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Because of the almost daily advances of medical science, we Americans are living much longer. But, unfortunately this increased longevity is frequently accompanied by debilitating diseases such as arthritis , stroke, Alzheimer's and just plain frailty . Thus, Long-Term Care is a rapidly growing part of health care that we must plan for if we want to avoid a potential financial crisis. Large and modest estates are being depleted by Long-Term Health Care costs which Medicare and Medicare Supplement policies do not cover. |
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1. SPEND ASSETS OF ESTATE: If a couple doesn't care about leaving estate to at-home spouse, children, relatives or charity, this is a viable option.
2. CARE BY CHILDREN: Daughters in the past have been the primary caregivers. Today, parents and children often live far apart. It is a financial fact that most women have to work outside the home in order to create enough family income. Daughters are generally no longer available as caregivers. Also, many parents reject the thought of being a burden to their children.
3. CARE BY SPOUSE: If there is a spouse, he or she is often not physically able to provide the needed care on a long term basis (Bathing, Toileting, Moving & Dressing).
4. MEDICARE AND MEDICARE SUPPLEMENTS: Pays for a short recuperative period in a skilled unit of a nursing home following a hospitalization, 95% of residents are in custodial care which is not covered.
5. MEDICAID (MEDICAL ASISTANCE): It is the safety net for those who need it. It was designed to help those who have no appreciable assets, or who exhausted their assets paying for their Long-Term Health Care.
6. FEDERAL LONG-TERM CARE INSURANCE:
The bad news: The Federal Government has repeatedly said that there is no chance that they will assume this annual expense of $100 billion to $200 billion/year .
The Good News: The government position is that if you want to protect your assets and income for your spouse and children, the Federal Government (and the State of Wis.) will subsidize your purchase of Long-Term Health Care insurance by allowing you a income tax deductions for Long-Term Care Insurnce premium paid.
In August of 1996 Congress passed the Kennedy-Kassenbaum Health Insurance Act, effective January 1,1997 which:
- Allows Long-Term Health Care premiums to be included with all other un- reimbursed medical expenses in itemizing on your federal tax returns .
- A bill with bi-partisan support is currently pending in Congress that will allow a straight deduction from reportable income for LTC health premiums. This is much more advantageous than the present itemization benefit. Wisconsin has a straight deduction for Long-Term Care premiums.
- In 2001 Congress passed legislation that makes LTC insurance available to 20,000,000 Federal and Military personnel , their spouses, parents, spouses parents and retirees on a voluntary basis.
- A John Hancock-Metropolitan joint-venture has been selected as the exclusive carrier for this Federal program.
- Our agency, Senior Care Insurance Services Inc , is the marketing agency for the state plan with John Hancock.
7. INSURING AGAINST THE COST OF LONG-TERM HEALTH CARE:
LONG-TERM HEALTH CARE IS A FINANCIAL RISK. WE HAVE DEALT WITH FINANCIAL RISKS (FIRE, AUTO, HEALTH AND LIFE) BY INSURING AGAINST THEM (SPREADING THE RISK AMONG MANY). INSURING AGAINST THE EXPENSE OF LONG-TERM HEALTH CARE IS ESTATE CONSERVATION.
WHAT IS THE COST OF INSURING?
There are many options and factors affecting the rate, but a range would be between $1,000 and $2,000 per year, depending on age, health and benefits. Also there is a spousal-partner discount of 30%. ASK YOUR SELF THESE QUESTIONS :
- Do I want to plan for my independence being able to select type and location of my Long-Term Health Care?
- Do I want to make sure I'm not an emotional and financial burden to my children?
- Do I want to provide financial security for a spouse? An inheritance for children, grandchildren or charity
- Would I be eligible for Medical Financial Assistance (because of minimal assets and income)? Later, my spouse? If eligible for Medical Assistance, do we realize that our estate must repay the state for this assistance at our deaths, prior to distribution to our heirs? (Federal and Wisconsin Law)
WHEN SHOULD I PROTECT MY ESTATE AGAINST LONG-TERM HEALTH CARE EXPENSES?
MANY SENIORS ASK THIS QUESTION.
My answer is that if you want to assure your future Long-Term Health Care, be sure that you maintain your independence and have assets you want to protect, you should do it as soon as possible for the following two reasons:
1. It takes more than premium dollars to purchase Long-Term Health Care Protection. You must be medically insurable . Many seniors wait too long and become uninsurable. You will never be more healthy than you are today.
2. Economically you are much better off by purchasing your Long Term Health Care as soon as possible, as the following illustration shows.
| Year of Purchase |
Purchase
Age |
Daily
Benefit
Purchased* |
Annual
Premium |
Years to
Pay Premium |
Total Cost to
Age 85 |
| 2008 |
55 |
$150 |
$1327 |
30 |
$39,810 |
| 2013 |
60 |
$191 |
$2052 |
25 |
$51,300 |
| 2018 |
65 |
$244 |
$3390 |
20 |
$67,800 |
| 2023 |
70 |
$311 |
$6305 |
15 |
$94,575 |
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*For every year that you wait to buy, the cost of care goes up by 5% compounded annually. Thus, you must purchase more daily benefits and you are a year older. That is why the annual premium is so much more every 5 years in the above chart. |
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