The statistics on long-term care tell the story.  Over age 65, almost 70% of people will need some form of long-term care.

 The experiences of family and friends tell even more poignant stories about long-term care – the emotional roller coaster and the cost of paying for long-term care – at home or in a facility can add stress and strain to an already difficult time for which few of us are prepared.

Long-term care insurance is one way to mitigate some of the risk of long-term care costs that can easily reach $80,000 or more per year. Yet, I’ve heard many people say out of hand – I just can’t afford it.  That response is often based on myth rather than fact.  So what do people really pay for long-term care insurance? 

New research from the American Association for Long-term Care Insurance (AALTCI) helps consumers put the costs in perspective.  Over a third of recent buyers of long-term care insurance paid less than $1499-per-year, according to the report. 

AALTCI 2010 Report:  What People Pay For Long-Term Care Insurance

Premium Amount           Under Age 61           Age 61-75         Age 76 And Older

Less than $500                2.0%                        0.2%                 0.9%
$500 – $999                   26.1%                        9.5%                 9.8%
$1,000 – $1,499              15.4%                      11.3%               11.4%
$1,500 – $2,499              24.1%                      31.6%               19.5%
$2,500 – $3,499              11.8%                      20.7%               24.0%
$3,500 – $3,999                3.3%                        6.4%                 6.8%
$4000 and Over                 6.0%                       14.9%              28.2%
Source:  American Association for Long-Term Care Insurance (http://www.aaltci.org) analysis of data based on individual Partnership policy sales, June 2010

Of course, averages are just that and none of us are average.  So you really need to speak with someone who understands long-term care insurance and can help guide you through selections on how much of the risk you want to cover and how much your health and family health history play in what you think the future need for long-term care might be.

 An increasing number of people are purchasing coverage for part of the potential risk.  For example, if the daily cost of care in your state averages $200, you choose to purchase a policy for $100 per day recognizing you’ll cover the rest of the cost of care out of your savings.

 People are also purchasing shorter term policies, for example almost 30% of people purchasing individual policies in 2009 chose a benefit period of 3 years.  

Below are three tips from AALTCI for saving money when you purchase long-term care insurance 

1.  Leverage Your Good Health:  Insurers will require you meet certain health qualifications to obtain coverage.  Discounts are provided to those in good health and 62 percent of applicants between ages 40-49 qualified in 2009.  The percentage drops to 46% for ages 50-59 and only 38% for ages 60-69.  Once obtained, the preferred health discount is not lost when your health changes.  

2.  Right-Size Your Coverage:   Some long-term care insurance is always better than none.  Factor in other sources of income such as Social Security, pension and 401k plans that can pay costs and allow you to add money-saving options such as a 90-day deductible (Elimination Period) or consider a limited-pay plan with a Shared Care option that allows two spouses to share a common benefit pool.

 3.  Compare Coverage:   Each insurer establishes its own rates, health standards and available discounts.  As a result, virtually equal protection from two highly-rated insurers can vary by between 30 and 80 percent.   Ask your insurance professional if they have access to policies from just one or from multiple insurers.

When you look at long-term care insurance, remember there is no one “right” plan.  It depends on your individual circumstances and resources.  Yet, looking at what others are purchasing can help provide some perspective.  And always compare prices and benefits at two or three diffferent companies. 

Resources:

AALTCI

Long-term Care Quote – easy way to compare rates on long-term care insurance

It’s the kind of research about Medicare and aging that makes you scratch your head.  Yet the finding is critical to retirement planning and estimating your costs for Medicare and long-term care. 

Healthy retirees actually face higher total health care costs over their remaining lifetime than the unhealthy, according to new research conducted by the Center for Retirement Research (CRR) at Boston College and underwritten by Prudential Financial.

So before you run out for ice cream, beer, steak – whatever else you’ve dropped from your diet to stay healthy – think about why the costs are higher. They are pretty compelling reasons to keep up with the healthy lifestyle. but also plan for the increased costs of a longer life.

The Center for Retirement Research study cites reasons the healthy incur higher lifetime health care costs than the sick:

1.  People in good health can expect to live significantly longer, and therefore are at risk of incurring health care costs over more years.

2.  Many of those currently free of chronic disease will succumb to one or more such diseases.

3.  People in healthy households face an even higher lifetime risk of requiring nursing home and other long-term care than those who are not healthy, reflecting their greater risk of surviving to advanced old age, when the risk of requiring such care is greatest.

So, the good news is if you are healthy you’ll probably live longer.  And, the reality is that as the years go by a chronic medical condition will increase your health care costs and make it more likely that you will need long-term care assistance.  

