And, Long Term Care specialists like Trish Karlinksi of John Hancock LIfe Insurance
wants to help inform people on what Long Term Care is and what it can do. "The cost of Long Term Care is not the same as insurance," she said. Karlinski was invited by Daren Blonski of Edward Jones in Sonoma to speak to the public at the Sonoma Valley Chamber of Commerce on May 16. Their intentions are to simply help people better understand one of the most critical situations people find themselves in as they age. The presentation was not a sales pitch and neither she or Blonski were doing this just to get more clients.
"My role is to educate people on this," said Karlinski. She explained that her mother had fallen unexpectedly and suffered a broken hip. From this personal experience in her own family, Karlinski knows very well the details of Long Term Care that often people don't fully understand and can easily get confused on. She noted that as medical science advances most likely people will be living longer well past 100. If that is so, then Long Term Care is essential.
Typically today, LTC costs anywhere from $4,000 per month to well over $9,000 per month depending upon the facility and the type of care provided. Karlinski said it is important for people to know what their options are.
Some people might think that their assets alone can or will pay for a LTC situation. But as Karlinski pointed out, "for how long?" To have a person's hard earned assets eaten up by LTC costs would leave them with little or nothing to leave to their heirs or to charity.
Government programs can help such as Medi-Care or Medi-Cal but there are certain requirements and limits. Some of those limits and requirements can be confusing and leave gaps. Seeking the help of family and relatives is another option, but as Karlinski pointed out, "it is important not to put family into a stressful and draining situation." And of the four options she mentioned, Comprehensive and supplemental Insurance is also helpful in meeting the needs of a Long Term Care circumstance.
Long Term Care policies are not the same as health insurance and Karlinski clarified that it is important that a person take into account, inflation, cost of living increases and interest rates. Will you be able to stay in your home? What about the cost of your activities of daily living while you are recovering? That alone can become a major cost that could be greatly helped by a good LTC. Even if a person were blessed to be able to remain in their own home, at some point being in a facility, hospital or rehab might occur at least once in a person's life time.
On average currently, the daily cost of LTC at a typical nursing care facility is about $250.00 per day. In some situations having care provided in the home might cost less. Yet again, it is difficult to say for certain what a person's medical conditions will be as they age. It can all vary. "Most people if given the choice, would prefer to remain in their home," said Karlinski. But realistically, that might not be possible so it is best for people to plan in advance. To place the burden of providing care upon family members or relatives only causes strain. "One good way to show that you care about your loved ones is to have a LTC plan in place," said Karlinski.
As LTC has become more prevalent as the Baby Boomers are aging, it is currently against the law for an insurance company to offer an LTC plan to someone and then exclude them based upon an already-disclosed pre-existing condition. Karlinski noted there are four categories of Long Term Care applicants that impact policy outcomes. These are:
1) Preferred (those rare people that are perfectly healthy as they age) Their application gets a discount, this is about 10 percent of those that apply.
2) Standard (this is where most people are in the application process to an LTC plan)
3) Conditions taken into account at level 1 (Pre-Existing Conditions such as diabetes, high blood pressure, heart conditions, etc) this is about 25 percent of those that apply for a LTC plan.
4) Conditions taken into account at level 2 (PECs such as pacemakers, transplants, etc) this is about 50 percent of those that apply for a LTC plan.
While at present LTC plans are not permitted to increase premiums at whim as with health insurance plans. HMO and PPO plan rates can often change suddenly. "This is true, said Nancy Kincaid, press secretary for the California Dept. of Insurance. "Proposed rate changes must be submitted to the Department of Insurance for review." "Those subject to review are done so by department actuaries," added Kincaid. "The companies must justify their proposed rates." Yet she pointed out that, "some policies are subject to rate regulation and some are not." "It depends on when the policy was issued," said Kincaid.
LTC's tend to have an annual increase of a about two to five percent annually. Karlinski also talked about the importance of understanding three aspects to a LTC plan, they are: Elimination Period, Benefit Period and the Inflation option.
Regardless of the daily benefit amount in a given LTC policy it is critical that policy holders know the details about the elimination period, is that 30 days, 60 days or 90 days? And, how long will the benefit period last for, will it be only two years, five years, 10 years? Etc. Again, no one knows for certain how long a person will need LTC and what their medical conditions will be. Taking on an inflation option for the policy is a good idea because no one should come up short when extended LTC is needed. The rate of inflation plus the flux of interest rates is inevitable for just like mortality and health no one can say for sure what the economy will be in the future. Kincaid said when looking through the various LTC plans it is best to ask the particular LTC Insurance companies how they build their rates. "Companies must justify their proposed rates," she said.
Karlinski stressed that is very important for people to start thinking about LTC now and not when a circumstance or situation occurs suddenly. By then the ability to plan and to provide for a decent quality of life setting might be too late. Kincaid noted that, "this is a challenging line of insurance, because rates have been quite volatile over the years." It is important that when applying for any LTC plan, that any current or past medical condition is disclosed. Karlinski did not say in particular which state regulation, forbid LTC insurance companies to deny coverage for a pre-existing condition. It was also not clear whether that has to do with a condition already disclosed upon applying, when a policy has been offered to a consumer; or whether what was uncovered later that had been unknown to the insurance company.
Usually, all insurance underwriters have done their homework in advance. Kincaid said to verify this would require more details. "LTC is quite complicated," she said. "Different policies are subject to different laws and regs, depending on when the policy was issued." Earlier in May, the Wall Street Journal examined the topic of LTC
. It was said in that report that there are many things and aspects to consider. But that like any insurance policy, there is always a gamble.
In trying to discern some of the details, this reporter observed that much of the current regulation centers upon how LTC is administered and the quality of the LTC. Groups such as California Advocates for Nursing Home Reform,
raises awareness about the quality of life issues that occur when people are placed in LTC situations. Details about LTC insurance policies and how they are regulated is according to some sources, still a new field. And, with the movements for health care reform, it is uncertain to say how LTC insurance will structure itself to meet the growing demand over the next few decades.
Still, Karlinski and those in the insurance profession see LTC care as an important issue that must be addressed as the Baby-boomer generation moves closer and further into old age.
To learn more about the basics of Long-Term Care the National Association of Insurance Commissioners have published a booklet entitled "A Shopper's Guide to Long-Term Care Insurance. To obtain a copy and other related information
visit the National Association of Insurance Commissioners website. Or, call 202-471-3990.