Long Term Care Insurance, what am I protecting? Neil Gholson

What does long term care insurance protect?

In some instances this is an obvious answer. Let's keep the burden of care giving away from our kids; they have their own lives to live. The other obvious answer is protecting ones assets. The longer we live the greater the chances of having a long term care event in our lives. Let's take a look at both areas.

Having come from a family where my mother was the primary care giver for my grandmother after her onset of Alzheimer's disease, I can truly concur with many people who absolutely do not want to, and will not put their own children in peril of being a caregiver.

I actually saw my own mother age probably 10 years, over an actual 2 year period of care giving, before my grandmother was admitted to a 24-hour skilled care facility. This definitely made its mark on me, something one will never forget I assure you.

Other than the transfer of burden of away from your own children, there is one other item that sticks in my mind. That is the choice involved with your own care or your spouse’s care.

Most people prefer to stay at home as long as possible. Long Term Care insurance is one way to accomplish this without dipping into family funds or care giving. Let's face it, a LTC event is costly, both mentally and financially. One year stay in a long term care facility can cost up to $90,000. That cost will rise significantly within the next 10 to 15 years. Without long term care insurance the options are very bleak unless you are independently wealthy. Having a plan that can offer financial means as well as a feeling of being in control is an alternative to having everything taken from you.

Secondly, your assets are being protected. There are basically three phases of money: Accumulation, Protection, and Disbursement.

Protection Phase

The protection phase of money is just that, protects what you have worked for and earned over the years. You cannot look at LTC insurance as a cost, but rather a simple way to protect your assets so that they are there when you need them. If these assets are diminished from a LTC event, it could leave you, and or your spouse impoverished for many years to come. Not to mention not being able to pass assets on to your heirs in the disbursement phase of money.

With a Long Term Care insurance policy in hand, the possibility of having choice, being well cared for, not putting a burden on your kids, and being able to live out retirement in the manner of which you are accustomed becomes a real possibility!

In conclusion, long-term care insurance serves two purposes. The first is to provide money to help cover a long term care and event without having to burden our family are children with this responsibility. The second is to protect our nest egg from the financially devastating impact of a long term care event.

Neil Gholson, President LTC Financial Solutions

Neil began his career in Marketing and/or Operations in 1981, and in 1989 went full-time into the Insurance industry. Long Term Care experience includes Regional Sales Manager for LTPC from 1999-2003, and Regional Manager for the National Education Association’s Long Term Care Program. Neil holds his Health, Life, Series 6 and Variable Annuity License and can offer insurance products in all 50 states. Additionally, he has a Certificate in Financial Planning.

Beware of Medicaid Friendly Annuities By Ray Voelkle, CLTC

As if baby boomers didn't have enough to worry about, they are now faced with the possibility of caring for their parents as they themselves gear up for retirement. More and more people are becoming aware of the lack of resources available from the government for financing long-term care, defined as needing assistance with daily activities or supervision caused by a cognitive impairment. Just as aware are unscrupulous marketers who offer quick fixes to complicated issues. Near or at the top of the list of easy solutions are so-called "Medicaid friendly" annuities.

What is Medicaid planning?

Medicaid is a health insurance supported by the state and federal government. It is figuratively the safety net for millions of Americans who cannot afford health care. It is also used for payment of nursing home costs. Because it is a program based on financial need, applicants must either have limited assets and income or transfer those resources to qualify. Medicaid planning, practiced by elder law attorneys, is the name given to efforts to accomplish this goal. For years, elder law attorneys have used immediate annuities in Medicaid planning to protect the assets of families so they can qualify for long-term care Medicaid benefits. Federal law allows the assets of an individual, which otherwise would have to be spent on care in a nursing home, to be converted into income through the use of an immediate annuity.

Here is how an annuity works.

You give a sum of money to an insurance company and in exchange, they promise to pay you a monthly amount for a certain period of time, either for a fixed period or for your lifetime. The logic behind the use of an annuity in Medicaid planning is this: you give income to the facility and have Medicaid pay for the balance of the care cost rather than pay the much higher private (non-Medicaid) rate. For example, Fred needs skilled nursing home care, which in his state, costs $5,000 per month. He has $100,000 in assets, which the Medicaid program requires he spend on his care. Instead of paying privately, he purchases an immediate annuity, thus converting cash into income. Although the income goes to the facility, he instantly qualifies for Medicaid. Fred's family has an opportunity to receive the balance of payments if he dies before the annuity is paid out.

The Pitfalls of Buying Annuities for Medicaid Planning

Many insurance agents have picked up on the concept and have begun promoting the use of these so-called "Medicaid friendly" annuities when someone needs nursing home care. Whether they push them in a seminar setting, in a phone call or letter, or in a one-on-one meeting with you, here's what you need to be aware of before you consider purchasing an annuity.

The key question then is when do you think you will get sick and need nursing home care? If for example it's at age 85, the annuity cannot be longer than about 5 years. If there is a large sum of money, the monthly pay-out may exceed the cost of care, therefore disqualifying you from Medicaid benefits. The goal is to have Medicaid pay for care. The problem is that Medicaid only pays for what consumers want least - skilled nursing home care. Statistically only 1% of those between the ages of 65 and 74 will end up full-time in a skilled facility. The annuity owner is therefore forced to spend cold cash for home care, adult day care and or assisted care living.

States reacting to federal pressure and tight Medicaid budgets are aggressively restricting the use of immediate annuities. Many either ban their use outright or are allowing their use only if the state is the beneficiary. At best their future use in Medicaid planning is questionable. What if the owner outlives the annuity? The family gets nothing. The only way the family wins is if their loved one dies sooner rather than later.

You know when you're being sold a Medicaid friendly annuity if the insurance agent is looking to sell "Medicaid friendly" annuities as a quick fix, here are some headlines commonly used in ads or direct mail efforts that will tip you off..

1.. Well-kept secrets that lawyers, CPA's, and brokers don't know that will protect you from losing a lifetime of savings to nursing home costs.

2. How to qualify for nursing home payments with no out of pocket costs.

3. Learn about a government entitlement program that pays for nursing home care for seniors.

Explore An Alternative: Long-Term Care Insurance Before you consider an annuity purchase to qualify for Medicaid, speak with your insurance professional about how it compares with long-term care insurance, which is specifically crafted to pay for care where it is most wanted and needed, at home and in the community.

