Frequently Asked Questions

Q. What is Long Term Care? 

A. Long term care is a range of services which address the health, social and personal care needs of individuals who need assistance or supervision with the activities of daily living, such as eating, bathing, continence, dressing, using the restroom and transferring.

Long term care can be provided in your home, or on an outpatient basis in an assisted living facility, or in a nursing home. Care can be provided by licensed professionals such as registered nurses; physical, occupational and speech therapists; or social workers. Trained aides, family members and volunteers can also provide many of the services.

Q. What is the Likelihood I Will Need Long Term Care? 

A. Demographics explain the recent focus on long term care. According to the Census Bureau, the number of people over age 85 (prime candidates for long term care) will more than double from 3.9 million to 8.5 million by 2030, and by 2050 will have more than doubled again to 18 million. Even today, people 65 and older outnumber teenagers.

Though many Americans would rather not consider the possibility, statistics reveal about 43 percent of people over age 65 will spend some time in a nursing home during their lives. Many more will need other services such as home health care. Yet alarmingly, long term care is often ignored in the financial plans of many Americans, which partially explains the tragic statistic that 70 percent of single people and 50 percent of couples with one partner requiring long term care become impoverished within one year. Doesn't it make sense to protect not only your wealth, but your health and independence against long term care costs the way we protect the loss of our homes with homeowners insurance against fires?

A. No,  more than 40 percent of people who are receiving long term care are under age 65. They may need continuing care due to a serious accident, stroke, brain tumor, multiple sclerosis, Parkinson's disease, or other debilitating illnesses. You can't always prevent your need for long term care, but you can protect your assets, preserve your choice of care and reduce the burden on your family by buying long term care insurance.

Q. Is Long Term Care Insurance Only For Nursing Homes?

A. Only 18 percent of long term care is nursing home care. Most long term care is home care, home health care, adult day care or assisted living care.

Q. How Much Does Long Term Care Cost?

A. Although the cost of long term care varies depending upon the type of services required and geographic location, the average cost of in-home care is $20,000 a year. The cost of an assisted living facility, depending on the level of assistance provided, may cost up to $50,000 a year. And, one year of care in a nursing facility may cost anywhere from $40,000 to $80,000. (The American Parkinson Disease Association, Inc., Summer 1998.)

Q. Why Can’t I Depend on the Government?

A. A 1997 survey conducted by the National Council on Aging reflected that 75 percent of American adults believe that Medicare is the primary funding source for long term care.

A common misconception is that Medicare or Medicaid will cover the cost of long term care, including nursing homes. In reality, Medicare covers very little of the cost of long term care services. In fact, Medicare covers virtually no long term care, but is intended for short-term, acute care only.

Medicaid, a program jointly funded by states and the federal government for the nation’s poor, does cover long term care, but qualifying for Medicaid frequently entails a prohibitive application and qualifying process after a person has depleted most of his personal assets.

Two-thirds of nursing home patients in 1995 were supported by Medicaid at a cost to taxpayers of $24.2 billion. As the baby boomer generation ages, legislators and private citizens alike have come to realize that the government cannot be expected to bear the costs of long term care for the population at-large. In response to mounting concern, Congress passed the Health Insurance Portability and Accountability Act of 1996 (Kennedy-Kassebaum) and a subsequent amendment which legislated:

• tax breaks for qualified long term care insurance plans;
• penalties for deliberately transferring assets in order to qualify for Medicaid; and
• criminalization of recommending in the role of professional financial advisor the transfer of assets to qualify for Medicaid.

With this legislation, the message from Congress is clear:

Americans must begin to take personal responsibility for their own long term care needs.

Q. Can I Depend on My Own Resources?

A. Financial ... It is important to note that about half the people who initially pay their own nursing home bills end up relying on Medicaid within three to five years. Many couples today have "put away" for their elder years without anticipating the actual cost of nursing homes today. Ranging from approximately $29,000 annually per person in the least expensive areas of the country to more than $70,000 in the most expensive, nursing home stays of more than a couple of years deplete assets in an unexpected hurry. An investment of approximately $2 million at a conservative 6 percent is needed to finance nursing home care for a couple. Alternatively, a savings account with $200,000 would be gone in about two and a half years of care for that same couple.

Family issues ... Protecting one’s own assets is not the only reason for including long term care insurance in estate planning. Members of the "sandwich generation," who have had to take care of parents and children at the same time, do not want to place the same burden on their children. Instead they would prefer to plan for their future needs and feel peace of mind knowing they can provide an inheritance for their children, not drain their assets.

