1.  Be proactive and talk (and listen) before an incident occurs.  Do it when as many family members can be there as possible.  A holiday, a birthday, another event when you can all sit down and find out each others wishes and make a list of things to do or research.   The Mayo Clinic has a small section on discussing long term care with loved ones.  It stresses active listening!

2.  Make a Plan.   The previous Mayo Clinic article has some insight into planning, but AGIS.com has a more detailed article that can help you out.   It stresses that the best plans include several elements (think Plan A and Plan B).
But what if an incident has occurred without prior discussions?  Disagreements can easily arise in this situation so some things to keep in mind are:

1.  Is there a spouse involved?  The discussion should start with her/him.  What are their needs and wants for the one in long term care?  How can the family support him/her?

2.  Can the family agree on someone to take the lead?  If you can all agree that one family member can be responsible, then release all the decisions to him/her.  This alleviates the entire family having to come together for each miniscule decision.

3.  Find an attorney who specializes in Long Term Care.  This can be really helpful because sometimes not all the family members understand the issues or the options and an attorney can be an unbiased, third party who can help family members focus on the issues at hand.

4.  Always remember that the relative in long term care should be first in every decision.  You want the best care for this individual without putting undue strain on the family!

Other reasons cited in the article were “physical abuse, choking on food, medication errors, neglect of basic care hygiene, and failure to provide assisted mobility”.

Click here for the full article from the Annals of Long-Term Care.

Senior Care and Information

Geriatric Care Management

All About Dementia

A full list of the health blogs available in the community can be found at:

http://blogs.healthcare.com/wp-list.php

LTCD:  In your book, you talk about the 5 Foundational Features of Long Term Care Insurance Policies. Could you tell us a little about each of these?

Scott Olson:  Sure. The first is "care settings": In which settings will the policy pay benefits for qualified care that you receive?  There are 3 main types of policies:  Home Healthcare Only, Facility Care Only, or Comprehensive (which is a combination of the two).  When looking at policies, make sure the care settings are what you want and that you are comparing apples to apples. .

The second Foundational Feature is the Daily Benefit.  How much will the policy pay for each day that you receive qualified care?  When comparing policies, make sure you understand how much of the Daily Benefit is available for each care setting.  Some policies may pay a smaller percentage of the Daily Benefit for care that is received at home or in an assisted living facility.

The third Foundational Feature is the inflation benefit.  This is the most confusing part of a LTCi policy.  There are 3 different ways to structure the inflation benefit:

1. No inflation benefit – the Daily Benefit never grows.  It remains the same for the life of the policy,
2. Future purchase option—you have a limited right to periodically increase your Daily Benefit.  When you choose to increase your Daily Benefit you do not have to prove that you’re still healthy. When you choose to increase your Daily Benefit, your premium will go up because you are buying additional coverage,
3. Automatic Inflation Benefit—your Daily Benefit automatically grows each year by a certain percentage which you choose when you purchase the policy.  The automatic increases in the Daily Benefit each year do not make the premium go up.  There are many different types of Automatic Inflation Benefit.  The most common are 5% Compound, 5% Simple and 3% Compound.  In my book I include a chart that compares how the different types of inflation benefit impact the Daily Benefit over a 30 year period.

Word of caution:  One of the biggest mistakes people make when comparing policies is comparing a policy with a Future Purchase Option with a policy that has an Automatic Inflation Benefit.  A policy that gives an "automatic option to increase" is not the same as a policy with an Automatic Inflation Benefit.

The fourth Foundational Feature is the Benefit Period.  How long is the policy designed to pay benefits while you qualify to receive benefits?  It is sometimes described in terms of dollars, sometimes in terms of years, and sometimes in terms of days.  It is similar to, and sometimes referred to as, the "Lifetime Maximum Benefit".   The most commonly offered Benefit Periods are 3 years,  5 years, or Lifetime/Unlimited.  A 3-year Benefit Period means that if you use up all your Daily Benefit each day, your policy would run out of benefits after you’ve been on claim for 3 years.  A Lifetime/Unlimited Benefit Period means that the policy could never run out of benefit. 