Ray Voelkle has earned the designation "Certified in Long-Term Care" or CLTC, after completing a rigorous multidisciplinary course focused on the profession of long-term care. He can be reached at the LTC-Financial Solutions, LLC Insurance Agency at 877-582-2048 or by e-mail at r_voelkle@yahoo.com.

Necessary Components LTCi (Long Term Care Insurance) Sam McClure

Let's talk about the Necessary Components of LTCi (Long Term Care Insurance). Where will you be in 5, 10, 20 years? Where will you be living? Who will you be living with? Will you be living at all?

No one knows the answers to these questions. As much as a person likes to assume they will maintain their independence and health, anything and everything is subject to change. As our older population ages and life expectancies continue to increase, the reality of protecting ourselves is becoming more and more apparent. The life savings of many are rapidly being depleted due to the high expense of long-term care. The 2006 average daily rate for a private room in a nursing home is $206 ($75,190 annually)¹ – 6.8% increase from the 2004 rate of $192. This is an expense that most Americans cannot self-fund on an annual basis. By 2030, many retirees will not have enough income and assets to cover basic expenditures for any expenses related to a nursing home stay or service from a health care provider.² Below is a projected chart of where health care costs will be over the next 30 years. ³

IF COSTS GROW 10% ANNUALLY
Year	One Year of Care
2007	$94,000
2017	$243,000
2027	$630,561
2037	$1,633,152

One way consumers are taking on this high risk is by taking out private insurance or Long Term Care Insurance (LTCi). This protection is to help stabilize the sometimes overwhelming cost of care. However, the premiums paid for LTCI can become very expensive as well depending on how you design your coverage. Since this is true, LTCI is not designed for everybody. If you have assets greater than $150,000 to protect than LTCi would play an important role in preserving those assets. The question remains though, that if a person takes out coverage, what are the necessities to have included in your plan. This article will focus around the major components of a policy, which relieves the financial burden one may face out of pocket. Along with these components will include important care-giving features that are very necessary for adequate coverage.

The major components and features necessary for an adequate policy:

Daily Benefit - A very important component is the daily benefit is the dollars per day that the insurance provider will pay out to assist you with your care. Insurance companies offer daily amounts ranging anywhere from $50 - $500. It is important to investigate the cost of facilities in your area. One must remember to set their maximum amount around what is truly affordable. You do not want to adjust your way of living to make the premiums.

Benefit Period/Multiplier This is another necessary component where you are trying to determine the length of your coverage or how long you want your benefits to pay out. The overall average length of stay computed from the CURRENT resident data shows that an average length of stay of 901 days, which is 30 months or about 2.5 years, in a skilled nursing facility. The average length of stay for DISCHARGED residents is 388 days, or just over 1 year. ⁴ The CURRENT residents figure is the one most commonly reverted back to when designing coverage. The most commonly chosen Benefit Period is somewhere between 2-5 years. There is a 1-3% chance that coverage will be exhausted longer than 5 years. ¹

Elimination Period – This is the length of your deductible. For long-term care insurance the deductible is paid by the number of days chosen, not by a fixed dollar amount. The typical deductibles range from 20 – 100 days. You must self-insure during this time frame. Keep in mind that assistance on your deductible includes Medicare, if of age. Like any insurance, the larger your deductible is, the less expensive your premium will be. The opposite applies if you take a smaller deductible.

Inflation Protection - Due to the increase in life expectancy and the dramatic rise of cost of care in this country, inflation protection is extremely important to have included in your plan. Without it, your plan could very well become inadequate. This ranges from person to person. Make a personal and family profile of your expectancies. Evaluate your current health, age, longevity in your family, family health history, etc. This will make the decision of which or if any inflation protection is of importance to your policy. The cost of inflation will increase your premium significantly, but will assist in the maintenance of your policy.

Levels of Care – It is very important to make sure that policy you invest in is 100% comprehensive. This will provide you protection in skilled nursing facilities, assisted living residences, adult day care centers and most importantly, home health care. The goal of LTC coverage is to help you maintain independence at your own home for as long as possible. In turn, it would make sense to have access to 100% of your benefits for the place people want to be the most. Home.

Benefit Triggers – Most carriers require that a person meet one of two triggers to access their benefits.

· Any form of cognitive impairment. (Alzheimer’s, senility, dementia,etc.)

· Unable to perform 2 out of 6 activities of daily living (ADL’s).

1) Eating

2) Dressing

3) Toileting

4) Bathing

5) Incontinence

6) Transferring

It is important to note, when being medically assessed to qualify for the triggers, to make sure your own primary care physician does this evaluation.

Informal Care Giving – This feature is included in most all-comprehensive policies. Registered Nurses sent out from an agency typically provide home health care. When someone is in need of assistance and has a complete stranger assigned to his or her case, it is easy for personality conflicts and trust issues to arise. This has been noted and due to this major carriers have included the feature of Informal / Independent Caregivers. This is where it does not have to be an RN sent out to your house. It can be a friend, a neighbor, sometimes-family members, someone you know and trust. This will put the person in need of care at ease along with the family and friends around him or her.

Waiver of Premium – LTCI is a lifetime payment. If one is to go on claim then all premium payments will be waived for the duration of the claim. If he or she recovers the policy and premium will pick back up accordingly.

The way one designs their coverage will determine what they risk and what they will protect. It is not always feasible to design the “Cadillac policy” for complete peace of mind. It comes down to finding a median between adequate coverage versus what one can or is willing to afford. For more information on LTCi (long term care insurance) to help further your knowledge in protecting and maintaining your assets, please review the contacts below.

