Purchasing Long-Term Care Insurance

Article submitted by Senior Solutions of Southwest Florida.
For more information, they can be reached at 239-332-4233.

Placing a loved one in a long-term care facility can be an emotionally, physically and psychologically draining experience. Vast amounts of information, to which many are being exposed for the first time, must be absorbed-often in a short period of time before a decision is made. For those who haven't planned ahead, the decision-making process and expense can be devastating.

Understanding in advance what financial resources and service options are available to your loved one can shorten your learning curve, minimize your frustration and help you to focus on what is most important: to make the best housing decision for your loved one.

True or False?

• I don't need to be concerned; my family won't need long-term care.
• Costs for a person to receive long-term care services can't cost that much.
• When my loved one runs out of money, no problem, I'll just put him/her on Medicare or Medicaid.

If you answered True to any of these questions, you need to read on:
FACT: 43% of the 65+ age group will require long-term care services at some point during their lifetime. 
FACT: Costs for a person to live in a skilled nursing facility can run upwards of $50,000 each year.
FACT: Medicare covers only 9% of skilled nursing services while Medicaid covers 52% of skilled nursing care and less than 10% of assisted living services nationwide.

The most common payment options currently available for long-term care services are: Private funds, Medicare, Medicaid, and Long-Term Care Insurance. Not all facilities accept all payment options. While this is only a brief explanation of each payment type, it is important to know all the benefits to which your loved one is entitled and to inquire of each facility what sources are accepted as forms of payment.

Medicare and Medicaid are often confused terms, even by those in the industry, but they are very different programs. Medicare is a Federal Health Insurance program comprised of two parts. Medicare Part A is automatically available to those 65+ who qualify for Social Security and to some disabled persons. It is a Hospital Insurance program that covers costs associated with skilled nursing facility care, home health services, hospice care and inpatient hospital care.

Medicare Part B is a Medical Insurance program for individuals aged 65 and older, requires a monthly premium and primarily covers outpatient services such as physician services, diagnostic tests, ambulance services, clinical laboratory tests, flu vaccinations and some therapy services. Co-pay typically applies.

Currently, there are about ten Medi-Gap insurance policies that offer varying benefits to supplement Parts A & B. Medicare is a complicated program with many conditions that apply to services related to your loved one's care. Don't make the assumption that everything is covered by Medicare, because rarely is that the case. Several websites listed below offer more in depth information.

Medicaid is a joint Federal-State program that pays for medical services for the medically indigent. A common misperception of this program is that anyone who can't afford services is eligible for Medicaid. Not true. Florida's Medicaid program for skilled nursing care differs from the assisted living Medicaid Waiver program. Neither program has sufficient funds or facilities to serve all those in need. Those on wait lists can wait several months for acceptance. Listed below are local contacts for application information.

Long-Term Care Insurance has become a more widely used tool for financing long-term care as people realize how financially devastating the associated expenses can be. At present, over one hundred companies offer long-term care policies, so be sure to select a company that is financially secure to protect your investment. Premiums vary. Important aspects of policies to consider and compare are the daily benefit amount, what, if any inflation protection each policy offers, the designated elimination period (can vary as much as from zero to 120 days or longer), and benefit period (can vary from one year to lifetime coverage). Another complex subject with critical ramifications, it is prudent to make an informed choice when purchasing long-term care insurance.

After careful review of the payment options, it is important to understand the various types of providers that serve the elderly. As America ages and lives longer, the concept of Assisted Living has emerged as a viable part of the long-term care continuum to meet the unprecedented demand for these services. The philosophy of Assisted Living is to provide hospitality, personal care, and some skilled nursing services to the frail or disabled as they need or want while maintaining maximum independence.

Assisted Living (AL) services can be provided in a freestanding community (ALF), as part of a Continuing Care Retirement Community (CCRC), and sometimes within a skilled nursing facility (SNF). Personal care services refer to a resident's Activities of Daily Living (ADLs) and include bathing, dressing, grooming, eating, ambulating and toileting. A Certified Nursing Assistant (CNA) typically delivers personal care services including ADLs. Skilled nursing services refer to those services that, by law, require a licensed practical nurse (LPN), or a registered nurse (RN) to deliver. These include dressing changes, administration of some medications like eye flushes, simple procedures, observation, assessment and consultation. In Florida, most medications may be administered by an unlicensed, though trained individual in an AL setting, under the supervision of a licensed nurse.