Also, people who have been independent throughout their lives have an aversion to "going on welfare." The most common alternative to relying on public funding has been care provided by family members. In today’s transient society, the family members usually expected to provide care may be living in other areas of the country. Additionally, the traditional caregivers – women – have joined the workforce in increasing numbers making it difficult for them to stay home and provide the necessary assistance.

Quality of care ... Since Medicaid pays less (than private-paying patients) to nursing homes  most facilities limit the number of Medicaid patients they will admit. A person dependent on Medicaid may lose control over a number of major issues. The quality of care at a nursing home accepting Medicaid patients may not be as desirable as a private-pay home. The location may not be as convenient to visiting family members. Also, a person dependent on Medicaid may not have the opportunity to choose the level of care desired.

A. Take a look at your health plan brochure. Chances are there are specific exclusions for nursing home care and extended or chronic care provided in the home.

Q. How Can I Get Help? 

A. Clearly, not all long term care insurance policies are created equal, and this is not a "one size fits all" product. Certainly, any conscientious purchaser would want to gather this information from several different companies. Next, the purchaser would compare the various policies, examining strengths and weaknesses of each to determine which would be the best fit.

Recognizing the importance of a systematic approach to purchasing long term care insurance, FTJ also understands it can be difficult to find the time to scan the entire market to identify policies that offer suitable coverage. We believe you will truly appreciate the convenience of dealing with an experienced, reputable agency for your LTCI research. 

All of your comparisons, questions and concerns can be addressed through FTJ, saving you valuable time and energy. Free and without obligation you now can view a detailed comparison of three top-rated policies, online with a carrier-policy-price comparison. Your analysis will include:

•  review of each company's financial stability ratings, experience and size,
• a thorough side-by-side comparison of each policy's features, and
• a personalized quote.

Several carriers even offer association premium discounts to qualified members and their relatives.

Q. Which Plan Should I Choose?

A. The list of reasons why long term care insurance needs to be a part of any financial planning is long and convincing. But the actual purchasing process is not so simple. As insurance companies have recognized the growing need for long term care plans, they have jumped into the market with a bewildering variety of coverages in response to different markets. Media writers have been consistent in their advice to the prospective buyer – shop around. 

• First of all, the buyer needs to be aware of whether or not a plan qualifies for tax breaks under HIPAA. With a qualified plan, premiums are deductible and the proceeds from the policy are not considered taxable income.
• An equally important issue is the quality of the insurance company. How is it rated? Will it still be paying benefits when the purchaser needs them? What is the company's experience in LTC insurance?
• Next comes examining the specific terms of the policy. How clearly does the contract read? Does it cover skilled, intermediate and custodial care? Will it cover in-home services or only care in a nursing home? If a person wants to stay home, will the plan pay for homemaker services and home modifications like installation of grab bars and ramps? Is the policy an indemnity or reimbursement policy? Some policies offer discounted rates for preferred health status and married couples; some don’t. The options can be confusing and overwhelming for the non-specialist. The Long Term Care Insurance Evaluation representatives at FTJ work to inform and assist you with choosing and customizing the right plan for you from a sound and reliable insurance carrier.

Q. How Can LTC Insurance Protect My Nest Egg From LTC Expenses?

A. Here are the assumptions:

A married couple, both 55, have an investment portfolio worth $250,000. This portfolio has earned an average 6 percent after-tax investment return over the past ten years, and they expect this same rate of return to continue for the next ten years. They are considering using a small portion of their investment returns to pay the $1,200 annual premiums for long term care insurance policies for both of them with the following benefits:

• $100 a day for nursing facility, assisted living or home health,
• 90-day elimination period,
• Three-year plan for the man and a five-year plan for the wife, and
• Five percent simple inflation rider.

This example is for hypothetical consideration only. Long Term Care Insurance policies require medical underwriting approval. Investment returns may be less than expected.

What would you decide? Do you have investment income that could help fund long term care insurance premiums? Long Term Care Insurance could be a lot less painful than you think.

Information Sources (unless otherwise noted): 1. HIAA Consumer Guide to Long Term Care, 1996. 2. American Health Care Association, Quality Care for Life, May 1993. 3. New England Journal of Medicine, 1991. 4. Business and Health Magazine, January, 1997