Long-Term Care Insurance – A Personal Decision

By Nancy K. Crevier

Mary Beth Olah is hoping that people took time during the week of November 5 to 11, declared Long Term Care Awareness Week by the American Association of Long Term Care Insurance, to find out more about long-term care insurance.

“A few years ago, I didn’t even know what long-term care insurance was,” said Ms Olah. She was working as a licensed physical therapist, and in that position she frequently encountered families trying to care for their aging parents as well as their own children, and struggling to do so. “I saw a lot of crises,” said Ms Olah, who is now a licensed independent long-term care insurance agent in Newtown appointed with Genworth Financial. “I thought I could help a lot more people on a wider scope as a long-term care insurance agent than as a physical therapist,” she said.

As was she not so long ago, many people remain uninformed about long-term care insurance, Ms Olah said. “It’s still a fairly new product, and while more and more people are looking into it, a lot of people are under the impression it is ‘nursing home’ care.”

Long-term care insurance can be used to pay for the cost of a nursing facility, but more than that, the specialty insurance offers people a choice, Ms Olah explained. “More people use this insurance for home care than they do for nursing homes,” Ms Olah said.

The majority of people who have long-term care insurance use it to cover the costs of in-home care and equipment, so that they can remain in their own homes longer.

“People also get long-term care insurance to protect assets,” explained Ms Olah. “With a long-term policy, it is possible to avoid dipping into savings to pay for the costs that come with ongoing care.”

Many of Newtown attorney Paul Lux’s older clients come in wondering if long-term care insurance is a wise route, said Mr Lux. He does not have a pat answer for them and even though he looks at the issue every day, he still labels long-term care of any kind, “A problem. It’s very complex.”

For example, as people age, they may choose to gift their assets to family members. A change in the gifting law in 2006 requires a five-year look-back period to protect assets, though. Many policies that people have are three-year policies, said Mr Lux, so assets given to children that do not fall into that five-year period are not protected.

Long-term care insurance is not as popular as when it was first issued, though, is Mr Lux’s observation. Since 2006 the number of long-term care insurance policies sold every year has decreased, said the attorney. Premium costs are more related today to costs that the insurance companies have to pay out, he said, making them less affordable than when they were first offered to the public.

“The people who have assets of less than $600,000 do not have the means to buy long-term care insurance. People with more than $1 million in assets have enough to take care of themselves. So, the people with assets that fall between $600,000 and $1 million are most likely to look at buying long-term care insurance,” he said. “[A long-term care policy] is a difficult sell.” A newer life insurance product with a long-term care rider that pays a benefit to survivors if the policy holder never uses the long-term care provision may be more beneficial in providing for the future, said Mr Lux, but not all insurance companies offer that rider at this time.

Exploring Options

There are other options for protecting assets and providing for long-term care other than the specialized policies, said Mr Lux, but each case must be considered individually. “It’s a choice people have to make,” he said, but he remains ambivalent about the appropriateness of a long-term care insurance policy himself.

Tom Gutner, president of Ashlar of Newtown, the Masonicare long-term care facility off of Toddy Hill Road, does not yet see a lot of incoming residents insured under a long-term care policy. The average age of a patient at Ashlar is about 86 years of age, said Mr Gutner, and because long-term care insurance is a fairly recent product and can be costly, he suspects that the current generation of elderly did not have the means to purchase long-term care insurance or understand the new product.

“Future generations may be more aware of options that they have when it comes to paying for care in the future,” Mr Gutner said.

For people who have the foresight and means to purchase long-term care insurance, it can help with the cost of living at Ashlar, he said. A private-pay patient currently pays $350 a day at Ashlar. “Long-term care insurance might cover a percentage of that cost for a certain number of days and that can help offset the cost,” said Mr Gutner.

Most of the Ashlar residents get assistance from the State of Connecticut, and Mr Gutner sees where the state would have an interest in promoting long-term care insurance as the population ages.

“If assets are preserved a longer period of time, it would delay patients having to go on state aid,” he said. “Right now, I think it is a matter of education and getting younger people to think about the future.”

Connecticut Partnership for Long Term Care is a new cooperative effort between insurance companies and the State of Connecticut. According to the State of Connecticut Office of Policy and Management, the Connecticut Partnership “is a joint effort by state government and private industry to create an option to help you plan to meet your future long-term care needs without depleting all of your assets to pay for care. Under the Connecticut Partnership, private insurance companies competitively sell special long-term care insurance policies. These policies not only offer benefits to pay for long-term care costs, they also offer Medicaid Asset Protection should you ever need to apply to Connecticut’s Medicaid Program for assistance.”

What that means, explained Ms Olah, is that if a consumer uses the value of their long-term insurance policy on care and still needs additional care, Connecticut Partnership for Long Term Care may help by allowing people to apply for Title 19 Medicaid and still keep the amount of assets the policy had paid out.

Both Mr Gutner and Ms Olah suggest seeking the input of someone skilled in the specialty area of long-term care insurance, as personal situations affect which policy, if any, is appropriate for an individual.

 Long-term care is an area of risk that many eligible people fail to cover, Ms Olah said. “It’s hard to look at long-term care when you are young and healthy.”