What Is The Current State Of Long Term Care Part 3

In the previous posts we took a look at what Long Term Care (LTC) is as well as how those who suffer from chronic illnesses are cared for in various types of facilities. As explained, stays in nursing homes and assisted living facilities are not cheap. Statistically 2 out of every 5 people will need some sort of LTC services, and the cost of those services is steadily rising each year. 

We also discussed a couple of ways to shift the burden of the expenses to an insurance carrier, through either a traditional stand alone Long Term Care insurance (LTCI) policy or a life insurance policy with living benefits. Depending on one's financial situation, age and health conditions, one option may be preferred over the other.  However, there are still another way to help cover the costs of LTC services. 

Short Term Home Healthcare (STHHC) insurance is a great alternative for those who possibly can't afford the premiums of a LTCI policy. As most people would prefer to stay in their own homes instead of a facility, a STHHC is an obvious choice. Especially with Covid wreaking havoc in nursing and assisted living facilities. home healthcare is a better option. But there is a caveat. 

The costs of home healthcare are much higher than staying in a facility. This makes sense if one considers that one-on-one care will cost more compared to a facility where several staff members watch over dozens of people at once.

As I mentioned in a previous post, my father suffered from Parkinson's Disease and insisted on being in his own home. His in-home care company was charging him in excess of $75,000 each year! He barely had the funds from his pension and some rental incomes and fell short each month. To subsidize the shortfall he was dipping into his home equity line, which our family was unaware of until he passed away. 

A better way to pay for the cost of home healthcare is the purchase of a Short Term Home Healthcare insurance policy. The cost of one of these policies is not nearly as expensive as a traditional LTCI plan and the application process is very simple. However there are a few drawbacks. 

The policy only covers in home care and for a total of 365 days. Given that some people only receive in-home care services a few days of the week, the 365 days don't have to be consecutive. In other words, the policy can be used over several years potentially. 

The applicant for one of these policies must be 60 years old and the rates do go up every five years, so these are points that must be taken into consideration. However, I still recommend this coverage to our clients who are looking into LTCI. 

For a good explanation of the policy and how it works, you can watch a short video by clicking here. 

Trying to self-fund long term care expenses is difficult for the vast majority of Americans. There is a myth that the government will take care of us, but it's not true. With our life spans getting longer it doesn't mean that the quality of life is better as we age. Making sure that we don't burden our families as our health declines should be a priority for most people. 

As we plan for our retirement years we need to seriously take into consideration that our health will decline and there will be expenses to deal with. Let us help you with planning and if you have any questions let us know. In the meantime, please stay healthy!

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

What Is The Current State Of Long Term Care? Part 1

Over the past year nursing homes, assisted living facilities and other facilities that house the chronically ill, mostly the elderly*, have been ravaged by Covid. The numbers of infections and deaths are heartbreaking, especially since the vast majority of these people are isolated from their families. But why are all of these people in these facilities to begin with? Are there other options available and what do those options cost?

In general terms, most of the people who are in these types of facilities are deemed "chronically ill", which means that they will be ill for a long period of time and there is no cure. Some will receive some rehabilitation but getting them back to 100% is not possible. An example of this could be an older person who has broken a hip which will prevent them from walking again. 

Medically speaking, long term care (LTC) services are for those who are unable to perform or need help with Activities of Daily Living (ADL's). These are:

• Bathing
• Transferring (going from the bed to a chair, for example)
• Dressing
• Using the toilet
• Eating
• Incontinence

Paying for these services can be expensive. Many people find out too late that Medicare will not cover the costs of assisted living facilities and will only pay for skilled nursing care for up to 100 days, and that is only if you are released from a hospital. In other words, the smart move is to begin looking for LTC insurance early on when you are healthy and insurable.

Most LTC policy's benefits will be triggered if someone is unable to perform two of the six ADL's. Another way to trigger the benefits is to be cognitively impaired, i.e. Alzheimer's or dementia.

There are other types of facilities as well, which mostly are non-medical. Think of an apartment but has meals and someone checks in on you. LTC policies generally don't cover these types of facilities.

Let's assume that you are reading this and are healthy enough to go through the underwriting process with an insurance carrier. What are your options? My suggestion is to call a few facilities in your area** to find out what they are charging their patients. Most are pretty good at giving you rates, but be aware that some will give you a monthly rate and others a daily rate, which is an industry norm. 

With that valuable information at your disposal you can begin to look at ways of covering those costs. Needless to say, these services can be very expensive and it can easily take a few years to wipe out any assets one may have spent a lifetime working for.

Let me say right off the bat that there are a limited number of available "Medicaid beds" in each facility, but to be eligible for those one has to prove a level of indigence. In other words, you are limited in the assets you own and there is a "look back period", which at the time of this writing was 60 months. This is to avoid someone from transferring all of their assets to a family member so they can get free nursing care. 

