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Overview
Long Term Care
At Equitable Life & Casualty, we understand the devastating effects a long term illness can have on you and your loved ones.
Our insurance plans were designed to help reduce the burden a long term illness can have on an entire family.
With our Long Term Care insurance plans, you and your family won't have to worry over "what if it happens." You can have the peace of mind you want, knowing that you can remain independent and that you can afford the quality care you need - when you need it.
What is Long Term Care? Long Term Care (LTC) can be defined as residential, in-home, and community based services for individuals requiring assistance with activities of daily living due to functional or cognitive impairment. LTC provides specialized personal and rehabilitative services that include social, residential, rehabilitative and medical care. Typically, LTC is required because of aging, a prolonged physical illness, a disability or cognitive impairment (such as Alzheimer’s disease).
Who Will Need Long Term Care? Anyone could be subjected to...
Approximately 60% of Americans who reach age 65 will need LTC at some point. Among people age 85+, the proportion of people who are impaired and require LTC is approximately 55%.(1)
Chronic diseases are the leading cause of death and disability.(10) Among adults age 65 and older, 95% of all health care spending is for chronic diseases.(2) Heart disease, cancer, stroke, chronic obstructive pulmonary diseases and diabetes account for 70% of deaths.(2) Heart disease, cancer and stroke alone account for 60% of all deaths for people age 65+.(2)
About 80% of seniors have at least one chronic health condition; 50% have at least two. The average 75 year-old has approximately three chronic conditions and uses five prescription drugs.(2)
An estimated 4.5 million Americans are afflicted with Alzheimer’s disease. Approximately one in ten people age 65-84 and about one-half of people age 85+ have Alzheimer’s disease.(3)
How Much Will Long Term Care Cost?
What About Medicare and Medicaid? Medicare
The federal Medicare program provides medical care for the aged and the disabled. While Medicare primarily covers acute care, it also pays for limited stays in post-acute skilled nursing care facilities and intermittent home health care services. Medicare requires beneficiaries to pay part of the cost, leaving about half of health spending to be covered by other resources(6)
Medicaid is the health care program for low-income individuals financed jointly by federal and state governments. Today, Medicaid is the largest payer of LTC services. The LTC services covered by Medicaid vary widely. Medicaid does not always cover home and community-based care or care in an assisted living facility. Accordingly, LTC choices can be considerably limited under Medicaid.(8)
Many people who pay their LTC costs privately can quickly deplete their assets and become eligible for Medicaid.(10)About 30% of elderly Medicaid LTC recipients first entered a nursing home as out-of-pocket (private pay) residents, spent down their assets, and eventually qualified for Medicaid.(11)
Long Term Care Insurance (LTCI) is a means of reducing the financial risk if LTC is needed. People buy LTCI for a variety of reasons, including protecting assets, having choices in the type of care received, protecting family members from having to pay for care, and decreasing the chances of having to rely on Medicaid.
Nobody knows what LTC services they will need, but with proper planning, there can be many available options with LTCI, including coverage for nursing home, assisted living, home and community care. LTCI policies are becoming more popular and more widely used by individuals to pay for some or all of their LTC expenses. In doing so, they can secure their independence and financial future, and that of their loved ones as well. A serious accident or illness requiring LTC can financially drain personal savings and deplete hard earned assets. LTCI can protect assets and retirement plans while providing the freedom to choose quality services in the event care is needed. While LTCI is not appropriate for everyone the cost of LTCI can be remarkably affordable.
What are Your Options?
Because there are so many misconceptions about LTC, the first step is education.
Many Americans, at some point in their lives, will need LTC services. Without proper planning, long term health care costs have the potential to eat up retirement income and accumulated assets.
In addition to the confusion about the cost of LTC, many people have a false sense of preparedness, believing that Medicare or Medicaid will cover their LTC needs.
Today, many people turn to family and friends for help with LTC. Informal care and support works only if children or relatives live close by, are financially and physically able to provide the care needed, and are not working themselves. Nearly 79% of the people who need LTC services live at home or in the community.(2)
If personal savings are to be the primary LTC financing resource, people should be saving for about 25 years to cover potential LTC costs, and adding 5% each year to cover the annual inflation of LTC facilities and services.
