The Definitive Guide to Long-Term Care in 2020
This is the ultimate guide to Long-Term Care (LTC) in 2020.
And let me be clear about something:
This is not a post in which I try my hardest to
sell you Long-Term Care Insurance.
Yes, I'll cover LTC Insurance and how it can be a viable solution to the problems that Long-Term Care can represent.
But our main goal is to help you come up with a plan for how you would handle a Long-Term Care event.
If you are tired of marketing half-truths and pushy salesmen, you'll love this guide!
What is Long-Term Care
Will the Government pay for your Long-Term Care?
Long-Term Care Rate Increases
Long-Term Care Discussions with Family
Types of Long-Term Care Insurance
LTC Insurance tax advantages for Individuals, Business Owners and Companies
Cost of Long-Term Care
Long-Term Care Partnership Programs
Putting Your Plan Together and FAQ
What is Long-Term Care?
At it's core, Long-Term Care is help with everyday activities that relate to personal care. There are six main categories that are usually used to define the main Activities Of Daily Living (ADLs):
Using the Toilet
Caring for Incontinence
Inability to control bowel or bladder functions. Inability to to care for catheter or colostomy bag.
Moving into and out of a bed, chair or wheelchair
What else does Long-Term Care help with?
Many times, someone who needs help with the above ADLs will also need help with other aspects of life. Some of the most common are called Instrumental Activites of Daily Living (IADLs) and they include:
Food Prep and Cleanup
Shopping for Food and Clothing
Using the phone
Taking Care of Pets
Responding to emergencies like fire alarms
The bottom line is that a Long-Term Care need can disrupt your ability to preform some of the most basic activities of life. It can represent a major life change and disruption. How well you and those close to you respond to this event will depend, in part, in how well you have prepared for something like this to happen.
Long-Term Care Discussion with Family
What are the chances I will need Long-Term Care? Why do I need to discuss this with my Family?
If you turn 65 today you have a 70% chance of needing some type of Long-Term Care. When length of care exceeds one year it averages 3.7 years for women and 2.2 years for men.
(Government Source: https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html)
The most important take away from these statistics is that you need to consider Long-Term Care when planning for your future.
You need to have discussions with your family on how you will handle a Long-Term Care event, especially if you think they will be the ones providing some type of care.
Since Long-Term Care can involve such comprehensive care, it is important that your family talk about and think through what helping someone with the activities of daily living would involve physically and emotionally as well as the cost of time and money for the one providing care. We will look at this a bit more in our next chapter.
Is it feasible for family to provide Long-Term Care.
Can your family afford to quit their job to take care of you? Do they have other responsibilities that would preclude them from caring for you full time? Are they physically able to help with activities such as transferring? Do they live close and if not, are they willing to move? Are they emotionally strong enough to provide care and see you at your weakest point?
Care is not always full time, so the question of feasibility depends on the situation. Nevertheless, it is important that you and your family consider their lives to see if they are both willing and able to provide care. Maybe they can provide some care, but full-time care would be to much. It is a discussion you need to have.
Do you want family to provide care for you? Can you afford to pay for care? Is LTC insurance the best option? Many people would prefer others to provide care if possible.
Self-pay, LTC Insurance and family care all need to be evaluated to see which works best for you.
Talking with your family is a great first step in being prepared for a future Long-Term Care event.
Cost of Long-Term Care
Long-Term Care can be very expensive. Especially when a nursing home is needed. Consider that certain long-term care needs can be over a decade, especially in the case of Alzheimer and dementia.
Here is a chart that summarizes the average prices in Atlanta now and in 20 years. The prices almost double assuming a modest 3% inflation:
You can use this "Cost of Care" calculator here:
Cost in Time
Long-Term Care can be time intensive for the caregiver. Someone who needs LTC will many times need someone with them or available at all times. They are called activities of daily living for a reason, you do them every day.
What does this mean for you family?
Can your family afford to quit their job to take care of you?
Do they have other responsibilities that would preclude them from caring for you full time (children, pets, spouse, hobbies or other commitments)?
Do they live close and if not, are they willing to move?
Care is not always full time, so the question of feasibility depends on the situation. Nevertheless, it is important that you and your family consider their lives to see if they are both willing and able to provide care. Maybe they can provide some care, but full-time care would require to much time.
It is a discussion you need to have.
