In January, 2005, the US Department of Health and Human Services, Administration on Aging, launched a nationwide long-term care awareness program called "Own Your Own Future" to encourage people to better understand and plan for long-term care. This initiative was joined on August 29, 2008, by the American Health Insurance Plans (AHIP), when it launched its own national education campaign.
The government campaign is a joint federal-state initiative to increase awareness among the American public about the importance of planning for future long-term care needs. The core of the campaign is the "Own Your Future Planning Kit," which is available at no cost to the consumer and may be ordered or downloaded from this website.
The above site is a part of the National Clearinghouse for Long-term Care Information, which provides a wide range of information, resources and options, including information on services and financing options. The categories included (with links) are for general information and assistance, resources to assist with caregiving, healthy aging, financial planning, housing planning, and advance care planning. To access, click on Longterm Care Planning Resources.
The centerpiece of the AHIP campaign is a new consumer-friendly website, http://www.mylifemyfamily.com/ . The website provides consumers with basic information about long-term care insurance, along with videos that feature real-life stories, an interactive online quiz, and additional resources on long-term care insurance.
If you are wondering why the subject of long-term care planning has become more and more frequently the subject of newspaper and magazine coverage and appears on a steadily increasing number of websites, including blogs, it is easy to understand when you are aware of three very important facts: At least 70 percent of people over age 65 will require some long-term care services at some point in their lives. Currently, one year in a nursing home costs an average of $75,000. And, contrary to what many people believe, Medicare and private health insurance programs do not pay for the majority of long-term care services that most people need--help with personal care such as dressing or using the bathroom independently. Worse, Congress has tightened the financial requirements to qualify for Medicaid, the federally and state-funded program for those who live at or below the poverty level.
Medicare, for which 65-year-olds are eligible whatever their income, covers long-term care only in a nursing home, and then only for 20 days (with a co-pay after that) following a hospital stay for the same condition. It does not pay for at-home or assisted living care. Medicaid, by contrast, already pays for 44% of total long-term care services, but covers only the indigent. Consequently, if an individual has assets at the beginning of the long-term care period, they must be paid down until the patient meets the rigid qualification requirements: indigent status. Donald Grimes, executive director of Long Term Care Education Specialists, a nonprofit that gets funding from government agencies and insurance companies and educates the public about long-term care, was quoted in the June 2008 issue of Forbes in an article by Carrie Coolidge. He said: "There's a silent epidemic in the US involving hardworking middle-class citizens going broke because of long-term care costs." The article features an elderly couple who ended up destitute after consuming their life savings paying for Alzheimer's care for the wife. They ended up destitute together in a nursing home paid for with help from Medicaid.
But there is another very important aspect of long-term care insurance that most consumers do not know. Most policies provide for in-home care, not just in nursing homes or assisted living facilities. Another important, though little known, provision is for in-home care long before the policy holder has reached old age. As was the case of the daughter of the above cited couple, who purchased long-term care insurance to avoid her parents' fate, in case of an illness or injury that requires a recovery period after a hospital stay, a daily stipend (which varies according to the monthly premium) will be paid for an in-home aide and even such equipment as an in-home hospital bed. Genworth, the largest vendor of long-term care insurance, recently stated that 80% of care is already delivered at home, versus 18% in nursing homes and 2% in assisted living homes. Genworth, like many other insurers, "have gotten more progressive and responsive to the market," according to Shay Jacobson, president of Life Care Innovations, a Chicago geriatrics consulting firm.
Why is it important to act now? The answer is simple and clear: the earlier you start paying for a policy the less the premium, and the easier it is to get coverage. For a 55-year old, an annual premium could be as low as $1,128 for a guaranteed renewable John Hancock policy with a $200 daily benefit to be paid for up to 3 years (or a total of $219,000 in benefits). For an individual aged 65, the yearly premium jumps to $3,948 a year. Neither of these policies has an inflation adjustment. That can add another 65%. Second, it is far easier to find better coverage the younger you are, when you are apt to have fewer ailments. Even what may seem to be minor one to the applicant can cause an insurer to refuse coverage. The insurers do thorough medical checks (with permission), and they carefully screen every ailment for which a doctor has been consulted. For example, even the hint of possible future joint replacement surgery found in records would raise a red flag and could cause denial. In short, the younger the insured, the better chances are for finding coverage at a reasonable rate. Current statistics indicate that only 11% of applicants in their 50s are turned down, versus 57% of those 80 or older. As Ms. Coolidge states, "Once you're in a policy, the insurance company can kick you out only if you stop paying premiums."
Sources: Websites given above; Forbes, June 2, 2008, Investment Guide>Insurance, "Home, but not Alone," by Carrie Coolidge.
