Obama’s new Health Care Law introduced a voluntary national long-term care insurance program which hoped to make Medicaid benefits readily available to those living at home. A National Long Term Care System was created by the Community Living Assistance Services and Supports Act (CLASS Act) in America for the first time. The CLASS Act hoped to make long term care services more affordable in the US.

This new Long Term Care Program was to be funded by premiums collected by the program participants. The premiums ranging in the $100 - $200 for this program was to be collected through pay roll deduction. The main idea behind collecting premiums for this program was to ensure that tax dollars would not be used to fund this Act.

Late 2011 media sources confirmed that this long term care program was shelved because authorities realised that it couldn’t be sustained without using the tax payer money. The CLASS Act, for an affordable premium, guaranteed working adults at leat $50 a day if they became disabled and needed long term care. Health and Human Services concluded that it was not possible to keep this solvent because participation was voluntary.

The main flaw in this program was because it was voluntary, few healthy people would choose to pay a premium for services thay may never need. Without the healthy people paying into the system, it would not be possible to keep premiums affordable for those who wished to participate. What this means is, people most likely needing long term care benefits would be the ones who were going to disproportionately sign up, which would result in more bad risks and not enough good risks in the insurance pool.

Though the CLASS Act failed, it yielded valuable information which will help design a better program in the future. Though it is a very noble idea to have some sort of universal long term care program coverage, the sustainability of such a program requires people to participate in this program even if they are healthy. But this assumption has been one of the most controversial aspects of the law as many feel that it is an unconstitutional use of federal power.
The failure of the CLASS Act does not change the dire need for a program which would make long term care more affordable in the US.

While just having basic coverage when building your Long Term Care Insurance policy is a good place to start, it’s worth while considering adding riders to your plan. As optional riders come with extra costs choose a policy where the following benefits are offered automatically.

The Alternate Care Benefit allows your policy to pay for additional care, services, supplies, treatment and equipment which otherwise were not covered by your LTCI policy. What this means is if your doctor and your insurance company agree that certain items such as in-home safety devices, medical alert equipment etc are necessary for your care, then your LTCI policy will pay for them.

If there is a high demand for nursing homes in the area you live, it becomes necessary to reserve a bed in the nursing home for a certain number of days if you are in the hospital. The Bed Reservation Benefit in your LTCI policy will pay to reserve your bed in a nursing home while you are in a hospital.

Once you begin to receive cash benefits from the insurance company all LTCI companies will waive your premium on all LTCI policies.The Waiver of Premium Benefit ensures that premium will continue to be waived as long as you are on claim.

The Homemaker and Chore Services Benefit in your LTCI policy pays for some form of homemaker and chore services. This benefit pays for a home health care aid who provides services such as cooking and fixing meals, doing laundry and washing dishes, taking the trash out and house work such as mopping and light vacuuming. Such homemaker and chore services are services which will almost always be needed to some degree and it is important to ensure that your LTCI policy pays for such services.

The Equipment and Home Modification Benefit will pay for incidental home modifications such as widening doorways to accommodate a wheel chair, adding a ramp, installing a stair lift to go between levels of your home and adding grab bars or rails in the bathroom.

Many types of proposals have been made to change the long term care financing scene over the last few years. These include the regulation of the private LTCI market, tax subsidies for private insurance purchases and reforms to maintain a role for Medicaid. The last decade has seen a growth in tax subsidies for private long term care insurance.

At the federal level, HIPPA (the Health Insurance Portability and Accountability Act of 1996) maintains that the federal tax benefits for premiums on qualified long term care insurance policies and employer provided LTCI is not counted as taxable income to the employee. Tax treatment at the state level for LTCI premiums differs from state to state. Some states allow individual tax deduction, some allow tax credits while few others allow tax credits to employers who offer group policies.

The after-tax price of LTCI is not affected by state tax incentives because state tax incentives are usually low when compared to federal marginal rates. Because of this some states allow individuals to take only the federal or state tax incentive and not both. By making the Medicaid program more generous the state can influence the demand for private long term care insurance.

Setting Medicaid’s asset and income limits and making Medicaid eligibility requirements more stringent will result in Medicaid becoming a less attractive substitute for private LTCI. Given the fact that only radical reforms in Medicaid will stimulate private LTCI, some states are participating in a “Long Term Care Partnership Program.” Individuals from states participating in this program buying private LTCI will qualify for Medicaid and still be able to protect a higher amount of wealth from the asset test.

An individual from a state participating in the partnership program, buying a private LTCI policy with $150,000 coverage will be able to protect $150,000 of assets and be shielded from Medicaid’s asset test. The purpose behind this partnership program is to increase the asset limits for only those individuals buying LTCI. This makes LTCI more attractive and encourages people to buy private LTCI.

Both private and public sources offer health insurance in the US. A subsidized public insurance offers limited protection against rising long term care costs. The private market for LTCI is small when compared to the high and uncertain long term care expenses.

With rising number of aging baby boomers and increasing cost of long term care services the cost of long term care is expected to triple in the next 30 years. Only 4% of long term care costs are covered by private insurance while one-third of it is out-of-pocket expenses. 35% of all long term care expenditure is met by Medicaid which makes it the single largest public funding program for covering long term care services.

