WHAT LTC POLICY CUSTOMIZATION IS APPROPRIATE?
Rest assured that your ever-present motivation for independence (of choice), safety and security will sustain your desire for the best home care, the best adult day care, the best assisted-living care facility, and the best nursing home care for the final chapter of your life.
Therefore, while you remain in control of the hard currency and the human currency to make it happen, it is your responsibility to plan for your high quality “end-of-life” care-receiving.
Remember, most people want to leave this world with no regrets. A well-funded, generously designed LTC insurance policy is a critical determinant towards the realization of one’s high quality “end of life”, no regrets legacy.
TYPES OF LTC POLICIES:
There are three main types of tax-qualified LTC policies:
a.) Comprehensive, which covers Home & Community Based Care and Facility Care (Assisted Living and/or /Nursing Home). The Comprehensive LTC policy is clearly the dominant favorite.
b.) Home & Community Based Care Only
c.) Facility Care Only (Assisted Living and/or /Nursing Home)
Most Comprehensive long term care policies include the following STANDARD FEATURES:
Care Coordination
Home Health Care
Adult Day Care
Respite Care
Assisted Living Facility Care
Nursing Home Facility Care
THE KEY LTC POLICY CUSTOMIZATION PARAMETERS:
BENEFIT PERIOD:
The benefit period you select is the minimum amount of time that you will receive benefits. When you select a benefit period, it is expressed in years. This can range anywhere from one year to unlimited years (lifetime coverage). Usually, the benefit period is multiplied by the daily benefit, you choose, to equal a lifetime maximum or pool of money to pay for your care. For example, if you purchased a 5 year benefit period with a daily benefit amount of $250, this would give you a benefit pool (lifetime maximum) of $456,250 (1825days x $250) in 2007 valued dollars, prior to any inflation treatment.
Nationally, LTC insureds have been purchasing a Benefit Period of 5.5 years on average, although a respectable % of LTC insureds opt for a Lifetime Benefit Period.
DAILY BENEFIT AMOUNT:
The daily benefit amount you select is the minimum dollar amount that the insurance company must pay for your care on a given day. Some policies pay this benefit as a weekly or monthly benefit, which allows you to receive benefits for expenses on specific days that are greater than your daily benefit. Typical policies have Daily Benefit Amounts from $50/day to $500/day. For the Phila. area, a Daily Benefit Amount of $250/day is recommended.
ELIMINATION/DEDUCTIBLE PERIOD:
The elimination period is the length of time you must pay for long term care services before the insurance policy begins to pay benefits. Typical policies offer an Elimination Period of 0, 30, 60, 90, 180, to 365 days. When you choose your deductible, you are agreeing to pay for any charges during those days. Generally, the longer the elimination period, the lower the premium.
INFLATION TREATMENT OF DAILY BENEFIT AMOUNT:
When you purchase long term care insurance, you will want your policy to stand the test of time. The costs of long term care are expected to increase just like they have done in the past. In fact, over time, the costs of long term care can double or triple what they are today.
The two most common inflation protection options in long term care policies are 5% compound and 5% simple inflation protection.
If inflation for long term care runs at least 5% annually, a nursing home that now costs $250/day could be charging more than twice as much a day in 14 or 15 years. Without inflation protection, your policy could cover less than half of your care at that time.
5% per yr. Compound Inflation Treatment is recommended for purchasers aged 55 - 65.
A 5% per yr Simple Inflation Treatment is recommended for purchasers 66 - 70;
and 0% (none) for purchasers over 70.
HOW MUCH DOES A HIGH QUALITY, CUSTOMIZED LTC POLICY COST?
Following the above recommendations, $325.00/month is a representative monthly premium for a most favorable risk, 60 yr. old applicant couple, purchasing a high quality LTC insurance policy with comprehensive (Home-based Care and Facility Care) claim benefits of $250/day (in 2007); a 3 year benefit period; a 90 day (deductible) elimination period; and a 5% Compound Interest Inflation treatment of the daily benefit. The $325/month amount for the couple takes into account the aggregate of all applicable discounts (Spousal discount and Most Favorable Risk discount).
THE BEST LTC INSURANCE CARRIERS:
The best carriers are the ones that are often the largest, have the most policyholders, and have been selling long-term care insurance for a considerable period.
It is wise to check out the financial strength of your considered carrier(s)from several financial-rating agencies.
The principal financial-rating agencies are:
A.M.Best 908-439-2200; Standard & Poors 212-438-2000; Fitch 212-908-0500; Moody's 212-553-0377; and Weiss 561-627-3300
All of the financial-rating agencies have websites.
