How long might I need long-term care benefits?
By jeremy.engdahl-johnson
Reuters examines how long-term care (LTC) policyholders can deal with rising rates, offering several suggestions, including this one:
If you’ve got the unlimited coverage and face a big rate hike that you can’t afford, consider dropping back to less coverage. Likewise, anyone shopping the market will do well to consider the less comprehensive coverage.
The LTC market has been moving in this direction in recent years. The percentage of insured policyholders with lifetime benefits has fallen from 36 percent in 2002 to just 15 percent in 2009, according to Helwig.
Three years of benefits will be enough to cover all but 13.1 percent of policyholders, according to a recent Milliman study based on the claims history of four large insurance companies; just 7.6 percent will need more than four years of benefits and only 4.5 percent require more than five years.
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If you have unlimited and it is affordable, keep it! I have seen a few claimants need care more than once and it is reassuring to know you can use the coverage and not have to “save” it for later. One lady in my client base has already had 5 claims, and a famous doctor has used his policy 3 times so far. Several have had temporary disabling conditions and recovered. The 3 year number is not magic. Those numbers are based on those old facility only plans (pre 1995) where folks may have struggled to stay home for years before finally going to a SNF. The newer policies that include home and assisted living will tell a different tale. I have had several so far exhaust their 4 year policies, and they still need assistance. If possible, add Restoration of Benefits to the policy. It is cheap and may be a lifesaver. Shared for couples is good, too. Higher daily benefits can be stretched. With the government regulations pushing prices up in an attempt to prevent rate hikes later, as well as the historic 5% compounding on the care costs, we are often constrained by budget. OK-then 2-3 years will give a cushion to help our clients to start lining up their next move for when the coverage runs out. The care coordination will get them off on the right foot and equipment will help the family with staying home comfortably. In the event of needing more care, they have effectively handled the immediate crisis and can move forward with dignity.