Long-Term Insurance – Tips for 2017
A Complete Walkthrough
Long-Term care is a phrase in the insurance world that most folks are afraid to talk about. But not BGA Insurance Group, in fact we recommend that you do and we’ll even start the conversation for you.
The frustrating part of our business being a broker is that most people view us as “my Medicare person” but contrary to that, we assist in complete retirement planning, and for ALL age groups.
After I help a potential customer understand what Medicare is and how it works I like to ask a few fact-finding questions pertaining to post hospital care. My first question is, “do you have Long-Term or Short-Term Care insurance in place?”
If yes, I ask “when is the last time your policy was reviewed?” 99% of the time it has never been reviewed. I then explain to them that is exactly what I specialize in and that will usually open a brand-new window of conversation to see if they were properly set up from the beginning.
Now most times when I sit down with folks I find they do not have a plan in place to protect their assets at all, which always leads me to asking my next question. “Do you know anyone who has ever needed post hospital care?” More times than not they usually know someone who has needed it.
I then ask “how was their experience? How did it make that person feel? How did it make you feel? How long was their stay, or how long did they need the care? How did they pay for the care? How did that affect their family? How did it affect your family?”
In a lot of cases people lost all their assets having to pay for the care.
All these questions I ask will enable me to open-up a healthy dialogue regarding post hospital care and how important it is to have it. When I finally get someone comfortable to talk about it most concerns people have are remaining independent in the home without intervention from others, but you need help cooking, cleaning, and dressing, and you do not want to move in with a family member.
Who would help and how would you pay for their help?
Full-time long-term care assistance can run $6,000 – $10,000 a month, or even more if medical care is needed. Most parents do not want their children to bathe them or assist them with toileting. They also want to maintain good health and receive adequate health care.
The biggest concern of all is having enough money for everyday needs and not outliving their assets and income
Let’s start with a Long-Term Care Policy because I think everyone by now has heard the term used when discussing health care. It is post hospital care designed to cover you for a longer period of time than most other plans.
The lifetime probability of becoming disabled in at least two activities of daily living or of being cognitively impaired is 68% for people age 65 and older. That is a scary statistic if you really think about it.
There are three levels of post hospital care that I explain when going over what Medicare covers and what it doesn’t cover. There is Custodial care, Intermediate care, and Skilled care. Most folks are shocked when I explain that Medicare does not cover Custodial or Intermediate care.
In fact, Medicare only covers a small window of Skilled care and you need to qualify for it. Most patients if they need care after a hospital stay only qualify for Custodial or Intermediate care and not Skilled care. All the reason more to talk about a post hospital care policy.
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You can talk to your BGA agent about all the ways to set up your long-term care plan and there are a variety of ways to make it affordable. First thing to go over is how long the policy will cover you.
In most cases I see plans that have a Benefit Period of two to five years. Another important benefit is the Daily Benefit you would receive. The Daily Benefit is the amount of money you are to receive to help pay for the level of care you are receiving.
You can choose $50 a day, $100 a day, $150 a day etc. But the most important aspect you need to do is add an Inflation Rider onto your Daily Benefit because the level of care you pay for today will be much more expensive 10, 15, 20 years from now if you need the care.
Simply put, you will want your Daily Benefit to keep up with the cost of inflation. Another benefit you will want to discuss is Elimination Days. These are the amount of days until your policy starts paying benefits. Some policies have 15, some 60 and some even 90 days before benefits kick in.
Remaining Independent at Home
It all depends on how much money you have and can afford to pay for care on your own. Let’s go back to a concern that most folks have, remaining independent in the home.
It used to be that most Long-Term Care policies would be sold for the sole purpose of the patient being treated in a skilled nursing facility. This leads me to the next benefit that I feel is the most important, home health care.
I like to structure the plan for facility care and/or home health care because most people would rather get their care at home surrounded by their loved ones, they are more comfortable, and they usually recover quicker.
There many other benefits you can add to your client’s policy but the more you add the more expensive it becomes so it is very important to get your client’s input as to what is most important to them.
Long-term care insurance has features that you can adjust. Like buying a car, you can get all the extras, and pay for them, or you can buy a base model that costs less but still provides decent transportation.
With all that said it is very important to have a long-term plan in place, but not everyone can afford a Long-Term Care Policy. This is a reason we then discuss a Short-Term Care Policy. It is a policy that in a lot of ways is the same as Long-Term Care but pays benefits for a shorter period-of-time and is much less expensive.
Most policies that are sold are either sold with a 90 day, six month or a year Benefit Period of care but have multiple benefit periods. With Short Term Care the underwriting health questions are usually less stringent than Long-Term Care so chances are more people will qualify.
Other benefits that a Short-Term Care plan may include is Nursing Facility Confinement, Assisted Living Facility, Home Health Care, Adult Day Care, and Hospice Care.
There are a couple of other ways you can even break down a post hospital care plan to fit your budget. Some insurance carriers also sell Nursing Home Care or Home Health Care plans.
This means you have one choice as to where you receive your care but these types of plans are even less expensive than a Short-Term Care policy.
I feel there is no right way or wrong way when purchasing post hospital insurance, just long as you’re satisfied with the benefits you can afford. I know this is a topic you don’t want to discuss with your children although I think you should, but at least discuss it with your BGA Insurance agent, it’s why we’re here.
Contact us if you are in or near any of the following areas:
- Philadelphia, PA
- Allentown, PA
- New Jersey
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