For example, an 80 year old can expect to spend one-third of their remaining life suffering from one or more chronic diseases.  That will likely lead to higher out-of-pocket expenses and long-term care costs.

So what do you do with this information?  The key message is don’t put off purchasing insurance – like Medigap insurance or long-term care insurance – because you are healthy today. 

It’s an easy trap to fall into.  Feeling so good about your health today, it’s hard to think about a time when you are older and not so healthy.  So you put off the decision to purchase insurance.  But, then you discover that you can’t buy the insurance when you need it – that’s the nature of insurance.  Insurance is about protecting yourself from future risk that may or may not happen.

The researchers put it this way: “Individuals who wait until their health declines represent a particularly bad risk because they incur higher medical costs than the healthy, at least in the short run, and also pay fewer years’ premiums.  Therefore, households that do not buy Medigap when they first join Medicare run the risk of facing substantially higher premiums, as do household of any age that postpone buying long-term care insurance.”

So if you’ve been putting off purchasing Medigap or long-term care insurance because you are healthy now.  This research is a new way to look into the crystal ball of the future  – and the likelihood of needing health care should send you Medigap and long-tem care insurance shopping. 

Resources: 

“Does Staying Healthy Reduce Your Lifetime Health Care Costs” Center for Retirement Research at Boston College  

How to Cut Health Care Costs from Longevity Alliance

Put two baby boomers in a room and get them talking about family issues and it won’t take long to get to concerns about long-term care.  But, odds are they haven’t talked with their spouse, or siblings or parents about the topic.

 Why are we so hesitant to speak with family members about long-term care? 

New research gives us some insights into why we behave the way we do about this topic of long-term care which, the statistics say, will impact more than two-thirds of us after age 65.  

 First, to confirm we don’t talk about long-term care, new research sponsored by Genworth Financial says:

 * 92% of people have not discussed long term care with their spouse

* 95% of parents have not discussed long term care topics with their adult children

* 96% have not discussed long term care with their parents

 What’s stopping us?  Those surveyed said they were concerned about upsetting their family members by bringing up the topic. 

Anyone who has been in a long-term care crisis or caregiving situation can tell you that having information about preferences and resources would have made their family responsibility a whole lot easier.  Upsetting, no.  Comforting, yes.

So as part of your retirement/financial/life planning, make a pledge to start letting your family members know about your long-term care plans.  Don’t you have any?  Then, why not start today to think about your long-term care plan. 

Start with these three questions – then spread the word: 

1.  What long term care options would you prefer most?

2.  What are the roles and responsibilities of different family members for managing care if it is needed?

3.  How will you pay for each of your long term care needs if it becomes necessary?

 Resources: 

Longevity Alliance Long-term Care Quote 

Let’s Talk – resources and video about long-term care  

Medicare and Long-term care information

Control, choice and independence are what we want as we age.

Research reports confirm these are high priorities.  Yet, we often fail to plan and take the steps necessary to have a better chance at living out our life in the way we want.

Take, for example, new research that shows 1 out of 4 will need someone else to make end-of-life medical decisions for us.  And where people had the right documents in place, their wishes were carried out according to family members interviewed as part of the survey.

The study, published in the New England Journal of Medicine, concluded that advance directives – living wills and health proxies chosen to make end-of-life decisions – are “important tools for providing care in keeping with patients’ wishes.” 

If concerns about legal fees are the reason you are putting off getting these documents in place, you don’t need a lawyer. You can download copies free at caringinfo.org. The documents are state specific. If you’ve moved to a new state recently, this is a good time to update your advance directives.

For those with life threatening health conditions, like cancer, you might find this information from the National Cancer Institute helpful in understanding the role of advance directives.

Another way to preserve choice, independence and control is to have a plan for long-term care and know how you will pay for that care.   An estimated two-thirds of people over the age of 65 will need some form of long-term care.    

Since Medicare generally does not pay for long-term care (custodial care helping you do things you can no longer do for yourself), you will need to pay for care yourself, spend down your assets to qualify for Medicaid, or count on family and friends.  Long-term care insurance is one way to shift some of that financial risk to an insurance company.  Whether or not long-term care insurance is right for you depends in part on your health, your financial situation and your age.  Make sure you speak with someone knowledgeable about long-term care insurance who will customize policy benefits reflecting your situation and always get insurance quotes from 2 or 3 companies since they can vary widely.

Planning for long-term care and end-of life is something many of us put off…until later.  But having the right documents and plans in place can be a great benefit to your family.  

And it gives you a better chance of knowing “ I did it my way.”

Helping your parents?  Here’s an article from the Baltimore Sun on documents you need to help  your parents with their finances.

