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  • Sarah Smith, Tenaya Insurance

Long Term Care 101: Part 1 - The Basics

This week we're kicking off the conversation about long-term care in our quest to dispel the mystery around what many find to be an intimidating subject. It doesn't have to be so scary, and we're committed to simplifying it for you. Since November is Long-Term Care Awareness month, we can't think of a better time to start the conversation. We're rolling out Part 1 of our month-long series about long-term care.


Say the words long-term care and chances are you think "nursing home". The reason so many people have this idea in their mind is because for years, these policies were marketed to you by insurance companies as " nursing home policies". Today, that couldn't be further from reality. These policies have changed greatly over time to accommodate how our lifestyles have changed, and the way that we want to receive care today, and nursing homes are just one of the options available to you.

Needing long-term care places an enormous emotional, physical, and financial strain on loved ones and family members. That's why having a plan is so important. Even with long-term care posing one of the most significant threats you can face to your financial security, most people know little about it. And what you do hear isn't always accurate. So let's jump right in . . .

Q: What is long-term care?

A: To understand long-term care, let's first clarify one point of confusion. Many people confuse long-term care with hospital stays, and other medical care, and health insurance plans generally do not pay for long-term care services. Your health insurance pays for medical care, and doctors visits, medications, etc. Health insurance does not pay for long-term care.

Long-term care is care that you need if you can no longer perform certain tasks for yourself. These tasks are called "Activities of Daily Living", or "ADL's". To better understand this, think of the activities that you did when you woke up this morning: you probably stepped out of bed, walked to the bathroom, used the restroom, took a shower, got dressed, ate breakfast, got in and out of a chair. When performing two or more of these ADL's becomes impossible without assistance, you have a long-term care need. There are other support services that can also be covered with long-term care insurance policies that involve everyday tasks, such as housekeeping, meal prep, and managing money to name a few.

There are many ways you can find yourself in this situation: you can have a stroke, Alzheimer's, dimentia, disability, various health conditions, and simply old age just to name a few. While most long-term care claims occur later in life, there are a significant amount of claims that occur at a much younger age due to disability, or an unexpected illness, so it is by no means strictly an "old age" thing. This type of care is generally required full time and can become very expensive!

Q: What are the odds I'll need care?

A: Many people find it hard to see themselves needing hands-on assistance with basic living activities like bathing, getting dressed and eating. So they avoid thinking about it altogether. The U.S. government reports that 70% of people who reach age 65 will require long-term care services at some point in their lives.

Q: What is long-term care insurance?

A: Long-term care insurance is where you pay a reasonable premium to protect yourself from a very catastrophic risk. By having a long-term care policy you are literally transferring the risk of having to pay these costs out of your own pocket and putting that risk onto the insurance company to shoulder. We'll talk about what the costs for long-term care services are in next week's post. (HINT: It's very expensive!) With long-term care insurance you are protecting your lifestyle, your assets, and your family as it gives you options. Options to receive care how, and where you want it if you find yourself needing it. You don't have to deplete your savings, or sell your home to pay for the care you need. After all, you didn't work your entire life carefully saving for retirement to blow it all on an unforeseen medical issue did you? Or course not. You worked to create a lifestyle, an estate, provide for your family, maybe create an inheritance for your children and grandchildren. Ensure you'd be able to maintain your standard of living throughout retirement. Relax, and travel. See the world. Indulge in hobbies and interests you've never really had the time for. You earned it. But if you don't have a plan in place to protect all of that, there is a very serious risk looming that can take it all away.

Q: Do long-term care policies only pay for care received in nursing homes?

A: Absolutely not! The way we live our lives and the way we want to be taken care of in our later years has changed, and the policies on the market today have evolved to reflect those changes. The largest benefit that most of today's policies have are the ability for you to stay in your home and receive care, which is what 77% of Americans prefer.

Others would rather live with a family member or in some type of supportive housing where there are more social activities that they can take advantage of. You could receive care in an adult day care facility, an assisted living facility, board and care homes, or a nursing home. The good news is, there are many options available out there besides just nursing homes. We are continuing to see new options pop up as we are seeing retirement care communities that are getting more and more creative with incorporating this type of care into comfortable settings so that as residents age and progress into needing more of this type of care it is available on-site.

Q: How come I'm just now starting to hear about long-term care?

A: Long-term care isn't something that our grandparents (or parents, depending on your age) really needed to worry about, but times have changed. Long-term care is fairly new (within the last 30 years) and that is simply because with the advances in medicine and technology we are now living longer than ever before. The average life expectancy in the United States did not reach 65 until approximately 50 years ago. Today, the chances of you living into your 80's, 90's, and even into your 100's is far more common. With that increased life expectancy comes a much higher risk of needing long-term care. Experts estimate that by the year 2040, we will have over a million people in the United States over the age of 100!

Q: Are all long-term care policies the same?

A: No, there are some important and very significant differences between policies. In a nut shell there is no "one size fits all" policy. Everyone's needs, budget, and goals for this time in their lives is different. What's important to you will be different from the person next to you. Your long-term care insurance policy can and should be customized to fit your specific needs.

There can be huge cost differences from company to company for comparable coverage, and each insurer charges different rates, offers different discounts, and are flexible with different health issues. There are also differences in the way services are covered (whether you're reimbursed only for costs incurred up to a certain limit, or whether it's a fixed monthly amount). A great agent will easily walk you through the process of what you need to know to find the best coverage to fit your needs.

TIP: Be sure to work with an independent agent. Someone who is independent has the ability to shop multiple insurance companies for you and compare coverage and costs. Since there can be such significant price differences from insurer to insurer it pays to have them shop around. Someone who works directly for an insurance carrier (they are not an independent agent) can only show you policies that that company has to offer. This may or may not fit your needs. It is always better for you to have options! So make sure you work with someone who has the ability to shop the market and look at multiple carriers and policy types for you.

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Join us next week for Part 2, where we'll cover just how much long-term care services really cost . . . you'll be in for a shock! Have a question you want us to answer about long-term care? Let us know in the comments below, or email us at:

Ready to get started on your long-term care plan? Give us a call, we'll walk you through the process of getting the best plan in place for you.

Call Tenaya Insurance Services at (925) 322-8073 today!

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