According to every survey that I have seen on reasons for buying LTC insurance, the number one reason listed is to protect the assets. But, should this be number one? Many agents have convinced themselves that LTC is all about protecting the money. While protecting the assets are important, I would question whether it should be the most important. I personally have experienced several LTC needs throughout my immediate family. In each case the primary concern was not the finances but the loved one that was in need of care. With the assistance of home health care and assisted living we were personally able to avoid a nursing home stay for my father in his final months. By having LTC insurance, we could choose the nursing home that worked best for our family for my mother in law. Whereas protecting assets should be a goal, I think what is more important is providing a plan that gives the family choices, control and assistance in the care that is most appropriate for the given situation.
If LTC is all about protecting assets, then Medicaid becomes a primary competitor. But, Medicaid does not provide the care options that private pay can provide. Facility options can be limited, HHC and assisted living may not be available. A few years back while attending a meeting led by the Department of Insurance, the head of the Family and Social Services Administration who oversees Medicaid in Indiana told us that according to their studies, the estimate that around 33% of the people in the nursing homes on Medicaid could and should be cared for outside of the facilities. Why would anyone want to put their health care in the hands of the Government if they had other choices available to them.
According to new research by the Urban Institute, Rich Johnson states that about 40% for the older adults have a household wealth between $100,000 and $499,999. Only 12% of older adults have assets exceeding $1 million dollars. If the LTC product is all about protecting wealth, then the market is limited to the financial planners. But, if it is about care, choices and control then this product is of great value to the most common seniors in our society. If I can offer a plan that could help you and your family avoid a nursing facility and give you more options for care; if I can offer a plan that will assist the caregivers and relieve them of stress and anxiety; then I have something of value to offer to that client.
According to new studies, Genworth tells us that 70% of their claims begin outside the nursing home. 90% of their claims are under $150,000. Boston College now tells us that the average stay in the nursing home for a man is down to 11 months and 17 months for a woman.
A 2-year plan would provide coverage for the majority of stays. It would open doors for alternative more desirable care. It could help keep family members from going or delay stays in a nursing home. It would provide relief for those families that will take on the responsibility of caregiving. It can do all this at a price that would be more affordable for the average older adult.