Long Term Care (LTC) Insurance pays for personal, custodial, or skilled care in your home or a facility. Typically, a policy reimburses the policyholder a pre-determined daily amount to cover the cost of help to assist with the Activities of Daily Living (ADLs), including bathing, dressing, walking, food preparation. As a person ages or suffers from a health problem, the need for help with ADLs increases and is often the reason that people struggle to life independently.
The question of whether or not to buy LTC insurance is a topic of conversation among many people as they approach retirement age. Can you self-fund the kind of care you might need towards the end of your life? Do you have family that will provide care? Do you have a family history that makes it more likely that you will experience a health condition that can have long-term impact on your ability to live independently? When should you buy it? Younger when it would be cheaper, but you’ll pay more before you actually use it? Later when you’re older, and the price can be really prohibitive?
It’s a complicated decision that is worth the effort to investigate the pros and cons of LTC insurance for your specific situation. Here are a couple of resources to jump start your thinking:
• 5 Things You Should Know About Long-Term Care Insurance, AARP.org, Family Caregiving, Financial and Legal.
• What is Long-term Care Insurance?, longtermcaree.acl.gov, US Department of Health and Human Services
Deena purchased a LTC policy for herself after she placed her mother in a memory care unit and saw first-hand the high cost of her mother’s care. Over the course of 9 years in the facility, Virginia’s care ran over $500,000. Gratefully, Virginia was able to self-fund her care, but Deena realized that in the same situation, she didn’t have the resources to pay for multiple years of care. And, knowing that Alzheimer’s ran in her family, with 3 previous generations having experienced the devastating effects of the disease, Deena knew her chances of developing the disease were very high.
So, Deena set out to find and buy LTC insurance. In an incredible stroke of good luck, she bought the Cadillac of LTC policies. It included a good daily payout rate that increased each year, and more importantly, had no life-time cap on the total amount that could be paid for her care. Shortly after she purchased the policy, they stopped selling that particular policy.
We built the future availability of our LTC policies into our financial plan as we contemplated our retirement. Of course, we assumed that we would not need to tap into the benefit for many, many years to come. In fact, it was only 4 years after my retirement and our move to Tucson.
It’s hard to know when to initiate the LTC benefit. Is it too soon? Have we waited too long? Typically, you don’t want to start drawing down on the life-time cap before you really need it, so that the benefit lasts throughout your lifetime. Since Deena’s policy didn’t have a life-time cap, we didn’t have to factor that into our planning. I was more focused on having completed all of the policy requirements before we really needed the help that the policy would provide.
So, in the spring of 2018 I called the LTC company to see if Deena was near qualifying for the policy’s benefits. I was on the phone for a long time answering their questions. It was clear even to me that Deena’s need for help with ADLs was not significant enough to qualify for the benefit. They wouldn’t even send a nurse to perform an in-person assessment. They basically told me to call again when things changed.
By December of 2018, Deena’s condition had significantly deteriorated and so I called again. This time, my answers were different and clearly showed a need for help with bathing, dressing, walking. The questions were designed to determine what type of help the beneficiary needed for each ADL:
No assistance
Stand-by assistance
Cueing assistance
Hands-on assistance
Is the help needed occasionally? Every time? Has the frequency of the need changed overtime?
In the course of the six months between the first and second phone call, Deena had progressed from No assistance to Stand-by, Cueing and Hands-on assistance. For example, that spring, Deena chose her clothes and dressed herself without any assistance from me. By December, I was narrowing the options to a couple of outfits (cueing assistance) and helping balance her while she put her clothes on (hands-on assistance). And so, an assessment was scheduled in late December.
Deena was very conflicted. Did she want to do really well and then not qualify for the LTC benefit? Did she want to “fail” the assessment so the benefit could start? I assured her that I felt equally conflicted. We finally decided to just answer the nurse’s questions honestly, and not worry about what the answers meant.
I arranged to do the initial part of the assessment on the phone with the nurse prior to her visit to our home, which really turned out to be a good decision. I was afraid that it would be hard for Deena to hear my answers to the questions because they truly showed her decline. And I was afraid that she’d contradict me because she wasn’t capable of an honest assessment of her status.
We heard in January 0f 2019 that her application for LTC benefits had been approved. Deena had very mixed feelings. It was hard to know that she had declined so much that she qualified for help. In truth, we really didn’t need the extra help at that point, but I knew the process could take a long time and I was afraid to wait until we did need it and then be so far behind the eight ball.
So, we started the 90-day elimination period in April of 2019, during which we paid to have a caregiver come once a week for 2 hours. We finally finished the elimination period in late September and increased the caregiver to twice a week for 4 hours each. By the end, we had caregivers 12 hours a day, 7 days a week. All of it, after the 90-day elimination period had been satisfied, paid for by Deena’s LTC policy.
Finding, purchasing and using a LTC policy can be a long, exhausting process. But, if you can stick with it, the dividends are amazing. I don’t know how I ever could have provided the amount of care Deena needed and got if we hadn’t had her policy.
Amazingly, I know a family where the husband has had a LTC policy for a long time. From outside appearances, he more than qualifies to use the policy’s benefits. But they continue to struggle on their own, without any of the help that he has been paying for many years to receive. They won’t even make a call to see if he qualifies. His wife says, “she doesn’t want strangers in the house.”
To each their own, but I know that the quality of Deena’s life was greatly enhanced because of the care that she received because of her LTC policy. I will be eternally grateful to her for making such a great decision all of those years ago.