Bibliography

1) MetLife Market Survey of Nursing Home and Home Care Costs, 2006. www.metlife.com

2) LTCIP Academy

3) Stucki, B.R., and J. Mulver. Can aging Baby Boomers Avoid the Nursing Home? Long-term Care Insurance for Aging in Place. Washington DC: American Council of Life Insurers, 2000. www.acli.com

4) www.elderweb.com

What is the difference between disability insurance and long term care insurance? Amy Long

What is the difference between disability insurance and long term care insurance? Quite often people do not understand the differences between disability insurance and long term care insurance. As with many insurance products, the average consumer tends to confuse the two. Disability insurance is meant to protect future earnings due to a disabling event. Disability insurance covers a percentage of your lost wages if you are unable to work due to an illness or injury. Without disability insurance many people would not be prepared for the loss of wages that accompanies such incidents. The typical disability insurance policy usually covers about 60 percent of one’s lost wages. A disability policy will pay the insured if a doctor declares that you are not physically or mentally able to return to work due to an accident or an illness. A standard short term disability policy will pay loss of wages for a period of no more than 6 months. Long term disability policies usually pick up where short term disability policies leave off. Some long term disability policies pay for 5 or 10 years while many cover for lost wages to age 65. Policies can be 'guaranteed renewable' and 'non-cancelable.' Guaranteed renewable means the insurance company cannot drop the policy, unless premium payments are skipped. Non-cancelable means the insurance company can never raise the premium on the policy. Both are desirable, but non-cancelable is usually best.

Long Term Care insurance is intended to help cover expenses that are incurred when one enters a nursing home, an assisted living facility or is receiving care at home. Without long term care insurance, an individual could end up having to exhaust all of their assets in order to pay for their care. As with disability policies, certain criteria must be met in order for the long term care policy to pay out benefits. When a medical doctor declares that an individual needs help with certain activities of daily living or if there is any kind of cognitive impairment that persists, the long term care policy will pay. There is usually a waiting period that long term care policy holders must satisfy before benefits pay. Waiting periods can last anywhere from 30, 60, 90 or even 180 days. The length of the waiting period is depending on which policy the individual has bought into when they initially purchase the long term care policy. The longer the waiting period is the lower the premium. The policy holder is responsible for all expenses during this waiting period. Medicare may cover a percentage of these first 100 days of care if it is preceded by a three day hospital stay. The waiting period is simply another term used for the insured’s deductible. Long Term care policies pay a pre-determined daily benefit such as $150 for a set benefit period. Benefit periods range anywhere from 2 years to lifetime. The longer the benefit period is the higher the premium. If a policy consists of a $150 daily benefit and a 5 year benefit period then the individual would have $150 per day to pay for the cost of their care for a period not exceeding 4 years. Most claims are usually satisfied with a 5 year policy. Long term care insurance is important for people in their 50s and 60s to seriously consider. Like long term disability policies, long term care policies can be "guaranteed renewable", meaning the insurance company can not drop the policy. Most experts recommend a policy that is guaranteed renewable.

What is the difference between disability insurance and long term care insurance? Disability insurance is meant to protect future earnings due to a disabling event and long term care insurance is intended to help cover expenses that are incurred when one enters a nursing home, an assisted living facility or is receiving care at home. Contact a LTCi professional to determine what plan works best for you.

What happens if you stop paying your premiums on your Long-Term Care Insurance Policy? By Amy Long

What happens if you stop paying your premiums on your Long-Term Care Insurance Policy?

What happens if you stop paying your premiums on your Long-Term Care Insurance Policy? When you purchase a long term care insurance policy it is important that you make a long term commitment to pay the premiums for an extended period of time. If you stop paying your premiums it is likely, as with most types of insurance coverage, that your policy will be canceled therefore loosing all premiums that have been paid in. Having non- forfeiture benefit options added to your policy will help protect the policy holder but it can be very expensive.

Some companies do offer a non-forfeiture benefit option to protect the policy holder from loosing premiums paid in when canceling a policy. A non-forfeiture benefit option offers the policy holder protection if they decide to cancel their coverage for whatever reason. A non-forfeiture benefit option can add 10% to 100% to a policy’s cost depending on the age they are at the time they take out the policy and the type of non-forfeiture benefit option that they buy. States may also require insurance companies to offer long-term care policies with a written offer of non-forfeiture benefit. Policy holders are given a choice of benefit options with different premium costs. Such options include reduced paid up policies, shortened benefit period policies and extended term policies.With these benefit options the company gives you a paid up policy when you stop paying your premiums. With a reduced paid up policy, your policy will have the same benefit period but with a lower daily benefit and with a shortened benefit period policy or an extended term policy the policy holder will have the same daily benefit period but with a shortened benefit period. This is all dependent upon how long the policy holder pays their premiums and the amount of premium they have paid in. A return of premium non-forfeiture benefit option may also be offered to policy holders and is generally the most expensive type of option. With a return of premium non- forfeiture option the company will pay back to the policy holder, all or part of their premiums that they have paid in if they drop their policy provided they have paid their premium for a certain number of years.

If you do not accept a non-forfeiture option some states will make it mandatory for a company provide a contingent non-forfeiture benefit option. A contingent non forfeiture option provides the policy holder protection if they are no longer able to pay their premiums due to the carrier increasing premiums to a certain level. With a contingent non forfeiture benefit option, if the premiums increase to a certain level the contingent benefit will become effective. The policy holder will then have a choice to either reduce the benefits so that the premium stays the same or covert the policy to a paid up status. If the policy holder converts the policy to a paid up status they would have a policy that is equal to the premiums that they have paid in.

What happens if you stop paying your premiums on your Long-Term Care Insurance Policy? If you make the right choices early on you can avoid potential problems in the future. Ask a professional how to plan accordingly.

How does a LTCi policy protect Senior Citizens? By: Susan P. Payne

How does a LTCi policy protect Senior Citizens? Lets take a few minutes to look at this. Life is a journey full of surprises! No one knows exactly what the future holds. You worked hard to save and invest wisely for retirement. And, though it’s impossible to predict what lies ahead, we can gain some control of the future by examining our lives and finding solutions that will protect our independence. The reality of life is that, despite everything you do to take care of yourself, your chances of needing long-term care steadily increase over time. The costs that go along with long-term care can exhaust your savings and impact your standard of living along with your independence. Fortunately, there’s a solution. With long term care insurance, you can help ensure that if you ever need long-term care, you’ll be better able to pay for it and help protect your family, your assets and remain in control of your future!

