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No one likes to pay insurance premiums of any kind and long term care insurance is no exception. We pay these premiums because the alternative leaves our retirement income and investment assets exposed to high risk if long-term care becomes necessary and we have to pay for the care ourselves. It is no secret that the cost of health care facilities care can quickly drain your retirement funds and force a retiree into financial ruin. With purchasing a long term care insurance, a policyholder is accepting a small loss each year in the form of premiums paid. This small loss helps ensure that he or she will not be wiped out financially by unmanageable long-term care costs in the future.

3 Choices for Premium Payment Periods

People who are unfamiliar with long-term care insurance often think about how long the premiums will need to be paid. The answer is that there are three choices for the premium payment period which is usually offered by insurance carriers. The most favorite choice by far is a ” lifetime ” payment period that requires the payment of premiums until death or until the policy is started. Some object to paying these premiums for such a long period of time. In response to that objection, I usually ask prospective clients to consider other forms of insurance that they most likely own. For instance, would they expect to only pay premiums for health or major medical insurance for a short time, or do they plan on paying those premiums for life? I believe they expect to pay auto insurance premiums for as long as they drive? Isn’t it reasonable to pay homeowners insurance premiums for as long as they own a home? As long as the financial risk is present, the payment of insurance premiums is prudent. Since the risk of needing long-term care is present for as long as we live, the premiums for long-term care insurance can be expected for the remainder of our life.

Shorter Premium Payment Periods Equal Higher Premiums

The second and third options for payment of long term care premiums allow the policyholder to condense all of those expected premium payments into a much shorter time. For those under fifty-five years of age, a ” pay to age sixty-five ” option may make sense. For others a ” ten-year pay ” option may be a good choice. Since the expected premium payments over a lifetime are simply put together into a shorter timeframe, the cost of these premiums is much higher. So therefore, these choices usually make sense for policyholders who can take advantage of tax deductions that help them reduce the overall cost of their long-term care insurance.

The New York Times have just published an article entitled, ” Caring for the Caregivers ” and while I read the piece, I merely shook my head a few times thinking about the implications in the article and what I know from my perspective in the eldercare industry. One of the first things I learned in this business is that when it is feasible, most people want to age in place, meaning live in their homes with whatever help, be it homecare and/or technology, they will need for as long as they can. America’s aging population is increasing and there is a shortage of homecare aides to help this burgeoning group do what they want, which is to stay comfortably in their own homes.

But, as the article pointed out:

” According to the Labor Department, personal and home care aides are expected to be the second fastest-growing occupation in the United States from 2006–2016, increasing by 51 percent, slightly behind the expected growth in systems and data communications analysts. “

So who exaclty are these people who come into the homes to take care for your parents? The NY Times article points it out succinctly, ” most home care aides are women, low income and minority, and many of them are immigrants. ” And although ,some states have taken steps to provide them with basic labor protections, most of these women work for agencies that under the existing federal guidelines are allowed to mark them as companions, leaving the caregivers with no rights to minimum wages and overtime. This is not to say all agencies take advantage of this fact, there are many that have realized the efficiency of low-staff turnover and treating their workers accordingly. This sector of healthcare is growing rapidly and yet many of its workers are not protected. However, these caregivers should be, because they are the backbone of the aging in place movement; the ones supporting and tending to the needs of our elders in their homes.  So what’s being done about this issue?

Right now the Service Employees International Union are now working to unionize homecare workers in every state. Washington and Montana have unionized homecare workers, while here in California, there is still in-fighting ongoing between the unions. Many have voiced the opinion that new laws and legislation has to be passed by the Labor Department to offer greater federal protection for homecare workers. I believe this is the best way to keep these workers safe. (Yep, that’s a nudge, President Obama, but I do realize you are very busy these days.) In the end, it all circles back to quality of care. Happy, well-paid, well-trained workers who work for agencies with low turnover are, and will always be, the ones delivering the highest quality of long term care to our mothers, fathers and possible even us one day.

There are so many suggestions and opinions about long term care insurance which are mainly based on anecdotal evidence. Every once in a year, the American Association for Long-Term Care Insurance publishes a LTCI Sourcebook that cuts through the fog of opinion by helping to establish the facts.  The 2009 version of this publication have just been released and is available and here are some of the results of the data gathered from a large sampling of the leading continuous care insurers about those who have an individual long-term care insurance policy:

Number of policyholders and amount paid in claims: 8.25 million Americans currently have long-term care insurance and last year 8.5 billion dollars were paid in claims to 180,000 policyholders.

