Bear with me. I will be brief.
Long Term Care Insurance is intended to pay for help doing things you have trouble doing for yourself
These things include:
· Bathing
· Dressing
· Cooking
· Eating
· Pooping
· Getting Around
Or, your mind has generally turned to aspic (a French word for beef flavored Jello) and you can’t do anything but stare at that damn squirrel outside your window.
Notice that screwing is not on the above list. The inability to get it on is not the insurance company’s problem. Also not included are sailing, snowboarding, mowing the lawn, shoveling snow, and dancing to the sounds of Room Full of Blues. Smoke ‘em while you got ‘em. Do them while you can.
Now, some of what follows will be redundant with the previous posting on “10 Things You Should Know About Long Term Care Insurance.” Doesn’t hurt to mention them again – I know how your memory is.
The following is an outline of the terms of the policies that my wife and I took out when we were in our early 50’s. We will talk later about the finer points to consider when purchasing a policy. We will also explore each of these benefits in more detail in subsequent posts. The choices available to you in these areas will have a substantial impact on your ability to age with grace and dignity. Stay with me on this.
What does our policy cover?
Here is a list of each of the benefits covered by our policy.
1. Privileged Care Coordination
2. Home Care
3. Respite Care
4. Caregiver Training
5. Equipment
6. Nursing Home
7. Assisted Care Facility
8. Bed Reservations
9. Alternate Care
Privileged Care Coordination: This is the feature that sold us on our policy. This is a fancy way of saying that the insurance company will assign a LICENSED health care professional to coordinate whatever help we need for the things we need help with. Here is why it is important to us: WE HAVE NO IMMEDIATE FAMILY TO TAKE CARE OF US. And, some of our friends may be reluctant to help with the bathing, dressing and pooping issues. We wanted to make sure that we had some help lined up before we have that aspic problem I mentioned above.
This Privileged Care Coordinator, or PCC, will meet with you, with your primary care physician, and others to determine what services are best for you. You will jointly present a Plan of Care to the insurance company. All other benefit payments will depend on this Plan of Care – if it ain’t in the plan, it is generally not covered. The PCC will find those services, negotiate the costs, fill in claim forms, monitor your needs. You will want to feel that you can trust this person.
Home Care: These are services that you receive at home, to help with the list of things you need help with, performed by professional care providers. Important Note: This does not include Hospice Care. More on Hospice in a later posting.
Respite Care: This is short term care intended to give an unpaid caregiver (such as a spouse, relative, friend, volunteer) a break. As fascinating as you are, and as hard as it is to believe that anyone would not want to spend every minute of every day with you, your unpaid caregivers will want time for themselves, to go to the Bahamas and to get over the urge to smother you with a pillow.
Caregiver Training: If you have an unpaid caregiver, the Insurer will pay to train them on how to get you in and out of bed, deal with medical issues, or handle those awkward tasks no one wants to speak about.
Equipment: This includes pumps, ramps, grab bars, stair lifts, etc. Not covered; artificial limbs, teeth, or anything placed IN your body. Go ahead and get the penile implant now, because the insurance won’t pay for it. Also, not covered if it is something that will substantially increase the value of your house.
Nursing Home: Nursing homes provide 24/7 nursing care under the supervision of a real nurse. They are licensed by each state. The LTC Insurance Policy will pay for your room and board, but not drugs. Or cigarettes. Or scotch. A rehab center is not a Nursing Home. Neither is your boat or house.
Assisted Care Facility: These also provide 24/7 service but without the nursing care. These are also licensed. A rehab center is not an Assisted Care Facility. Neither is a nursing home, hospital, your boat or house.
Bed Reservations: Lets say your goddaughter and her husband invite you to visit them on their boat in the Bahamas. For a whole month. And, they agree to help you with the things that have caused you to reside in a Nursing Home or Assisted Care Facility. They are SO thoughtful. The Bed Reservations benefit will pay the cost of holding onto your “bed”, or room, until you return. Even godchildren have their limits.