American’s are living longer, leading healthier lives than ever before. We know what is healthy for us and what is not. We have access to medical advances and care that with each passing day we hear about another person celebrating their 100th birthday. Most never expected to live that long. Have you thought about living a long life and the financial and emotional risk associated with long term care? Chances are, you or someone you know has faced the issues involved with caring for a family member. Long Term care is the ongoing care for a chronic, long term illness or disability such as Alzheimer’s, a broken hip or an inability to perform Activities of Daily Living (ADL's). Long Term care can include home health care, supervised adult day care, assisted living, residential care, respite care and nursing care.

When it comes to long term care, evaluate the impact on yourself and your family. Would you be able to stay at home to care for yourself or would your family care for you at home? How will you pay for it? Families often bear the burden. The majority of long-term care is provided by unpaid family caregivers to seniors living in their own homes or with their families. Discovering the benefits of long-term care insurance will help ensure your financial security and independence.

Reasons to own a Long Term Care Policy:

You can have a professional plan and coordinate your care at home.

Your family can be a part of your care plan, but they don’t have to be the planners.

You will have the money to pay for the care without depleting your nest egg.

Your loved ones can carry on with their jobs and own family commitments.

Your family will help out of love instead of out of feelings of obligation.

You will have the funds to be better able to choose your own facility or stay at home, whichever is more appropriate.

You may be able to stay in your own home longer.

You may be able to stay with your children without depending on them for all of your care.

There will be less strife between family members. One person won’t have the sole responsibility of caring for you.

How does a LTCi policy protect Senior Citizens? by protecting your independence and family’s well-being. Including Long Term Care Insurance (LTCi) in your financial plans is an important step toward making sure the high cost of long-term care doesn’t take your choices away. Work with a Long Term Care Specialist who can answer your questions and help you obtain affordable protecvtion best suited for your needs today!

What do I look for in a good Long Term Care Insurance company? By Robert McClure

What do I look for in a good company? You know that you should buy long term care insurance, but where should you look and which company should you consider? A lot of advisors either sell one company’s policy, or they only sell a few policies a year, or truthfully, they really don’t know. So what do you look for in a good company?

We’ve all heard that any insurance policy is only as good as the company standing behind it, but what does that mean? It means that the company must meet the standards of an excellent and superior rating. In order to achieve a rating like this a company must meet certain requirements. Look for:

• Financially sound companies • Committed companies with a large client base • Claims paying history • Length of time selling LTC insurance • History of rate increases

They all sort of blend into one another, but let’s look at them:

Financially sound companies

Check their ratings with the companies that rate the strength of insurance companies. Generally you can get a good flavor of the company’s financial strength by looking at their A.M. Best rating. If you want to back up your findings, you can by looking at Standard & Poor, Moody’s, Fitch, Duff & Phelps or Weiss Research, A.M. Best usually gives a very good overview of the companies strength and the companies don’t have to join the rating service in order to be rated.

Where do I get this? Updates are published monthly, quarterly and annually and can be found in any public library. In addition, you can usually find the ratings on each company’s web site. Do this first and then ask your agent.

Committed companies with a large client base

"The theory of large numbers" works here. The larger the client base the better buffer you have against rate increases. As claims come in the companies need to financially spread these over their client base. If larger claims come in than forecasted then the company has to decide whether to absorb this into its projected cost of business or to pass this along to policy holders in the form of a premium rate increase. Companies who have made a commitment to this line of business normally do not raise premiums. A smaller, uncommitted company may be more inclined to do this.

Where do I get this? The company web site should have their policyholder information readily available. Also the agent representing the company should have their marketing materials, approved by the state where you live, that give policyholder information. In addition, you can get more information from the rating agencies, A.M. Best etc

Claims paying history

Sometimes a good financial rating may not tell the whole story. Some companies with good ratings have been known to deny or delay paying claims in health insurance. If they use that same practice in other areas, then there is a good chance it will do so for long term care insurance claims. Also, it is important to ask how many claims have been paid since they started selling LTC insurance.

Where do I get this? Call your state insurance department for information on the complaints filed about specific companies. If this isn’t available then sometimes you need to use your own judgment based on size and reputation of the company. A well-known company is less likely to risk bad publicity for this type of action.

Length of time selling LTC insurance

The Company that you choose should have been selling long term care insurance since the early 1990’s. If they haven’t then they probably have not been in the business long enough to have experienced enough claims. Without good claims experience then a company can’t tell if they have set their premium rates correctly. You do not want a company to find out that they set them wrong to begin with and you are the recipient of a "rate adjustment".

Where do I get this? Once again if you look at the same sources from the above items you will find this information. The state approved company marketing materials will have this information as well as an informed LTC insurance agent.

History of rate increases

Any company that has ever had a rate increase to its existing clients should not be a company for primary consideration. There are always exceptions to this especially when it comes to health issues and the need for coverage from a company that specializes in these problems.

Where do I get this? You can always contact your state department of insurance and ask them, or ask your agent. However, a sure fire way to do it is to ask your agent for the first page of the long-term care insurance personal worksheet for that particular company. This is a part of their application and will always show their rate increase history.

Finally!

Now we know what to look for in a good company. The ideal company will be very large and financially sound. It will have a lot of long term care insurance clients and will have sold these policies since the early 1990’s. In addition it will not have any complaints with your state insurance department concerning the payment of claims. And finally, the ideal company will have a good reputation and will not have ever raised rates to their existing clients in any state.

How Does LTCi Protect Young Families? By Susan P. Payne

How Does LTCi protect young families? Every day many people of all ages experience a significant change in health status. How would it impact your family if a sudden unexpected accident or illness happened? Are you prepared to handle the cost associated with long-term care? Needing long term care help is a family issue. What will happen to saving for the kids college? Your retirement? Your finances? Planning for a secure future can be possible with integrating Long-Term Care Insurance (LTCi) protection planning.

LTCi is important, yet overlooked by many. It is the day-to-day help you need when a serious illness, injury or disability makes you physically or cognitively unable to care for yourself for a long period of time. This type of care is usually provided at home, in an assisted living facility, adult day care or, lastly, in a nursing home. No one ever wants to think about a catastrophic illness or an accident like a broken leg or hip. Close your eyes and think about what life would be like with a broken hip. You could not walk, bathe or dress yourself. You would need someone to assist you in your normal activities of daily living. Could you depend on your family? Would you spouse have to miss work? Would the kids need to miss school or their sporting events?

