Care for the long term

DATE | 10/13/20
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Paul A. Werlin, President, Human Capital Resources, Inc.

One of the greatest Americans who ever lived, Benjamin Franklin, “invented” the concept of insurance in 1752. Since then, a trillion-dollar business has grown with insurance companies around the globe offering products that provide all kinds of protection.

Today, people, businesses, and even governments buy insurance to protect cars, homes, businesses, and people from the dangers and unexpected mishaps that are a part of life—like fire, theft, floods, and many other losses. You have life insurance to provide protection to your loved ones in the event of your death or incapacitation, and health insurance to pay the doctor and hospital bills that can potentially wipe out all your savings. But what about you and your quality of life?

When you’re older, you’re more likely to need medical care. Medicare and other health insurance can pay the hospital bills, but what happens after that? Would you rather be in a facility or at home getting the care you need to have the quality of life you want? That’s where long-term care (LTC) insurance comes in. Most people want to receive care at home whenever possible. And over 80 percent of long-term care claims are for home care and community-based services.

Your LTC insurance options

Fortunately, today there are three different types of insurance options that can protect us and our loved ones against the catastrophic cost of long-term care.

Traditional LTC insurance. Dollar for dollar, it tends to be the most cost-effective way to purchase LTC insurance. In many states, LTC policies qualify for the National Partnership Program, which can also provide you some Medicaid asset protection. Under Wisconsin’s Long-Term Care Insurance Partnership Program, an amount equal to the benefits a person receives under a qualifying Long-Term Care Insurance Partnership insurance policy is excluded when determining:

  • The person’s resources for purposes of determining Wisconsin Medicaid eligibility, and;
  • The amount to be recovered from the person’s estate if the person receives Wisconsin Medicaid benefits. (Source:

Asset-based LTC insurance. This type of protection is funded by a lump sum payment. Particularly in this low interest rate environment, if you have excess cash on the sidelines that is not needed for an emergency, some insurance companies are offering extremely attractive plans that include a lifetime long term care benefit. The lump sum is often in excess of $50K to as much as $100K and more. These asset-based options may also include an enhanced death benefit if care is not needed, and some of them even have a limited liquidity feature, where all or a portion of the premium can be returned.

New and innovative care products. While we tend to think of life insurance as something for our loved ones and beneficiaries to use, we are seeing more companies offer living benefits as a part of life insurance. One of these benefits can include a chronic illness benefit, or a long-term care acceleration “rider.” These new features enhance traditional life insurance protections for loved ones but add the flexibility to use all or a portion of those benefits for your own needs if care becomes necessary. While this sounds attractive, keep in mind that as you draw down the benefit for yourself it reduces the remaining death benefit that your loved ones may receive.

LTC insurance gives you leverage to protect you and your family

Education is the key to understanding the importance of long-term care protection. In the financial world, leverage simply means protecting a large asset using a smaller asset or lower expense. In the care management/home care world, leverage means having the ability to choose from a wide range of care options versus a smaller, more limited menu of options. Long-term care protection is your leverage.

In the fall of 2020, Eileen Dunn, Care Manager at Associates of Clifton Park, a national firm with 25 years experience in LTC products, received a call from the wife of a gentleman who fell, broke his hip, and required surgery. After surgery he was to go to a nursing home for physical therapy rehabilitation. “His wife was genuinely concerned about him being in a facility given the current pandemic situation, and was looking for other options,” Eileen explained. “When she said they did not have long-term care insurance, I knew their options were limited.” Eileen, who has more than 20 years of experience, continued, “She could take him home, but public health would only provide physical therapy and a home health aide three days a week. He needed physical therapy five days a week and a home health aide 24 hours a day because his wife was unable to assist him with showering, dressing, or getting him up from a chair to go to the bathroom. After a few weeks of physical therapy, when he would be able to safely move about, the aide service could be cut back to four hours a day. She was shocked that the cost of care would be $4,500 per week for those first few weeks, then would be between $1,000 and $1,500 per week once he could walk.

“Unfortunately, she didn’t have leverage. She was willing to pay the $12,000 for that first month or two, and the $3,000-$4,000 per month after that, but he wasn’t. If their retirement plan included one of the long-term care solutions available, they would have had options. He could have come home, and the cost of his care would have been covered in the comfort and safety of his home.”

Eighty two percent of long-term care insurance claims are for home and community-based services. The reason? Your need for care comes about incrementally. First you may need someone to help with laundry, grocery shopping, or yard work. But as time goes by, your needs increase and you may need more assistance with bathing, dressing, and just maintaining your quality of life.

Plan ahead for potential pandemic effects

So why is now the time to define your own long-term care plan?

Because the life and long-term care industry has been tightening their belts over the past several years, making it harder to qualify for coverage and making benefits more expensive. When the pandemic hit, they tightened even more. Some are now asking specific COVID-19 questions and are considering age-restrictions on issuing new policies.

Eileen spoke about a recent situation related to COVID. “I had another client whose husband had Parkinson’s disease, dementia, and some other health issues. The wife had some health issues of her own and they were using their long-term care insurance to get assistance four times a week. However, when COVID struck, they weren’t comfortable having aides come inside their home knowing they work with other clients and feared they could contract the virus. One of their adult children lost their job but was able to move in with the parents to help. Because they had an indemnity policy, they received a cash payment they used to pay that child to provide their care, limiting their risk of exposure to the virus, and compensating their child for the lost income they had experienced.”

Explore your options today

No one has a crystal ball to see the future, but the reality is almost 70% of us will need some form of long-term care in our lifetime. So now is the time to evaluate your options, maintain control over where you get your care and who gives it to you, and protect your retirement plan with the leverage long-term care protection provides.

Sound complicated? Feel free to schedule a personal phone consultation with Eileen, or contact one of the licensed insurance professionals at Associates of Clifton Park for more information at 1-800-893-1621 or