When unpaid informal expenditure for long term care is not taken into consideration, out-of-pocket payments which account for nearly 33% of total long term care costs becomes the second largest source of funding for long term care costs. Over one-third of Medicaid expenditure is already ear marked for long term care expenses and ever increasing medical and long term care costs will only add to the federal and state financial pressure. In order to take the pressure off of Medicaid and state budgets there is an increased interest to expand the private long term care market.

Many are unwilling to choose private long term care insurance even when policies are “actuarially fair” which means premiums paid into the LTCI company equal benefits paid out to the policyholder. This is because of the “implicit tax” nature from Medicaid. This means that a major portion of the premium individuals pay for private LTCI goes towards benefits that Medicaid would have paid in the absence of private insurance.

Medicaid has two sources for this “implicit tax”. First, Medicaid is not the “primary payer”. It is a “secondary payer” which means that benefits from private insurance must be paid first even if the policy holder is otherwise eligible for Medicaid. Second, Medicaid is “means tested” which means private LTCI protects individual’s assests. With Medicaid imposing the 3 to 5 year look back period it is highly unlikely that individuals will spend down enough to meet the “asset test” Medicaid demands.

Relying on incomplete coverage of long term care costs by public insurance such as Medicaid leaves people exposed to extremely high out-of-pocket expenditure. Medicaid leaves about 40% (30%) of long term care expenses for male (female) uninsured. At the same time people are unable to meet long term care expenses over a long period of time because of the eligibility rules of Medicaid.

This results in public insurance crowd-out private insurance even when public insurance itself has limited coverage and exposes one to high risk. Without the reduction or elimination of the “implicit tax’ from Medicaid a change in the Federal and State reforms will not increase the demand for private market for long term care insurance.

As 78 million baby boomers reach retirement age, this population will become a heavy financial burden to the future generations threatening to exhaust long term health care entitlement funds. This aging population will be the largest senior population is US history and will double the previous numbers for seniors. Surveys reveal that 50% of respondents are not aware of the true costs of long term care, are worried about their savings and do not have enough funds to put toward future health care needs.

Most underestimate savings needed to fund future long term care costs. The fact that many current care givers are making their own financial sacrifices is raising concerns among many health care professionals. Aging women and their care takers are faced with four basic challenges which are: lack of preparation, finances, workplace flexibility and the keen desire for independence.

Preparation must happen beyond the personal level. Federal, state and local agencies must work together to help the current care givers and future retirees to ensure that they do not exhaust finances of future generations. A vast majority of individuals participating in demographic studies desired individuals to qualify for Medicaid services without having to spend all personal assets right down to poverty levels.

This can be achieved by creating private-public partnerships which protect personal funds to a specified amount with the purchase of approved long term care insurance. The primary hands-on care givers for loved ones continue to be women. Women who are not currently care givers expect to be providing care at some point in the future.

Many long term care-giver surveys revealed that women support long term care insurance policies which allow seniors to remain in their own homes. They strongly believed seniors should be entitled to stay and receive care as long as possible in their own homes in community based settings. Holding personal assets above the poverty level but still gaining access to Medicaid Services is a tricky solution that may be possible with the purchase of approved long term care insurance in the future.

America’s New Health Care Law introduces a voluntary national long term care insurance program which makes benefits available to those receiving long term care at home. The Community Living Assistance Services and Supports Act - CLASS Act creates a new National Long Term Care Program which is funded by premiums collected from the participants. Premiums will be in the range of $100 - $200 per month paid through pay roll deduction by the program participants. Tax dollars will not be used to fund this Act.

When employers participate employees will be enrolled automatically. However, they will still have the freedom to opt out of the program. An individual will also have the option to directly enroll in the program. Premiums will be based on age and existing health problems will not make one ineligible to apply so long as they have atleast a part time job.

Cash benefits can be received only after you have paid premiums for 5 years. Benefits in the range of $50 to $75 per day can be collected as long as needed or even lifetime after a doctor or a health provider certifies that you need long term care.

For the CLASS Act program to roll out in 2012 the Department of Health and Human Services must create the rules and regulations to govern it prior to 2012. With the additional mandatory 5 year pay in period before benefits can be paid out will make 2017 the earliest date we can see any impact of this program on our nation’s LTC needs. By this time the oldest baby boomer will be well into their 70s. At this point the already overburdened long term care system will need much more than what CLASS Act will deliver.

The program’s $50 to $75 per day benefit covers barely 2 or 3 hours of home care for those receiving care at home. When the annual long term care costs are $50,000 this daily benefit does not go far. Inflation and rising cost of living have not been factored into this program making daily benefits amount insignificant.

There must be enough number of participants contributing to this program for a long enough period to make lifetime benefits available to participants. Not many in their 40s and 50s look forward to pay roll deduction of about $100 - $200 towards this program. The “I won’t need long term care” mentality and the lack of guarantees that premiums will not increase annually will not encourage people to enroll in this program.

America’s New Health Care Law aims to change the Long Term Care system in the country. Its purpose is to introduce a voluntary national long-term care insurance program. The law hopes to make Medicaid benefits readily available to those living at home.

