Consider the do's, don'ts of long-term care
By: Amos Goodall, Jr.
Baby boomers' parents are now needing additional health assistance or skilled nursing care as boomers themselves approach retirement. They are beginning to understand the importance of planning, with long-term care insurance as one important tool.
This insurance generally provides financial assistance at home, an assisted living facility or nursing home. It pays a benefit to chronically ill individuals who cannot perform a certain number of daily living activities (i.e., bathing, dressing, eating, transferring, toileting, continuance), or who have a severe cognitive impairment, such as Alzheimer's or another form of dementia. The benefit may change depending on whether they're at home or in a facility.
Another alternative is the purchase of a life care contract from an economically stable continuing care retirement community.
There are four general options to consider:
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Save money to pay for the care, hoping it will be enough;
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Plan to qualify for public benefits such as Medicaid;
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Hope the federal government finally will enact a long-term care program; or
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Purchase a long-term care insurance.
Long-term care insurance gives the peace of mind of knowing that there will be resources, and it maximizes available choices. In investigating this, consider the following dos and don'ts:
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Don't wait too long to buy. With an estimated 50 percent risk of needing care, a young age should not be consideration. Forty percent of all long-term care expenses are incurred by people ages 18- to 64. When people wait, they may no longer qualify because of health conditions or it may be too expensive.
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Do purchase a sufficient daily benefit. In Pennyslvania, a semi-private room averages more than $200 per day. A policy with inadequate benefits will require the use of personal funds to fill in the gaps.
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Do understand the "waiver of premium" feature. Typically, once the insured is receiving benefits from the insurance company, the premiums on the policy are "waived." If recovery is made, then premiumswill resume.
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Do consider policies with an inflation rider. The cos of long-term care insurance continues to increase faster than inflation. Recently, the cost of care has risen 7 percent annually, and the insurance companies are offering policies with riders that provide protection. Whether to use simple or compounded inflation protection usually can be determined based on the age of the purchaser.
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Do consider purchasing a "paid up" policy. A policy's premiums usually rise. A "paid up" policy no longer required a premium once the insured reaches a certain age or after a given number of years.
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Don't forget to notify your tax preparer. Some premium payments are be tax deductible.
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Do consider, if you are a business owner, using your company's checkbook to pay the premiums. Greater tax benefits are given to business owners.
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Don't worry about unused benefits. Some people fret that they may die without needing the policy. With some companies, individuals can purchase a "return of premium" rider which, upon death of the insured prior to the age of 65 years, pays ack premiums on most policies after 1o years of policy ownership, less any benefits paid.
These are just a few factors to consider when selecting long-term care insurance. choosing the right policy can reduce family stress and give you greater control over your future care. Given the sector's complex law and frequent regulatory changes, it's best to work with an experienced insurance professional. Goodall & Yurchak has a handout which will assist you in understanding available choices at www.centrelaw.com/pdf/1.pdf.