How will having a Long-Term Care Insurance (LTCi) plan help you and your family?

1. Protects your independence,live how you want, where you want

2. Protects your family from the potential burden of being your caretaker

3. Protect your savings, college funds and retirement plans from the high cost of long term care

4. Many plans will pay for home health care providers, home health aides and caregivers, giving you freedom to choose what makes you comfortable

Why does someone my age need to think about long-term care?

Today you are healthy. But 24-hours from now, things can change. Many illnesses, once considered to be life threatening, are now life altering with the medical advances in place today. Many now leave you ‘disabled’ relying on others for care, sometimes for short periods of time, sometimes for life. Long term care protection requires you to "health qualify". No matter how much you would be willing to pay, a change in health can make it impossible for you to health qualify for long term care insurance. For individuals who are currently young and in good health, you have the possibility of locking in "preferred rates" for your lifetime. Cost for insurance can be significantly lower at younger ages so you will save money! You lock in savings and you can never be cancelled even if your health changes. You may benefit now and again later as many people need and use their benefits when they are young and again when they are older. How does LTCi protect young families? Because things can change tomorrow, now is the right time! A long-term care insurance specialist can answer your questions and help you obtain affordable protection best suited to your needs, at any age.

How Can Long Term Care Insurance Keep Up With Inflation? By: Neil Gholson

How can long term care insurance Keep Up With Inflation? When purchasing a long term care insurance policy, it is important to have an inflation protection rider included in your policy. Since many people who purchase policies do not access their benefits for many years, having inflation protection helps keep your policy competitive with the rising cost of care. A 5 percent compound inflation protection rider is recommended for individuals purchasing long term care insurance who are under age 65. A more modest inflation protection option of 5 percent simple interest is recommended for people over age 65. With compound inflation doubling in 14.3 years, a 50 year old who purchases a $150 daily benefit with 5 percent compound inflation protection will have a $300 daily benefit by the time they are 65. The daily benefit will have grown by 5 percent compound each year. With simple inflation doubling in about 20 years, a 65 year old that purchases a policy with a $150 daily benefit and 5 percent simple inflation protection will have a policy that will have grown to $300 by the time they are 85 years of age. The daily benefit will have grown by 5 percent simple each year. These types of inflation protection are automatic. The daily benefit will automatically increase by 5 percent compound or simple each year and premiums will stay level. We know what the cost of care is today but in 20 or 30 years when an individual is more likely to go on claim, having a policy without inflation protection will not provide enough coverage when it comes to claim time. Although having the inflation protection rider in your policy has been proven to keep your policy competitive, this finding is also due to the shift in care received in nursing homes toward assisted living and home and community based alternatives. Recent studies have shown that more than 80 percent of the costs of care will be covered by such policies. Other options include a Guaranteed Purchase Option (GPO), or the option to increase coverage. This option differs greatly from an automatic inflation protection rider. Having a GPO is not automatic and your premiums are not level. With a GPO you can choose to increase your benefits periodically for example, every two or three years. A GPO usually gives you the option to increase your benefit by 5%, 10% or 15% of the original amount of your daily benefit. When you do increase your benefit, your premium will increase. The increase in premium is dependent upon the age you are at that time. If you increase your daily benefit regularly then you usually do not have to show evidence of insurability. If you do not regularly increase your benefit, you may not be given the chance again. Inflation protection can be one of the most important decisions that you can make when purchasing a long-term care insurance policy. With the rising cost of care it is important that your benefits have raised throughout time or you may find years from now your policy is not adequate enough to pay for your care.

Investigate Long Term Care Seminars Carefully By Ray Voelkle

Consumers worried about needing long term care and the risk that it may bankrupt them are often drawn to Long Term Care Seminars that promise to protect hard earned savings by having the government pay for their care. A closer look at what some seminars are promoting is called for.

No reasonable person disputes that they will do everything they can to live a long life. That results in the high probability of needing long term care, defined as requiring assistance with your everyday activities or needing supervision due to a cognitive impairment. The cost of providing that care often leads to a severe strain on a family's finances because of the lack of other options.

Medicare, the primary health care program for retirees, pays only for skilled or rehabilitative care, not custodial care in any venue. Veterans believe that the VA will pay for home care, adult day care, or assisted living. Funding is limited and generally based on service-related disability. In fact, the federal government has communicated this message to veterans by encouraging them to purchase long term care insurance through the new Federal Long Term Care Insurance program.

Thus, seminars promising to protect assets become attractive. Whether or not you get the right advice depends upon the training and motivation of the sponsor.

Most programs are given by elder law attorneys who state they understand the complexities of long term care financing. Unfortunately, that may not be the case. For example, if the only thing discussed is Medicaid, chances are you are not getting the entire picture.

Medicaid, a federal and state program for financially needy individuals, will pay for custodial care but primarily in nursing homes. Funding for home care and assisted living is very limited and based on availability of funds. If the sponsor suggests that a so-called "Medicaid plan" will protect assets you need to understand the consequences and be ready to ask tough questions.

Medicaid planning is simply taking your lifesavings and either giving it away or placing it in a trust. While it may sound simple, there are serious consequences:

Beware of Serious Tax Consequences

Has the issue of transferring tax qualified investments such as an IRA, Keogh, or tax deferred annuity been discussed? Gifting those assets creates an immediate tax that could reach 40% or greater. Is it being suggested that you transfer low cost-based assets such as stock or your home? If you do, the recipient picks up that basis, creating a tax when the property is sold. If those assets remain in your name at your death, there is little or no tax.

Have you been told to gift your home? If later sold by anyone other than you, it also creates a capital gains tax. That tax may be greatly reduced or even eliminated by using your homeowner exemption of $250,000 ($500,000 for a couple).

Do You Have Retirement Income?

Income is rarely discussed by Medicaid planners but yet is the key to retirement survival. Retirees live on income, not principal. Even if there are no tax consequences to gifting assets, income such as pension, social security, IRA, or annuity payouts cannot be protected. For example, a retired military individual may also have a second source of income. None of it can be protected; it must be spent on your care.

Where Do You Want Your Care Delivered?