This is easy to understand but hard to decide because it requires some prognosticating. This can be very subjective.  One way that I try to make it more objective is by having my clients approximate their future net worth at retirement and choose a Benefit Period that will approximate that figure.  A policy with a starting Daily Benefit of $200 and an 8 year shared Benefit Period, would have a starting Lifetime Maximum Benefit of $584,000 ($200 x 365 x 8 = $584,000).  That Lifetime Maximum Benefit would grow each year according to the Inflation Benefit chosen.  If this couple chose a 5% Compound Automatic Inflation Benefit, then the $584,000 would grow every year by 5% compounded growth (e.g. the Lifetime Maximum Benefit would grow to $951,274 within 10 years.)

The fifth and last Foundational Feature is similar to a deductible, and is called the "Elimination Period".  It is the number of days that you receive qualified care before the policy will start to pay benefits.  As with any insurance, the higher the deductible, the lower your premium.  The most common Elimination Periods that are offered are 30, 60, or 90 days. 

To read more on the Five Foundational Features, check out Scott’s book by clicking here.

The guide is available for download at http://www.nrmla.org/digitalassets/Catalog.aspx.  It’s located on the bottom of the page under all their other audio downloads.  All the other downloads are Reverse Mortgage specific, but I think that this guide might be interesting to the readers of this blog since it gives a "comprehensive overview of the many Medicaid and the National Aging Services Network services" which are "available to seniors through federal and state government agencies".

With that said, the article continues by saying that most Americans are sorely behind in their savings for retirement.  The statistics they reported indicated that 36% of working Americans over the age of 55 have less than $25,000 in retirement savings.  Not enough to retire on let alone if there is a major health event.   Health care costs rise faster than even inflation does.  So this means that even if inflation has been taken into account for retirement plans, a major health event could still suck those savings and retirement funds faster than planned.

The article was even more pessimistic when it talked about Reverse Mortgages as an option for retirement.  It mentioned Yale economist, Robert Shiller, as beleiving that home prices could possibly decline by 30%.  Wit this scale of decline, there is no equity left to do a Reverse Mortgage.  Downsizing is all that is left…

This artilce seemed all doom and gloom.  We all see the problems out there…has anyone seen someone with solutions?

I think that this is a great way to promote ways for Seniors to live independently, but I have a few questions about how they are doing it.  Senior Independent Living Month isn’t in a month for them, it runs from May 15th to June 15th.  That seems like half of two months - why not just pick a month like every other cause out there?  They are promoting this by partnering with the National Association of Homebuilders, Rebuild Together,  and the National Committee of Grandparents for Children’s Rights (NCGCR) for different publicity events.  These are some GREAT organizations and they should have some good success with them, but I find it VERY interesting that they aren’t trying to partner with National Aging in Place Council (NAIPC) who has their own annual event in October called National Aging in Place Week.

I guess if they can bring more publicity to the issues of long term care, who is going to provide it and who is going to pay for it, I’m all for it.  We’ll see what kind of press they get…

There was only one line that I would take contention with though.  He writes that "If you are under 59, you are too young to shop for long-term care."   So many factors go into whether or not you will need Long Term Care that the decision to "shop" for it really needs to be on a case by case basis.  It never hurts to be informed in your 40’s or 30’s for that matter…especially if your family history indicates you may need Long Term Care earlier than your 60’s.

But with that said, Darras breaks down different types of insurance nicely (directly from his press release):

LIFE INSURANCE

• Leaves our loved ones financially secure, in the event of a tragedy
• May not be necessary if no one depends on you for income, financial support and you have enough money for burial and funeral expenses
• Have a reliable second party listed on your policy so they can be notified if you miss paying a premium
• Make sure you have ‘waiver of premium’

DISABILITY INSURANCE

• Get disability coverage when you’re young
• Consider "own occupation" policies
• Beware clauses limiting coverage to 24 months, after that, requirements change and you could be denied coverage
• Understand the ‘limitation on benefits’
• Group disability coverage from work does not protect you and it’s taxable

LONG-TERM CARE

• If you are under 59, you are too young to shop for long-term care
• If you are older, understand what services long-term care policies cover and who provides the care
• Make sure the policy allows for care: in your home, by a family member or friend, in the home of a family member, in an adult care service facility, in an assisted living facility, a hospice facility or in a nursing home
• Understand the terms: custodial, intermediate and skilled care