Original Masters

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Welcome
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Long Term Care

• Brought to you by our 457 Plan partners

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Workshop Objectives

• Provide sound education
• Illustrate principles and examples
• Help you identify your goals and financial
  objectives

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Long-Term Care Coverage
76expectnot toneed it
Source American Health Care Association, 1998
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Long-Term Care Coverage
43 age 65 will neednursing-home care
Many will not be prepared for the expense
Source 2002 Field Guide, National Underwriter,
2002
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Are You Covered forLong-TermCare?
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Long-Term Care Costs
YES
NO

• Private health insurance
• Group health insurance
• Medicare
• Medigap insurance

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Costs Can Be Prohibitive
AVERAGE ANNUAL COST 56,000
MONTHLY COST 4,667
Source AARP, 2001
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Soaring Long-TermCare Costs
Source Health Care Financing Administration, 2002
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Are there any other side effects to this
medicine besides bankruptcy?
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CommonMisconceptions

• 1. It will never happen to me
• 2. My family will care for me
• 3. Medicare will pay for it

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It Will NeverHappen to Me
43 age 65 will need nursing- home care
Source 2002 Field Guide, National Underwriter,
2002
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It Will NeverHappen to Me
Average stay 2.5 years1 10 stay 5 years2
Sources 1 2002 Field Guide, National
Underwriter, 2002 2 Health Insurance
Association of America, Guide to Long-Term
Health Care, 1999
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My FamilyWill Care for Me

• 1. No medical expertise
• 2. Expense
• 3. Physical and emotional demands
• 4. Lifestyles

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MedicareWill Pay for It
YES
NO

• Short hospital stays
• Long-term care

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MedicareWill Pay for It
Part A Hospitalization Post-hospital
skillednursing care Home health care Hospice care
Part B Physicians services Inpatient and
outpatientmedical services Outpatient hospital
care Diagnostics
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Medicare Coverage
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The deductible and co-payment amounts shown are
for 2002. They are adjusted annually for
inflation.
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Inpatient Hospital Care
The costs shown are for 2002. They are adjusted
annually for inflation.
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What Does Medigap Cover?
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Who Is Payingthe Cost?
OTHER 8 PRIVATE LONG-TERM CARE INSURANCE 9 ME
DICARE 12
ELDERLY AND THEIR FAMILIES 27
MEDICAID 44
Source Health Care Financing Administration, 2002
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Failure to prepare for the cost of long-term
care is the primary cause for impoverishment
among the elderly.
American Health Care Association, 2001
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What Are Your Options?

• Self-insure
• Medicaid
• Long-term care insurance

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Self-Insure
AVERAGE ANNUAL COST 56,000
MONTHLY COST 4,667
Source AARP, 2001
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Self-Insure
Future Costs in 10 Years
AVERAGE ANNUAL COST 91,218
MONTHLY COST 7,602
Assumes a 5 inflation rate
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Medicaid
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Qualifying for Medicaid
COMMUNITY SPOUSE
INSTITUTIONALIZED SPOUSE
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What IsMedicaid Planning?
1. Outright transfers 2. Irrevocable trusts 3.
50/50 strategy 4. Home ownership
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Long-Term Care Insurance
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Long-Term Care Insurance
InsuranceCompany
Individual
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Types of Care
Nursinghome care
Home health care
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Community Care

• Adult day care
• Respite care
• Assisted living
• Board and care
• Continuing care retirement communities

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Levels of Care
Skilled Care
Custodial Care
Intermediate Care
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Why ShouldYou ConsiderLong-Term Care Coverage?
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Long-TermCare Benefits

• 1. Preserve independence
• 2. Preserve freedom of choice
• 3. Preserve standards of living
• 4. Protect assets
• 5. Avoid welfare

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Source American Health Care Association, 1998
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Is Long-Term CareInsurance Right for You?

• Net worth
• Potential out-of-pocket costs
• Premium costs

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Tax Advantages
How much of your premiums qualify?
Age before year-end
2002 annual limit
40 or younger . . . . . . . . . . . . . .
. 240 40 to 49 . . . . . . . . . . . . . . . .
. . . . . 450 50 to 59 . . . . . . . . . . . .
. . . . . . . . . 900 60 to 69 . . . . . . . .
. . . . . . . . . . . . . 2,390 70 or older. .
. . . . . . . . . . . . . . . . . 2,990
Source Commerce Clearing House, 2002
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Additional Long-TermCare Considerations

• Women
• Children of aging parents
• Families with ahistory of illness

Source Health Care Financing Administration, 2002
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Attributes of a Good Policy
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Policy Cost Factors

• Daily benefit amount
• per day coverage
• Waiting time
• 0, 30, 60 ,90 days
• COLA
• none, 5 simple, 5 compounded
• Benefit period
• 3, 5, 7 years or lifetime

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Why Consider It Now?
Premiums increasewith age
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Why Consider It Now?
Pre-existingconditions
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Consider the Benefits

• Dignity
• Choice
• Independence

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Recent Developments in Long-Term Care
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Long-Term CarePartnerships

• Easier to qualify for Medicaid
• Shelter more family assets
• Involve you, your state, and insurance company

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Your Three Options

• Self-insure
• Medicaid
• Long-term care insurance

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Careful PlanningIs the Best Insurance

• Evaluate your situation
• Explore different options
• Make good decisions

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Where Do You Go from Here?
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Where Do YouGo from Here?

• Do it yourself and use your Plan resources
• Work with others
• Procrastinate

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Thank You