An Overview of the CLASS Act
A National Long Term Care System is created by the The Community Living Assistance Services and Supports (CLASS) Act in America for the first time.

What does it provide?
To help pay for long term care services, this Act allows you to buy Long Term Care Insurance by 2012.  With this kind of system, you will be entitled to receive a basic lifetime cash benefit which can be used to pay for long term care services.

Who is eligible and how does one enroll?
If you have at least a part time job and over the age of 18 you are eligible to apply. If your employer participates you will be enrolled automatically but you will still have the choice to opt out of the program. If you can not be enrolled through the company you work for, you have the option to directly enroll through the government. Existing health problems will not make you ineligible to apply as long as you have at least a part time job. Premiums will be based on age.

What is the rate of premiums?
The program aims to make this kind of insurance within reach to all. $100 would probably be the average Premium through this program. But if the program begins to loose money the government reserves the right to raise the premium. If premiums become extremely high people may not buy it. But those who buy are probably those who need it making premiums go even higher. A discounted premium of only $5 is what a very poor person or a student may pay.

How does one receive benefits?
At least a $50 a day cash benefit as long needed is what this program hopes to provide. You become eligible to receive cash benefits for as long as you need when a doctor or a health provider certifies that you need care. This cash benefit you receive can be used as you desire. This cash benefit may be used to pay family members and/or friends providing you long term care. It may also be used to pay for a wheel chair or to make your home wheelchair accessible. You are eligible to receive benefits only if you have paid premiums for at least five years.

Can one still keep private long term care insurance?
Yes. Insurance companies will offer policies to supplement coverage by CLASS just as Medigap supplements basic Medicare. To compete with the CLASS Act private insurance companieswill begin to offer long term care insurance policies.

Will this program be a success?
Many believe that this program will be a success but many financial institutions believe that less than 6 percent of adults will buy the CLASS Insurance. If this occurs then this fully funded insurance system will turn into just another government entitlement program. Or it could change from a voluntary insurance to mandatory government coverage. The financial burden on Medicaid can only be reduced by a government or private long-term care insurance system.

Your choice of long term care insurance policy coverage, benefit period and ways to minimize your premiums depend on knowing the average stay at an assisted living facility and a nursing home. The average stay for residents in nursing homes is 28 months and 27 months for assisted-living residents. Many receive some kind of long term care in their own homes before or after their stay in nursing homes or assisted-living facilities.

Based on the fact that an average 65 year old today will need some kind of long term care services for at least three years, the most popular Long Term Care Insurance Policy is one with a three year coverage. When there is a family history of Alzheimer’s disease and other such long-lasting conditions a longer benefit period is suggested. More than five years of coverage is needed by 20% of 65 year olds today.

Generally lifetime benefits cost more than two times the premiums of a three year benefit period. A policy with benefits which are ‘short and fat’ rather than ‘tall and thin’ is recommended. A ‘short and fat’ policy with a $200 maximum daily benefit for three years is actually worth $219,000 of long term care. If you use less than the maximum daily value of $200, the coverage gets extended for more than three years.

A 6 year benefit period with a daily maximum benefit of $100 is an example of a ‘tall and thin policy’. You will have to pay $50 out of pocket for every day of long term care if your daily care expense is $150 when you have a policy with only a $100 daily maximum benefit. Benefit periods strongly influence your cost of premiums for Long Term Care Insurance.

Since it is most common to receive care in your own home first, look for a policy with a zero day waiting period for home care but has a longer waiting period for nursing home care. As premiums can increase significantly when you consider lowering the waiting period for all types of care, pay a little extra for a rider to eliminate the waiting period for home care.

Premiums can reduce for a married couple with a shared three year benefit policy when each can use from the other’s benefit period if one needs a longer period than the other. For example, if one needs 4 years of coverage the spouse can use the remaining two years. Keep in mind your unique financial situation, family history of medical illness and your preferences of what kind of care and where you want to receive it when you choose your benefit period.

The ‘waiting period’ in Long Term Care Insurance is the number of days a policy holder must pay for long term care expenses out of his or her own pocket before the insurance policy takes over. This duration of time before the long term care insurance coverage begins to pay out benefits is commonly called the ‘Elimination Period’ or the ‘deductible’. The Elimination Period or deductible works in a similar way as in major medical insurance policies. The main difference is that in a medical insurance policy you will pay a total dollar amount for the initial expenses while in a Long Term Care Insurance policy you are required to bear your own expenses for a specified number of days before coverage begins.

What are the common Elimination Periods?
Elimination Periods vary from company to company and from state to state. The Elimination Period is one of the riders that a policy holder must clearly understand before he buys a policy. Not many companies offer a ‘zero-day elimination period’.

30, 60, 90, 180 and 365 days are some common elimination periods offered today. Policy holders with significant assets of their own choose a 180 or 365 days elimination period. Longer the elimination period, lower will be the cost of Long Term Care Insurance.

How do I choose a reasonable and cost effective Elimination Period?
Elimination Period influences the premium rate for Long Term Care Insurance Policy. Few choose a shorter elimination period while still fewer choose a zero period. With a shorter elimination period a policy holder will have lesser expenses before his/her long term care insurance policy begings to pay benefits.