Age of claimants: Of the new claims opened during 2008, 61% of claimants were age eighty or older, 30% were between seventy and seventy-nine and only 9% were under the age of seventy.

Sales by issue age: It was found that 24% of long-term care insurance buyers were between the age of forty-five and fifty-four. 53% were between fifty-five and sixty-four. 15% were between the age of sixty-five and seventy-four.

The sales by daily benefit amount: Only 6% bought policies with a daily benefit between $50 and $99, while 31.5% were between $100 and $149, 35% were between $150 and $199, and 27% bought more than $200.

Sales by elimination period: The number one favorite elimination period selected was ninety days, with almost 83% of buyers choosing it.

Sales by benefit period: Benefit period choices by long-term care insurance consumers were as follows: 2 years, 7%; 3 years, 30%; 4 years, 15%; 5 years, 24%; 6–10 years, 11%; and Lifetime/Unlimited, 13%.

Sales made by benefit increase mode: 40% chose 5% compound interest, 16% chose simple interest, 13% chose a Future Purchase Option, 7% chose CPI (consumer price index), 14% chose none, and 10% chose other forms of inflation protection benefits.

Care settings paid for: 42% of long term care insurance claims paid were to policyholders receiving home care, 30.5% to those in a nursing home, and 27.5% to those who are staying in an assisted living facility.

There are still many other interesting facts revealed by this gathering of important data that I will try to include in future articles. The information given here should be helpful to anyone who is seriously considering the purchase of long-term care insurance.

A vital ingredient in any successful long-term care insurance plan is to have a cheap policy without having to give up on good coverage. If you receive quotes from several highly rated insurers and yet find that the premiums are still too much to bear, there is no need to panic and assume that long term care insurance costs too much. You may be able to adjust the benefit amounts of the original quotes to place the premiums more in line with your expectations, thus ensuring an affordable policy.

Know the Costs of Long-term Care Where You Live

One of the many ways to lower premium costs is to make sure that you know what the actual costs of care are in your area. There are lots of statistics used when discussing long-term care costs and these are always based on national averages. The actual cost of home care, nursing homes and assisted living facilities in your particular area may be much lower. You can always find out more about local long-term care costs by simply downloading the latest Genworth Cost of Care Guide or by calling a few local home care agencies and long-term care facilities to ask for comparison rates.

Adjust Your Benefit Period

Another different method to lower long-term care insurance premiums is to use a shorter benefit period. Many consumers feel that non-limited benefits are necessary for good coverage. A recent study published by the American Association for Long-Term Care Insurance in their 2009 Sourcebook discovered that only eight percent of those people who bought a three year benefit period exhausted the policy and yet still need care. Only a little over one percent of those with a five-year benefit period will see their claims closed because of policy exhaustion. This means that lowering the benefit period can be a practical way to lower insurance costs without giving up vital coverage.

Reexamine the Elimination Period

One way to bring down long-term care insurance premiums is to increase the elimination period (the number of days after your care begins that precedes the insurance company’s first payment of claims).

Almost ninety percent of individual continuous care insurance policies uses a period of elimination between ninety and one hundred days according to the same 2009 Sourcebook referenced above. If your initial quotes used a thirty-day or sixty-day elimination period, you may have the ability to significantly lower the premiums by choosing a ninety-day elimination period instead. There are other ways that an experienced long-term care specialist can help make this kind of insurance which is affordable for you. If you ask for suggestions on lowering your premiums, the specialist will be happy to work with you to craft a long-term care insurance policy that is effective and affordable.

Private insurance companies sell LTCI policies to offset the costs of long term care. LTCI is just like all insurance policies that requires premiums to help recipients avoid paying large sums later on in the event of an illness or a catastrophic event. Premiums are based on the individual’s age at the time of purchase and are usually locked in for the life of the policy. LTCI covers the following, {depending on the policy you choose: and is dependent on the policy that you choose:}

1.Care in a skilled nursing facility

2.Care in an assisted living facility

3.Home health care

4.Adult day health care

Buying a LTCI policy allows the policyholder to choose from many options, such as the amount of the daily benefit, the number of years the policy will pay benefits, and, after the applicant qualifies for a policy, the number of days or months before the policy will begin paying benefits.

It’s very important to evaluate policies carefully to see which one offers the benefits you require with a premium that fits your budget. Policies differ in their contract conditions, deductibles, benefits and deductibles. It is also important to consider the rising cost of health care. Be sure the LTCI policy provides inflation protection for benefits to increase as health care costs continue to rise. Policies are generally labeled according to the place in which benefits are paid.

