Can LTC Insurance Help You to Stay Out of a Nursing Home?

Most people mistakenly view "long-term care" as synonymous with "nursing home care". The myth that a need for long-term care automatically means a nursing home confinement exists because at one time, nursing homes were the first, last, and ONLY option available for people who could no longer live at home. Now, nursing homes are just one of the many environments in an expanding continuum of long-term care.

A person needing long-term care normally progresses through a continuum of care and may entirely avoid a nursing home confinement. For example, older people experiencing the frailties of aging may be able to stay at home because they require only a minimal amount of assistance for a few hours each week. If their condition worsens and they experience problems with maintaining their balance, taking medications, or loss of memory, a move to an assisted living community is normally more appropriate than a move to a nursing home.

Unless the condition worsens, or a terminal illness develops, the need for more comprehensive care in a nursing home will probably never be required. This trend toward helping people avoid nursing home care and receive care in more comfortable settings is a bright spot in the generally somber subject of long-term care.

LTC insurance was initially created to pay for skilled nursing home care needed beyond Medicare's 20 days of coverage. But over the past several decades, legislation has been passed that requires coverage to pay for all levels of care, not just skilled care, irrespective of Medicare's benefits.

Two of the main reasons for purchasing LTC insurance are the ability to maintain current living arrangements and remain independent. Having LTC coverage could provide you with the financial resources needed to stay in your home longer or move to the more positive environment of an assisted living community.

LTC insurance may also allow you to have better access to high-quality providers who wish to maintain relationships with insurance companies. LTC insurance companies are beginning to locate and contract with providers who have demonstrated high quality work and ethics. A provider screened and recommended by an insurance company may provide better quality care than caregivers in the general population.

As our society ages, and the demand for care skyrockets, it will be those who can guarantee payment for care with private funds- either their personal assets or coverage from an LTC insurance policy - who will have access to high-quality providers.

7 Factors to Consider When Evaluating Long-Term Care Insurance Carriers

History has proven that most insurance companies that enter the LTC Insurance market will not remain in the market for an extended period of time. Therefore, the majority of companies offering LTC insurance should be avoided. Narrow your choice to those companies who fit the following criteria:

1. Longevity in the LTC insurance industry
    The longer a company has been in the LTC business, the more likely they are to remain in the business. As a general rule, it is best to select an insurance company that has been in the market for 15 years or longer.

2. Financial Ratings
    A strong financial rating is vital to the future of your investment in the coverage. You should select a company with an A rating or higher by the A.M. Best financial rating service. Never choose an insurance company rated less than A.

3. Name Recognition of the Insurance Company
   Recognizing the name of the insurance company is an indicator that the company will remain committed to the market. Insurance companies that have built name recognition and protected a brand name over a number of decades are more likely to continue protecting their reputation.

4. Approved as a "Partnership" Company
    Companies that have been approved to offer Partnership policies have gone through a stringent approval process that indicates a major commitment to the LTC insurance industry.

5. Rate Increase History
    LTC insurance premium rates can be increased on existing policies if an insurance carrier can justify the rate increase to your state's insurance department. Since policies are subject to rate increases, always ask about the rate increase history of the insurance carrier being recommended. Select one of the few carriers that have done a good job with underwriting and pricing, and have a reasonable premium rate increase record.

6. Reasonableness in Premium
    Choosing a company that has a lower than average premium rate could spell disaster for your future LTC Insurance plan.This is one of the few industries in which shopping for the lowest price combined with the most generous benefits is not a wise strategy. Chances are, these carriers will raise rates substantially in future years. Obviously, it also wouldn't be wise to purchase coverage from an insurance carrier with substantially higher than average premiums.

7. Stringent Underwriting Process
    If an insurance carrier has a conservative underwriting philosophy, it means the company's coverage is relatively difficult to obtain. Since you have maintained your good health, you should be rewarded by being insured in a "risk pool" of people who have also mantained their good health. A stringent underwriting process is your strongest indication that the insurance carrier will also be in a good position to pay your claim in the future and will also be less likely to substantially raise your rates along the way.

Is It True that My Long-Term Care Insurance Premium Can Never Be Raised?

Unfortunately, this is NOT the case but it is a common misconception. While premium rates cannot be raised due to advancing age, deteriorating health, or claims, the carrier CAN apply for a "class-wide" rate increase, which will affect all policyholders who have the same type of policy.

You can reduce your chances of having frequent premium rate increases by choosing a carrier that is highly committed to the industry, has a history of excellent premium stability, and have published their claims payment history.

Should You Ever Replace Your Long-Term Care Insurance Policy for Another One?

The decision of whether or not to replace a current policy should be taken very seriously and analyzed by your financial advisor and a long-term care planning and insurance expert. In most cases, you have more to lose than gain by replacing an existing policy. But each situation is unique, and should be analyzed by considering the following questions:

• Is your current insurance carrier financially stable and committed to the LTC insurance industry? Do they increase your premium rates frequently?
• Has your health changed for the worse since you purchased the policy? If so, you may not qualify if you applied for coverage today.
• How long ago was the policy purchased? A policy purchased several years ago probably has a fairly low premium compared to the premium of newly issued coverage today. This may be true even if your current carrier has increased your premium rate.

Can I Purchase LTC Insurance for My Mother Without Her Knowing?

The answer to this question is no. The person who will be insured must consent to the coverage by signing an application. They must also be fully aware of the purpose of the application, understand the policy benefits, and understand the underwriting process.

However, a person may pay the premium for another person. In many cases, children pay the premium for their parents' LTC insurance coverage. If there are several children, splitting the premium may make LTC insurance an affordable option for people who could otherwise not afford it.

Is There an "Ideal" Age to Purchase Long-Term Care Insurance?

Actually, the decision to purchase long-term care insurance has nothing to do with age. It has to do with whether or not you haave prioritized your other insurance needs, whether or not you can afford the premium, and your tolerance for risk.

Here are 2 good reasons why advice to wait until a "perfect age" before considering LTC insurance is dangerous:

1. Long-term care insurance premiums rise with each year a person waits to purchase coverage and are also on the rise in the industry in general.
2. While waiting until the "perfect age" to purchase coverage, many consumers will become uninsurable, and some may even begin to needing long-term care.

Myth that Medicare Covers Long-Term Care Persists

Despite the increase in the public's awareness about the issue of long-term care and the understanding that there's a good chance they may need it in the future, many people are still confused about who or what will cover the costs of long-term care.There continues to be the misconception that Medicare will cover the costs of long-term care. MEDICARE DOES NOT COVER EXPENSES FOR LONG-TERM CARE.

What does Medicare cover? Medicare provides health insurance coverage to Americans over age 65 and to some people with disabilities who are under age 65. It pays for physician and hospital care - NOT the expenses associated with the care of people who simply need assistance with the activities of daily living, or supervision due to cognitive impairment.

So where did people get the idea that their Medicare coverage would cover long-term care expenses? This misunderstanding is probably attributable to the wording in the Medicare Handbook. In it, it's explained that under certain conditions, Medicare covers thhe first 20 days in a skilled nursing home  and another 80 days of care on a co-payment basis. But care less than 100 days is short-term care, not long-term care.

Medicare's short-term benefit is designed to partially cover rehabilitation from a serious injury or illness. There is also a three-day prior hospitalization requirement to qualify for benefits. In most cases where long-term care is needed, there is no prior hospitalization.

Now many of you reading this are saying to yourself, "but what about my Medicare Supplement policy- won't that cover my long-term care expenses?" This is another common misconception. In fact, Medicare Supplement policies only cover services approved by Medicare. These policies do not cover long-term care either.