Listen carefully to what the moderator is telling you: "Medicaid will pay for your custodial care in a skilled nursing home." That's correct. But where do you want your care to be delivered? Like most people it is at home and in the community, not in a nursing home. In short, Medicaid pays for the one thing you never wanted; care in a nursing home. If you want to stay in your home, you have to ask those to whom you gifted your assets for your money back.

A Better Alternative: Long Term Care Insurance

There are, however, retirement seminars given by attorneys who don't focus exclusively on Medicaid. Without exception, they recommend long term care insurance precisely because of the consequences discussed above.

Long term care insurance (LTCI) has two roles: it helps keep families together and allows your retirement portfolio to execute for the purpose for which it was intended, namely retirement. From a family perspective, think about who will be providing your care. Like it or not, children will play a key role. LTCI allows children to provide for needs longer and better by paying for the difficult work of bathing, dressing, feeding, and toileting.

From a financial point of view, LTCI allows your retirement plan to stay intact. That is particularly important given the recent steep decline in portfolio values. The product, in effect, protects the balance of the investment account. LTCI also protects income.

When buying coverage, choosing a long term care specialist is critical. Consider their training, educational credentials, and commitment to help solve your long term care needs. The key is whether they talk about a plan or a product first. If they are interested in the plan you are dealing with a professional. If their initial presentation centers around product and price, consider getting a second opinion.

Is Your Financial Planner Going to Pay Your Long Term Care Bills? By Georgia McClure

I always like to ask my clients, "Will your financial planner be willing to pay your long term care bills, will they have access to good quality Home Health Care Providers?" Many lawyers and advisors are now reluctant to recommend against Long Term Care Insurance for fear of law suits later on, from children, when hundreds of thousands of dollars were required to pay for their parents long term care bills. Planners who fail to recommend coverage are more times than not, unaware of the real RISK of needing care one day.

The senior has now become the GREATEST financial risk that Americans face today. The majority of them are unaware of it because let's face it: No One wants to think about needing Long Term Care. It is going to happen to someone else! Long term care bills are the biggest reason for financial failures among seniors today. Yet there are a lot of Financial Planners and Investment Advisors who will say that you don't need Long Term Care Insurance. If you already have a lot of money, perhaps you don't! The question is: Would it be a smart decision to have this coverage? What we are seeing today are many Financial Planners split on the subject of LTC Insurance. You will hear some say that if you have any resources you should not be without it, that it is an integral part of financial planning, while others think if you have enough money you should self-insure. Who is right?

Every financial advisor I talk with would recommend long term care coverage if he knew in advance that his client would need several years of long term care. Do the math. In a state where long term care bills are averaging $170 per day, and the average premium is $4000 a year for a couple, aged 60, and they live another 20 years, they have paid out $80,000 in premiums for the peace of mind that they will not go broke. Without the insurance, they could end up paying over $80,000 in less than two years for ONE OF THEM on the advice from a Financial Planner telling them that they DON'T NEED IT! It must be concluded that Financial advisors who recommend against LTC Insurance figure you are not going to need care since they would recommend you obtain coverage if they knew you were going to have to spend several hundred thousand dollars. You should find out from the advisor what is the BASIS for their prediction? Also, be aware that Advisors are sales people. They are in the business of making you money. If you purchase Long Term Care Insurance, you have less money for them to manage! The decision is yours. At this point in your life, are you more interested in making a few more thousand dollars a year or are you more interested in protecting what you have already earned from the most DEVASTATING financial risk that people face in America today? One of the biggest financial mistakes a person can make today is needing Long Term Care and having no coverage! Is this a mistake you want to take a chance on making? Seek out a LTC Insurance Specialist to help you make the best informed decision for you and your family. Remember, your Financial Planner or Advisor is not going to pay your long term care bills. You will!

Don’t Be Fooled By "Instant Quote" Long Term Care Insurance Websites by Neil Gholson

What is the deal with the instant long term care insurance quotes that are all over the net. Lets take a closer.

There are many choices on how we search for information today. Not only do we have resource libraries, and media opinions, but we now have the greatest source of all. A completely unlimited resource that doesn’t care about politics, or media opinions, or the flavor of the day. It’s the information highway, the internet! With the likes of search engines like Google, and Yahoo at our very finger tips it’s very simply to do a quick search on virtually any topic in question. Unfortunately, just like the predecessors before the internet, some things can be manipulated to fool the average consumer. Let’s take a basic search for Long Term Care Insurance. Oh my, millions and millions of hits,now what?? Well as consumers, we think all we need is a price and then just pick the best one, sometimes possibly, but not in the case of long term care insurance. One price does not fit every American’s inquiry on the internet search engines.For example, let’s say we have a married couple in their late 50’s in reasonably good health. They eat right and take care of themselves physically. Easy right, any product for Long Term Care Insurance. nope, way to many variables. There is absolutely no way this couple could get a fair and honest shake from a site that promises an instant quote. There are always three basic drivers of a long term care insurance plan that determines what company, product, and size of plan one needs, health, age and finances. Health determines best company to utilize; age determines what product is best suited for you; and finances determines size of plans you can comfortably afford. Instant long term care insurance quotes websites may be able to go through a short list of health questions on a site to see if you are even remotely eligible, but that’s it. Then there are medications, doses, pending surgeries, and other controlled conditions that might make a difference to an insurance company. Age is easy enough, but some carriers offer better rates at certain ages than others. Finances are a very unlikely topic to inadvertently display for who knows who, so that’s out too. Now, I’m sure this is beginning to make complete sense. Only if I had never taken any medications, known exactly what company and plan I can afford, then I could possibly get an Instant Quote from the internet. The bottom line, you need an expert in this field to make recommendations about your future needs. Your stock broker, financial planner, tax accountant, lawyer know little more about long term care insurance, other than they know you need it. That is still more than these instant long term care insurance quotes websites. Ask an expert that specializes in long term care insurance and represents several companies. They are out there, don’t trust the protection of your assets and choices in your care to anyone other than a true expert. Some sites are good, and your name goes to an licensed agent in your state who is an expert in long term care insurance, as well as partnerships, LTCI tax laws and other localized situations. Get as much information as possible so that you can make an educated decision on your long term care insurance plan. Go to a Specialist.

