Seniors and their families should take long-term-care insurance out of the shadows

4/6/2016 (PRESS RELEASE JET) -- It’s something most people haven’t thought about, said Charles Wheeler, the President of TheHealthInsuranceMart.com and a member of the McHenry County Board.  Wheeler is talking about long-term-care insurance. As he explained it, even among those who have thought about long-term-care insurance, few really understand what it is.

What is long-term-care insurance?

“What it’s not is nursing-home insurance,” he said. “It’s not health insurance – it’s not going to pay for you to recover from, or treat, an illness.”

What long-term-care insurance is is “a device that is triggered by a participant’s inability to perform any two Assisted Daily Living (ADL) functions. ADLs include those things most people take for granted in the morning – getting out of bed, dressing, washing themselves and general hygiene, eating and using the toilet.”

If a doctor determines they can’t do any two, or more, of these activities, that triggers a pre-determined elimination period. The elimination period is the period of time between diagnosis and the time when benefits begin. The elimination period is generally somewhere between 30 days and one year though Wheeler has heard of two-year elimination periods.

But I’ve got Medicare?

“Medicare will generally pay the first 90 days of nursing-home care,” he said. “But, after that, you’re on your own.”

Wheeler also warned that Medicare only pays for nursing-home care if the individual goes directly from a hospital to a skilled-nursing-home facility.

Once the elimination period is satisfied, the payments begin. The size of the payment is determined at the time the policy is purchased. Typically, policies range from $500,000 to $1 million, in overall benefits though they can run higher determined by the individual's needs and financial resources. The monthly draw from that figure is also established at the time the policy is purchased. It’s often a percentage of the total coverage, such as one or two percent.

As an example, if the participant has a $500,000 benefit in their policy and they choose to elect a one-percent draw, they’ll receive monthly benefits of $5,000 until they recover or until the fund is depleted. That’s a big help. For instance, that would cover 100 percent of the costs for a senior sharing a bedroom at Shepherd Premier Senior Living in Ringwood (Shepherd also offers private rooms at an additional cost). And that $500,000 policy will last for 100 months.

Senior care comes with sticker shock

Without a senior care policy, $5,000 per month can quickly eliminate a senior’s savings and any equity they’ve built up in their home and investments. Wheeler said the costs of senior housing and services usually come as a shock to someone when their parent or loved one needs that kind of care. And if someone thinks those costs are high today, Wheeler warns that the cost of senior care will go up over time.

With those kinds of costs, someone’s estate is often quickly used up leaving little or nothing to children or a spouse.

Wheeler said long-term-care insurance will continue to pay if someone returns home and receives care there, even if the caregiver is a member of the family or it can pay initially to keep the person out of the nursing home in their private residents.

And your money back

Wheeler also noted that some people are reluctant to pay for long-term-care insurance. Their main objection is usually, “What if I don’t ever need nursing care?”   For those people, he said there is another option where, after a set period of time, and if the policy isn’t used, they can get back some or all the money they’ve paid into the policy.

“They’re worried they’ll never use the policy,” Wheeler said. “There is an additional premium, but they can get their money back. And, if they do use it, that’s what it was for.”

With the aging Boomer population putting pressure on caregivers and facilities that serve seniors, as well as driving costs up from increased demand, Wheeler said long-term-care insurance is something more and more people may want to think about especially with 65% of the population requiring long-term care in their lifetime.