411 on Long Term Care Insurance

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the 411 on longterm care insurance is it right for you?

WRITTEN BY Elizabeth A. Walker

LET’S FACE IT. NOBODY WANTS TO TALK ABOUT LONG-T TERM CARE insurance. It ranks up there with updating your will and life insurance. But many people will need some assistance in the future, so it’s important to understand the basics and then decide if long-term care insurance is a protection to pursue.

What is long-tterm care insurance?

Long-term care means an individual

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aide coming to the home to skilled care in a nursing home. Long-term care insurance

needs assistance with some activities of

(LTCI) can help cover the cost of that

daily living (ADL). ADL include bathing,

care, allowing you to protect your assets

dressing, using the toilet, mobility, and

against the risk of paying for long-

eating. Assistance ranges from a health

term care.

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life ) ) ) long-tterm care

And it’s a viable risk. According to the U.S. Department of Health and Human Services, 12 million adults age 65 and older will need long-term care services by 2020.

When should I get long-tterm care insurance?

“The best time to apply is when you are healthy, in your 40s or 50s,” said Louise White, owner of a State Farm Insurance franchise in Landisville. “The earlier you get it, the less you have to pay and you have the greatest number of options available to you.”

Isn’t it long-tterm care for, well, old people?

Hmm, you’d think so, but not necessarily. The U.S. Department of Health and Human Services notes that 40 percent of people receiving long-term care right now are between the ages of 18 and 64! You may be perfectly healthy today, but tomorrow could bring the diagnosis of

monthly benefits are adequate for the

a chronic illness or a tragic accident.

demographic area, said Andrew R.

predict what costs may be in the future.

So how do you know that the

O’Connor, Certified Long-Term Care

insurance you purchase today will cover

What happens if I have LTCI and never

Advisor for Mutual of Omaha Life

your costs in the future?

use it?

Insurance Company. He also said

Most policies do not have a cash value,

“Inflation protection is important to

individuals should check the company’s

keep up with rising healthcare costs,”

said White, although some products may.

rating, which is a sign of the company’s

O’Connor said.

It’s like other insurance coverage—you

ability to pay claims. A company should

don’t know if you’ll need it, but it’s there

be rated at least an A-.

to cover the bases in case you do. If

“Ask what discounts are given if you

You can purchase a simple or compound inflation rider, said White. It works the same way as simple or

you’re not sure, “just get the basics and

are married, in preferred health, married

skip the bells and whistles,” White said.

when applying, a two-person household,

“If you only have a certain amount to

or a current Medicare supplement client,”

benefit and 5 percent inflation. With a

budget for LTCI, then only spend that

he added.

simple inflation rider, the daily benefit

amount.”

Make sure the plan’s daily and

Let’s use an example of a $100 daily

will increase 5 percent of the base benefit What about inflation?

What should I look for in a plan?

compound interest.

Like everything else, healthcare costs continue to rise and it’s impossible to

each year. So the first year’s benefit would be $100, the next year $105, the next $110, and so on.

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With a compound inflation rider, your daily benefit will increase based on the

with your own assets.”

Long-term care insurance is a hefty

White said most people should

topic to sort through. It would be easy

total benefit. On the first anniversary of

consider long-term care insurance, unless

to flip the page to the next, undoubtedly

a policy with a $100 daily benefit, the

they are very wealthy and have enough

more interesting, story. Instead, talk to

benefit increases 5 percent to $105. On

assets to risk paying for long-term care.

your insurance agent or financial advisor

the second anniversary, the benefit

On the other hand, long-term care

to see if long-term care insurance should

calculation would be $110.25, or $105

insurance might not be in your best

be part of your financial plan. Also

plus 5 percent. The next year, it would be

interest if you have a low income and few

check with the human resources director

$110.25 plus 5 percent and so on. Over

assets to protect.

at work—more and more companies

time, a compound rider results in greater coverage.

Do I really need to consider LTCI? Long-term care insurance isn’t

A common misperception is that

are starting to include long-term care

Medicare or Medicaid will cover the cost

insurance as part of their benefit

of long-term care. Medicare will only

packages.

pay for skilled nursing care if you need it

Long-term care insurance may

for a short period of time. Medicaid will

or not may be right for you. By

necessarily inexpensive. It’s difficult to

only pay for long-term care if you meet

doing the research, you’ll find the

think about purchasing more insurance

its qualifications, which include paying

peace of mind you need to face the

with priorities like college tuition and

down your assets first.

future. ) ) )

mortgage payoffs, not to mention beefing up that retirement fund. Consider it part of your overall financial-planning package.

“Coverage is based upon what the family wants to accomplish,” said O’Connor. “One way is to fully cover long-term care costs or to cost share

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Own Your Future Pennsylvania has partnered with the U.S. Department of Health and Human Services to offer individuals between 45 and 65 a free long-term planning kit. The Pennsylvania kit includes a Pennsylvania Resource Guide that provides helpful Pennsylvania-specific information.

To obtain your free kit, go to www.longermcare.gov/campaign. You can also call 866.752.6582.

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©2006 Nationwide Mutual Insurance Company and Affiliated Companies. Nationwide Life Insurance Company. Home office: Columbus, Ohio 43215-2220. Nationwide, the Nationwide Framemark and On Your Side are federally registered service marks of Nationwide Mutual Insurance Company. Not available in all states.

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