Long-term Care Insurance

Long-Term Care (LTC) is help that a person may need if he/she is unable to perform certain personal tasks for an extended period due to illness or disability. LTC may include help at a nursing home, adult day care center, assisted living facility, or your own home.

Long-term care insurance is a policy that is designed to help pay the cost of LTC. But even the best LTC insurance policy will not cover all the expenses.

Long-term care is very expensive, especially if the care lasts for a year or more. LTC policies pay for costs associated with this care. On the other hand, LTC insurance can also be rather expensive - especially if a person never needs to use it. Most people who enter a nursing home stay only a few months. The statistics below are from studies conducted in 1997 and produced by the Ohio Department of Aging in 2001.

• Once a person reaches age 65, there is a 43 percent chance of being in a nursing home at some future date.
  
• The average stay in a nursing home for people age 65 and over was 290 days.
  
• Only 10 percent of these nursing home residents had a stay between one year and three years.
  
• The average "long-stay" nursing home patient stays for about two years.

Ohio's Partnership for Long-Term Care Insurance

Ohio long-term care insurance companies can now offer policies that qualify under the state's Long-term care Partnership Insurance Program. Partnership insurance offers a way for people to buy long-term care insurance, receive policy benefits and protect a matching amount of assets if they need to apply for Medicaid. With any insurance policy, it is important for the consumer to choose the type of coverage that fits their needs. Only you can decide if Long Term Care insurance is right for you. Your decision should depend on personal health and wealth matters. (Source: Ohio Department of Insurance)

The Ohio Department of Insurance's Long-term Care Partnership Web site provides more information about the partnership program, as well as fact sheets and other resources, frequently asked questions about long-term care and help in finding an agent.

[back to top]

Do you need LTC insurance?

Should you buy LTC insurance?
Only you can say. Your decision should depend on personal health and wealth matters. Start by asking yourself these questions:

About your health
Are you a good candidate for a long stay in a nursing home during your lifetime?

• How healthy are you?
  
• Do you have healthy habits?
  
• What is your family's health history?
  

• Can you afford the policy, now and later?
• Can you afford extended nursing care?
  
• Do you want to leave your family anything? 

[back to top]

Will you need long-term care to protect your health?
While there are no guarantees, if you answer YES to any of the following statements, your chances of needing long-term care might be higher than the average person.

Life Expectancy
Your parents, grandparents, and other family members have generally lived into their 80's or older. There's a good chance you'll do the same. And the longer you live, the more likely it is you'll need long-term care.

Gender
You are female. One fact of American life is that women live longer than men. As a result, women have a greater chance of being alone and needing long-term care.

Health & Habits
You've been a heavy smoker, have high blood pressure or diabetes, or other health habits or conditions that could result in more serious problems in the future. Anyone can have a disabling accident, develop Alzheimer's or have a stroke, but your chances are greater if you've had a history of health problems.

Family History
Your parents, grandparents, or other relatives have suffered from senility or Alzheimer's in their old age. There's no guarantee the same thing will happen to you, but your chances may be greater.

[back to top]

Should you buy long-term care insurance to protect your wealth?
Many people who need long-term care may not need long-term care insurance. These questions will help you decide where you fit financially.

Medicaid
Do you now receive Medicaid or Supplemental Social Security Income (SSI)? If YES, you do not need LTC insurance.

If you were eligible for Medicaid, would you be willing to have Medicaid pay your long-term care bills? If NO, you will need a supportive family or a good LTC insurance policy.

Family Support
Would relatives or friends be willing and able to take care of you if you needed continual help with such things as eating, dressing, bathing, etc.? If YES, you may not need to worry about the cost of long-term care. If NO, you will need to plan for the cost of long-term care needs.

Income
Can you depend on having a monthly income of at least $4,800 to pay for long-term care? If YES, you might not need LTC insurance. You would be able to pay the average cost of care out of your own pocket at today's prices.

Income/Savings
Can you afford to pay $100-200 (or more, the older you are) from your income or savings every month for insurance premiums? If NO, you might not be able to afford LTC insurance. Today's premiums will probably be even higher in the future.

[back to top]

What affects your premium?

• Age: Age is an important factor in long-term care insurance premiums. The older you are when you buy the policy, the higher your premiums will be.
• Once you've bought the policy, the premiums on most policies do not automatically increase because you get older.
  