Seeing a loved one loss the ability to do actives of daily living is difficult. It is even more difficult to try and be the caregiver to a loved one that losses the ability to do these activities. Are your loved ones emotionally strong enough to provide care and see you at your weakest point? Do you want them to?
Did you know:
Many of the people that buy Long-Term Care insurance do so because they experienced a loved one (usually a parent) go through a LTC event. They know how difficult and emotionally challenging it can be to provide the level of care needed during a LTC event.
They buy LTC insurance because they do not want their loved ones to go through what they did.
Will the Goverment Pay for my Long-Term Care?
Medicare Coverage for Long-Term Care
Many believe that Medicare will pay for most of their long-term care expenses. While Medicare will pay for some LTC related services, it does not provide payment for the comprehensive LTC services that are usually needed.
Most long-term care isn’t medical care and Medicare will only pay for medical care. Instead, most long-term care is help with basic personal tasks of everyday life, activities of daily living.
Not Covered by Medicare
Custodial care is one of the primary aspects of long-term care and is not covered by Medicare (except in limited circumstances). This is personal care given to someone to help them with activities of daily living (ADL- eating, bathing, dressing, toileting, transferring (walking) and continence). These make up the majority of LTC services and are the primary source of long-term care.
Nursing homes, assisted living facilities, home healthcare and adult day care are not covered unless it is skilled nursing care, prescribed by a doctor and on a part time basis and the individual must be “confined” (unable to leave their home without assistance).
Ongoing care is not covered by Medicare. Skilled nursing care beyond 100 days is not covered.
Covered by Medicare
Medicare will cover some LTC services but in general they are very limited in both scope and time. In addition, you must need medical care and not just Long-Term Care. For a complete list of what Medicare covers please see: https://www.medicare.gov/coverage/long-term-care.html
Medicaid Coverage for Long-Term Care
In Georgia the majority of Nursing Home LTC is paid for my medicaid. However this does not come without a cost. In order to qualify for Medicaid LTC you must spend down your income, you may be subject to asset repayment after you pass away and you have limited options for type of care and care locations.
Medicaid Income Limits
In order to receive Medicaid for LTC in GA, you must have less than $2000 in assets. If you are married you may keep your home if the value is under $572K. However your spouse must live at the home and not need LTC. You would also be able to keep 1 car. These assets will not be safe once both you and your spouse pass away.
You may be able to put some assets in a Miller Trust.
GA Medicaid State Recovery
Georgia's Estate Recovery Program requires that once both you and your spouse pass away, your remaining estate be used to reimburse the taxpayers for the Long-Term Care services provided to you by Medicaid. This means that your home and other assets would be taken away from your heirs by the government.
The main way to prevent this is through a Georgia Long-Term Care Partnership policy.
Type of Care Provided by Medicaid
Medicaid pays for nursing home care only when it is medically necessary. It requires a physical or mental impairment that requires continued care under the supervision of a doctor. This takes the form of either a skilled nursing care facility or a intermediate care facility. Home care is not covered. You also have to use a Medicaid approved facility, which can significantly limit your options.
Types of Long-Term Care Insurance
If you do not plan on using Medicaid, do not want to or cannot be taken care of exclusively by family or if you want protection against incurring massive self pay costs; you may want to consider Long-Term Care Insurance.
There are two main types of LTC insurance plans we usually recommend, Partnership plans and Asset Based plans.
We do not normally recommend using life insurance with living benefits and we will explain why below.
Long-Term Care Insurance: Traditional Plans
Top Carriers: Mutual of Omaha, National General Life, Securian, Transamerica
Cheapest type of Long-Term Care insurance.
A cost effective way to protect against LTC events.
Can be eligible for government Partnership Programs. (Read more HERE)
Covers the cost that most people would incur from a LTC need.
Eligible for tax deductions
If you do not use the benefits you get nothing back.
Benefits can run out for extended LTC needs.
Possibility of rate increases. (Read more in our Rate Increases section)
For most people, this type of policy is the best choice. These plans are affordable, offer a significant amount of coverage and have a lot of customization options. The plans we recommend qualify for the governments Partnership Program (read more HERE). This provided an additional layer of protection.
Long-Term Care Insurance: Asset Based Plans
Top Carriers: One America and Lincoln National Life
The most comprehensive type of Long-Term Care insurance.
Re-positions assets instead of spending them, you get your money back if you never use benefits.
Can use qualified or non-qualified money.
Has easier underwriting options.
No Rate Increases.