Homecare-only policies pay for care at home and in an adult day care or adult day health care facilities. Make sure the policy includes both types of day care. Facility-only policies pay for care in a skilled nursing facility and in a good assisted living facility. Comprehensive policies pay for care in a skilled nursing facility, assisted living facility, adult day care or adult day health care facility, and at home.

Since LTCI claims are often paid many years after the purchase of the policy, it is imperative to check the following:  The financial strength of the company. Some of the industry’s major rating services are A.M. Best , Duff and Phelps, Moody’s, Standard and Poor’s and Weiss Ratings . Reputation and claims-paying history of the company. Contact your State Insurance Department for information on specific private insurance companies.

The applicant must be healthy at the time of the application. Each insurance company has individual requirements and/or limitations. Not sure when is the right time for you to buy an LTCI policy? Or how to assess what you will need from a policy? Visit our Expert Column on Financing Long Term Care to find out more.

In a long term care insurance (LTCI) policy, take note that the elimination period is often called as the policy deductuble. In many ways it is similar to the deductible used in major medical insurance policies. One significant difference is this: rather than a certain dollar amount that you will initially pay for your own care expenses, there is a specified number of days for which you will be the one responsible for your own care.What are My Options? In these day, there are just a few carriers that offer a zero-day period for elimination. The most common choices are 30, 60, 90, 180 and 365 days, although these periods differ from one carrier to another carrier. The choice of 180 or 365 days is most often made by those who have significant assets of their own. Selecting a longer period helps them keep the cost of LTCI extremely low.

Although if one selects a 90-day elimination period, the amount of funds put at risk is miniscule when compared to the asset protection afforded by the policy’s total pool of benefits.What is a Reasonable Choice for an Elimination Period? Some popular financial authors recommend setting it as low as possible, perhaps even at zero. It’s true that once the elimination period is short, the less likely it is that you will have to pay out when the time comes for you to begin receiving continuous care.

However, low elimination periods have a very dramatic effect on the premiums that is paid throughout the life of the policy. Usually some form of compromise is necessary for the sake of affordability. In making a decision about the elimination period, many policyholders remember that insurance is often used as a way to avoid extremely dangerous financial losses rather than insuring against every possible expense. Accepting even just a small portion of the risk involved can be a reasonable and economical choice for most individuals.

The Smartest Thing You Can Do: Remember that what is right for most people may not be right for you. In deciding on the best elimination period for your own situation, it is prudent to consider what the cost would be for the most expensive assisted care that you may have to receive, which is usually used for facility care. Once you have a good idea of the daily costs for facility care in your area, simply multiply the costs by the various elimination period choices and determine the amount that you feel is affordable.

When you decide on the elimination period that best fits your situation, earmark those funds for your care, and then let them grow, so that they keeps pace with inflation, at the very least.  Using a little financial common sense goes a long way toward making a wise decision about the LTCI elimination period.

Planning for long term care is complicated. Each person’s needs are unique, so therfore, the cost of long term care differs greatly. Some social and physical assistance is available for free or at a low cost, while very expensive nursing home or home health facilities can cost upwards of $200 per day. There are many different ways to finance long-term care. You may need to use a combination of payment sources, which may include Medicare, Medicaid, long-term care insurance and other programs, in addition to your own resources.

It is essential to consult a professional such as an elder law attorney, financial planner or an accountant when planning for long-term care, this person should be well versed in estate planning, public programs like Medicaid, and issues and the needs of senior citizens. These long term care professionals often work as a team. Gilbert Guide recommends getting a second opinion before making any final decision on financial matters. Check out our Learning Centers and Expert Columns where our long-term care assistants will point you in the right direction, raising awareness of the issues you need to know about when planning for your future.

Here are some of the many ideas available to reimburse for senior care (Click on the links below to see what else is covered outside of long-term care.)  For Medicare, which is for continuous care, covers some skilled nursing care either in a nursing home or in the home along with hospice care.  Medicaid, the partially federally funded, but state-operated program provides medical care for some small income people and families with limited resources. Medicaid usually covers nursing home care, however for some certain states, funding is available for assisted living, homecare or home health care.

Medigap, which are policies available to Medicare, A & B enrollees who are not Medicaid recipients have the option to sign up for and covers some nursing home care.  Managed Care (HMO) provide enhanced services for nursing home care above Medicare’s basic offering along with additional medical assistance outside of long-term care. Long-term Care Insurance (LTCI) actually covers everything, from non-medical homecare to nursing care; however, it depends on the type of policy you purchased. Veterans Benefits will cover adult day health care, home health care, respite care and hospice care.