LTC Misconceptions

Breaking Down The Long Term Care Claim In Numbers

Breaking Down the Long Term Care Claim In Numbers

Now that Long Term Care Insurance has been around for a while, sufficient data has been accumulated so that we have a good grasp on claims. The industry is paying a very large amount of dollars in claims – some $6.6 billion in benefits was paid to about 200,000 individuals in 2011 – all of you should be aware of this information.

Here is an analysis of the more than 160,000 claims that a leading carrier paid by the end of 2011.

In Dollars
• $1.2 million is the largest single claim
• 50% of all claim dollars are paid to claimants with mental disorders including dementia

Benefit Recipients
• 78.7 is the average age of claimants. At age 80, it’s approximately 26% of claims, age 85 it’s about 24% of claims and age 90 it’s 9%
• Youngest claimant is 28; oldest is 103
• 71% of claims have been paid to female claimants
• Married women tend to claim at an earlier age than single women and men

Length of Claims
• 43% of claims last less than one years due to short recoverable illness, a sudden terminal illness or a single use of non-caregiving benefits
• The average length of claims that last more than a year is 4-9 years
• 35% of claims will last more than five years
• Of 100 people, 80 do not transition from where they receive their initial care.

Who Goes On Claim And For What – By Gender And Cause
• Single Women – 38% of all claims
• Married Women – 27% of all claims
• Single Men – 11% of all claims
• Married Men – 24% of all claims
• Women – Dementia, Cancer, Fractures, Stroke
• Men – Dementia, Cancer, Stroke, Parkinson’s

Of all the claims, 59% died while on claims, 30% recovered and 11% exhausted their benefits.

(Source – *AALTCI Source Book)

Abe Glickman, LTCA, LTCP
Abe Glickman Insurance Group
Toll-Free Phone: 877-298-5824

“It is better to create a plan 10 years too soon than one day too late.”

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LTC Misconceptions

Misconception #1: It won’t happen to me.

LTC By The Numbers

  • One in Two – Americans will need Long-Term Care at some point in their life. Long-Term Care Your Financial Planning Guide 2003
  •  65 year olds – can expect to need an average of 3 years of formal and informal long-term care, and 20% can expect to need more than 5 years. Kemper, Penn State University, Inquiry 2006
  •  21% Of Americans who are either caring for an aging parent now or have had to do so in the past. CBS News Poll (Feb. 07)
  • 50% Proportion of population 85 and older that will require help with activities of daily living. Wall Street Journal Online (Feb. 07)

Misconception #2: I can afford It…

Current Care Costs

  • Nursing Homes – Nationally the average annual cost for a private room in a nursing home is $70,912 ($62,532 semi-private). Average length of stay – 2.6 yrs. Care Scout 2005
  • Home Care – $18-$20 per hour – $52,000 annually @ 8 hrs per day, the average duration for receiving home care is 4.3 years. National Alliance for Caregiving and AARP 2004
  • Assisted Living Facilities – average $34,860 + per year. Average length of stay is approximately 3 years. MetLife Mature Market Survey 2005-

Misconception #3: Medicare Covers LTC

The devils in the details.

The Facts On Medicare… Medicare only covers skilled care – care defined as; services provided by or under the supervision of technical or professional personnel, and:

  • Must be rehabilitative care with ascertainable goals.
  •  Maximum nursing home benefit is 100 days.
  • Maximum nursing home benefit is 100 days.
  • Maximum nursing home benefit is 100 days.
    Misconception #4: Medicaid will pay…
  •  It will pay – after you’ve exhausted most of your assets.
  •  Medicaid limits your choices – usually to a Nursing Home.
  •  I’ll give my money away and get Medicaid – Medicaid has a 60 month look back period on transferred assets. If caught there is a penalty period.
  • You typically must use the facility that Medicaid directs you to use.
  • You may want to stay at home or go to an Assisted Living Facility.
  • Medicaid pays less to facilities than it costs to provide care.
  • Estate Recovery – requires Medicaid to recoup assets from your estate at death.
    Other Popular LTC Misconceptions…

Prenuptial agreements protect my assets from long-term care costs my spouse may incur. – False. Medicaid does not recognize pre nuptial agreements. When you are married the assets of both are considered for “spend down” purposes.

Living Trusts protect my assets from long-term care costs. – False. Irrevocable trusts can protect assets from LTC costs, but are subject to the 60 month look back period. Living Trusts are not designed for long-term care asset protection from Medicaid.