The most expensive type of Long-Term Care Insurance.
No Partnership Program option.
Only partially eligible for tax deductions
These are interesting plans with a lot of benefits. They can be structured to never run out of benefits and if you don't use your benefits you will get a return in the form of a death benefit. They are not subject to rate increases and they have flexibility in both plan design and payment options. They do require more of an investment however it can be viewed as simply re-positioning a small portion your assets to pay for a specific future need.
Long-Term Care Insurance: Life with Living Benefits
Top Carriers: Principal, Lincoln, Transamerica, Prudential
Offers duel benefits.
Can work in certain tough underwriting cases due to health issues.
Expensive, you pay for both benefits.
Do you need life insurance or long-term care insurance? This policy does both however you can only use it for one.
Not Partnership eligible.
Many policies have restrictions on when. benefits can be taken.
We do not usually recommend Life with Living Benefits. These plans try to cover both life insurance and long-term care insurance but end up doing both poorly. It is very expensive life insurance coverage and if you are buying permanent life insurance it is for a reason, to provide a death benefit to someone! Using this benefit on Long-Term Care is counter productive. You need to be aware that many times these plans have different definitions of what it takes to start receiving benefits.
These plans can sometimes be useful if you cannot get better Long-Term Care policies due to medical issues.
We'd love to hear from you
Long-Term Care Partnership Programs
Georgia offers a Long-Term Care Partnership Program. This program came about because the government realized how expensive Long-Term Care is. They spend tons of money on Long-Term Care via Medicaid and were looking for a way to encourage more people to plan for future Long-Term Care needs. The Partnership Program protects participants against some provisions of Medicaid spend down and against estate repossession from your heirs.
You buy a Partnership LTC Policy.
You need Long-Term Care and start using your policy.
You still need Long-Term Care! You decide to use Medicaid.
You exhaust the benefits in your LTC policy.
For the Medicaid spend down, you get to keep assets equal to the amount of benefits used by your LTC Partnership Policy! If your LTC used a total of 200K in benefits you get to keep 200K instead of keeping only 2k!
You get to use Medicaid and keep some assets. And your home is also protected from asset seizure once you pass away. You and your family win!
The main benefits of the partnership program is that it helps your policy provide ever more protection against an extended Long-Term Care event. Conditions like Alzheimer's and Dementia can easily extend over 10+ years. Most traditional LTC polices only last 3-6 years.
If you have a partnership policy and have to use medicaid for LTC after your policy expires, you will be able to keep a portion of you assets and your home will pass on to your heirs instead of being repossessed by the government. This is not a minor benefit!
Click picture to read more!
The Georgia Partnership Program is worth talking about! Schedule an initial call today!
Long-Term Care Insurance Rate Increases
The Important Facts about LTC rate increases in Georgia:
Georgia passed the Rate Stability Regulation on October 1, 2008 for Long-Term Care Insurance. This regulation only affects policies issued after 2008.
Rate increases were VERY common before the legislation change in 2008. Almost 99% of policies issued before the 2008 rules have had rate increases
Rate increases are very UNCOMMON after the legislation change in 2008. 11 out of the 13 active LTC carriers in Georgia have NOT had rate increases on policies issued after 2008. Only .03% of policies issued after 2008 have had rate increases.
Why are there less rate increases after the 2008 regulation?
Why are there less rate increases after the 2008 regulation?
There are less rate increases mainly because the regulation made it so the insurance company has to reduce profit levels from the policy if thy want to raise rates.
LTC Insurance has also been around longer so they have a better idea of the cost. For a long time policies that were sold were under priced.
The regulation also requires new policies to be sold with a "cushion" to help prevent the need for rate increases.
Lastly, policies sold after 2008 must be certified by an actuarial to have no anticipation of needing a rate increase.
This means that while we still have the potential for rate increases on Traditional LTC plans, we no longer a large concern like it is for policies sold 2008!
LTC Insurance Tax Advantages for Individuals, Business Owners and Companies
The Health Insurance Portability and Accountability Act of 1996 (HIPPA) set the rules for what type of LTC polices are qualified to receive tax deductions. Only Traditional LTC policies qualify for deductions. We will explore how these deductions work for Individuals and Business Owners.
Always consult your CPA to ensure you qualify for LTC insurance deductions!
Deducting Long-Term Care Insurance usually works better for Business Owners and Companies than it does for Individuals!
