“Most people would like to age in place, but it’s an impracticality from two points of view: financial and social. When you age at home, all by yourself, you’re isolated and that causes loneliness, and you get depressed and you die sooner. We need to be able to live together, to have closer neighbors. Most of the United States is still rural and people live miles apart, which makes them dependent on automobiles, and when you get to a certain age, you can’t drive, which causes more problems.
“Financially, it’s very expensive to try to re-create home health care for one person: you need two persons for that care: one to do the work and the one to watch over the care. It’s better to live in a congregate area, like an apartment building or independent housing. I find that we are not really equipped in the United States to age at home. Even though home care agencies would like to sell you on that, it’s unrealistic: the (health care) workers often don’t show up, especially on night shifts and swing shifts.’’
Cooper says that until the United States “makes home health-care work a profession, it’s not going to work. Eighty percent of home care is done under the table, especially in the southern states, where it is still a form of slavery. In those states, the workers are told they get free room and board, so they should be available to work whenever they are needed. California passed a law that says you can’t make a home health-care worker work beyond 40 hours per week, even if they live with you. But in Louisiana, Mississippi and Alabama, there is still a lot of labor misuse and the wages are too low. At $15 an hour, you are barely making it and you can’t make it on that in San Diego,’’ Cooper says.
On the road, Cooper says he meets Canadian travelers and the conversation inevitably turns to the Canadian national health insurance system, which Cooper applauds. “In Canada, home health-care nurses and nursing homes are covered under their system. The Canadians are proud of their system and they don’t mind paying for it; they want it! Overall, health wellness is done better in Canada, Britain and Scandinavia than we do here,’’ he says.
Cooper says assisted living facilities emerged in 1981 as “a midpoint between home care and a nursing home. They have the advantage of offering autonomy to residents and on-staff caregivers who can help with housekeeping and taking medications.
He says that assisted living facilities’ monthly fees range from $800 to $3,000 and few subsidies are available. However, health insurance or long-term-care insurance may reimburse certain costs and some states and municipalities offer subsidies for low-income residents. Some residents may be eligible for Supplemental Security Income (SSI) or Medicaid payments.
However, Cooper says that the rising cost of assisted living may require more families to instead choose aging in place, home care or multi-generational housing, all of which have drawbacks.
Long-term-care insurance policies, introduced about 40 years ago, are the newest form of insurance and “the companies that offer it do not really know if the cost models are accurate,” Cooper says.
Because underwriters underestimated the rising cost of insurance and how much longer Americans would live, some companies have reneged on claims, leading to litigation. Some insurers have raised rates as much as 85 to 95 percent, Cooper says.
“Long-term insurance is still a viable option for many, although the number of insurers selling it has declined,” Cooper says. “Avoid purchasing policies from insurers who do not have a solid financial background and check into how many complaints have been filed against them for nonpayment.”
And, long-term care insurance is now restricted to a fixed time period and payout amount (unlimited lifetime benefits are no longer available), Cooper says.
With the turmoil in the long-term care insurance field, hybrid insurance policies have been introduced that are more flexible and promise no rate increases for the duration of the contract, he says. But Cooper warns prospective buyers to check with their financial advisor before buying, because policy details can be confusing.
He provides a chapter on understanding long-term-care insurance, with suggestions on how to deal with issues that affect your choice of a policy, including aging parents; passing on an estate; business succession; choosing between college versus retirement nest eggs; and the impact of lending money.
The 'Shady Acres' Myth Of Long-Term Care
November 30, 2016
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Comments
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Hybrid policy is an available option today but I wouldn’t recommend it because of its limitations. It may seem cheaper but I think that’s just in the beginning. Since its benefits are limited, you might end up paying for more. Paying for nursing homes or other long term care facilities out-of-the-pocket is not recommended because of their high cost. Another problem can also arise and that’s when you zero out your policy. When this happens, you have nothing left for your family in case something happens to you. Long term care insurance is still reliable despite a few issues in the industry. It provides comprehensive coverage, peace of mind and can protect your loved ones from expensive long term care costs. To help you plan for long term care, here are reliable resources you can use: Association for Long Term Care Planning - www.altcp.org/long-term-care-insurance US Department of Health and Human Services Long Term Care Website: longtermcare.gov
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Some insurance companies have had rate increasing on older blocks of Long Term Care Insurance. However this has nothing to do with increased lifespan and almost every claim is paid. First, reason for increasing have to do primarily with low interest rates and low lapse rates. These plans were never priced for the very low interest rate environment we have had for many years. The plans today are priced for the low interest rate environment. In addition, the older plans were priced for much high lapse rates. Today, less than 1% of these policies ever lapse. Underwriting was also less conservative than it is today so claim rates were higher than expected. Most companies have much more conservative and scientific underwriting so they can price health condition properly or decline cover of people with certain health issues which make them much higher than average risk. Most companies in the past did offer “unlimited†benefit coverage which, with a few exceptions, are no longer available. The American Association for Long Term Care Insurance say almost all claims are paid and paid on a timely basis. There have been a few lawsuits, some involved people who were attempting to get coverage on items not in the policy to begin with or who had committed fraud in obtaining the coverage itself. Nobody is reneging on claims. Some companies have never raised premiums. While it is true some companies have raised premiums, the premiums were much lower to start with and even with the increases they are lower than what new plans would cost for the same benefit today. Most plans are NOT fixed time limit … they are, with a few exceptions, pool of money products. If a person does not use the maximum they are entitled to each month at the time of claim they don’t lose the money, it stays in the pool and grows with inflation. Unlimited plans are available in both the traditional market and hybrid market. There is no turmoil in the Long Term Care Insurance field. Business for many companies are up. Business for specialists, like myself, are way up. Requests for information are up even more. Hybrid insurance policies are available but only a handful have traditional benefit triggers. This is a reason to speak with a specialists. Most financial advisors are NOT Long Term Care specialists so they really don’t have a very good understanding of any of these LTC products. Traditional plans are not very confusing and hybrid plans can be more confusing … but a LTC specialist who may place 200 to 300 policies a year or more will have a very good understanding of the products and how they work and the underwriting. You also don’t mention the Partnership Program. These plans, available with traditional LTC policies in most states, provide additional dollar-for-dollar asset protection. Here are some outstanding resources for information: LTC Planning News: includes news stories on health and Long Term Care Planning. It also has videos and website links which I use often: www.longtermcareplanningnews.com. US Department of Health and Human Services LTC site: http://longtermcare.gov. The American Association for Long Term Care Insurance (AALTCI) Consumer and Industry Advocacy Group: solid information: www.aaltci.org
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Jonathan Pond, Financial Planner, says that 90% of estates are spent this way: 1) nursing home 2) IRS 3) children 4) grandchildren 5) charity The Federal Deficit Reduction Act provided for every state to have a Partnership program to provide asset protection for those who buy qualified long term care insurance policies. http://www.partnershipforlongtermcare.com/ An alternative are linked products, Life Insurance or Annuities with long term care riders. In most states you can also use your qualified money (IRA/401k) to fund your plan. http://lifeinsuranceltc.com