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November 10, 2009 at 07:00 PM
These tough economic times have impacted almost everyone. With baby boomers approaching retirement in unprecedented numbers, for some it has meant postponing retirement a few years, and for others indefinitely.
Those who are still able to purchase long term care insurance often 
have stringent budgets, making LTC planning quite challenging. As a result, they have limited choices when purchasing coverage that will at least offset some of the high costs of LTC.
Some try to manage this by electing shorter benefit periods of two or three years and/or longer deductibles (i.e., elimination periods) of 90 or 100 days. They hope to maximize their benefits this way, while keeping premiums affordable.
But it is not that simple. Policyholders with shortened benefit periods and limited pools of money may one day face serious problems if they need LTC that exceeds their benefits and available pool of money.
For them, advanced planning is imperative.
For the LTC advisor, that means careful and judicious review of the proposed LTC policy’s provisions is necessary long before an illness or the need for care appears on the horizon. Since financial and estate planning needs change with the economy as well as with an individual’s personal circumstances, constant professional monitoring of those provisions is essential, particularly when families elect shorter-term LTC policies.
Following are three examples based on the actual experiences of our clients. Their names and identifying details have been changed. Their stories indicate that shorter-term LTC policies do provide valuable coverage, but clients, families and advisors need to be aware of all policy features in order to maximize benefits.
James and Fay: This New York City couple purchased LTC insurance in 1996 at the ages of 68 and 61 respectively. They selected a shorter-term policy that had a $150 daily benefit for both home- and facility-based care, a three-year benefit period, a 90-service-day deductible, and a 5% simple inflation adjustment.
When Fay passed away suddenly from a stroke, James continued to live in their resident co-op apartment and his home for 40 years. But by August of 2009, his arthritis had progressed to a point where he could no longer live alone. Daughter Kim lived in a nearby suburb, so she could visit and assist her father. Kim and her husband did have a home large enough to enable her father to move in, but Kim knew her father’s care was likely to become more than she could provide as she was also managing her own home and her family’s needs.
Here is where the shorter-term LTC policy came into play. Kim located the policy and contacted the claims department to find out what benefits were available and to determine whether her father was eligible for them. The company helped with gathering information and providing support to initiate claim. Her father’s arthritis was progressive, and he required assistance with bathing, dressing and mobility, so he clearly met the benefit eligible criteria.
But Kim was confused about how to make the benefits do the most good for her father. So she sought the assistance of a geriatric care coordinator. The geriatric professional provided insight to her father’s possible long-range care needs and also suggested alternatives to maximize her father’s benefits while continuing to maintain a quality level of care.
In the end, Kim’s decision to seek professional help enabled Kim to preserve her father’s pool of money and at the same time lengthen the period during which he could receive benefits under the shorter-term LTC policy that was purchased so many years before.
