Written by Jackie Slaughter—February 5, 2013
The Long-Term Care Insurance (LTCi) market has experienced a year of change. Carriers have pulled out of the market; the ones that remain are revising the traditional coverage to a more flexible plan after finding the cost of care to be too steep. Meanwhile, benefits are being revised and premiums have increased.
Despite these hurdles, LTC insurance has never been more important. It can help save your clients’ retirement. It can help save families a lot of stress and hardship. That is what is important. We don’t look at these changes as a reason to stop talking to your clients about LTC. We look at them as the reason you should help them explore all their options when it comes to funding their long-term care risk. It’s up to you, the agent, to help them find the plan that is right for their family and their budget.
This blog series will explore the different options available to your clients, including traditional LTCi, linked benefit products, short-term care and stand-alone home health care. Each blog will lay out details about each option so you are armed with the knowledge of when to use which one.
What is Short-Term Care?
Well, as the name implies – it is short. Benefit periods can be 100, 200 or 360 days. Short-Term Care needs most often arise after an accident, illness or injury where the client is treated initially in the hospital and needs additional care in his or her home, a nursing facility, assisted living facility or hospice facility. In order for clients to qualify for Short-Term Care, they need to not be able to perform 2 of these 6 ADLs:
Pros and Cons
-Simple to present, easy for clients to understand
- Helps individual remain independent as long as possible
-Helps relieve the burden for loved ones
- Most are not Tax Qualified Policies
- Most are not Partnership Qualified
- Most are limited to one year for benefit periods
- Most do not require or offer inflation protection
- Most do not offer the ability for family members to provide support
- Most have a 6 month look back and forward for pre-existing conditions
Jane is a healthy 43-year-old who has saved $10,000 to use as a down payment on her dream home. Jane loves hiking and is always looking for more challenging trails to conquer. One day, while hiking a new trail, she loses her footing and falls several yards down a gorge. Her entire left side is severely injured, but with physical therapy, her doctors expect her to fully recover within six months. Jane is quickly discharged from the hospital and is now at home and needs help dressing, bathing, getting around the house, and getting to and from physical therapy while her husband is at work.
Jane opts to hire a home health aide 10 hours a day, 5 days a week, at an expense of approximately $21 an hour, or $1,050 a week. This quickly adds up to over $25,000 during her six-month recovery period. Fast forward to Jane’s recovery, she now has no savings to put toward her dream home and owes more than $15,000 in recovery costs. For around $45 a month, a Short-Term Care policy would have covered the majority of her recovery expenses.1
Michael is a 73-year-old suffering from chronic back pain, and his doctor is recommending disc replacement surgery. During his recovery, Michael would need help getting up from chairs and bed, dressing and bathing. He plans to hire a home health aide to provide assistance for six hours every day at a cost of $126 daily. He has a long-term care insurance (LTCi) policy that will begin paying benefits after he meets his 90-day elimination period, but in the interim, Michael expects to incur more than $11,000 in care expenses. A Short-Term Care policy could help cover most of the cost incurred while Michael waits for his LTCi benefits to kick in.
*These are hypothetical examples from MedAmerica Solutions
1 Example assumes a 200 Day Benefit, 20 day EP, $210 Daily Benefit, No Inflation, Issued at age 43.
Marketing/Sales and Target Market
Look for clients who:
- Non-buyer’s remorse clients who wish they purchased LTCi at a younger age and now find it cost prohibitive
- Working age adults who may not be ready to commit to LTCi, but want some coverage for an unexpected accident or illness
- Clients who have LTCi and want supplemental coverage to pay for the care during the LTCi policy’s elimination period
- Clients interested in LTCi who can’t afford a traditional policy
Also, Short-Term Care can be a good fit for people who are:
- Recovering from a traumatic medical event requiring a short period of care at home, nursing home, assisted living facility, or adult day care
- Dealing with the onset of a chronic condition requiring short or long term care
- Family needs some time to make decisions about how to handle a long term care event
Medico – Recovery Care Platinum
For more information on LTCi and Short-Term products call a marketing coordinator
LTCi Department 1-888-456-8884 (option 4)