Shorter elimination periods affect the total premiums you are going to pay in the long run. Those choosing longer elimination periods can save more on insurance premiums. While choosing an Elimination Period it is important not to compromise the cost with the benefits it will give in the long run.

What is the best Elimination Period?
Each individual’s situation is unique. What works for others or many may not work best for you. Consider your own financial situation, your own needs, and your own family medical history before you choose an elimination period. Consider the costs of care and the cost of the facility that you will have to pay out of pocket before policy pays any benefits.

Find out the cost of services and the daily facility care in the institution of your choice. Multiply this number by the different elimination periods. Once you have these numbers, choose the one which is affordable to you.

When you know the best elimination period, begin to secure funds for your out of pocket expenses and for the rest of your care. Allocate savings for your care and make sure they increase in value keeping up with inflation. Check with your agent if your long term care insurance policy will count your stay in a rehabilitation facility and/or Medicare/Medicaid licensed homes counts towards your elimination period.

As the cost of health care facilities, nursing home care, assisted care facilities, adult day care centers keep rising buying a long term care insurance policy becomes an important part of your financial planning. Below are common mistakes to avoid while buying Long Term Care Insurance.

1. Denial should not stop us from planning.
Living in a make believe world where you think that you will never need long term care prevents you from planning for the future. Though we all hope we never need long term care, accident or illness can happen to anyone at anytime forcing us to seek long term care. Working age adults (people between the ages of 18 and 64) constitute 40% of people receiving long term care today.

2. Living on hope is not a strategy, planning for the future is.
Though you don’t have to buy a long term care insurance right this minute, don’t wait too long to just start planning for it. At least find out how much a policy will cost you and your spouse. Find out if you can health qualify and what changes in your health will make you ineligible.

3. Not planning for enough coverage.
Though none of us can predict the exact kind of long term care we will need, it is important to have at least an overall idea of the kind of care we want to invest in. Keep in mind the rising cost of health care and buy a policy which comes with an inflation protection. Your long term care insurance benefits must be on par with rising cost of health care services.

4. Medicaid and Medicare will not cover long term care costs.
All of us desire that our medical bills get paid by someone else. But if you want your financial independence, have the options and choice of the kind of care you want and where and how you receive it, start planning to buy long term care insurance early.

5. Work with a professional long term care insurance agent.
If there is a history of chronic illness in the family look into the option of buying long term care insurance early. How early is too early and how late is too late? Work with an experienced and knowledgeable long term care insurance agent who stays current with the different types of LTCI policies, riders, options, benefit periods etc. and will guide you to buy a policy which best fits your needs.

6. Buy a policy from a reputed company.
Look for a financially stable insurance company to buy your LTCI from. Check for companies which can provide proof of policy payouts and receive high creditworthiness and good rating from standard rating companies based on objectives measures. You want a stable company which is still around to pay your benefits when you need it the most.

The average annual cost of a nursing home stay is not less than $74,000 across the country. But only 10% of Americans over the age of 65 have Long Term Care Insurance to cover this high bill. Long Term Care Insurance Premiums are more affordable than you think.

More than 100 insurance companies sell Long Term Care Insurance. Look into products of a company which has not increased it’s premiums in the last 15 years.  Insurance premium increase must meet state regulatory approval and few companies have a record of stable pricing.

Standard LTCI policies clearly define the types of care they cover and pay only for such services. A policy which offers cash benefit is worth considering. If you would like to use the money as you want, for example use it for in-home care, pay a family member taking care of you etc., then “Disability Model’ policies pay cash for policy holders who qualify for benefits. One of the draw backs here is benefits over $250 per day may be taxed as income.

The premium of your long term care insurance policy is heavily dependent on the age at which you buy the policy. Buying young ensures a great premium rate. If you wait till you are older you are not only taking the risk of higher premiums but you may develop health issues which will not allow you to qualify for insurance. There are attractive and competitive LTCI premiums rates for those who are still in their 40s.

There are insurance companies which offer couple’s discount regardless of whether you and your partner are married. Even unmarried including same sex couples can avail the couple’s discount. When a mother and an adult daughter live together (known as multigenerational cohabitants) they too qualify for a couples’ discount.

When only one partner applies for a policy and qualifies for coverage there are only small discounts available. With a “shared-care” plan married and unmarried couples can save big on premiums. If a couple buys a shared plan of 6 years of coverage and one spouse uses only one year of benefits, the other spouse has 5 years of coverage. This kind of policy where each can tap into each other’s benefits is cheaper than buying two different policies.

Women today can expect to live longer than their maternal ancestors due to their better life styles and being more aware of diseases related to women. Increased longevity also means increased probability of needing long term care. Women’s standard of living and their quality of life as they grow older will be affected by the long term care they will receive.

Traditionally women are the care givers. They give and receive majority of the long term care services to other family members which comes with high costs. At the end of their life time they may need long term care services themselves which again involves high costs.

Women are more likely than men to help aging family members with bathing, dressing and other personal activities of daily living. They often also help out in grocery shopping, cooking meals, doing other household chores and giving medications. Along with all this women may be caring for their own young family and become a part of the emerging ‘sandwich generation” of care givers.