Going back to our options, if you are young enough you may want to look into a life insurance policy with LTC or "living benefits" as part of the policy or even a rider. This locks in the rate for your coverage and if you should pass away before you use it the life insurance will pay a death benefit to your loved ones. 

The nice part about this option is that it pays you a percentage of the face amount of the policy once your doctor says that you can't perform 2 of the 6 ADL's or if you are cognitively impaired. Once the benefits are triggered they pay until they run out.

In the next post I will go over a couple more options. In the meantime, check us out on the web and please stay healthy!

*One of the myths of nursing facilities is that only the elderly are patients, when in fact nearly a third of the patients are under the age of 65.

**Costs vary dramatically depending on your geography.  

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog! 

My Personal Long Term Care Story Part 2

In my previous post I told the story of my aunt who spent 22 years in a nursing home after breaking her hip. Since her adult children were in no position financially to pay for her care, my parents took the reins. The financial part of her care was draining, but so was the emotional segment. Frankly speaking, my parents were burnt out.

When my aunt died, my mother called me and broke the news in a very somber voice. Knowing exactly what she was thinking I asked, "Do I hear dad in the background dancing a little jig?" Two decades of financial burden was finally off his plate.

My mother chuckled and said, "Shut up. We're supposed to be sad." She was sad at some level but at that moment she was glad that it was over. 

As I mentioned previously, soon after this I approached my parents about purchasing long term care insurance. Surely they would see the need after all they had been through, but that wasn't the case at all. In fact, my father was adamantly against the idea. "I'm not trying to make a sale, I'm trying to avoid going through all this again," I pled , but he wouldn't listen. "I don't care if you buy a policy from someone else, just get a policy!" I said.

Within a few years, my mother, who was now in her seventies, was in need of a knee replacement. At some point during or after the surgery she had a small stroke. The two week rehab became six weeks of rehab.

The stroke also triggered dementia. When she returned home, she insisted that family members, who were long dead, were at the house and she was going to serve them dinner. My father, who had refused my help in getting a long term care insurance policy was her caregiver. Over the next five years they settled in to a routine. I would drive two hours on the weekends to visit, sometimes with my own family, and sometimes not. It was all very stressful, as my father, I discovered, was a micromanager. 

My mother's health declined slowly over the years and my father wasn't doing much better. He developed a twitch in his hand and refused to discuss it. His weight dropped as he tried to manage the household, which he wasn't very good at doing, while driving my mother to her various appointments. Occasionally, he would ask me to fill in while he took care of his own medical issues. 

About five years after her stroke my mother had a health setback, which was looking pretty dire. That's when my father told my sister that "Maybe I need to look into that insurance your brother tried to talk to me about." She had to explain that it was too late, no insurance company would accept my mother's application. 

Seven months later my mother passed away. Now all of the attention was refocused on my father, who would later disclose that he had already been diagnosed with Parkinson's Disease. 

He insisted on living alone, and let it be known to anyone who would listen that he wanted to be left alone. My sister and I made attempts to help, which he only accepted when he was desperate. After a series of falls we intervened, saying that he needed to either go to a facility or have someone stay with him. He settled on a home health agency which was approximately double the cost of a facility. 

When I asked him how he could afford the home health care, he said that he still had the rental income from the properties my mother had inherited, along with his pension. Unfortunately, he also had more expenses and debt that he didn't let us know about. To make up the difference, he was dipping into his home equity line. We didn't know about that part of his finances until his death earlier this year. 

One of my regrets is that I was never able to convince my father that there was value in long term care insurance. Friends and family, who still acknowledge that he was very "difficult" man, try to tell me that I did my best, but as an agent, I failed in my job. 

Nowadays, we have long term care policies, life insurance policies with "living benefits", and short term home health care policies, which would have helped my parents immensely, if they had been open to the idea. If you don't want to be a burden to your family, take a serious look into these options. 

With Covid taking it's toll in facilities, home health care is more important now than ever. If you have a family member in your care, take precautions, wear a mask and wash your hands, like we've been told. Please be safe and enjoy your holidays with your loved ones so you can enjoy them next year as well. 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog! Thanks! 

My Personal Long Term Care Story Part 1

When I speak to groups about long term care I usually start off by asking the audience to raise their hand if they know of someone who is either receiving care or has received long term care. Of course, every hand goes up. Each participant has a story about a parent, grandparent or other family member who has been in a facility or had home care at some time. 

Since it's Long Term Care Awareness Month I thought I would share a personal story. In 1979 my aunt, who was already having mobility issues, fell down and broke her hip. My mother's oldest sister by 20 years, my aunt was moved to a nursing facility. Her adult children were in no position to pay for a nursing home, so it fell on my parents to help out.

My aunt had inherited a rental property when my grandmother had died a few years earlier, but the rent was not enough to cover her bills. At the time, long term care insurance had not been developed yet, so the cost of her care would have to come out of someone's pockets. 