The state of Florida regulates the Assisted Living industry through the Department of Elder Affairs under Florida Statute Chapter 400. Florida providers must have at least a Standard Assisted Living Facility license (Standard ALF) in order to offer assistance with ADLs and medications. Two additional licenses, the Limited Nursing Service (LNS) and the Extended Congregate Care license (ECC) allow providers to deliver some skilled nursing services and more personal care than a Standard ALF-licensed provider. The benefit of an ECC-licensed community is that it will be less likely your loved one would have to move in the event she needs more care. Accommodations are typically apartment-style with kitchenettes and private baths. Some offer companion suites and rates. Amenities vary. Monthly room rental rates typically include hospitality services like meal plans, cable television, local telephone, housekeeping, laundry, maintenance, at least scheduled transportation and a range of activities and events.

Assisted Living rates for care vary from an all-inclusive monthly rate to a structure of a base rate for one level of service with increasing levels of care as the resident needs/wants additional services. Some communities charge for services based upon a point system. Typically, a resident's initial care level is defined during an assessment process that may change over the course of the resident's stay as his condition and needs change. ALFs accept private pay, some long-term care insurance plans and, in some cases, the Medicaid Waiver program. Currently in Florida, only the ECC-licensed AL facilities may participate in the Medicaid Waiver program, though not all do.

Continuing Care Retirement Communities, or CCRCs, are large campus environments, rich in amenities, that, in some cases, provide simple-deed ownership of a villa or apartment, but usually provide a guarantee of long-term care service provision in an assisted living (AL) or skilled nursing facility (SNF), conveniently located on campus, for the resident's lifetime. This concept is sometimes referred to as Life Care. In exchange, CCRCs typically require a large endowment as an entrance fee, locally ranging from $190,000 - $500,000, depending on the size apartment that is selected. Once accepted, residents also pay a monthly maintenance fee for life. This fee ranges from several hundred dollars to thousands monthly.

In addition to the entrance fee, applicants must pass a rigorous physical examination. CCRCs red flag and may reject applicants with certain health diagnoses like COPD, Parkinson's or some other neurological disorder. Sometimes, though, membership may be granted to those who have been red-flagged, but those residents must pay, on a fee-for-service basis, for any long-term care services they ultimately use. As additional services are used, residents continue to pay monthly maintenance fees. CCRCs accept private pay only. Some long-term care insurance policies will cover assisted services when utilized.

As the long-term care industry has evolved, Independent Living (IL) complexes with a rental rate structure have emerged as a less expensive alternative to those active and frail seniors with whom the CCRC concept doesn't agree. These communities offer apartment-style living with a host of hospitality services, like meal plans, transportation, housekeeping, laundry and maintenance services. Abundant activity programs and onsite pools, exercise equipment, golf holes, art/woodworking shops encourage residents to maintain an active and healthy lifestyle.

Independent Living rental rates vary according to apartment size/location and may or may not include hospitality services. Independent Living providers accept private pay and some long-term care insurance policies. In Florida, when residents of an IL community require personal care or skilled nursing services, they must contract privately with a third party (see Home Health Agencies). Often residents move to an assisted living facility, sometimes located on the IL campus, when enough assistance is required.

Skilled Nursing Facilities provide the widest range of nursing and personal care services from sub acute care to intermediate and custodial care. All SNFs accept private pay, and most are Medicare/Medicaid certified. Few accept VA benefits, and most long-term care insurance policies apply. Of the long-term care continuum, SNFs are the most heavily regulated by the federal government. Daily rates include a furnished private or semi-private room, meals, bed linens, housekeeping, activities, and all nursing care and personal care required for a patient's length of stay. Ancillary services like personal laundry, beauty/barber salon services, medications, personal supplies and durable medical equipment are billed to the family separately. Skilled nursing providers usually manage medications that must be administered by licensed nurses and sometimes will submit claims directly to the insurance company on behalf of the responsible party.

Some AL and SNF communities offer specialized programming like dementia care. These facilities are often specially outfitted with features to cater to the particular needs of a population. Due, in part, to the typical resident's fluctuating level of functioning, sometimes the rates in these communities are all-inclusive. That is, furnished accommodations, hospitality services, personal and nursing care and ancillaries, are all included in the monthly rental rate.

The services offered by Home Health Agencies vary. Some are certified by Medicare and offered licensed personnel; others accept only private pay or some long-term care insurance plans and offer a limited range of personnel. Home Health Agencies may deliver services at one's own home, to a resident in a CCRC, IL or ALF.

By doing the research and planning ahead, especially if a crisis occurs, family members can make a more thoughtful decision, ensuring a more satisfactory outcome when it's time to make the move. The process may still overwhelm you, but you, and your loved one, will be happier with the result.