Whether she is a daughter, sister, niece, wife, mother or friend the woman’s care giving role takes a toll not only on her emotions and physical health but also on her finances. Providing long term care for loved ones comes with loss of time and wages at work and missed carrer opportunities. Add to this is the increased strain on her finances because of the additional costs of special medical equipment and home modifications which may be necessary.

There may come a day when she may need long term care services and have no one to provide her with the needed long term care. The ability to finance the required long term care whether in her own home or in a nursing facility and at the same time protect her life savings becomes extremely important. Long term care insurance provides a woman with options to customize a policy which best fit her individual needs allowing her to maintain personal as well as financial independence.

When private insurance companies selling Long Term Care Insurance, state residents who buy these LTCI and the state government collaborate or partner together we have what is known as A Partnership Program. For those who continue to require long term care, such Partnership Programs enable the purchase of a more comprehensive shorter term long term care insurance policies worth while by linking these special policies or Partnership Qualified or PQ policies with Medicaid.

Partnership Qualified policies have requirements which differ from state to state. But generally, most PQ policies are required to be Tax Qualified, offer comprehensive benefits (inclusive of institutional and home services), and provide consumer and state specific inflation protection. In most cases the only difference between LTCI policies sold in a state and PQ policies is the amount and type of required inflation protection offered by each.

The State certifies Partnership policies when they meet specific requirements for the Partnership Program. Individuals selling these Partnership Policies are trained by the State insurance department to understand how these policies work and relate to private and public coverage options.

When you buy a Partnership Qualified policy you are eligible to apply for Medicaid under modified eligibility rules. One such rule includes a special feature called an “asset disregard”. This special “asset disregard” feature allows you to keep assets that would not otherwise be allowed if you wanted to qualify for long term care services benefits which come with Medicaid.

With these policies Medicaid will disregard the total amount of assets equal to the total amount of benefits you would actually receive with your Partnership qualified policy. As these policies come with inflation protection, the amount of benefit you receive can be higher than the benefit amount you originally purchased with the policy. For example if you have a Partnership Qualified policy for a $100,000 benefits and apply for Medicaid when you are eligible, you are eligible to retain 100,000 in assets over and above the state’s Medicaid asset threshold.

In most states the Medicaid threshold is $2000 for a single person and higher for married couples. Individuals and states both benefit from Partnership programs. It allows individuals to pay for the long term services they need while still being able to retain and enjoy their assets. For the state, it decreases the amount spent on long term care services from Medicaid dollars.

When choosing rider options while buying Long Term Care Insurance policy, an Inflation Protection Rider is one of the most important riders to consider. There are four important Inflation Riders for different age groups. Depending upon your age choose one that works best with your Long Term Care Insurance policy.

The No Inflation Protection
For those 80 and older it would be more advantageous to buy as much daily benefit as possible instead of buying inflation protection. So the choice of not buying inflation protection may work best for people 80 and above. Consider buying the highest daily benefit you are able to afford.

Guarantee Purchase Option
The Guarantee Purchase Option comes with no upfront costs. Instead these costs are built in or have a minimal charge which is about 2%. With this rider comes the option to increase the daily benefit value once every two or three years depending upon the contract. The disadvantage of this option is the new age of the insured (every two or three years) influences the cost of each increase. This would be beneficial to people in their 70s.

Simple Inflation
The Simple Inflation Rider allows for an automatic increase in the daily benefit value by 5% every year. But this 5% increase in daily benefit value comes with a 40% - 60% increase to the premium. But this rise in cost of premium results in double the daily value benefit in 19 and a half years. This Inflation Rider is best suited for people in their 60s.

Compound Inflation
Many would agree that the Compound Inflation Rider would be the best option for those under the age of 60. With this kind of rider even though your premium may double the benefits you gain is well worth it. Usually Compound Inflation adds 5% to the daily benefit. In 14 and a half years the daily benefit doubles because the 5% daily benefit increase is compounded annually. It is very common to see compound inflation choices at 3%, 4% or sometimes even linked to the Consumer Price Index.

In all the above options, age plays an important factor in your choice of LTCI and Rider Options. Other equally important factors influencing your choice of LTCI and rider options are your finances, health and family situation.

With advances in medical field and healthier living choices people are living longer. The aging population is increasing and growing number of families are experiencing first hand the advantages of having a Long Term Care Insurance policy. According to media reports the average age of people buying Long Term Care Insurance has changed from 72 in 1990s to almost 58 today. This is due to the growth of Long Term Care Insurance policies, lack of alternative plans which pay for long term care and increased family awareness about LTCI policies.

Growth of LTCI Policies
More than 10-15 years ago LTCI policies were sold as nursing home policies. Long term care insurance policies have evolved over the last few years. Consumers have a choice of comprehensive plans where they can not only choose the kind of care they want but also where to receive this care.  Today’s LTCI policies offer a wide variety of home care, assisted living care, adult day care or skilled nursing home care. Families are able to appreciate the option of their elderly staying in one’s own home and receive the long term care they need.

