We wrote an article today on our health insurance site about how some Colorado lawmakers are pushing for the return of asset testing in determining eligibility for the state’s Medicaid program. The federal government – via the Children’s Health Insurance Program Reauthorization Act – has been encouraging states to expand access to public health insurance [...]
If you’re researching long term care insurance, you’re probably aware that the 2005 Deficit Reduction Act (DRA) extended the “look back” period for Medicaid eligibility from three years to five years – ie, assets transferred to someone else anytime in the five years prior to applying for Medicaid will be taken into consideration when determining [...]
Our most recent article on the Colorado Health Insurance Insider addresses long term care and the looming funding crisis as the baby boomer generation ages. Louise links to an article by John Goodman that has several excellent ideas for keeping Medicaid afloat by encouraging the use of personal assets, long term care insurance, and state [...]
Long-Term Care Insurance is still considered a new type of insurance protection and can be misunderstood as to what it really covers. There is a lot of confusion about what type of benefits long-term care insurance has, when will the benefits be needed, and who needs to get long-term care coverage. Long-term care has gotten increasingly popular due to the rising costs of long-term care services, the growing size of America's retired population, and America's increasing expected life span. These factors all combine to cause a great deal of concern for people faced with that decision.
"On average, U.S. nursing homes now charge $54,900 a year, and this could reach as high as $190,000 by 2030." -www.retirement-living.com, 2005
Most people assume that medicare will help pay for their long-term care. They work toward retirement assuming that they don't need to worry about it because should they need long-term care, medicare will pay some or all of the bill. Medicare is health insurance for people over the age of 65, and counting on Medicare probably isn’t the answer. To qualify for Medicare benefits, you must have a 3 day hospital stay first, then nursing home costs for each benefit period are as follows:
- On days 1 through 20, Medicare pays 100%.
- On days 21 through 100, Medicare pays all but the first $101.50 per day
- After day 100, you are required to pay 100% of the costs incurred.
While no one wants to think about the worst case scenario, we can help you plan for and help protect your future so you can focus your energy on what’s really important – enjoying life.
Similar to life insurance, the younger you are when you purchase long-term care insurance, the less expensive it will be. And the prices are set so you'll always pay less by buying early, no matter when you end up needing it. Because of this, a lot of people will buy a policy twenty to forty years before they expect to use the policy. To make this a viable option, the insurance company will include an option for the benefits to increase by a certain percentage over the life of the policy to keep up with the increase in the cost of care.
Inflation protection can be one of the most important options when purchasing long-term care insurance and make a substantial difference in how the policy performs when needed. When purchasing long-term care insurance, an individual should consider adding inflation protection to their policy as an added benefit rider. Using a variety of different methods, inflation protection will increase the policy benefits on an annual basis. The methods used will be one of the following:
Simple Interest Benefit Protection
Based on the original daily benefit, benefits will increase by a pre-set percentage, typically between 1% and 6%.
Compount Interest Benefit Protection
Beginning with the original daily benefit, the benefit is increased based on a pre-set percentage, normally between 5%-6%. Each year when the daily benefit is increased it is based on the current daily benefit allowing for a much larger increase in benefits.
Consumer Price Index - Urban (CPI-U) Protection
This type of inflation protection isn't as common as the previous two. The daily benefit is increased on a compounded bases by the same percentage as the CPI-U. While this may seem like a better way to make sure your daily benefit is keeping up with the increase in the cost of care, the cost of care inflation may not be the same as the inflation of other goods and services.
Call us with questions or setup an appointment to discuss your long term care needs. You may reach us at our Colorado offices toll-free at (866)747-7913 from 7:30a.m. to 6:00p.m. or e-mail us at info_at_insuranceshoppers.net. Denver and Boulder area residents can reach us at (720)352-7561.
Discussions on the most important aspects of long term care:
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