Long Term Care (LTC) Insurance

We've been talking about finances and in my last post, I shared some cost estimates for providing care. It's a hefty price tag no matter how you look at it--you and your parent will pay this in money, emotional stress and/or personal effort, no doubt in all three. I'd like to share some options for the money side. One of the most important financial aids to consider is Long Term Care Insurance.

In the 1980's, the company for which I was working offered LTC policies to me as an employee, to my spouse and to my parents or in-laws at a reasonable group rate. I found out that any policy would remain in force at the same premiums if I left the company. I immediately signed up and arranged for a policy for my father-in-law. Three years ago, as Dad's health declined, the family made plans to care for him at home and later in an assisted living facility. Three years ago, that 25-year-old policy kicked in a chunk of change to help pay for Dad's expenses and supplemented his income to allow for him to live in comfort with good care. It was one of the best investment decisions my husband and I ever made.

Care Tip: Talk to your parent about purchasing a policy, certainly, but consider a policy for yourself, especially if you're over 50. The earlier you purchase, the lower the premiums will be and the lower the overall cost.

Let's talk about the basics of LTC coverage. I'm using "you" to mean you and/or your parent; I'm assuming you're considering your own policy.

What Might an LTC Policy Cover?
An LTC insurance policy is designed to cover a variety of care options that you may need if you are chronically ill or have become mentally incapacitated and need continuous care over an extended period of time. A basic policy will pay:
• A daily sum to cover the cost of a nursing home stay.
• A daily sum to cover the costs of supportive services provided in your home, such as 24-hour nursing care, a health aide, meal service, or housecleaning.
• A daily sum to cover the expenses of living in an assisted living community.

Activities of Daily Living (ADL)
Most LTC policies judge a person’s physical competence in terms of how many Activities of Daily Living the person can perform on his own. These activities include such things as bathing, dressing, preparing and eating a meal, and taking medication. Each policy will state what it considers to be “full function”. If a person cannot perform 3 or 4 of the ADLs described (depending on the policy), then the person may begin to claim benefits from the policy. Usually a doctor’s statement is needed to verify eligibility.

Make sure that the policy clearly states when and under what conditions benefits are triggered. Make sure that you understand how the policy is defining each ADL and share that information with your doctor who will be writing the report to send to the insurance company.

Some Benefits of an LTC Policy
When looking for a policy, pay attention to the following:
• The daily benefit for the nursing home. Most insurance companies will give you a choice of the benefit you want from as low as $60.00/day to $200.00/day. Each increased amount also increases the premium cost of the insurance. To choose a benefit level, visit or call several nursing homes in the local area to determine the average price. Even choosing the lowest benefit translates into money you or your parent will not have to pay from current income sources.
• The daily benefit for in-home care and what is covered. The in-home care is usually stated as a percentage of the nursing home benefit. Again check some local sources such as the Volunteer Nursing Association to estimate local costs for such services.
• The assisted living benefit. Some policies include a benefit if the person lives in an assisted-living facility as a result of a decrease in the number of ADLs the person can perform.
• The criteria for invoking the policy. In how many of the ADLs must the person be deficient and what documentation is necessary to gain benefits?
• When do benefits begin? Many policies specify that benefit payments begin 90 days after the patient has met the criteria (qualified) for benefits. Until that time, you are still responsible for paying the premiums.
• Increasing benefit provision. What provision is made to increase the daily benefit (from $60/day to $90/day, for instance)? Most policies allow you to increase with a medical affidavit and an increase in the premium, but some companies only allow changes to the policy once per year during an “open enrollment” period.
• Cost-of-Living increase. Costs are sure to rise and some policies provide an automatic adjustment of the daily benefit based on the current cost-of-living indexes. Some companies charge an extra premium for this adjustment.
• The lifetime limits for the policy. The higher the limit, the better, but higher limits mean higher premiums also.

So, the best LTC policy can provide benefits for home care, assisted living communities and nursing home care. In my next post, I'll share some other things that you need to consider when looking for a policy and a way to decide how cost-effective a policy might be for you and your family.