Fewer Alternative Choices
Medicare, Medicaid and Medigap do not pay for long term care for an extended period of time. Medicare, the Federal Health Insurance program pays only for short term skilled care such as specialized inpatient hospital stays for a limited time. Medicaid, a state based program supplemented by Federal Funds is a welfare program. You need to expend all but $2000 of your assets and meet your state’s poverty criteria to be eligible for Medicaid. The private supplemental health insurance policy which covers some of the costs that Medicare does not cover is Medigap.

Growing Consumer Awareness about LTCI
By 2030 the Baby Boom Generation reaches retirement and the senior citizens population will be nearly twice what it is today. Many families are witnessing the difficulties when aged parents and loved ones do not have a long term care insurance policy. The financial hardship a family can find itself when caring for aged parents and loved ones has forced many families to openly discuss long term care choices and long term care insurance.

Families who have members suffering from cognitive impairment resulting from Alzheimer’s disease are becoming aware of the importance of planning early for the care of their loved ones. More and more families with loved ones needing chronic care to help perform daily activities because of a disability or an ongoing illness are realizing the value of buying LTCI.

The desire to protect one’s life savings has encouraged families to have open discussions about planning for long term care. Involving the family in decisions regarding the purchase of LTCI allows the children to be aware of the benefits of LTCI and be prepared to handle a difficult situation in life. Children in 30s and 40s who are part of such decision making often buy a LTCI for themselves later on as they realize the value of it.

When considering buying a Long Term Care Insurance policy a general rule of thumb is to look for the basic coverage and then add a few additional riders to make the policy best fit your needs. Almost all Long Term Care Insurance Companies offer polices which provide some kind of combined nursing home care, home health care, assisted living and adult day care services. But by offering policies with special features, riders, discounts and expanded benefits, insurance companies differentiate themselves and their products.

Riders are special provisions of the insurance policy which provide additional benefits which make adjustments to the basic contract or policy. A rider can be defined as something added to the basic policy to provide additional benefits at an extra cost. Though riders add valuable benefits to your policy choose the optional riders which are worth the extra cost.

Following are few of the important optional riders to consider:

Inflation Protection Rider
This is the most important rider to keep in mind while buying a LTCI policy. Most plans offer a 5% compound inflation protection or 5% simple or equal inflation protection to ensure that your LTCI benefits are on par with the rising cost of health care services. You do not want to lose purchasing power due to inflation at a time when you need it the most.

Spousal Benefit Rider
With this rider you and your spouse/partner can use each others LTCI benefits. For example if you are married and buy a three year shared benefit policy and you use only two years of benefits, your spouse can use the remaining 4 years.

Home Health Care Elimination Rider
This rider eliminates the deductible or elimination period for coverage for Home Health Care. This rider makes you eligible to receive your home health care benefits on day one of your claim without having to wait out the elimination period.

Non Forfeiture Benefit Rider
This rider guarantees you that you will not lose all your benefits if you stop paying premiums. It allows you to use benefits sum total of the value of premiums paid in the past.

Return of Premium Benefit Rider
If in your life time you do not use any of your long term care insurance policy benefits then your beneficiary will be entitled to receive some or all of the premiums you had paid.

Restoration of Benefits Rider
If you come off claim for 90 days and make a full recovery no longer needing long term care, this rider restores your policy benefits to its original maximum value. For example if your policy has a three year maximum period and you used one year of benefits, this rider will add back the money you used for a year. This makes you have a brand new policy.

For a generation for whom children are not common and stable couples very rare, the aging baby boomers are in need of care support. How the family circle will evolve to the elderly from now until 2030 has been a topic of many demographic and Long Term Care studies. Traditionally it has always been the family circle which provides care for the elderly. In fact 70% of care provided to frail seniors comes form the informal network - mainly the children or the spouse. This is only possible with today’s elderly (parents of baby boomers’) who have more children to care for them and generally live in stable couples.

Very soon the situation will change. Fewer children per couple, high divorce rate, common-law unions and blended families are few factors to note. Add to this better medical care, lower death rate and rise in the average life expectancy rate has led to people living longer. Those couples who have not separated will be living together longer.

Today’s boomers - tomorrow’s elderly - had fewer children. Who will take care of this generation of seniors? Less than 10% of even those who can afford Long Term Care Insurance of this Baby Boom generation have bought LTCI. Millions of baby boomers have not planned for their long-term care. Many will find themselves in difficult situation, without funds to pay for long term care. They will be forced to turn to the public system to help them pay for their long term care.

The need to develop new programs and new ways to help support the long term care for aging seniors is felt more than ever before right now. Designing new support systems for this increasing aging generation is very strongly needed. The public system needs to adapt when informal services have changed. These are the reasons which have forced the government to try a voluntary plan (the CLASS Act) in the hope that at least a small percentage will do some planning. Of course the best choice a baby boomer can make regarding his long term care is to plan ahead and seek long term care insurance.

Medical Underwriting or Health Screening is a process insurance companies use to determine if you are eligible to buy an insurance policy. Different Long Term Care Insurance Companies have varying health screening procedures. Few companies review each patient’s medical records, while few study the records if you are over a specific age and still others conduct a phone or a face to face interview if you are over a certain age when you apply.

