Legacy Services – How to Find Your Best Long Term Care Insurance Seminar (17:45)
Introduction
Hello, my name is Brad Winnekins and I’m the founder of Legacy Services. Legacy is an independent broker that has specialized in LTCi since 1999.
Welcome to our seminar on LTCi. You can watch this presentation from start to finish or you can skip ahead to whichever subjects you wish to view by clicking on them in the menu on the right.
This seminar explains key factors of long term care including: the likelihood of needing care, the average duration of care, and the average cost of care. Then we cover the basics of LTCi including – what LTCi pays for, the differences between traditional and hybrid LTCi, and the advantage of purchasing coverage earlier in life.
For additional information please schedule a no obligation phone consultation. During these calls we provide personal price comparisons and analysis on the top traditional and hybrid LTCi policies.
Long Term Care Overview
What is LTC? If someone needs assistance with 2 of 6 activities of daily living, or if they have a cognitive impairment that requires supervision, then they need long term care.
In the middle column you will see different health conditions that cause people to need long term care. Sometimes people need care simply because the aging process has made it difficult for them to do activities of daily living.
The third column shows statistics on where long term care is provided. Often people think long term care means nursing home care exclusively. As you can see, many people receive care at home or in assisted living facilities.
The Cost Of Long Term Care
This slide shows the average annual cost of long term care services. The cost of care can vary by provider or facility. And the cost of care can vary greatly depending on geographic location.
To find the cost of care in your area – go to the top of our website and click on Learn More, and then click on Cost of Care Map. Then enter your city, state, or zip code and you will see the average HHC, AL, and NH costs for your area.
Government Assistance For Long Term Care
Government assistance for long term care is limited. The most Medicare will pay for long term care is 100 days.
Medicaid will pay for long term care but Medicaid is a means-tested program. You must spend your assets down to state specific levels before you can qualify.
The Medicaid qualification rules are complicated and state specific. To learn more about how Medicaid rules apply to your situation we recommend you seek the advice of an elder law attorney. Elder law attorneys specialize in Medicaid law.
The third paragraph includes the website address for the National Academy of Elder Law Attorneys. If you go to that website, you can enter your zip code and find elder law attorneys in your area.
What Does LTCi Pay For?
Most LTCi policies sold today provide coverage for the services shown here. However, there can be differences between contracts, so when shopping for coverage it is important to confirm what services are covered.
Once you qualify for benefits the insurance company lets you decide where you receive your care. Also, you get to choose the care provider. The only restriction is that with most policies the caregiver or facility must be registered with the state as a provider of long term care services.
Is LTCi Right For You?
LTCi is not right for everyone. During phone consultations we discuss the questions on the left to learn about your financial situation.
On the right are general guidelines we use to help people decide if LTCi is appropriate for their circumstances. It is important to consider how LTCi premiums will fit into your retirement budget.
The Cost Of Traditional LTCi
This slide shows sample pricing for traditional LTCi. The pricing is an industry average and does not represent a specific company. In phone consultations we provide a personal price comparison of the top carriers that sell traditional LTCi. Let’s begin by looking at the coverage example on the left:
We start with a $4500 monthly benefit. This pays for home health care, assisted living, and nursing home. You can purchase lower or higher amounts.
Next is a 3-year benefit period. Once benefits are triggered this policy would pay for a minimum of 3 years. If the policyholder is not using the entire monthly benefit, then the policy would pay for more than 3 years. You can purchase shorter or longer benefit periods.
The third benefit feature is 3% compound inflation protection. This makes the monthly benefit grow automatically by 3% compounded every year. In this example the inflation protection is built into the premium, so the benefits grow each year without any change to the premium. We recommend this feature because it helps your benefits keep up with the rising cost of long term care services. Many policies are sold without built-in automatic inflation protection. It is important for consumers to understand what type of inflation protection they are purchasing.
The last coverage component is the 90-day elimination period. This is like a deductible. Once the policyholder triggers benefits, they must pay the first 90 days of care themselves and then the coverage kicks in. We can use shorter elimination periods but that increases premiums significantly. The elimination period only has to be met one time. Let’s say a policyholder completes the elimination period, goes on claim and then recovers and comes off claim. Then, two years later they need care again. This time they do not need to go through the elimination period. Benefits would be paid on day one of care.
On the right are estimated annual premiums for the sample level of coverage we discussed. Premiums are based on age of purchase, gender, marital status and health. Pricing for women is higher because they make more frequent and longer claims than men. Pricing for single people is higher because they make more frequent and longer claims than married people.
A monthly premium payment option is available. It is automatically withdrawn from your checking account.
After you purchase coverage premiums do not increase because of age or changes in health. The only way premiums can change is if there is an increase on all policyholders in a block of business. It is important to understand that state insurance commissioners have the authority to deny rate increases. Also, policies sold today use much higher starting premiums than in the past. In addition, underwriting is much more difficult than in the past. These changes were made to improve rate stability on policies sold today.
To receive a personal price comparison on all the top carriers for traditional LTCi please sign up for a no obligation phone consultation.
The Cost Of Hybrid LTCi
This slide shows sample pricing for hybrid LTCi. The pricing is an industry average and does not represent a specific company. In phone consultations we provide a personal price comparison of the top carriers that sell hybrid LTCi.
Hybrid products are different than traditional products in three key ways. First, hybrid products have a death benefit, less LTCi claims paid. Second, hybrid premiums are guaranteed never to go up. Third, hybrids have a cash value if you cancel the policy. Of course, these extra features make the premiums more expensive. However, many people believe the extra benefits are worth the cost.
