Dear Valued Customer,

If you’re wondering if you will need long-term care, If you’re under 55, it’s unlikely. Even over 55, only a small percentage of the population will need long-term care before they are in their 70s or 80s; but it’s important to know the facts.

This issue of the “————” is focused on providing you with the information you need. Read on to see if you should buy long-term care insurance, find out how much it costs, the best age to buy long-term care insurance, and much more.

Please contact us for more information. We have knowledgeable people on our staff who understand long-term care insurance.

We appreciate your continued business and look forward to serving you.

Kind regards,

The fact that you might need long-term care doesn’t mean that you have to pay someone to provide it. Many people who need help get it for free from a relative or friend, usually at home. In a recent survey of people over 50, roughly 90 percent said they expect to be the primary caregiver if their spouse or partner needs long-term care.

But even unpaid caregivers need a break from time to time, or have full- or part-time jobs that prevent them from caregiving throughout the day. If you do pay someone to provide assistance with ADLs, the cost of long-term care depends on three factors – the general level of charges in your part of the country, the specific expense rate for the services you need, and how long the need for care lasts.

In August 2005, the average cost for a month in a semiprivate room in a nursing home ranged from a low of $3,000 in Shreveport, LA, to a high of $9,250 in New York City, according to a survey by the MetLife Mature Market Institute (MMI). A year-long stay translates to $36,850 in Shreveport and $112,400 in New York City.

The MMI also surveyed covered costs of Assisted Living and Home Health Care. In August 2005, the lowest average monthly base rate for an Assisted Living facility was $1,650 in Jackson, MS area and the highest was $4,300 in the Stamford, CT. area.

In August 2005, the lowest average hourly rate for a home health aide was $12 in Shreveport, and the highest was $23 in Rochester, MN. If you need a home health aide around-the-clock, these rates translate to a daily rate ranging from $288 to $552, or a monthly rate of $8,640 to $16,550.

Finally, don’t forget that long-term care costs, like most health care costs, are rising faster than the general rate of inflation. The bottom line? A four-year-or-longer stay in a nursing home could cost $200,000 to $450,000 or more (in today’s dollars). If you can’t pay this out of your own pocket and aren’t poor enough to qualify for Medicaid, you should consider buying long-term care insurance.

Source: Insurance Information Institute, “How much does long-term care cost?”
http://www.iii.org website. Accessed November 24, 2015. http://www.iii.org/articles/how-much-does-long-term-care-cost.html

© Copyright 2016. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.

If you need long-term care services and have to pay to obtain them, what financial resources could you call on? Do you have enough to pay for four or more years in a nursing home, an assisted living facility, or home health care?

If you’re over 65, don’t rely on Medicare or private health insurance. Medicare doesn’t pay for custodial care, and private health insurance rarely pays any of the cost of long-term care.

If you expect to have very little money when you need long-term care services, you might qualify for Medicaid, a government program that pays the medical and long-term care expenses of poor people. If you expect to be in that situation, you probably shouldn’t buy long-term care insurance, because your state’s Medicaid program will pay your long-term care expenses. Buying long-term care insurance would only save the state—not you—money. The exception is if you live in California, Connecticut, Indiana, or New York, states that have a Partnership for Long-Term Care program. For residents of these four states, buying long-term care insurance does offer an additional benefit.

If you expect to have a lot of money when you need long-term care services, you also probably shouldn’t buy long-term care insurance. Instead, you should plan to pay for the care “out of pocket”—that is, as a regular expense. One financial advisor suggested in a newspaper interview that if your net worth is in the $1.5 million range, not including the value of your home, you could safely skip buying long-term care insurance and treat long-term care expenses, if they arise, as you do your other bills.

If you fall in-between these two categories, owning long-term care insurance, like all other insurance coverages, offers peace-of-mind benefits as well as financial ones. For example, a recent survey of people age 50 and over asked how confident they were that they could pay for long-term care services if they needed them. Among those with long-term care policies, 52 percent said they were very confident and another 40 percent said they were somewhat confident. Among those who didn’t own a long-term care policy, only 8 percent were very confident and only 27 percent were somewhat confident.

But if you’re under 85—and especially if you’re under 65—that doesn’t mean you should ignore the topic of long-term care insurance because:

• You might already be unable to buy long-term care insurance. Wakely Consulting Group, an actuarial firm, studied applicants for long-term care insurance in 2003-2004; the findings: 11 percent of applicants in their 50s, 19 percent in their 60s and 43 percent in their 70s were rejected.
• A Milliman & Robertson actuary estimated that 15 to 25 percent of the over-65 age group are uninsurable for long-term care.
• A report from the Henry J. Kaiser Foundation indicates that over five million people ages 18-64 need some type of long-term care.
• The latest data from the National Center for Health Statistics (for 1999) reported that roughly 160,000 of the people living in nursing homes were under age 65 (nearly 10 percent of the total). Of those receiving home health care services, roughly 400,000 were under 65 (about 30 percent of the total).