Many companies depend entirely on your answers to the application questions and ask you to sign a medical release form if they decide to sell you a Long Term Care Insurance Policy. Few companies may need copies of your medical records when you are buying a policy while others may need it only at the time of claim. If you want to increase your benefits or buy new benefits the company may require additional health screening. The premium you pay for additional benefits in both cases will be based of your present age. The increased cost will be added to your premium.

LTCI companies have different health screening procedures. While you may be denied coverage by one company, another one may accept you. You may not be eligible to purchase a policy if you already:
use long term care services and need help with activities of daily living
have AIDS or AIDS Related Complex (ARC)
have Alzheimer’s disease or any form of cognitive dysfunction or dementia
suffer from Multiple Sclerosis or Parkinson’s or any other progressive neurological condition
have a history of strokes or have had a stroke within the last 12 to 24 months
have cancer which has spread beyond its original site.

The above are the primary conditions that can make you ineligible for buying LTCI. But if you develop any of the above conditions after obtaining coverage, you will still be covered for the care you would need for that condition. After you have been accepted for coverage, your coverage can be cancelled only if premiums are not paid when due or you have received the policy’s maximum benefits.

Long Term Care Insurance Policy Premiums are determined by your age, type of policy you choose, daily benefit amount to be paid, number of years the policy will pay benefits, the number of days after you qualify for the benefits before the company will start to pay benefits, and your choice of inflation protection. Over the years the LTCI premiums can increase. At the time of buying a LTCI policy, the agent should provide you a Personal Worksheet which shows among other details if the company has had rate increases since 1990. This sheet also informs you in which states and by how much the rates increased.

The California Department of Insurance website lists the rate increases for every company that sells LTCI. California passed legislation in 2000, making it difficult for LTC insurance companies to increase future premiums. Beginning 2006, it became mandatory for companies filing for premium increases over a certain amount to offer their policy holders the choice of stop paying their premium and keep the benefits equal to the total amount of premiums already paid. Generally only a small amount of care will be financed by the total amount of premiums you have already paid and just because of a premium increase you were unable to pay, you will not lose all your benefits.

To find out what your options are if your rate increases, contact the CDI online. By reducing some of the benefits of your policy you have the right to negotiate with your company for lower premiums. This option or a similar option may be offered by few companies subject of a class-action law suit as part of the settlement agreement. If you have received notice of premium increase or you need to lower your premium contact your local Health Insurance Counseling and Advocacy Program (HICAP) office online or at 1-800-434-0222.

Long Term Care Insurance Policy Premiums are based on:
• your age
• kind of policy you choose
• daily benefit amount to be paid
• number of years the policy will pay benefits
• after you qualify for the benefits the number of days (if any) before the company will start to pay benefits
• choice of inflation protection.
Some companies will insure you for a higher premium if you have a particular pre-existing condition.

Age is one of the most important factors which influence your Long Term Care Insurance Policy Rates and Premiums. If you are in your mid forties your annual premium can only be a few hundred dollars as opposed to several thousand dollars if you are in your in mid seventies. The cost of benefits you choose is calculated differently by different insurance companies. It is due to this reason that you may see significant differences between premiums for similar benefits.

A simple example a Long Term Care Insurance Company may calculate the premium based on every $10 of the daily benefit you choose. The premium for daily benefit of $100 would be $950 per year, if the company charged $95 for each $10 of daily benefit. A similar package of benefits may cost $150 with another company making the annual premium rise to $1,500.

Your LTCI premium will also be affected by the method and amount of inflation protection you choose. This nearly doubles the cost for those not expected to need care for many years – usually for those in their 40s and 50s. Your ability to change LTCI policy diminishes as you age but your probability of developing health conditions which make you ineligible to apply for new benefits increases.

Keep in mind that LTCI is an investment you hope that the rest of your life is financed by. It is important to buy a policy from an established company with experience in LTC insurance.

With The Tax Qualified (TQ) Long Term Care Insurance Policies you can deduct some or all of your premiums from your federal and state income taxes as a medical expense. Your age, along with your medical expenses which exceed 7.5% of your adjusted gross income (AGI) will influence the actual amount that can be deducted. At your current age, the specific amount you can deduct each year increases by an amount that is calculated by the federal government. Each year your accountant or your insurance company can give you the information regarding your deduction with reference to your LTCI premiums. Benefits received under TQ policies will not be taxed as income.

The Non-Tax Qualified (NTQ) policy premiums can not be deducted from your income taxes. The benefits received under such a policy are also not tax free. However there are other advantages with NTQ policies. The NTQ LTCI policies under the federal law pay benefits sooner than TQ policies and may have more generous benefit triggers. While Tax Qualified policies only pay if you are unable to perform 2 Activities of Daily Living (ADLs) out of a list of 6, NTQ policies begin to pay benefits when you are unable to perform 2 activities of daily living out of a list of 7.

TQ policies require a health care professional to certify that you will need at least LTC services for at least 90 days. This verification is to establish that the LTC needed is not short term and this is not a waiting period before the benefits begin. Your insurance company will still be required to pay any benefits even if you didn’t need care for the full 90 days - except for the duration Medicare paid for your care if any.

There are different ways to buy a Long Term Care Insurance Policies. You can buy it as an individual, as a member of a group or faith-based organization or as an employee or a family member of a person who is a public employee or in the military service.