• If you buy at age 65, you'll always pay the same price as new customers who are 65 years old.
  
• But, it's likely the company will raise the rates for all customers as costs increase.
• Benefit: How much will the policy pay? Most policies define benefits in terms of the maximum daily benefits and offer numerous choices (e.g. $50, $90, or $120 per day).
• Inflation Protection and Nonforfeiture of Benefits: These 2 features can make a big difference in LTC insurance premiums.
• Elimination Period: The premium for a company's policy with a 100-day elimination period is more affordable than the same policy with a shorter period. Of course, the 100-day elimination period means you'll be paying for the first 100 days of care yourself. At today's LTC prices, that could cost you more than $15,000. And if you leave the nursing home within 100 days, such a policy pays nothing.
• Benefit Period: The "benefit period" tells you how long the policy will pay daily benefits.
• The benefit period can be as short as one year or as long as "lifetime" (unlimited).
  
• Increasing a policy's benefit period will also increase its price

[back to top]

Where can I receive care under a long-term care policy?

The types of places where you can get long-term care depends on what is allowed by your insurance policy. There are four kinds of facilities where care is usually delivered, and policies generally include all four.

Your policy will cover your care in one or more of the following:

• Your Home
• Adult Day Service Center
• Assisted Living Facility
• Nursing Home

[back to top]

Consumer protections

Ohio law requires companies that sell long-term care insurance to give you information to help you protect yourself. The company must give you a whole range of information as listed below.

• Ohio Shopper's Guide to Long-Term Care Insurance: the company's name may be printed on the cover, but this booklet was written by the National Association of Insurance Commissioners (NAIC) and it has a lot of good information about long-term care insurance.
  
• An outline of coverage: a summary of the policy that explains what the policy will do and what it will not do.
  
• Notice of your 30 day free-look period. Even if you sign a contract and write a check, once you receive the policy you have 30 days to look it over and, if you change your mind, get a full refund.
• Company history of rate increases.
• Suitability standards. Because not everyone should buy LTC insurance, state law now requires a new form to be part of your application. The Personal Worksheet can help determine your ability to pay premiums and your reasons for buying.
  
• Nonforfeiture option required. Many policies already offered a nonforfeiture option prior to 2002; now Ohio requires it. This optional coverage (which may increase your premium) allows you to collect partial benefits if you stop paying premiums for any reason.
  

[back to top]

Selecting a company

Medicare Long-term Care Planning Tool

A Web-based questionnaire that helps you understand:

•  What long-term care services are available,
•  How much you can expect to pay for long-term care, and
•  What financing options are available to support your long-term care costs.

Ohio Senior Health Insurance Information Program
Obtain a copy of OSHIIP's, Ohio Shoppers Guide to Long-Term Care Insurance, for information about long-term care insurance and a listing of the companies that are authorized to sell long-term care insurance in Ohio. Investigate the financial health of any insurance company that you are considering. The Ohio Department of Insurance does not recommend or rate insurance companies or endorse the ratings of any private firm.  Look for ratings from insurance rating services:

A.M. Best Company
908-439-2200

Fitch Investors' Service
800-893-4824

Moody's Investor Service
212-553-0377

Standard & Poor's
212-438-2400

Several rating firms publish books with their ratings, so you may also be able to find what you need at your local library.

[back to top]

Shopping Tips

Always do these things:

• Do your homework: get a realistic idea of what you need and how much you can afford to pay.
  
• Make sure you can pay the premiums and still have enough money for basic needs such as housing, food, medicines, etc.
• Ask a trusted friend to join you when an agent visits your home.
• Shop around; LTC policies can have big differences in price and benefits.
  
• Read the outline of coverage very carefully and ask for a specimen policy.
  
• Ask questions about everything you don't understand.
• Ask your lawyer, a friend, or a relative to review the policy to see what you may have missed.
• Exercise your free-look option.
  
• Call the Ohio Senior Health Insurance Information Program (OSHIIP) for information or individual counseling: 800-686-1578.
  

Never do these things:

• Don't buy on the first sales visit. 
• Don't sign a blank application.
  
• Don't pay in cash.
  
• Don't write checks payable to an agent - always make them payable to the insurance company.
  
• Don't buy until you are sure you understand exactly what you are getting.
  
• Don't buy unless you are sure you can afford to make the payments every year. 

[back to top]