Long Term Care Insurance

by Thomas D. Begley, Jr. Elder Lawyer
Long-term care insurance
can be helpful to clients who are healthy enough and affluent
enough to afford it.

As elder and disability law attorneys, we must all be aware that Medicaid and other public assistance programs may not continue to exist in the future as we know them today.

In fact, the Deficit Reduction Act of 2005 has made it more difficult to become eligible for Medicaid. It would be a disservice to our clients to advise them to rely on these programs in the future.

Clients who can afford long-term care insurance and who may be insurable should be urged to consider purchasing the insurance. Premiums for long-term care insurance can be controlled to a certain extent by the client. The features that affect the premium cost, which can be selected by the client, are the maximum daily benefit, the elimination period, the benefit length, the inflation rider and the amount of home care covered.

There are two factors that the client cannot control that greatly affect the premium. These are the client’s age at application and health history. For this reason, clients should purchase long-term care insurance at the earliest possible time. Most experts consider that the best time to purchase long-term care insurance is about age fifty. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) provided tax deductions and tax relief for “qualified longterm care insurance contracts.” The New Jersey regulations concerning long-term care insurance contracts are found at N.J.A.C. 11:4-34.1 to 34.13. According to the Genworth Financial 2005 Cost of Care Survey, only about nine percent of the elderly have private long-term care insurance.

There are four reasons why people do not buy long-term care insurance:

• Lack of Awareness. The industry has not done a good job in marketing this product.
   
• Denial. Seventy-seven percent of people surveyed by the American Council of Life Insurance believed they would be healthy in retirement.
   
• Longevity and Retirement Survey Fact Sheet, American Council of Life Insurance. Survey conducted between August 12 and September 10, 1997.
   
• Cost. It is estimated that only 10 to 20 percent of the elderly can afford such insurance. J. M. Wiener, L. H. Illston & R. J. Hanley, SHARING THE BURDEN: STRATEGIES FOR PUBLIC AND PRIVATE LONG-TERM CARE INSURANCE, 14 (Brookings Institutions, 1994).
   
• Insurability. Many people wait until they have a diagnosis before applying for long-term care insurance. At that point, they are no longer insurable. Agents estimate that approximately 25 percent of persons applying are rejected for health reasons.

Long-term care can be provided at home, in the community, in assisted living or in nursing homes. Long-term care may be need by people of any age, even though it is a common need for senior citizens.

The goal of long-term care services is to help you maximize your independence and functioning at a time when you are unable to be fully independent.