As an individual you will have to meet all the current Long Term Care Insurance requirements of the state you live and buy your insurance. But if you buy this insurance as a member of a group or a nationwide organization you may not be required to meet the same requirements. Before you buy, find out the details and advantages of buying this kind of policy in your state as a member of a group.

LTC coverage can be available to some through the Federal Long Term Care Insurance Program (FLTCIP) due to their own or family member’s public/federal employment or military service. The FLTCIP is employer based system and does not pay any part of the LTC premium but it has it’s own LTC insurance program. AARP (American Association of Retired Persons) and some private employers and faith based organizations also sponsor their own private LTC insurance.

Most LTC insurance policy purchased in one state will pay benefits in any state. Places where care is provided is different from state to state and how these places are defined can also be different. Often when the time comes to receive the benefits, the care providing places in one state maybe different than in the state where the policy was purchased. If there is a difference regarding how these care giving places are defined between two states, the laws of the state where the policy was purchased will apply.

According to where benefits are paid Long Term Care Insurance Policies can be divided into 3 broad categories - Home Care Only, Nursing Home and Residential Care Facility Only and Comprehensive.

Home Care Only
As the name suggests Home Care Only policies cover care in your own home or a community setting. This type of Long Term Care Insurance Policy does not cover care in Assisted Living Facilities or Nursing Homes. This kind of policy must include benefits for home health, adult day health care, hospice, respite care, personal care and homemaker services.

Nursing Home and Residential Care Facility Only
This kind of policy covers care in a nursing home or any place that provides assisted living care as long as this place is licensed as a Residential Care Facility for the Elderly (RCFE). The benefits of this kind of policy is not the payment for room and board in these facilities. The policy benefits include coverage of all long term care services you receive in either of these facilities upto the policy’s maximum daily benefit amount.

Some of the RCFE include small neighborhood homes also called board and care facilities, retirement homes and specialized community facilities for patients with cognitive impairment (dementia) from Alzheimer. In this kind of policy, the assisted living benefits must equal to at least 70% of the nursing home care benefit.

Comprehensive
The Comprehensive Long Term Care Insurance Policies cover costs rising out of care in a nursing home, assisted living facility, home care and community care (adult day care). Certain requirements mentioned in the policy must be met before the LTC insurance benefits can be paid with this kind of insurance. LTC Comprehensive policies sold by different companies require different criteria to be met. When you are unable to perform two activities of daily living (such as bathing, using the bathroom, dressing eating etc.) or you have a cognitive condition that requires supervision, Comprehensive Long Term Care Insurance Policiy will pay you the benefits. Whether care is provided in a nursing home, at your own home or in an assisted living facility the criteria required for the benefits remains as described above.

Long Term Care is help that is needed to carry out daily activities like eating, bathing, dressing, using the bathroom etc. when you have a physical disability or cognitive impairment. This kind of non-skilled care is not intended to cure you and is not received in a hospital. Long Term Care Insurance pays for costs rising out of long term care services received in your own home, at a nursing home, adult day care or other assisted living facilities. Traditional health insurance, Medicare or Medicaid do not cover costs rising out of such services.

Medicare is the Federal Health Insurance program which aims to provide health services for people 65 or older. It also covers those who have disabilities under the age of 65, suffering from ALS or Lou Gehrig’s disease, or those dealing with permanent kidney failure requiring dialysis or a transplant. Medicare pays only for short term skilled care such as specialized inpatient hospital stays for a limited time only. Some out patient services such as doctor visits, prescription drugs, diagnostic tests and preventive care are covered by Medicare.

Medicaid is a state based program supplemented by Federal Funds which aims to provide health services to the poor and impoverished according to your state’s guidelines. Medi-Cal is the Medicaid Program in California. Only if you meet your state’s poverty criteria are you eligible for Medicaid. In other words you need to expend all but $2000 of your assets. Medicaid is a welfare program.

Medigap also called Medicare Supplement Insurance is private supplemental health insurance policy. It covers some of the costs that Medicare does not cover. It helps pay coinsurance, co-payments or deductibles of costs of services covered by Medicare. There are only 12 standardized Medigap Policies which have the same benefits regardless of which private company sells it to you.

Long Term Care Insurance is discussed in length both in the health care and financial circles. Children born between 1946 and 1964 are known as Baby Boomers. When the last of the baby boomers reach 65 by 2030, 40% of them will live to celeberate their 90th birthday. With increased life expectancy, the chances of needing long term care also increases over the age of 65. At some point in life 70% of people past the age of 65 will need some kind of long term care services.

Most senior citizens live on fixed incomes. They are barely able to keep up with the rising cost of living, mortgages and taxes let alone meet the high and ever increasing Long Term Care Costs . Majority of the seniors desire to spend their last years with dignity and independence in the comfort of their own home.

Many senior citizens have serious medical problems forcing them to rely on family for their daily living activities. Children are unable to care of their elderly parents because they have moved away due to their work or have young children of their own to take care of.

An injury or an accident can happen to anyone at anytime forcing them to seek long term care. Medicare and Medicaid do not cover long term care expenses. People buy long term care insurance to pay for the high long term care costs.