So, unless you have so little money that you will qualify for Medicaid, or so much money that you can pay the bills out of your own pocket, you should consider buying long-term care insurance.

Source: Insurance Information Institute, “Should I buy long-term care insurance?” http://www.iii.org website. Accessed November 24, 2015. http://www.iii.org/articles/should-i-buy-long-term-care-insurance.html

© Copyright 2016. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.

Long-term care (LTC) insurance pays for services to help individuals who are unable to perform certain activities of daily living without assistance or who require supervision due to a cognitive impairment such as Alzheimer’s disease. According to the U.S. Department of Health and Human Services, about 70 percent of individuals over age 65 will require at least some type of LTC services. There were 46.2 million people age 65 and older in 2014, accounting for 14.5 percent of the U.S. population, or about one in every seven Americans, according to the U.S. Census Bureau. By 2030 the Census Bureau projects there will be about 74.1 million older people and about 88.0 million in 2050.

About 4.8 million people were covered by LTC insurance in 2014, according to LIMRA. In 2015 the average premium for a 55-year-old male ranged from $1,066 to $2,075, according to the 2015-2016 Long-Term Care Sourcebook published by the American Association for Long-Term Care Insurance. For a 55-year-old woman, the premium ranged from $1,400 to $2,411. Based on 2014 buyers, 38.6 percent of new LTC insurance policies were purchased by individuals under the age of 55, and 91.9 percent of buyers were under the age of 65, according to the study. The age of new buyers has been dropping slowly. A decade or so ago the age of the average buyer was between 66 and 67 years old, whereas now the average application age for coverage is 56 years old.

INDIVIDUAL LONG-TERM CARE (LTC) INSURANCE, 2014 (1) Lives Percent change, 2013-2014 Premium ($ millions) Percent change, 2013-2014 New business 131,140 -24% $316 -22% In-force (2) 4,800,000 -1 10,000 1 (1) Based on LIMRA’s Individual LTC Sales survey, representing more than 95 percent of the individual LTC market. (2) Includes estimates for non-participants. Source: LIMRA. View Archived Tables

The number of Americans purchasing LTC insurance in 2014 fell 24 percent from 2013, and premiums declined by 22 percent, based on new business.

THE AGING U.S. POPULATION

The dependency ratio, or the number of people 65 and older to every 100 people of traditional working ages, is projected to climb rapidly from 22 in 2010 to 35 in 2030, according to the U.S. Census. The expected steep rise in the ratio over the next two decades reflects the projected proportion of people 65 and older climbing from 13 percent to 19 percent of the total population over the period, with the percentage in the 20 to 64 age range falling from 60 percent to 55 percent.

PERCENT OF HOUSEHOLDS WITH ONE OR MORE PEOPLE AGE 65 YEARS OLD AND OVER, 2011 State Percent Rank (1) State Percent Rank (1) Alabama 26.0% 15 Montana 26.5% 9 Alaska 16.4 51 Nebraska 23.7 41 Arizona 27.0 7 Nevada 24.3 33 Arkansas 26.3 13 New Hampshire 24.9 28 California 24.7 29 New Jersey 26.9 8 Colorado 20.6 48 New Mexico 26.0 15 Connecticut 26.5 9 New York 26.4 12 Delaware 28.0 5 North Carolina 24.2 35 D.C. 20.2 49 North Dakota 23.4 42 Florida 31.9 1 Ohio 25.7 20 Georgia 21.8 46 Oklahoma 25.3 24 Hawaii 31.4 2 Oregon 25.9 18 Idaho 24.5 31 Pennsylvania 28.1 4 Illinois 24.5 31 Rhode Island 26.5 9 Indiana 24.1 37 South Carolina 26.3 13 Iowa 25.5 22 South Dakota 24.6 30 Kansas 24.1 37 Tennessee 25.2 27 Kentucky 25.3 24 Texas 21.4 47 Louisiana 24.0 39 Utah 19.9 50 Maine 27.5 6 Vermont 25.7 20 Maryland 24.2 35 Virginia 23.8 40 Massachusetts 25.8 19 Washington 23.1 44 Michigan 26.0 15 West Virginia 29.1 3 Minnesota 23.2 43 Wisconsin 24.3 33 Mississippi 25.5 22 Wyoming 22.3 45 Missouri 25.3 24 United States 25.2% (1) States with the same percentages receive the same rank. Source: U.S. Department of Commerce, Census Bureau; American Community Survey. View Archived Tables

Source: Insurance Information Institute, “Long-Term Care Insurance” http://www.iii.org website. Accessed November 30, 2015. http://www.iii.org/fact-statistic/long-term-care-insurance

© Copyright 2016. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.