Medicare and Medicaid offer limited choices for LTC. Most people will not need just skilled care services or care in a nursing home. Moreover, many may find that the types of facilities they prefer are not covered by these programs. Next, they must be willing to accept whatever services these programs choose to provide and pay for those services they need that are not offered or covered.
Private LTCI is an option people should seriously explore. Insurance allows for flexibility, independence, the freedom to choose LTC settings, and most importantly, control over LTC costs.
Are You Prepared?
Financial advisors agree that most Americans, even those with annual incomes over $100,000, are woefully unprepared to provide and pay for LTC for either themselves or a loved one. Most wait 10 years longer than they should to even begin planning for LTC. Procrastination is a big reason, while underestimating the cost and/or overestimating the sufficiency of assets are other reasons. Yet the number one reason is the unwillingness to think about the issue . . . the thought that "it won't happen to me."
You cannot afford to put it off or, worst of all, think that LTC will not happen to you. The odds are simply not in your favor and the financial consequences can be severe. The best time to plan ahead is now.
Click here for more information about Long Term Care insurance.
Sources
(1) American Association of Homes and Services for the Aging. "Aging Services in America: The Facts" Revised 02/2006. www.aahsa.org 03/2006
(2)Centers for Disease Control & Prevention and Merck Institute of Aging & Health. "The State of Aging and Health in America." 2004. www.cdc.gov 05/2006
(3)Alzheimer's Association. "2006 National Public Policy Program to Conquer Alzheimer's Disease" 2006. www.alz.org 06/2006
(4) Assisted Living Federation of America. "What is Assisted Living?" www.alfa.org 04/2006
(5)Hospice Association of America. "Hospice Facts & Statistics." 03/2006. www.congressweb.com 05/2006
(6)Administration on Aging & U.S. Department of Health and Human Services. "A Profile of Older Americans." 2004. www.aoa.gov 05/2006
(7)Congressional Budget Office. "Financing Long-Term Care for the Elderly." 04/2004. www.cbo.gov 05/2006
(8)American Council of Life Insurers: Research Findings "Long-Term Care Insurance or Medicaid: Who Will Pay for Baby Boomers' Long-Term Care?" 2005
(9)U.S. Department of Health and Human Services: Administration on Aging. "Fact Sheet - Assisted Living" Updated 08/2006 www.aoa.gov 05/2006
(10)U.S. Government Accountability Office. "Medicaid: Transfers of Assets by Elderly Individuals to Obtain Long-Term Care Coverage" GAO-05-968. 09/2005. www.gao.gov 05/2006
(11)U.S. Government Accountability Office. "Long-Term Care Financing Growing Demand and Cost of Services are Straining Federal and State Budgets" GAO-05-0564T 2005. www.gao.gov 05/2006
(12)Allen, Kathryn G., Director, Health Care. Government Accountability Office. "A Look at Our Future: When Baby Boomers Retire". Presentation to the Medicaid Commission. 03/2006 www.aspe.hhs.gov 07/2006
Our insurance plans were designed to help reduce the burden a long term illness can have on an entire family.
With our Long Term Care insurance plans, you and your family won't have to worry over "what if it happens." You can have the peace of mind you want, knowing that you can remain independent and that you can afford the quality care you need - when you need it.
What is Long Term Care? Long Term Care (LTC) can be defined as residential, in-home, and community based services for individuals requiring assistance with activities of daily living due to functional or cognitive impairment. LTC provides specialized personal and rehabilitative services that include social, residential, rehabilitative and medical care. Typically, LTC is required because of aging, a prolonged physical illness, a disability or cognitive impairment (such as Alzheimer’s disease).
Who Will Need Long Term Care? Anyone could be subjected to...
Approximately 60% of Americans who reach age 65 will need LTC at some point. Among people age 85+, the proportion of people who are impaired and require LTC is approximately 55%.(1)
Chronic diseases are the leading cause of death and disability.(10) Among adults age 65 and older, 95% of all health care spending is for chronic diseases.(2) Heart disease, cancer, stroke, chronic obstructive pulmonary diseases and diabetes account for 70% of deaths.(2) Heart disease, cancer and stroke alone account for 60% of all deaths for people age 65+.(2)
About 80% of seniors have at least one chronic health condition; 50% have at least two. The average 75 year-old has approximately three chronic conditions and uses five prescription drugs.(2)
An estimated 4.5 million Americans are afflicted with Alzheimer’s disease. Approximately one in ten people age 65-84 and about one-half of people age 85+ have Alzheimer’s disease.(3)
How Much Will Long Term Care Cost?