Tax Advantages for Individuals
There are three main challenges that prevent individuals from deducting qualifying LTC premiums:
The deduction is "itemized" and not available if you claim standard deductions.
Deduction is limited for medical care. Your can only deduct the portion of your medical care that exceeds 10 percent of your Adjusted Gross Income (AGI). LTC premiums can count as medical care expenses.
LTC deductions are limited by age (see table below).
However, Health Savings Account (HSA) money used to pay qualifying LTC insurance premiums can be reimbursed. Employer funded Health Reimbursement Arrangements (HRAs) may pay for tax-qualified LTC insurance premiums as well.
Tax Advantages for Sole Proprietors
Sole Proprietors can deduct their LTC insurance premiums up to the age cap in the table below. This is listed as an adjustment to gross income on the tax return. The 10 percent threshold of Adjusted Gross Income does not apply.
Sole Proprietors can deduct premiums paid for the Long-Term Care insurance of spouses and employees, they can be treated as a business expense. Employees are NOT taxed on premiums paid by their employer for LTC insurance!
Employees and Spouses of Sole Proprietors
Tax Advantages for Partnerships, Limited Liability Companies (LLCs) taxed as Partnerships and S Corporations.
If the persons ownership in the company is greater than 2 percent they can deduct LTC insurance premiums up to the age cap in the chart above.
Non-owning employees can have their LTC insurance paid for by the employer and the employer can deduct the expense. This is not limited by the age cap in the chart above.
Tax Advantages for C Corporations
Long-Term Care Insurance premiums paid by the employer are deductible as a business expense and the deduction is NOT limited to the age cap in the chart above. The C Corp may offer the LTC insurance benefits only to a select group of employees if they would like. The IRC section 105 plan should be in writing and approved by legal counsel.
C Corporation Employees
Premiums paid for the corporation are excluded from the employee's income.
Business Owners and Companies should consider carefully the advantages of qualifying LTC Insurance policies tax treatment!
For information on Group LTC Insurance and other employee benefits please visit: https://ga-health-insurance.com/
Putting your Plan Together and FAQ
Planning for Long-Term Care is important. If you need Long-Term Care it will impact your life and everyone around you. The best way to ensure you receive the best care and to minimize the impact on others is to plan ahead.
You need to talk about it!
You need to discuss your plan for a possible Long-Term Care event with those close to you. This point can not be stressed enough! If you expect your children to take care of you, you need to ask them if they are willing! If you plan on paying for you own nursing home or buying LTC insurance to pay for your care, you need to let your family know that is what you expect to do. Long-Term Care events can happen suddenly. If you have not talked with your family about your plan you are setting everyone up for a bad time.
We Can Help!
Let us walk you through all the options. We can help you get a quote on a Long-Term Care Insurance policy so you can see if that makes sense for you. We can help you compare insurance carriers and find the best plan!
Frequently Asked Questions (FAQ)
Q: Do I need Long-Term Care Insurance?
A: It really depends on your situation and goals. Long-Term Care insurance can be a valuable tool in preparing for the future. It can help protect your assets, preserve your choices and ease the burden on your family. We evaluate each of our clients individually to see if LTC Insurance makes sense for them!
Q: Is Long-Term Care Insurance worth it?
A: It can definitely be worth it. The cost of Long-Term Care can be very expensive. Even if you plan to use Medicaid to pay for your LTC needs you must use up all your assets first. Long-Term Care Insurance is the most cost effective way to pay for a LTC need for many people.
Q: What companies sell Long-Term Care Insurance?
A: The top Long-Term Care Insurance companies are Mutual of Omaha, National Life, TransAmerica, Lincoln National, One America, Securian, MassMutual and NorthWester Mutual. We believe that for most people Mutual of Omaha, National Life and TransAmerica are the best traditional LTC providers while One America and Lincoln National offer the best asset-based policies.
Q: How can I get Long-Term Care Insurance?
A: Give us a call! 770-452-9335. We can help you get quotes with multiple companies, explain to you how the policies work and help you enroll!
Q: Does Long-Term Care Insurance require medical underwriting?
A: Yes it does. Generally you will need to fill out medical questions on an application. You may have to do a phone interview or meet other requirements based on the insurance companies direction.
Q: Can I get Long-Term Care Insurance if I have health conditions?
A: It depends on what your health condition is and what treatment you have had. We work with underwriters that will help direct us to the company that is most favorable to your specific health condition. Some products and companies have easier underwriting than others.