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Long Term Care - A primer

 No one should make a decision on whether or not to buy Long-Term Care
(LTC) insurance on the basis of this short summary of what is a very 
complicated field of insurance. The purpose of this article is to make 
members aware of some of the things they should know about LTC insurance
policies. It cannot be emphasized often enough that persons interested
in this kind of insurance protection should read the reference material
available to them before shopping for any policy and should very carefully
read and understand any policy they may subsequently be interested in.

Another thing to bear in mind is that there is a good possibility that 
a government administered program may be passed into law for federal 
employees and annuitants or for people generally and this may affect 
the way benefits are "packaged" and offered. 

As in any insurance purchase,carefully check to see that companies you 
may deal with are reputable and licensed. The office of the Florida 
Department of Insurance can advise you about this. ( 1-800-342-2762) 
Do not let yourself be pressured into a quick decision.

Persons who need care 24 hours a day by medical professionals need 
Skilled Care. This is the category of care customarily provided in a 
hospital setting following some kind of medical procedure, such as 
surgery. Those needing professional, supervised care for some period
during each day need Intermediate Care. This is the category of care 
generally needed following release from the hospital and may be provided
in your residence or during a short stay in a nursing home. 

But, those needing personal help in performing 1or 2 of the 6 activities
of daily living(ADL's - bathing, eating, dressing, toileting, continence
and transferring) or suffering impairment of thought, memory or orienta-
tion may need Custodial Care. This is often provided in the nursing home
setting and is the big ticket item of LTC. If this category of care can
be arranged at home or a place such as an adult care center it may be 
much more comfortable for the patient and will cost much less. 

Here are some of the things to consider when looking at policies offering
protection against costs of LTC: 

1. Do not fail to disclose any existing medical condition if applying
for a policy. Failure to do so could later void the policy.

2. Renewability. In Florida, all policies are to be guaranteed renewable.

3. How long will your coverage last? Expect a limit, such as 4 years 
in a nursing home and 2 years lower level care. Note that this will vary
from policy to policy. 

4.Daily Benefits. "Ball park" figures for benefits are $100/day for skilled,
custodial care and $50/day for care at home. But, look to see what other
benefits might be offered. You may not begin to receive benefits immediately.
Some policies will have a "waiting period" of up to 180 days during which 
you will pay expenses. So, note what the Elimination Period is in any policy
you are looking at. Medicare may pay for up to the first 90 days depending 
on the reason you have been admitted to a nursing home. It will also pay for
a certain period of care at home under the same conditions. Look carefully 
at the Premium waiver provisions of an LTC policy. Be aware that you may be
required to continue premium payments after you begin receiving services and
benefits. How long do you continue paying premiums before they are waived
and is there a limit to the waiver period? Companies have to offer Inflation
Protection whereby benefit levels would increase by a small percentage each
year until a maximum level is reached. Remember, inflation protection 
is an option. If you want it, make sure it is in the policy but then under-
stand that your premium will increase significantly. In putting together the 
package of benefits and the level of coverage you desire remember, the more
comprehensive the policy is the more it is going to cost. Providing inflation
protection, for instance, can almost double the premium. 

Look at these figures for annual premiums for one person from the Florida 
Department Of Insurance. 
    AGE        BASIC POLICY ONLY    POLICY WITH INFLATION PROTECTION 
     65              $1,526                    $2,871      
     75              $3,945                    $7,262  
     85              $7,615                   $12,646  

If you are looking at a policy with premiums dramatically lower than this 
example it would be wise to review the conditions of that policy carefully. 
Thus, if you are looking at LTC insurance, you have to give very careful and
informed thought to answer the two big questions: 
   (1) Do I need it? And , (2) Can I afford it?

Getting  complete and reliable figures about LTC and its cost is limited.

Statistics for predicting the probability of your entering a nursing care home
vary somewhat depending on the source. But, here are some "bottom line" 
conclusions from the National Association Of Insurance Commissioners, a body
of state insurance regulators with the primary responsibility to protect the 
interests of consumers. The risk of needing nursing home care is greater for 
women than for men and the need for such care increases with age. Two out of 
three people who turned 65 in 1990 will either spend no time in a nursing home
or will spend less than 3 months in one. (For details of available statistics 
see the references listed below and others that can be found in libraries and
on the Internet) The national average cost of nursing home care will be in 
the neighborhood of $38,000/year whereas 6 hours of care a week, in your home 
would amount to about $8,400. The kind of premiums you can expect to pay has 
already been mentioned. If, as some experts say, you should not spend more than
5% of your income on LTC insurance then your income should be in the neighborhood
of $60,000 in terms of buying average coverage  - and this is probably starting
at age 65. This means a premium of $250 a month. ( See below - Florida Department
Of Insurance)  Thus, the purchase of LTC insurance may be most appropriate for
people with substantial income or considerable assets they desire to preserve.

In conclusion, it should be emphasized that the decision to purchase Long Term
Care insurance should be made on the basis of careful study of the subject using
the many reference materials available, free of cost, some of which are listed 
here. 

The purpose of this article is not to recommend for or against the purchase of 
LTC insurance but to help you begin to become acquainted with a very complicated 
subject in view of the several pending pieces of legislation pertaining to it.
References 1. Medicare Supplement And Long-Term Care Insurance, 1998-99, The Florida Depart- ment Of Insurance, 200 E. Gaines St., Tallahassee, FL 32399-0323 (Free) 2. A Shoppers Guide To Long-Term Care Insurance, Revised 1996, National Association Of Insurance Commissioners, 120 W. 12th St., Suite 1100, Kansas City, MO 64105-1925 (Free) 3. Guide To Nursing Homes In (North/Central/South) Florida, 1998, Agency For Health Care Administration, 2727 Mahan Drive, Tallahassee, FL 32308 (Free) 4. www.fdhc.state.fl.us For information via the internet, just enter Long-Term Health Care on your favorite Search engine and start searching.
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