- Nursing Home - Nursing homes provide the most expensive form of LTC. The cost of a private room in a nursing home averages $74,095 annually ($203 daily).(1)
- Assisted Living Facility - The annual base rate is $32,294 ($2,691 monthly).(3) Nationwide, fees can range between $15 and $200 a day. A private room in an assisted living center costs about two-thirds less than a private room in a nursing home. Prices vary depending upon geographic location, residence, room size, and services needed.(4)
- Adult Day Care - The average cost of adult day care is $56 per day. Health-related services may be offered for an additional fee.(1)
- Home Care - Routine home care costs approximately $126.49 daily. Continuous home care costs approximately $30.76 per hour.(5) The average rate for a home health aide is $25.32 per hour.(3)
- Hospice - Inpatient hospice care costs about $562.69 a day and inpatient respite care averages $130.85 daily.(5)
What About Medicare and Medicaid? Medicare
The federal Medicare program provides medical care for the aged and the disabled. While Medicare primarily covers acute care, it also pays for limited stays in post-acute skilled nursing care facilities and intermittent home health care services. Medicare requires beneficiaries to pay part of the cost, leaving about half of health spending to be covered by other resources(6)
- Adult Day Care - Medicare does not pay for adult day care services.(7)
- Home Care- Medicare does not pay for non-medical home care services.(8)
- Assisted Living Facilities - Medicare does not cover care in assisted living facilities.(9)
- Skilled Nursing Facilities - Under specific guidelines, Medicare pays for 20 days in a Medicare-approved skilled nursing facility if preceded by a stay in a hospital.(7)
- Hospice - Medicare will pay for hospice services upon physician certification that an individual is terminally ill with a life expectancy of 6 months or less. Patients must choose to receive hospice care rather than curative treatments and care must be provided in a Medicare-approved hospice program.(7)
Medicaid is the health care program for low-income individuals financed jointly by federal and state governments. Today, Medicaid is the largest payer of LTC services. The LTC services covered by Medicaid vary widely. Medicaid does not always cover home and community-based care or care in an assisted living facility. Accordingly, LTC choices can be considerably limited under Medicaid.(8)
Many people who pay their LTC costs privately can quickly deplete their assets and become eligible for Medicaid.(10)About 30% of elderly Medicaid LTC recipients first entered a nursing home as out-of-pocket (private pay) residents, spent down their assets, and eventually qualified for Medicaid.(11)
- Income Qualification - To qualify for Medicaid, individual assets (income and resources) must be below certain limits. In most states, to be financially eligible for Medicaid LTC services, an individual must have $2,000 or less in countable resources ($3,000 for a couple).(10)
- Home and Community Care- Medicaid can offer a variety of non-medical and social services to allow some people to remain in their homes and communities. These services include personal care, emergency call devices, homemaker assistance, chore assistance, adult day care and other services that are cost-effective and necessary to avoid institutionalization. States often limit eligibility or the scope of services for home and community-based programs in order to control costs.(11)
- Assisted Living Facility - Typically, Medicaid doesn’t pay for care in an assisted living facility. Room and board costs are not covered. In some states, home and community-based services provided in assisted living facilities may be covered under a Medicaid waiver program.(8)
- Nursing Homes - The bulk of Medicaid LTC spending is for nursing home care.(8) In 2004, nursing home care accounted for about 46% of all Medicaid payments.(12)
- Hospice - In 2002, hospice services comprised only .3% of total Medicaid payments.(5)
Long Term Care Insurance (LTCI) is a means of reducing the financial risk if LTC is needed. People buy LTCI for a variety of reasons, including protecting assets, having choices in the type of care received, protecting family members from having to pay for care, and decreasing the chances of having to rely on Medicaid.