Until then, blessings on your caregiving day!

Estimating What Your Parent Can Afford

In my last post, I shared with you some average costs of eldercare, but the most important figure you need to know is what your parent and your family can afford on a monthly basis for caregiving. No matter whether your parent will remain in his home or move, the calculation is an easy one:

For home care, remember that home, food and clothing expenses must be paid in addition to the new expenses of caregiving.

(Parent’s Current Income) - (Parent's Current Expenses) = Funds Available for Care

In other words, the difference between your parent's income and his current expenses is what you have available for care. If you and other members of the family are willing to pitch in, that can be added to the "Income" side. If your parent can economize household or vehicle expenses, then that can be subtracted from the "Expense" side. Be as accurate as you can when making the calculations; this will help when you begin to research available services.

The "Income" side of the financial picture is probably stable at this stage of your parent's life. However, you have room to maneuver with the "Expenses".

Moving to a long-term care (LTC) community, for example, replaces many of the expenses your parent already has. To determine what's available for a new living situation, add up:

• Your parent's current income
• House payments or rent
• Utility expenses (electricity, gas, propane, sewer, water)
• Telephone
• Food
• Transportation (car insurance, gas)
• Property Taxes
• Cable fees
• Home Insurance
• Home maintenance (gas for the lawn mower or snow blower, light bulbs, carpet cleaning, for example)

Whatever your parent pays for these basics and all her income will now be shifted toward payment for a retirement or LTC community or for living with you. If there are any LTC insurance benefits available or financial help from the family, this allows for more options.

I was speaking with one caregiver at the Caregivers Conference last week who said that her mother resisted moving into a community because she was sure that it would cost her less to stay in her home. When her daughter did the math, she showed her mother that, in fact, moving to the community they'd chosen would cost exactly the same or a little less. And her mother would no longer have to do laundry, cook every meal, or clean. She could join in activities and would have time to explore some hobbies and visit friends. Her mother made plans to move that day.

Take the time to do the math. Keep the figures handy when you start deciding on care and housing options. Open up conversations with your parent about finances and try to work as a partner with your parent to find financial solutions that work for him and for the family. You'll be glad you did.

Blessings on your caregiving today!

How Much Will Your Parent's Care Cost?

Who pays for your parent's care? The short answer--your parent does and you do. Sometimes, insurance or the Government does.

So, one of the most important types of information you need to gather as a caregiver is financial--you need to know something of your parent's finances and your own. Let's start today with some basic cost figures so you can begin to estimate.

There are several ways that the financial aspects of your situation may play out.
Your Parent May Stay in His Own Home
This means that any care expenses are added to the day-to-day home maintenance, transportation, food and clothing costs your parent currently has.

In 2006, the average cost for a home-health aide was $20 per hour.

In the 2008 PBS television special, "Caring for Your Parents", one family reported that they spent $200,000 per year on 24-hr, comprehensive home care.

If your parent remains in her home, you, the caregiver, will also spend money from your own pocket to support her.

A recent study published by the National Alliance for Caregivers states that the average amount that caregivers who live nearby spend on home care for their parents is $8,496 per year. This includes food, transportation, and medical care and supplies.

When the caregiver lives at a distance (over an hour away), the costs will average close to $14,064 per year. As a long-distance caregiver, you must consider that your household may have to support an extra expense of up to $1172 per month in expenses to help care for your parent in her own home.

Your Parent May Move in With You
This means that you are adding another member of the family to your own expenses. Since your parent no longer needs his own home, monies previously spent on his house and its upkeep can now be dedicated to pay for his care. You will need to work out with your parent how the finances in the new, blended family will be handled. The care expenses are similar to those stated above, but you might be offering your own time and effort to offset some of the cost.

