eligible for a short-term plan.
LTC insurance is very affordable for most people. “The key to long-term care insurance is to apply early while it’s inexpensive,” said Kevin M. Lynch, assistant professor of insurance at the American College of Financial Services in Bryn Mawr, PA in a recent USA Today story.
There are many ways according to experts to save money when shopping. Experts suggest working with a Long Term Care specialist and understand you should design a plan based on your unique needs and budget which includes your future retirement plan and where you plan on living when you retire.
The good news is, according to this report, you can expect to be able to avoid that nursing home. An LTC policy will help provide these choices without financial devastation and burden to your family.