Longevity Alliance Retirement Risk

 The closer you get to retirement, the more you see how big a bite healthcare cost can take out of your retirement savings.  So how do you plan and what are the biggest risks in figuring out your healthcare costs from age 65?

 A new research report from the Center for Retirement Research at Boston College tackled these questions and came up with some recommendations. 

First, let’s take a look at what you can know and plan for in retiree health care:  Medicare Part B, Medicare supplement and Medicare Part D, Medicare Advantage or retiree health insurance premiums; co-payments for what insurance does not cover; and services that are not covered such as dental, eye glasses, hearing aids.

So where is the risk?  Co-payments for Medicare-covered services and payments for non-covered services, including long-term care costs.   Long-term care costs are the BIG potential risk.

So here are the facts on long-term care.

* It’s generally not covered by Medicare ( a maximum of 100 days)

* About one-third of people turning 65 in 2010 will need at least 3 months in a nursing home

* 24% of those people will need more than a year of long-term care

* 9%  will need more than five years of long-term care 

 Of course what you can’t know is which one will you be.  And there’s the risk. 

The research took data and applied various chronic diseases to the impact of health care spending after age 65.  Here’s what they found: 

At age 65, a typical married couple free of chronic diseases can expect to spend $197,000 on remaining lifetime health care costs.  There’s a 5% chance that number could exceed $311,000.  Those costs do not include long-term care.

Include long-term care costs in the calculations, the typical costs increases to $260,000 with a 5% chance that the costs will be more than $570,000.  Most of us don’t have that kind of money set aside for health care costs in retirement. 

So what do you do?   Here are three questions the report recommends you ask yourself as you ready for retirement: 

1. What risk are you prepared to accept of having your assets substantially depleted by health care costs? 

2  Given your current health and family history, are you above or below the average risk of incurring exceptionally high healthcare costs? 

3. Should you insurance against health care costs by purchasing long-term care insurance? 

If you take the step to look at long-term care insurance, Longevity Alliance recommends that you consider whether you want insurance to cover potentially all your long-term care costs or whether you are willing to share –paying some of the costs yourself and having an insurance policy that will pay a portion.  That strategy can lead to more affordable long-term care insurance rates.

Resources:

What is the distribution of lifetime health care costs from age 65? Center for REtriement Research at Boston College

Longevity Alliance – Insurance products and solutions to make a longer life better

Long-term Care Quote — online quotes for long-term care insurance

The Social Security Administration expanded its list of diseases that qualify for expedited processing including early-onset Alzheimer’s.  The addition of 38 new conditions means that “tens of thousands of Americans with devastating disabilities will now get approved for benefits in a matter of days rather than months and years,” according to Commissioner of Social Security Michael J. Astrue.

Among those who will be eligible for speedy action on their applications – known as Compassionate Allowance– are people diagnosed with early-onset Alzheimer’s and mixed dementia. About 200,000 people in the U.S. are thought to have early-onset Alzheimer’s, according to the Alzheimer’s Association. 

Compassionate allowance is a way of quickly identifying diseases and other medical conditions that clearly qualify for Social Security and Supplemental Security Income disability benefits.  It allows the agency to electronically target and make speedy decisions for the most obviously disabled individuals. 

“The diagnosis of Alzheimer’s indicates significant cognitive impairment that interferes with daily living activities, including the ability to work,” said Harry Johns, President and CEO of the Alzheimer’s Association.  “Now, individuals who are dealing with the enormous challenges of Alzheimer’s won’t also have to endure the financial and emotional toll of a long disability decision process.” 

It is estimated that about five million* Americans suffer from Alzheimer’s disease, and about 360,000 people are newly diagnosed every year. Alzheimer’s affects about 10 percent of people ages 65 and up, and the prevalence doubles roughly every 10 years after age 65. Half of the population ages 85 and up may have Alzheimer’s. 

The new Social Security process begins March 1. Here is a checklist from the Alzheimer’s Association on how to apply for Social Security disability and Supplemental Security Income Benefits for early-onset Alzheimer’s. 

Go to this Social Security website for more information on Compassionate Allowances and a list of the 38 new diseases eligible for the program.  The Alzheimer’s Association has information here that is a bit easier to understand.  

A reminder, too, for those with long-term care insurance with a diagnosis that impacts two or more activities of daily living — contact your long-term care insurance company as soon as  possible after the diagnosis.  This will provide you with clear information about your policy coverage and help you plan for future care.  If you are qualified, it may also trigger the creation of a care plan and beginning of the count on elimination days (your deductible). 