Nobody knows what LTC services they will need, but with proper planning, there can be many available options with LTCI, including coverage for nursing home, assisted living, home and community care. LTCI policies are becoming more popular and more widely used by individuals to pay for some or all of their LTC expenses. In doing so, they can secure their independence and financial future, and that of their loved ones as well. A serious accident or illness requiring LTC can financially drain personal savings and deplete hard earned assets. LTCI can protect assets and retirement plans while providing the freedom to choose quality services in the event care is needed. While LTCI is not appropriate for everyone the cost of LTCI can be remarkably affordable.
What are Your Options?
Because there are so many misconceptions about LTC, the first step is education.
Many Americans, at some point in their lives, will need LTC services. Without proper planning, long term health care costs have the potential to eat up retirement income and accumulated assets.
In addition to the confusion about the cost of LTC, many people have a false sense of preparedness, believing that Medicare or Medicaid will cover their LTC needs.
Today, many people turn to family and friends for help with LTC. Informal care and support works only if children or relatives live close by, are financially and physically able to provide the care needed, and are not working themselves. Nearly 79% of the people who need LTC services live at home or in the community.(2)
If personal savings are to be the primary LTC financing resource, people should be saving for about 25 years to cover potential LTC costs, and adding 5% each year to cover the annual inflation of LTC facilities and services.
Medicare and Medicaid offer limited choices for LTC. Most people will not need just skilled care services or care in a nursing home. Moreover, many may find that the types of facilities they prefer are not covered by these programs. Next, they must be willing to accept whatever services these programs choose to provide and pay for those services they need that are not offered or covered.
Private LTCI is an option people should seriously explore. Insurance allows for flexibility, independence, the freedom to choose LTC settings, and most importantly, control over LTC costs.
Are You Prepared?
Financial advisors agree that most Americans, even those with annual incomes over $100,000, are woefully unprepared to provide and pay for LTC for either themselves or a loved one. Most wait 10 years longer than they should to even begin planning for LTC. Procrastination is a big reason, while underestimating the cost and/or overestimating the sufficiency of assets are other reasons. Yet the number one reason is the unwillingness to think about the issue . . . the thought that "it won't happen to me."
You cannot afford to put it off or, worst of all, think that LTC will not happen to you. The odds are simply not in your favor and the financial consequences can be severe. The best time to plan ahead is now.
Click here for more information about Long Term Care insurance.
Sources
(1) American Association of Homes and Services for the Aging. "Aging Services in America: The Facts" Revised 02/2006. www.aahsa.org 03/2006
(2)Centers for Disease Control & Prevention and Merck Institute of Aging & Health. "The State of Aging and Health in America." 2004. www.cdc.gov 05/2006
(3)Alzheimer's Association. "2006 National Public Policy Program to Conquer Alzheimer's Disease" 2006. www.alz.org 06/2006
(4) Assisted Living Federation of America. "What is Assisted Living?" www.alfa.org 04/2006
(5)Hospice Association of America. "Hospice Facts & Statistics." 03/2006. www.congressweb.com 05/2006
(6)Administration on Aging & U.S. Department of Health and Human Services. "A Profile of Older Americans." 2004. www.aoa.gov 05/2006
(7)Congressional Budget Office. "Financing Long-Term Care for the Elderly." 04/2004. www.cbo.gov 05/2006
(8)American Council of Life Insurers: Research Findings "Long-Term Care Insurance or Medicaid: Who Will Pay for Baby Boomers' Long-Term Care?" 2005
(9)U.S. Department of Health and Human Services: Administration on Aging. "Fact Sheet - Assisted Living" Updated 08/2006 www.aoa.gov 05/2006
(10)U.S. Government Accountability Office. "Medicaid: Transfers of Assets by Elderly Individuals to Obtain Long-Term Care Coverage" GAO-05-968. 09/2005. www.gao.gov 05/2006
(11)U.S. Government Accountability Office. "Long-Term Care Financing Growing Demand and Cost of Services are Straining Federal and State Budgets" GAO-05-0564T 2005. www.gao.gov 05/2006
(12)Allen, Kathryn G., Director, Health Care. Government Accountability Office. "A Look at Our Future: When Baby Boomers Retire". Presentation to the Medicaid Commission. 03/2006 www.aspe.hhs.gov 07/2006
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