Alternate Care: This is anything else not otherwise covered, provided the Insurance Company agrees. Examples: in-home safety devices, other in-home equipment, medical response devices (“Help, I’ve fallen and I can’t get up!”), Meals on Wheels. If it makes it into the Plan of Care, it will be covered.
How much will the insurance company pay?
The insurance company is betting that your premiums plus the investment income on that cash will be more than they will pay in benefits. It is called the Profit Motive. It is a good thing. But it does mean that the insurance company is not inclined to pay for everything. That is why they put limitations and maximums on their liability.
The detailed terms of the benefits listed above will determine what qualifies and what does not. In our policies, it is pretty clear. Not a lot of jibba jabba, just plain English, so don’t be afraid to read it.
But there are two really important limitations: How much they will pay in any given month, and how much they will pay over the rest of your life. Later we will get into the actuarial statistics of how much you are likely to need. In the interim, here is what our policy says.
I was 53 years old when I bought the policy. At the time the policy was issued, my maximum MONTHLY benefit payment was $5,000. This amount would increase by $250 per year to cover inflation. I picked a fixed amount for the increase (5% of the original benefit amount) rather than a compounded percentage increase each year. I don’t remember why – probably because the premiums were lower (I have been know to be “frugal”). My maximum LIFETIME benefit payment was $240,000, increasing by $12,000 per year, same logic.
So, 5k a month. $240k total. Later we will look at how figure out the right amount for you, based on how likely you are to need certain types of care, for how long, at what kind of monthly cost. Hint - Make sure you have enough benefit payments so you do not need to give up the cigarettes and scotch to cover your costs. Well, OK, give up the cigarettes. In fact, give them up NOW. Sorry, I don’t mean to preach, but GIVE THEM UP NOW. I MEAN IT. (I feel better now.)
So, what happens when you have spent your life-time maximum and the insurance company is no longer interested in you? You are on the hook for the balance. And if you have no cash or assets with which to pay the bills for a Nursing Home or Assisted Care Facility? We will talk about Medicaid later. Stay tuned.
How much is all this going to cost me?
Here is the bottom line. For me, a healthy male, aged 53, married, non-smoker, no major illnesses, no major disabilities, reasonably good ticker, only a few controllable bad habits – annual premium cost is $1,000. My wife pays slightly more because, well, frankly, she is worth more. And she is likely to live much longer.
But here is the most important thing you must know about Long Term Care Insurance:
BE PREPARED TO PAY PREMIUMS ON TIME FOR THE REST OF YOUR LIFE!
That’s right, you heard me. Our policy requires us to continue paying premiums for as long as we live. If we don’t pay premiums, the policy will lapse. Not a good thing. This is a life long commitment.
Now that I have your attention, here is the critical exception: Under our policy (this may vary by policy, so READ the damn thing), once I am in a Nursing Home or Assisted Care Facility, premiums are waived and those benefits will continue until I reach the maximum lifetime benefit, or until I leave (dead or alive). But remember, if I am in one of those facilities, it must be in the care plan prepared by the PCC. So don’t piss-off your PCC.
Other Stuff you should think about
There are lots of other little twists and tid-bits in an LTC policy that make interesting reading. Like, what happens if the insurance company needs to raise premiums (ours have not been increased yet, but stay tuned – I don’t trust those bastards), how do you demonstrate that you really need a benefit, what qualifies as Home Care, what if I move to Costa Rica, etc. We will cover some of this minutia in later entries.
That is what a typical LTC policy looks like. Not as complicated as you thought, huh? And not as expensive ($1,000 a year is only $83 a month, or $19 a week). But, how does this look when you compare the accumulated premiums you are likely to pay over time versus the value of the benefits you are likely to receive? We will look at this in a later post. Stay tuned.
For those of us without a family safety net, this is an important component of our plan to survive growing old. This, and stockpiling enough wine and scotch to make it through.
Michael
Michael
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