“Long-term care is assistance with any activities of daily living, which can include bathing, dressing, transferring, eating and continence. Long-term care can also include short-term rehabilitation” (All About Long Term Care, “What is Long Term Care?”).
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Need: LTCI policy is meant for people who can afford continuity in payment of premium without that posing a burden on their finances and draining their retirement savings. Individuals needing long-term care usually fall in the 85+ age band. Experts suggest a minimum cover of three years for men and six years for women (Wolosky, p. 34).
Eligibility: The benefits are triggered in case of severe cognitive impairment or inability to perform two or more “activities of daily living”.
Coverage: LTCI covers skilled care in nursing, housekeeping at home, any medical care that is approved but not written in the policy. It is now available without age limit, offers unlimited benefits and covers Alzheimer’s as well. The maximum duration of the benefit pay-out is usually 3 to 5 years. The pay-out is made till the insured’s maximum lifetime benefit or till the pool of funds is completely used.
Employer’s role: The change in federal policy has shifted responsibility to individuals and their families for their healthcare. Employers now offer group LTC at discounted rates. From 2000 to now, there is a 17% growth rate in employer participation in Group LTC (Hirschman 65). If LTC is purchased under a group plan, it still remains portable since the policy is owned by the employee.
Ensuring benefit and avoiding fraud: LTCI policy like any other insurance policy should be carefully read and understood. Agents selling these policies are eager for high commission and often in their greed, tend to explain policy features in an incomplete way which can render the policy meaningless when a claim actually arises. Agents often use scare tactics especially with seniors who are lured to buy LTC Insurance. For example, as explained by Alexander, LTC policies can have severe disability criteria or not provide for inflation and turn useless at the time of claim. Similarly, even if a facility is licensed to provide care but it is not explicitly stated in the policy, one cannot claim coverage.
Purchase of long-term care by younger aged individuals: Owing to the expense associated with long-term care and fear that it may cut into retirement savings long term care policies are gaining popularity. Interest in LTCI is compounded by the fact that Medicare or other health insurance products do not provide this benefit. Besides the desire to be independent is another driving force that pushes younger aged individuals to buy LTCI. Experts recommend the purchase of LTC Insurance at age 50yrs or below to supplement disability insurance (Wolosky, p. 34). According to the Employee Benefits Research Institute “the 17- 44 age group has experienced a 400% rise in severe disabilities over the past 25 years” (qtd. in Gordon, p. 42). One-third of long-term care cases are below 60 yrs. A look at the escalation in premium suggests that purchase of LTC while a person is younger and can afford continuity in premium payments is prudent (All About Long Term Care, “How Much Does Long Term Insurance Care Cost?”).
|Age||Annual Premium ($)||Premium paid until age 90 ($)|
Younger individuals are showing an increased interest in the purchase of LTCI. It makes sense for high-income young individuals to buy such a policy since it works out cheaper if purchased at a younger age.
Besides such individuals who are in the high-income age band can buy LTCI for their dependent parents who may be not be living with them. In case of unforeseen circumstances, such individuals would have created a safety net- not only by way of protecting their retirement savings but also by maintaining job stability by not having to take on the role of caregiver.
- Alexander, Richard. The Consumer Law Page, Avoiding Fraud When Buying Long-Term Care Insurance: A Guide For Consumers And Their Families.2007.
- All About Long Term Care. (2007). Cost How Much Does Long Term Care insurance Cost. Web.
- All About Long Term Care. (2007). What is Long Term Care? Web.
- Hirschman, C. “Long-term care insurance comes of age”. HR Magazine 47.7(2002): 65-68.
- Murray, Gordon. “A guide to understanding long-term care insurance”. Employee Benefits Journal 26. 3 (2001): 42-46.
- Wolosky, Howard. W. “The long-term care insurance decision”. The Practical Accountant 35.1 (2002):34-36.