Long Term Care Protection
Does it make sense for you?
Odds of needing Nursing
Home Care
At age 55, there is a 1 out of 10
chance that you will spend time in a
nursing home sometime in your
lifetime
At Age 65....
43% of all Americans aged 65 or
greater will spend time in a nursing
home during their lifetime
At Age 75...
 There is
a 6 in 10 chance that you
will need nursing home care during
your remaining lifetime.
 Or, we can look at it in terms of
couples...
Source: National Nursing Home Survey
National Center for Health Statistics, 1985
Long Term Care Need By
Couples
 Out
of ten
couples, how
many do you
suppose will have
at least ONE
member spend
time in the
nursing home?
The Fact is....
7 out of 10 couples can expect
at least one partner to use a
nursing home after age 65
Source: Wall Street Journal, April 23, 1990
80% of Long Term Care is
received OUTSIDE OF
NURSING HOMES
Source: “Long Term Care: Diverse, Growing
Population Includes Millions of Americans of
All Ages”, Page 5, General Accounting Office,
November 1994
Why Would You Want
Coverage?





Independence
Assure Quality Care
Choice of Services
Leave Charitable Gifts
Avoid Being a Burden





Stay Off Welfare
Spouse’s Lifestyle
Protect Savings/Home
Pass on Inheritance
Not be Wiped Out
Doesn’t Medicare pay for
Long Term Care?
Medicare’s Requirements
At least a 3 day hospital stay
 Admitted to nursing home within 30 days of
discharge from hospital
 Admitted for treatment of the same
condition for which you were hospitalized
 Medicare approved nursing home

 Skilled
Care only
Medicare’s Benefits
Days
Medicare Pays
1-20
 21-100
All Costs
All Costs over $89.50
per day
Nothing


100+
Based on Medicare Provisions for 1995
Medicare’s Payment History
Sources of 1994 Nursing Home Care Payment
Only 11% of nursing care costs were paid
by Medicare
 89% of nursing care costs were paid by
other sources

Source: “Health Care Financing Review”
Volume 16, No.4-HCFA, 1995
Medicare Supplements
Designed only to supplement the benefits
paid by Medicare on approved charges.
 Generally pays Medicare’s required copayments and deductibles, and only if
Medicare approves the charges.
 Excludes Custodial Care.

Medicare Supplements’
Benefits
Days
1-20
 21-100

Medicare
All Costs
All costs above
$89.50 per day
Supplement
Nothing
$89.50
per day
Medicare Supplements
When Medicare ceases to approve the
nursing home stay, the Medicare
Supplement typically follows suit.
MediCARE Vs MedicAID
Medicare provides CARE for all Retired
Americans
 Medicaid provides medical assistance, or
AID to impoverished Americans, whether
retired or not.
 In order to receive ANY benefits from
Medicaid, you must first meet their
POVERTY LEVEL.

Imagine that you knew you would
one day need nursing home care,
and you visited your local loan officer
with a proposal...
His bank would pay for your long term
care, and at the time of your death,
they would recover all of their money
from any assets in your estate.
Would that be a good deal for
you?
In 1993, the Federal Government issued a
mandate requiring that all states recover all
Medical Assistance payments made to a
recipient from all assets in their estate, at
the time of their death.
 That mandate is called.....

Medicaid Estate Recovery
Have you thought about giving
away your money so you
could go on Medicaid?

Non- exempt assets must be transferred at
least 3 years prior to entering the nursing
home in order to not be considered an asset.
What if you transferred your
money and...
...The person you transferred it to decided
not to give it back when you needed it?
 ...They filed bankruptcy due to bad business
dealings or other problems?
 ...They were sued and lost the money?
 ...What would the gift taxes cost them (how
much of your assets would the taxes eat
up)?

Four Major Financial Risks
Risk
Home Fire
 Auto
 Medical
 LTC

Odds
1 in 1200
1 in 100
1 in 15
1 in 2.5
Cost
Insured?
$0-$250
Yes
$100-500 Yes
$0- 700
Yes
$100,000+ not yet
Source: New England Journal of Medicine
“Lifetime Use of Nursing Home Care”
Kemper and Murtaugh, p. 595
Three Possible Strategies

Strategy #1 - Self Insure- The (your name)
Insurance Company is reponsible for this
risk.
When one of you needs long term
care, can you pay for an average
length of time... about $100,000 to
$150,000...without selling your
home or affecting your lifestyle?
For most people, “self insurance” is
ruled out.
Strategy #2Go On Welfare

...This is what most people end up doing-not because they planned to, but because
they didn’t plan.
Go on Welfare
In order to qualify for Welfare, you must
first meet Medicaid’s level of poverty.
 That means you’ll have to spend any excess
assets on your own care first.

Example of “Spending Down”,
Assuming a $100,000 of
“excess assets”.
At an average cost of $40,000 per year, your
$100,000 would last only 2 1/2 years.
 Remember, if you had additional assets in
excess of what Medicaid allows, you will
have to spend those down as well.

Once all your excess assets
are gone, you could receive
AID...
How do you feel about that?
Let’s consider your alternative...
Strategy #3Transfer the Risk
Assuming the $100,000 is in some sort of
interest bearing investment, part of the
interest could be used to fund the premiums
of a quality plan of protection.
 Your protection could pay for your care for
both of you for an unlimited period of time.

Your money would remain
completely intact....

...and if the premiums were less than the
total amount of interest earned, you could
continue to invest the difference, and your
investment would continue to grow.
Would you have to “spend
down” your additional assets?
That’s right, you would be in a
position to retain all of them.
Welfare Aid? Would you need
it?
You would remain completely
independent!
Welfare or Independence?
If you had your choice, which would
you prefer....AID or COMPLETE
INDEPENDENCE?
Spending Down or Retention?
If you had your choice between
spending down your assets or
keeping them, which would you
prefer?
Liquidate your assets or keep
them?
Would you rather use your $100,000
to pay for your care....or instead,
keep your $100,000...perhaps even
seeing it continue to grow?
Using your $100,000, which
would you rather be able to
pay for?
Short Term Care
or
Long Term Care?
“The Lesser of Two Evils”
Either choice costs money, but if you
had your choice, would you rather
spend all your money on your
care.... or instead keep your
principal and spend some of the
interest on the solution to your
problem?
The only real question that
remains is... how do we best
design a plan that will fit your
specific needs and budget...
isn’t that right?
First, here are the things you
should be looking at in a long
term care plan...
Plan of Protection
Sound, highly rated company behind the
policy.
 Financially strong.
 Commited to Long Term Care protection
 Will be there when you need them.

The Experts Recommendations
Must pay benefits in a variety of settings,
including your own home.
 Full benefits for custodial care.
 Guaranteed Renewable.
 “Activities of Daily Living” benefit trigger.
 Inflation factor very important under age 70
