Long-Term Care Insurance - State Plan Members Only

What is Long-Term Care
Long-term care is a variety of services provided when an individual is unable to take care of themselves without the assistance of others due primarily to an injury, chronic illness, advanced age or cognitive impairment. This loss of functional capacity requires that the individual receive personal care services because they are not able to perform activities normally associated with daily living. What are the activities of daily living? — bathing, dressing, transferring (getting in and out of a bed or chair), eating, toileting and continence. In cases of cognitive impairment these maintenance activities may involve supervision of the individual. Covered individuals qualify for benefits by demonstrating the inability to perform two of the activities of daily living or by suffering from cognitive impairment.

Long-term care insurance does not pay medical bills — that's the purpose of health insurance or Medicare. Long-term care insurance also does not replace income — continuing income is provided by a retirement plan, disability coverage or social security. What long-term care insurance does do is cover services associated with daily activities of living to help you keep your independence and stay in control of your care.

Why is Long-Term Care Insurance Important?
Long-term care insurance is important because of the likelihood of needing the types of services covered by the insurance and the cost of paying for those services. We frequently think about long-term care services being focused on the elderly. It is important to remember that about 40% of the individuals needing long-term care services are of working age. About one-third of stroke victims are under age 65.

Overall there is a likelihood that one-half of the population will need long-term care services during their lifetime. And long-term care services are very expensive. Nationally and in Tennessee the average cost of nursing home services runs between $45,000 and $50,000 per year. Long-term care services provided in the home costs about $26,000 per year. Most employees cannot afford that level of expense even for short periods.

The limited functional ability of a family member has an impact on the family members that care for that loved one. This in turn affects the lifestyle of all family members and could jeopardize the family's financial security. Informal support systems of family and friends may not be available particularly in today's world where families are spread out and live great distances from each other

Additionally, a majority of caregivers are women and about 2/3 of them already work outside the home. Over half of the caregivers report missing at least one day of work and other attendance issues. One in five caregivers report leaving their jobs either temporarily or permanently.

Why Do People Buy Long-Term Care Insurance?
We all have limited financial resources to pay for the potential expense of long-term care by ourselves. And often these assets are obligated for a college education, paying off the house or serve as a retirement nest egg.

If you are rich and have assets in the $1 to $2 million range, you likely don't need this coverage. Additionally, if you have limited income and limited assets to protect, you also may not need this coverage. You can be impoverished and qualify for long-term care through Medicaid. However, there are limits to the support we can depend on. Medicaid requires you to spend down assets to $2,000; it defines assets as cash, stocks, bonds, savings and non-household property. You may be able to keep all but one motor vehicle. Then you have to surrender all income other than $30 per month. Trying to protect a family's wealth by transferring assets from one family member to another and subsequently qualifying for Medicaid is difficult. There is a 36-month limit on how far in advance you must dispose of your resources (60 months for irrevocable trusts). Medicaid reserves the ability to recover from the person's estate in the event of their death and there is a penalty, including jail time and a fine, for failure to properly report these factors.

The Key Features of the Long-Term Care Policy
The program is structured so that you make choices in the amount and duration of coverage. The benefit choices are the ones, other than your age, which will determine the amount of the monthly premium.

First, you choose from three daily benefit amount levels: $100, $150 or $200 per day for room and board in an assisted living or nursing home setting and a corresponding benefit for home care, adult day care, hospice and respite care of $60, $90 or $120.

Next, you decide on the benefit period of either three years (1095 days) or five years (1825 days). This is the duration of time your benefits will last if you spend the daily benefit amount. Should you use less than the daily maximum, your benefits will actually last longer.

And, finally, you may choose to add inflation protection, which will increase your daily benefit amount at the compounded inflation rate of five percent annually. If you choose not to include inflation protection, the amounts will remain the same regardless of the impact of the cost of these services due to inflation. Choosing the inflation protection option will result in a higher premium; however, the value of your coverage you purchase today will be increased to offset rising long-term care costs.

In addition to these choices, there are a number of fixed features associated with the long-term care plan. There is a 90-day elimination period that must be met — much like a deductible — by having an individual qualify for long-term care services before the insurance coverage begins to pay for those services. To qualify, the individual must be unable to perform two activities of daily living or by needing supervision due to cognitive impairment. Receipt of long-term care services is not a requirement for meeting the elimination period; certification of activities of daily living or cognitive impairment is all that is necessary. Meeting this deductible qualification does not mean that an individuals' needs be consecutive in day usage as long as the individual's needs are evident within a 365 day period.

The plan covers respite care, providing temporary care up to 21 days per calendar year at home or in a facility to give the primary caregiver a rest. Bed reservation is also covered for up to 21 days per calendar year to hold your bed in an assisted living facility, nursing home or hospice facility if you have to go to the hospital. The plan even covers home health agency services for household tasks that don't require a trained home health aide.

The plan is guaranteed renewable, which means it can never be cancelled as long as you pay your premium, and the premium can only increase if it goes up for an entire class of people, not just because you've used the benefits. The coverage is portable, so individuals may continue to pay premium directly to the insurance company under the same terms and conditions as active employees even after they terminate employment. The plan includes a waiver of premium so that when an individual qualifies for benefits and satisfies the elimination period, they can discontinue payment of premium and the coverage will remain in effect.

Premiums and Enrollment
New employees have 90 days to enroll and have guaranteed issue of coverage. Employees may sign-up for coverage by completing the enrollment form enclosed in the enrollment kit, over the phone by speaking with a customer service representative at MedAmerica Insurance Company or on-line via the website at www.ltc-tn.com. The employee's spouse, eligible dependent children, parents and parents-in-law may also apply for coverage; however, they must provide information about their health status. After the initial guaranteed issue period, employees may still apply for coverage, but will be subject to the same medical underwriting review for approval to participate.

The premiums for long-term care insurance are based on your age at the time of enrollment. Therefore, the younger you are when you apply, the lower your monthly premium will be. Please see the Long-Term Care Premium Page for a complete list of premiums.