Alot of these sites will give you low quotes to get you signed up and in the door, but just wait for your first real quote from them. Talk about sticker shock! All you would have accoplished is high blood pressure and a waiste of time. Something this is important is worth doing right the first time around.

How Does Long Term Care Insurance Work? by Brian Harris

How does long term care insurance work? This is a question I hear almost every day. Many people still do not understand how LTCi works. Due to the heightened awareness of Long Term Care Insurance over the past several years, most people realize that this coverage is an important part of their financial planning.

When you purchase LTC you are simply purchasing a pool of money to be used at a later date. We all hope to live to be 101 and pass away in our sleep. Unfortunately this is not often the case. There is almost 70% chance that one person in a couple will need Long Term Care at some point in their lives. For a single person there is a 40% chance of needing Long Term Care. Your pool of money is equal to your daily $ amount times your benefit period. Thus, if you select 4 year plan with a daily $ amount of $150, your pool of coverage is $219,000 ($150 X 's 365 days = $54,750 X 4 years = $219,000). Keep in mind, even though you have selected a 4-year plan, the policy can last much longer than 4 years. The policy will last as long as you have money in your pool of coverage. It works just like your checking account. As you receive care, the cost of the care comes out of your pool of money. Instead of you writing out the checks, the insurance company now acts as your bank and pays for your care from your pool of coverage. Thus, lets say you need homecare and the cost is only $120 a day, instead of the $150 a day you purchased. The other $30 a day is not lost it stays in your pool of money giving you 5 years of coverage instead of 4 years. If you are in a situation where you are receiving the full $150 a day, but you are only receiving care only 4 days a week, your pool of money would last 7 years instead of 4 years under this regimen.

Now let's assume, you purchase this policy today with $150 daily coverage, but you do not need care until 10 years down the road.Due to inflation, the $150 is not going to stretch far enough. Therefore, it is recommended to purchase an inflation protection option at the time you purchase coverage. With a 5% simple inflation option (which is recommended for people over age 65) the coverage grows and doubles every 20 years. Thus, the $150 you started with would grow to $225 in 10 years and $300 in 20 years. With a 5% compound inflation option, (recommended for people age 65 and under) your coverage grows and doubles every 14.3 years. Keep in mind , your pool of money is also growing and doubling over time, to offset the high rate of inflation.

When it is time to receive coverage under your Long Term Care policy, you are responsible for your elimination period. This is similar to the deductible in your auto insurance policy. It is the number of days before benefits begin. Common elimination periods are 30, 60 and 90 days, with the 90-day being the least expensive.

Long Term Care is not as confusing as many people make it out to be. Hopefully this article will make it a little easier to understand the question "How does long term care insurance work?". The bottom line is, going without this important coverage could easily wipe out your life savings. Remember, when you are looking into this coverage for yourself, you are simply purchasing a pool of money to pay for your future Long Term Care expenses.

What you need to know about Medicaid and Long Term Care (From National Conference of State Legislators)

"Medicaid is bankrupting state and federal governments. . . .The one thing everyone agrees on is that the program cannot be sustained as it is currently structured." John Hurson (D) President, Nat’l Conference of State legislators, 8/18/2005

It is said by many retirement policy experts that the greatest obstacle to the public recognizing long-term care insurance as a critical component of retirement planning is the mistaken belief that the government will pay for their long-term care services. While there is a kernel of truth to this possibility for some, those who truly wish to establish a cost-effective and secure strategy for preserving their assets and protecting their loved ones would be advised to contemplate today’s realities given the recent passage of the Deficit Reduction Act of 2005 (DRA). Once again, government is sending a strong message about its limited role with long-term care, a message that should give everyone pause.

Of the two major government programs, Medicare is the simpler to rule out as a long-term care provider. By definition, design and practice, Medicare is a traditional medical health plan that pays for acute, skilled medical services provided by physicians, nurses and hospitals. It is not a long-term care program. At best, Medicare will pay for up to 100 days of skilled rehabilitative services in a nursing home, but such limited services average about 3 weeks for those who are able to qualify for assistance. Limited, skilled home care services can be provided under Medicare for home-bound patients on a temporary and intermittent basis. Once again, however, these are not long-term care custodial services.

On the other hand, Medicaid, a state-run welfare program, has been exploited by some in order to have its benefit features used to provide taxpayer-funded nursing home services for people who could pay for their own nursing home care. The result has been an escalation of Medicaid’s fiscal instability, with out-of-control spending, huge deficits reported in all states, and those truly in need seeing their benefits reduced or cut altogether. So severe has been this drain on limited Medicaid resources that state and federal officials continue to take drastic legislative and regulatory steps to close the loopholes in the Medicaid law. The most recent restrictions went into effect in February of 2006 with the passage of the Deficit Reduction Act of 2005 (DRA), legislation called "Draconian" by lawyers who sell so-called "Medicaid planning" services.

It is interesting to hear elder care lawyers marketing their Medicaid planning services as if the end product, a government welfare program, was something most of us desire. "I can help you qualify for Medicaid," they proudly tout. It goes without saying that few of these same lawyers have plans to subject themselves or their parents to Medicaid level care when they become most vulnerable. As Stephen Moses of the Center For Long-term Care Financing pointedly states, "Medicaid is a means tested public assistance program. It is welfare . . . and has a dismal reputation for access, quality, discrimination and institutional bias. Medicaid recipients face long waiting lists even for inferior facilities. . . . No clear thinking person in possession of all the facts would coordinate benefits with a welfare program going bankrupt." Marilee Driscoll, author of The Complete Idiots Guide to Long-term Care Planning underscores Medicaid’s reputation, "It’s quite breathtaking the difference between the private pay rooms and Medicaid rooms [in nursing homes]."

With the recent passage of the DRA of 2005, navigating the Medicaid planning abyss has become even more treacherous. Here are just a few of the more significant changes.

• The "look-back" period for all asset transfers has been extended from three to five years from the date of application for Medicaid. It is extremely difficult for family members to research and organize their parents’ financial records going back one year. Imagine the task associated with five years of retrospective recordkeeping. Furthermore, few of us know five minutes before we will experience a major medical crisis, let alone five years. How will we anticipate the right time to transfer assets "our house or 410(k) savings" to loved ones?
  