After some thought and negotiations, her rental property was put in a trust, with my father as the trustee and the beneficiary. Any shortages would be the responsibility of my parents, who were in their 50's at the time. Statistically, people who have broken a hip usually survive on average around 3-5 years. If and when my aunt would pass away, my parents would inherit her rental property. 

Years came and went. The five year mark, then the ten year mark. My father renegotiated the leases as they expired to keep up with the cost of his sister-in-law's care. More years went by, and my aunt continued on in her nursing home. And as this wore on, my parents continued to age as well. Money was tight as my parents try to keep themselves and my aunt afloat. 

I was in high school when my aunt was put in the nursing home. While she was there I went to college, graduated, moved away, got married and had a child. When she passed away in 2001, my aunt had been in the nursing home for 22 years. My parents, who were now in their 70's, were financially and emotionally drained. At the time of her death, my mother and father were paying over $5000 per month out of their pockets for her care. 

After her funeral, my aunt's adult children asked about their inheritance. Apparently no one, including their mother, had bothered to mention the arrangement with the trust fund. Upset with the situation, they never spoke to my parents again.

As I was restarting my career in insurance, I tried to speak to my parents about their care. At the time, they were still eligible to purchase coverage, but being children of the depression, they deflected my pleas to look into it. 

"Don't put us (my sister and I) in the same position you were in all of those years," I begged to no avail. I lived about two hours away from my parents and my sister was about seven hours away. "What are we going to do if something happens to mom?" I asked my father. 

"I'll take care of her," he said. Sadly, his words were prophetic. 

In Part 2 of this post, I'll share what happened as my parents became chronically ill. 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog! Thanks!

Long Term Care Awareness Month In the Midst of Covid

November is Long Term Care Awareness Month and Surf Financial Brokers is here to help you understand why planning for your Long Term Care (LTC) is important. And even more so in a year when Covid_19 has ravaged our nursing homes and other facilities housing the chronically ill, as well as their staffs. As we have all seen on the news lately, planning can make the difference between dying alone in a facility or dying at home with access to loved ones.

I'd like to share with you some interesting numbers.* 

• Average out-of-pocket costs are $140,000 for people who use paid LTC services, and almost 9% will spend over $250,000.
• About 7.5 million people have LTCI coverage, and LTCI issuers paid about $11 billion in benefits to about 310,000 claimants in 2019.

And with the cost of care increasing each year, many people aren't sure if they can afford to be in a facility. if they may need a LTC insurance policy or what other options are available. 

When you include Covid into the mix, it makes planning more confusing. COVID-19 has  already killed at least 60,000 U.S. nursing home residents, and it appears to be increasing nursing home mortality levels by at least about 20% over the usual levels, according to nursing home Covid impact data collected by the Centers for Medicare and Medicaid Services (CMS), the agency that oversees Medicare and Medicaid.

Needless to say, the virus has changed the landscape and how people plan for their LTC needs. But what are your needs if you were to look at the future from now?

Unfortunately, younger people generally don't consider being chronically ill, until they see it happen to a parent or grandparent. This is usually when they realize how expensive care is, not to mention the wide variety of facilities and other options. LTC planning should be a part of the retirement planning process, as they are not mutually exclusive.

How does one handle the problem of the high costs associated with being chronically ill? First, there is traditional long term care insurance. It can be pricey as you get older and the companies reserve the right to raise your premiums, but these policies will also include some extra features like respite benefits for caregivers and can help pay for care in a facility or in the home. 

The number one objection I hear when showing a long term care policy to a client is "What if I die before I use it?' It's a reasonable question, as the premium cost can be high. One option is a Return of Premium (ROP) rider, which would, as the name implies, return premiums not used to the insured (or their beneficiaries) if they don't use the policy. Unfortunately, this ROP option is nearly as expensive as the actual policy and I have rarely had anyone ask for it.

The other option is to purchase a hybrid policy, typically a life insurance policy with either an LTC rider or "living benefits", which allow the insured to use the policy for their LTC needs. If they die before needing care, the life insurance just pays out. This has become a popular option, especially for younger clients. And we have one company that has begun including this into their term life policies.

The last option is Short Term Home Health Care (STHHC), which pays if you are receiving care in the home. One of the misconceptions we find is that in-home care is cheaper than a facility. This may be true if family members are the caregivers, but if a private company is brought into the home, the costs can be nearly double of a facility. 

A STHHC policy can help you stay in your own home for up to 365 days, which don't necessarily have to be in a row. This is a great option for people who are concerned about Covid in nursing homes and assisted living facilities. The policies are very affordable but the applicant must be a minimum of 61 years old. 

If you have questions about LTC planning, let us help. Drop a note on our website or book an appointment for a quick phone call. 

*Figures are from the American Association for Long-Term Care Insurance (AALTCI)

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog! Thanks!