If you have a history of Alzheimer’s in your family, you might want to consider purchasing a long-term care insurance in your 40s or 50s to cover some of the potential costs of care – whether at home or in a long-term care facility.compassion

Here are three frequent responses when the issue of long-term care planning comes up:

 1. It won’t happen to me (Get me that crystal ball and I’ll use it to pick stocks too!)

 2. I don’t want to think about it (Who does? But statistically it probably will happen)

 3. My children will take care of me. (Do they know?)

So, here comes some new information that may alter your thinking about excuse #3:

Employees in the U.S. who are caring for an older relative are more likely to report health problems like depression, diabetes, hypertension or heart disease.

That costs employers an estimated $13.4 billion per year, according to a MetLife Study of Working Caregivers and Employer Health Care Costs.  And some of those health care costs are borne directly by the employee, as well.

So, to put it bluntly, taking care of you may cost your children their good health.

Here are some additional findings:

* Employees providing eldercare were more likely to report fair or poor health in general.

 *Younger caregivers (18-39 years old) demonstrated significantly higher rates of cholesterol, hypertension, COPD, depression, kidney disease, and heart disease compared to non-caregivers of the same age.

* Caregivers tend to skip their own preventive health screenings such as mammograms.

* Caregivers are more likely to miss days of work and are often forced to switch from full-time to part-time to care for their elder reducing their income and losing health care coverage.

 * Eldercare may be closely associated with high-risk behaviors like smoking and alcohol consumption.

While eldercare is usually considered an older worker (50+) issue, this survey shows the heaviest health toll is taken by those ages 18-39.  This report doesn’t go into the financial toll it can take as well on the caregiver who often delays their own retirement saving while they care for their elder.

The report calls on employers for better coordination of wellness and eldercare programs, more work time flexibility and stress reduction seminars, among other benefits.  “They need solutions so they can be healthier and perform better,” said Gail Hunt of the National Alliance for Caregivers.

But, this report is also a wake-up call to anyone thinking that having their adult children care for them as they age is a long-term care solution with no consequences.

It’s good reason to put a long-term care plan in place for when you need it and to figure out now how to finance your long-term care, whether through your own assets or long-term care insurance or some combination.  

That way your children can lend a hand and emotional support as needed and preserve their good health.

If you worry about the cost of long-term care, but are concerned about the cost of long-term care insurance, maybe you’re looking at the wrong insurance company. 

Costs can vary by as much as 60% from one insurance company to the next for the same level of coverage, according to a recent study by the American Association for Long-Term Care Insurance (AALTCI).  That’s why experts recommend you get quotes from 2-3 insurance companies before you make a decision. 

It’s particularly important to shop up-front for long-term care insurance since you are unlikely to change insurance companies once you purchase. Because the rates are based on your age and health when you apply, it seldom makes financial sense to switch carriers after you’ve held the policy for several years – very different from say, auto insurance which encourages you to save by switching.

 What age is the best time to buy long-term care insurance? That all depends on your particular situation, but the study found that over half of the individual applicants are between the ages of 55 and 64, and one third purchase a daily benefit of between $100 and $149.  Most opt for an inflation growth rider that increases the potential pool of benefit dollars each year helping the policy keep pace with health care costs. 

What’s the cost of waiting to buy long-term care insurance? The cost analysis priced typical coverage for individuals ages 55 and 65. The study reports that a married individual age 55 purchasing $172,000 in current protection will pay about $20-a-week ($1,084-per-year) by qualifying for available good health discounts. By waiting until they are age 65, they’ll likely pay $63-a-week ($3,275-per-year) because costs increase with age and one must buy more coverage to keep pace with inflation the report concludes. 

Costs vary, of course, depending on your health, age and the level of coverage you purchase.  A specialist in long-term care insurance can help you determine the right options for you to consider in building a policy that meets your needs. 

You can find more information about long-term care insurance and get quotes online from a choice of companies at Long-term Care Quote from Longevity Alliance.

One out of three adults is a caregiver.  Are you? 

If not today, chances are you will be in the future.  Or someone will become a caregiver providing care for you.  That is the reality of our aging society. 

A new study on caregiving is a somber reminder that while it may be rewarding to give back, caregiving has an emotional and financial impact on everyone involved.  It’s one of the reasons it is so important to have a plan for long-term care – who provides care, how it will be paid for, where it will be provided …and the list goes on.  But first…

 …here are the facts*:

 1.  The average caregiver is a 49 year old female.  The average age of the person being cared for is 69.

 2.  The top reasons for needing care are: old age, Alzheimer’s/confusion, cancer, mental/emotional illness, heart disease and stroke. 