Your Parent Might Move to an LTC Community
Expenses for a long-term care facility, whether an assisted living facility or skilled nursing home, can run from $3,000 to $7,000 per month, depending on the quality of care, the level of care that your parent needs, and the region of the country in which you live. Costs for comparable care in Delaware, for example, are $1500 more than in North Carolina (based on personal research, December 2007). If your elder needs to move into an LTC facility, that’s $36,000 to $84,000 per year.

In 2005, the cost for a semi-private room in a nursing home was $176 per day. Annually, this adds up to $64,240. Fortunately, some of this cost will be covered by Medicare or Medicaid if your parent is eligible. Note that the average stay in a skilled nursing home is 2.4 years.

Whatever your situation, there will be money involved. In the next few posts, I'll look at how the financial end of care might be solved.

Finding Local Services

My day at the Triangle Caregivers Conference in Raleigh, NC, gave me some time to think about how caregivers might gather the information they need more quickly, especially when it comes to locating local services. As a caregiver, what might you be seeking?

• Medical Facilities and medical professionals for your parent's health.
• In-Home Services so that your parent can remain in her home longer.
• Home-related information so that your parent can keep his home in good repair.
• Housing options for the time when your parent can no longer live alone or wishes to lighten his responsibilities through a different living situation.
• Long-term Care Facilities, including assisted-living and nursing homes.
• Financial Counseling which might include discussions of reverse mortgages, budgeting, estate planning
• Legal Services for living wills, advance medical directives, powers of attorney
• Geriatric Care Management to assess your parent's needs so that you can arrange the best services.

You can see that there are many areas of concern. As a caregiver, you won't need to deal with them all at once, but over time, you will touch on each of these areas and need to explore possibilities and options.

What works best is to find those organizations and agencies where your parent lives that do a first information gathering for you. Gathering contact information about local resources is what these groups do for a living, so they are the experts. Once you've identified these "gatherers", you can return to them each time you have a decision to make. So who are these gatherers?

We've already talked about the value of a caregivers conference, especially where local service providers are exhibiting. Look for workshops, conferences, gatherings where the community comes together to present services.

Use an Eldercare Referral Service. Your employer may have access to one of these through your Employee Assistance Program. Many are fee-based groups that locate providers and services for you. Often the services and providers pay to be listed, so the cost to you is minimal. However, the best place to start is the US Government's Eldercare Locator. It's free and once you explain the type of serivce you're seeking, they can get you started.

Find the local Area Agency on Aging. The AAAs were created by Federal law in 1965 to provide support and services to older Americans. With the 2001 reauthorization of the Older American's Act came a new initiative, the National Family Caregiver Support Law. Area Agencies on Aging now have the responsibility to plan, provide and coordinate multifaceted systems of support services specifically designed to support caregivers. Contact them to see if they have a list of resources or can guide you in the right direction.

Hook up with the AARP and its local branches. The AARP website is full of information on caregiving and the local branches keep track of local services. Check the website or call the national office (1-800-424-3410) to find the local group.

Non-Profit Resource Gatherers. I've found that dedicated, local non-profit or government groups are often the most diligent and most helpful when it comes to guiding you to resources. In the North Carolina Triangle where I live, for example, a non-profit group named Resources for Seniors publishes a comprehensive directory of services in Wake County; in Orange County, two counties over, the county government provides a listing of resources in that county. Check the Senior Centers, call your public library, ask around as you arrange for other services, search the web. Local caregiving circles are fairly small and you'll be able to locate these gatherers fairly quickly.

So, find the information gatherers in your parent's community. Bookmark their websites, put them on speed dial:

• Local Caregiver Conferences
• Eldercare Referral Services, especially the Government's Eldercare Locator (1-800-677-1116, www.eldercare.gov)
• Local Area Agency on Aging, Caregivers Support
• AARP
• Local non-profit information gatherers

If you have any other suggestions of information "gatherers", let us know. Have a wonderful day!

I'm at the Caregivers Conference Today

Hello, Friends,
Just a reminder that I'm at the Triangle Caregivers Conference in Raleigh, NC today. I'll be back on Thursday to share what I've learned.

Blessings on your caregiving day!