Investor’s Column | Some basics about paying for long-term care

The good news is that people are living longer. That, however, increases the chances that you will live to an age where you will need long-term care.

Long-term care includes all of the assistance you would need with daily living task if a chronic illness or disability leaves you unable to care for yourself. It could be in your own home or in a facility.

Assuming one has some type of long-term care insurance, what has to happen to trigger the benefits to pay for care? Generally, long-term care insurance policies begin to pay when one of two different criteria is met and you have met the elimination period.

The first criteria is if you are unable to perform two of the six activities of daily living, often referred to as ADL’s, without assistance or supervision. They are continence, dressing, toileting, eating, bathing and transference. Transference is being able to move oneself into or out of a bed or chair.

The second criteria is you have severe impairment such as Alzheimer’s or dementia which makes it’s impossible for you to live independently in a safe manner.

Professional care can be provided in several different venues. Many long-term care policies give you the option to receive care in the setting of your choosing. They include:

• Home health care. Services provided in the home.
• Assisted living facility. A residential setting providing housing and support services.
• Memory loss units. These units, often a separate area of an assisted living facility, provide twenty-four-hour support in a secured premise.
• Nursing home. Full time care in a dedicated facility.
• Adult day care. Often a community based, daytime supervised facility that provides social, recreational or health assistance in an offsite facility.

You should be familiar with some of the following features and benefits of long-term care insurance before purchasing:

• Daily or monthly benefit. This is the maximum amount your policy will provide towards the cost of long-term care.
• Benefit maximum. This is the maximum and total amount available under a policy. (i.e. $325,000.00).
• Elimination period. This is the waiting period before benefits kick in. A longer waiting period is a good way to lower premium cost.
• Inflation rider. This helps to keep your benefit up with the cost of care.
• Shared benefit rider. This is a benefit that allows a couple to share benefits between them.
• Free look period. This is a thirty-day window after buying insurance which you may cancel for a full refund of your premium.
• Guaranteed renewability. Your policy can not be cancelled and premiums can’t be increased unless all policies of that type in that state are increasing together. This risk may be reduced via asset based long-term care. And yes, increasing premiums has been a challenge in the past for more than a few providers.
• Care coordination benefit. A service provided by a professional that may arrange, monitor and coordinate services.
• Exclusions. Certain conditions are excluded from most policies such as alcoholism, drug abuse, some mental illnesses. Self-inflicted injury is also usually excluded.

There are many reasons one should consider long-term care insurance. The first and I think the most important is that long-term care insurance allows you to stay at your home or a setting of your own choosing. This, in my opinion, is what long-term care insurance is all about. If you do not have long-term care coverage and you can’t do two of the ADl’s mentioned above, have few financial resources’ and little family support guess what? You may well end up in a facility that can provide those services.

Long-term care insurance helps you to maintain your independence and dignity. It can also help to relieve financial and caregiving pressure on your family.

Long-term care coverage can help protect your retirement assets and income. The median annual cost for home health care in Florida is approximately $45,760.00 for a home health aide for eight hours a day. The median annual cost for an assisted living facility in Florida is $51, 300 per year.

These should be eye-opening expenses for many of us. With today’ options available long-term care insurance may not be out of reach for many of you reading this article. The “lose it” (premiums paid) if you “don’t use it” (the benefit) are in most cases a thing from the past.

With the stock markets at all-time highs it may make some sense to reposition some assets for long-term care coverage.

Much of this article was sourced from Genworth 2017 cost of care survey, Unum, and Creative One.

Michael T. Doll, A.A.M.S. is an investment planner with Harbor Financial Services. He can be reached at 941-896-2473 or at mtdoll@harborfs.com. This is the view and /or opinion of Michael T. Doll and not necessarily the views and /or opinions of Harbor Financial Services, LLC an SEC Registered Investment Advisor, whose office is located in the state of Alabama. Michaeltdoll.com.