Now let’s look at the coverage example on the left:
We start with a $4500 monthly benefit. This pays for home health care, assisted living, and nursing home. You can purchase lower or higher amounts.
Next is a 6-year benefit period. We use a 6-year benefit period because hybrid pricing for a 6-year benefit period is not much more than for a 3-year benefit period. Once benefits are triggered this policy would pay for a minimum of 6 years. If the policyholder is not using the entire monthly benefit, then the policy would pay for more than 6 years. There is an unlimited benefit period available.
The third benefit feature is 3% compound inflation protection. This makes the monthly benefit grow automatically by 3% compounded every year. In this example the inflation protection is built into the premium, so the benefits grow each year without any change to the premium. We recommend this feature because it helps your benefits keep up with the rising cost of LTC services. Many policies are sold without built-in inflation protection. It is important for consumers to understand what type of inflation protection they are purchasing.
The last coverage component is the death benefit. If the policyholder makes no LTCi claims, then the policy would pay a $108,000 death benefit. Any LTCi claims paid are subtracted from the death benefit.
On the right are estimated single-pay premiums for the sample level of coverage we discussed. A single-pay premium means you pay one time and have no more payments. 10-pay premiums are also available. With a 10-pay premium you pay once a year for 10 years and after that you have no additional payments. With some hybrid products you can pay once a year for life.
Premiums are based on age of purchase, gender, marital status, and health. Pricing for women is higher because they make more frequent and longer claims than men. Pricing for single people is higher because they make more frequent and longer claims than married people.
To receive a personal price comparison on the top carriers for hybrid LTCi, please sign up for a no obligation phone consultation.
When Are Benefits Paid?
There are two ways benefits are triggered for LTCi contracts. Your doctor needs to write a one page letter explaining that you need assistance with 2 of 6 activities of daily living or that you have a cognitive impairment that requires supervision. Then, carriers typically send their own health care professional to do an evaluation of the policyholder.
We have worked with thousands of families who have filed LTCi claims. In most situations, the process went smoothly. It is important that you select someone younger to be your financial power of attorney. It would be this person’s job to work with the insurance company during the process of filing a claim.
Partnership Programs For LTCi
Most states have implemented Partnership programs for LTCi. If you purchase a Partnership-qualified LTCi policy, use up your LTCi benefits, but still need more long term care, then whatever your policy paid out in total benefits gets added to how much in assets you can keep and still qualify for Medicaid.
Not all LTCi policies qualify for Partnership so if you want a Partnership-qualified policy it is important to communicate that to your agent.
Partnership benefits do not make coverage more expensive. Partnership programs were created by state governments to encourage more people to purchase LTCi. Many states have websites that explain their Partnership programs. For more information go to your state’s general website and search on Partnership for long term care insurance.
Potential Tax Advantages for LTCi
Some states have state income tax deductions or credits based on your LTCi premium. Also, people with self-employed income often have special tax advantages with LTCi.
In addition, people with untaxed gains in annuities and whole life insurance can, in some situations, use that money in a tax advantaged way to purchase LTCi.
Finally, if you or your spouse have a Health Savings Account, you can use those HSA dollars to pay for traditional LTCi premiums up to the age-based limits shown in the chart.
For more information on potential tax advantages for your situation please sign up for a no obligation phone consultation.
An Overview of the Underwriting Process
The first step in the underwriting process is to complete an application. As part of the application, you must sign off on the release of your medical records to the insurance company.
In most situations carriers will not come to see you if you are having annual physicals. If you are not having annual physicals, then the carrier will send a nurse to draw blood and check blood pressure.
We assist you through this entire process. If you have questions about how certain health conditions affect the possibility of being accepted please sign up for a phone consultation and we can discuss the issue in more detail.
Key Statistics
This slide highlights some of the key statistics regarding long term care and LTCi.
The first column shows inflation on long term care services. Because the cost of long term care services will likely keep going up, it is important that consumers consider having inflation protection built-in to their LTCi contract.
The second column shows how long people need long term care. These statistics do not show the gender breakdown. On average women need care more frequently and for longer durations than men.
The third column shows the acceptance rate by age for people who submit LTCi applications. As you can see the longer someone waits to apply, the more likely it is that they will be declined. The good news is that, once you are accepted, changes in your health do not affect your coverage or pricing. Our average age of purchase is 53.
Topics Discussed in Phone Consultations
Everyone’s circumstances are unique. For this reason, our first step in a phone consultation is to get to know your situation. Some of the questions we ask include – where do you plan to retire, what is your approximate net worth, do you have any self-employed income, and do you have a Health Savings Account. The answers to these questions help us give you the best advice for your situation.
Our LTCi specialists use a consultative approach without sales pressure.
The bullet points on the right describe some of the specific issues we will cover with you. These include comparing traditional vs. hybrid products, discussing what monthly benefit and benefit period would work for your situation, the importance of built-in compound inflation protection and reviewing any possible tax advantages you may have with LTCi.
We will also answer any questions you have related to this subject. And if you think of new questions after the first call, we are happy to talk again.
Schedule a Phone Consultation
From our website you can schedule a no obligation phone consultation. We hold these calls weekdays, weeknights, or Saturday mornings by appointment. Phone consultations normally last 30 minutes.
When you sign up for a phone consultation we ask for your age and state of residence. We use this information to create one page personal price comparison sheets on the top traditional and hybrid products. We email these price comparison sheets to you before the phone consultation.
Thank you for listening to this presentation. We look forward to helping you find your best LTCi.