• Multiple smaller transfer amounts now will be considered as a larger single transfer when calculating the penalty period. These amounts may include gifts to charities, churches, and even IRS approved tax-free distributions to children.
  
• The penalty period (waiting period before Medicaid pays for care) will now commence with the date of eligibility for Medicaid rather than the date of the transfer, and after personal assets have been spent down.
  
• There is now a $500,000 cap on the amount of home equity (house and contiguous property) that can be excluded from Medicaid asset calculation.
  
• Annuities, which might be used to "shelter" assets, must list the state as the remainder beneficiary.
  
• States must now use the more restrictive "income first" rule when calculating acceptable monthly income allocation for the community spouse.
  
• Life estates will be considered as an asset unless the purchaser remains in the home for at least a year after the date of purchase.
  
• Any deposit fees that are still available from a Continuing Care Retirement Community entrance fee would have to be spent before applying for Medicaid.
  

The intent of these changes is to prevent the misuse of the Medicaid program by wealthier individuals who feel taxpayers (you and me) should provide for their free nursing home care so that they can leave an inheritance to their children. These abuses of the original intent of the Medicaid program, while benefiting the wealthiest, have created a fiscal black hole that jeopardizes the integrity of a program originally intended for those most in need. According to the Center For Long-term Care Financing, a 2004 report released by the National Association of State Budget Officers shows that “Medicaid is crowding out other parts of state budgets,” for the first time expending more state dollars on Medicaid than on elementary and secondary education. Few experts believe the DRA of 2005 will be the final action by state and federal policy makers to stop Medicaid from hemorrhaging. In the years ahead, we can expect continued restrictive action as well as additional tax-based incentives that will encourage individuals to secure long-term-care insurance.

Elder Care lawyers will no doubt concoct new ways to exploit the Medicaid law, but clients will only face greater uncertainly and risk as to whether these schemes will stand up to scrutiny by Medicaid bureaucrats when it counts. It is likely that the DRA will give potential clients reason to question the end game. Medicaid laws and regulations are extremely complex and change constantly. With Medicaid, choices are limited and care quality often substandard. Nor is it unusual to hear of lawyers making grievous Medicaid planning mistakes that result in clients failing to qualify for coverage. More enlightened elder care lawyers, however, are now likely to join with their nationally known colleague, Harry Margolis, who recommended in the February 2004 issue of Kiplinger’s Magazine that long-term care insurance should be a strong consideration for those who are healthy and could afford the premiums.

Joseph P. Blanchette, CLTC

Simplifying Long-Term Care By Ray Voelkle, CLTC

What is Long-Term Care? When people consider the subject of long-term care, they often think about nursing homes. In fact, long-term care has little to do with nursing homes. Understanding the difference can help you protect your family and finances.

The Consequences of Living Longer

Long-term care is a continuum of care services and housing that you will need later in life. Think you won't live a long life? Think back 25 years ago. If you had cancer or a stroke, you simply died. Few ever heard of Alzheimer's. Today, it is the leading cause for long-term care services. The longer you live, the more likely you are to need care. The question is not who will take care of you, because your family will most often, but rather what will that care do to your family and finances.

Long-Term Care is Usually Custodial Care

Long-term care is defined as needing assistance with your activities of daily living (toileting, bathing, dressing, eating, transferring from one point to another, and continence). It also includes cognitive impairment so severe that the individual needs constant supervision. If you need custodial care, chances are it will be delivered in the community, not in a nursing home. Many of you have heard compelling statistics from The New England Journal of Medicine stating that 43% of those over age 65 will need nursing home care. What the article actually said is that that number may spend some time in a facility. The fact is, few end their days in one. Every study conducted finds that care is overwhelmingly provided at home. The key question, of course, is who is going to pay for it? Who Covers the Cost?

Medicare & VA

Medicare, the primary health care program for retirees pays only for skilled or rehabilitative care, not custodial care in any venue. Medicaid, a federal and state program for financially needy individuals will pay for custodial care, but primarily in nursing homes. Funding for home care and assisted living is very limited and based on availability of funds. Veterans believe that the VA will pay for home care, adult day care, or assisted living. As with Medicaid, funding is limited and generally based on service-related disability. In fact, the federal government has as much said this to veterans by encouraging them to purchase long-term care insurance through the new Federal Long-Term Care Insurance program. The result is that consumers are forced to pay privately for their care. Unfortunately, the best thought-out retirement plan rarely takes into consideration living a long life. Put another way, those assets and income have been allocated to pay for retirement, not for the consequences of living a long life. This results in the need to invade principal and divert income. As a result, one of a seniors' greatest fear, outliving their assets, literally may come true.

The Role of Long-Term Care Insurance

The use of long-term care insurance thus becomes an important part of planning for disability caused by living a long life. The product has two roles: helping keep families together and allowing your retirement portfolio to execute for the purpose for which it was intended, namely retirement. From a family perspective, who will provide your care? Like it or not, children will play a key role. Long-term care insurance (LTCI) doesn't replace the need for family involvement in providing care but rather builds on it. It pays professionals to assist the person with the toughest tasks such as toileting, bathing, feeding and continence. This, in turn, allows the family to provide care better and longer at home. That leads to a critical question: have YOU planned for the consequences of living a long life? From a financial point of view, LTCI allows your retirement plan to stay intact. That is particularly important given the recent steep decline in portfolio value. The product, in effect, protects the balance of your account value. LTCI also protects income. Although you may qualify for Medicaid to pay for nursing home costs by transferring assets, your income (pension, social security, IRA and or 401k payout) cannot be protected. When buying this insurance, look for a long-term care specialist. Consider their training, educational credentials, and commitment to help solve your long-term care needs. The key is whether they talk first about a plan or a product. If they are interested in the plan, you are dealing with a professional. If they focus first on product and price, consider getting another opinion.

About Ray

Ray Voelkle has earned the designation "Certified in Long-Term Care" or CLTC, after completing a rigorous multidisciplinary course focused on the profession of long-term care. He can be reached at 1-866-582-2048 LTC-Financial Solutions, LLC or by e-mail at r_voelkle@yahoo.com. For more information: Simplifying Long-Term Care