3.  A majority of care is provided  for basic activities (activities of daily living) – getting in and out of beds and chairs, getting dressed, bathing showering, incontinence, and feeding.

 4.  Most caregivers also help with other tasks such as transportation, housework, grocery shopping, preparing meals, managing finances, taking medication and supervising paid services.

 5.  Caregiving lasts an average of 4.6 years.

 This is a task that few of us are prepared for and it almost always begins with a crisis.

So one of the best things that you can do for your family members is to think through how you want to when you can no longer care for yourself.

 Read our article on Five Truths about Long-term Care

 A well-documented plan with the right legal documents in place, funds identified for long-term care assistance –whether through long-term care insurance or your own savings, and a sense of where you want to receive care (at home, an assisted living facility you have identified etc.) goes a long way to helping your caregiver make the right decisions for you.

 This time of year calls to agencies on aging increase.  A visit home or a family holiday gathering can leave you suddenly aware of signs of aging and concern for safety.

So while you tackle the issues for your family member, do yourself and your family a favor, face up to the issues of longevity and get a long-term care plan in place.  

 Having your long-term care plan in place is a great gift.

Resources

*Caregiving in the U.S., the National Alliance for Caregiving, in collaboration with AARP and funded by the MetLife Foundations.  

Caregiver information from the US government

Long-term Care Insurance Information

National Alliance for Caregiving

Longevity Alliance

November is Long-term Care Awareness month so there are lots of new surveys: how much we don’t know or deny about our future need for long-term care; long-term care statistics; what long-term care costs; how long-term care gets paid for…and the list goes on.

There’s good reason we don’t like to think about long-term care since it marks a time of less independence and decreased independence.  Everything about our culture promotes youthfulness and activity.  So thinking about a time when there are things you can’t do for yourself – well, we naturally put it off.

But you shouldn’t and here’s why.

If you know anyone who has faced –or you yourself-have faced –finding long-term care for a family member or friend, the reality is all to clear.  Long-term care is expensive and it can disrupt not just family routines and dreams, but financial independence for you and your loved ones.

And by the way, while we think about long-term care mostly as aging related, the fact is that  about 40% of long-term care is provided to people under the age of  65 — accidents and disabling health conditions can happen at any age.

It’s also evident that our not-so-healthy lifestyle may be catching up with us and expanding the need for long-term care. A new study from the David Geffen School of Medicine at the University of California-Los Angeles found that people ages 60-69 report more disabilities than in past years.  Those in their 70s showed no change in disability rates.  Only those in their 80s showed improvements in disability over time. While the research didn’t pinpoint the reason for the increases, the researchers say that is likely obesity that increases stress and strain on the body that leads to increases in disability.

So, what are the implications?  Here are three to think about.

1. First, from a health perspective, the increases in disability should be a wake-up call to live a healthier lifestyle.  Diet control and exercise should be a regular part of our life at any age.  Staying healthy helps stay independent.

 2. Caregivers – there aren’t going to be enough of them if this trend continues as baby boomers age. That means the costs of long-term care assistance, whether at home or in a facility, will increase simply because of supply and demand.  That also means the potential to place a burden on your family for your care increases if you don’t have the financial resources to pay for it.

3. You should have a plan for long-term care and a way to pay for it. For some people long-term care insurance is the right solution.  For others, relying on families and friends and the government may be the only solution. One of the best things you can do for yourself is to get familiar with the realities of long-term care:  what Medicare does and does not pay for (mostly does not); what the cost of care is in your area today; and who you’ll want to help you through these decisions when the time comes. You owe it to yourself and your family to have a plan in place and have talked with family members about your long-term care wishes.

The five most common reasons for a long-term care insurance claim, according to the Association for Long-term Care Insurance, are Alzheimer’s Disease, stroke, arthritis, circulatory issues or injury.

You probably know someone who can tell you exactly what it means to be faced with long-term care needs and make decisions in a crisis (usually not a very pretty story) and you may know others who have the all the right documents in place and have provided guidance on their preferences when the time comes. Talk to them.

Here’s an article from the Huffington Post that captures one family’s story and another from the Orange County Register.

So, this holiday season do your family a favor.  

Get a plan in place for long-term care.  Learn more about long-term care insurance if you think that might be the right choice for you.  Have a discussion with someone in your family about what you want when the time comes for long-term care.  If you have a financial adviser, talk with them about a financial plan for long-term care. If you’re really serious about not wanting to burden your children, this is one of the greatest gifts you can give them.

 Share your long-term care story and advice.

Resources:

Government long-term care information   

Cost of Long-term care by state from MetLife

 Long-term Care Quote – insurance quotes from a variety of companies