What Is Long Term Care?

1. What Is Long Term Care?

2. What Is Long Term Care? • Long Term Care is an ever changing array of services aimed at helping people with chronic conditions cope with limitations in their ability to live independently

3. “The actual risk for needing Long Term Care (both nursing home and home healthcare) services is greater that 50%. (The general population perceives the risk to be less than 25%.)” Source: Health Insurance Association of America, 1995

4. Who Uses Long Term Care? • Nearly half of all Americans 65 and older will spend time in a nursing facility during their remaining life 1 • Persons 65 years or older numbered 34.1 million in 1997 2 1AARP National Nursing Home Study, 1996 2 Profile of Older Americans: 1998 - U.S. Bureau of the Census

5. Who Uses Long Term Care? • Studies show that for every 2 senior Americans receiving care in a nursing home, 5 others require regular assistance in a home care setting Long Term Care: Current Issues and Future Directions, U.S. General Accounting Office, 1995

6. Not Just a Senior Issue • 40% of individuals receiving long term care assistance are between ages 18-64 American Academy of Actuaries, January 1999

7. Why Is Long Term Care a Growing Concern?

8. Nursing Home Costs • Nursing home average annual costs range from $38,000 - $80,000+ • The average length of stay in a nursing home is 2.8 years Source: “LTC Choice: A Simple, Cost-Free Solution to the LTC Financing Puzzle”- Center for Long Term Care Financing, September, 1999

9. Who Pays for Long Term Care Source: Health Care Financing Administration, Office of the Actuary Data from the office of National Health Statistics, 1997

10. Who Should Think About Long Term Care? People ages 40 - 84

11. Private Health Insurance • Pays for 7% of Long Term Care costs1 • Pays for Skilled Care only • Skilled care is care provided by a doctor, RN or similar professional usually for 24 hours/day 1Health Care Financing Administration, 1998 statistics

12. Medicare - Nursing Facility • Covers some Skilled Care • In an approved Skilled Nursing Facility • 3-day prior hospital stay required • Must enter facility within 30 days • Patient must continue to show improvement

13. $0 First $101.50 All Costs 0 to 20 days 21 to 100 days Over 100 days All Costs Above $101.50 $0 What Medicare Pays What the Individual Pays What Medicare Pays

14. Medicaid • You must meet state and federal povertyguidelines for income and assets and may have to “spend down” or use up most of your assets on health care before you qualify. • Limits choices • Look-back audit

15. Tax Incentives of Long Term Care • All benefits received under the policy are generally income tax free* • For individuals, premiums may be deductible as Medical Expenses (7.5% of adjusted gross income) subject to age & premium limitations *Indemnity benefits in excess of per diem limitation (2000 limit - $190) Contact your tax advisor for additional details

16. What’s the Best Option? • Utilize savings? • Give away all assets? • Qualify for government assistance by “spending down” assets? • Depend on private insurance to transfer risk?

17. What are the Benefits? • Helps preserve independence • Helps protect standard of living • Helps protect assets • Helps preserve freedom of choice • Helps avoid welfare

18. Part of a Complete Financial Plan

19. Guaranteed Renewable • Policy cannot be cancelled as long as premiums are paid when due.

20. How Prepared Will You Be? 40 Year Old Savings Plan LTC Insurance Cost of care @ age 80 $422,399 (1 year of care) $1300/yr. at 10% x 40 years $632,908 (total savings) VS.

21. Why Should You Purchase Through Your Association? Your association recognizes the growing concern to plan for long term care needs. They want long term care insurance available to their members.

22. Through your association this benefit is... • At a discounted rate • Available to your family members such as: parents, grandparents, in-laws & children • Is fully portable