Power of Attorneys Graham Law Offices P.A. Attorneys Boise Idaho

Susan Graham: Thank you very much for participating in this call with us. My name is Susan Graham. I welcome you to this series of virtual estate planning lunches with me and my guest today, April Howard. The virtual part of the lunch is you provide your own lunch and listen on your own phone, to make it convenient for you to be able to gather this information.

Today's planning topic is: "Understanding Long-Term Care Insurance." First I will briefly tell you about myself. I'm a Certified Elder-Law Attorney in Boise, Idaho and have been a lawyer for thirty years. My practice is limited to representing people in retirement to help protect their independence, their assets and their families from the unnecessary interference of others, excess taxes, the expenses of the probate court, and catastrophic illness costs. I offer this program to inform the public and my clients to help them understand a variety of ways to have greater personal protection.

April Howard is the perfect person to be visiting with us today. She has been an insurance agent for over twenty years. A certified senior advisor, she owns her own agency, Howard Insurance Agency, located in Boise. She will be talking with us about understanding long-term care insurance because she handles those products, and has for a long time.

Let me cover a few brief housekeeping measures before we get started. If you want to visit with either April or me, I will give you that contact information at the end of this program. This workshop will last thirty minutes. You may want to have a paper and pencil available to take notes. The program is being recorded and we will have a transcription available on our website: http://www.graham-lawoffice.com/. That will be available within seven days.

So, now let's get to today's topic: "Understanding Long-Term Care Insurance." April, let's start with the basics. We're talking about long-term care. What is long-term care? And what could cause the need for that type of care?

April Howard: Long-term care is a condition that's going to last over 90 days. It's actually maintenance--something that you're not going to get any better from. Your doctor says that, "I can't do anything else for you and you're going to have to either go into a facility or have home health care and it's going to last over 90 days." For instance-and what causes long-term care-it could be a matter of different items. It could be an accident, and I'll give you an example. I had an older gentleman that went out to get his mail. He fell on the ice and broke a hip. Then, accidentally, a car hit his leg and broke his leg. Now, he could get better-it's going to take a while, it's going to last over 90 days-but he could get better. As it turned out, he needed to have long-term care, and he preferred to have it in his home. That works. Other things: Parkinson's Disease, strokes, heart attacks, Lou Gehrig's, Multiple Sclerosis, there are so many things that could happen. For younger people we see strokes, you know, bad heart attacks, and skiing accidents. So, normally that's what we see, or just pure aging and dementia, Alzheimer's. I have one gentleman who has been on care for nine years and he has Alzheimer's. He's not under any pressure because he doesn't know who he is. I have several people on care. Being in this business and caring for my people you see the different things that could result in the need for long-term care.

Susan Graham: When you talk about long-term care you refer to activities of daily living. What is that?

April Howard: I like to tell people just like when you get up in the morning, you have transferring out of bed, that's one of the activities of daily living-transferring. You normally get up and go the bathroom, that's toileting, then you usually jump in the bath tub or shower, bathing, and then you usually come in and try to get dressed, dressing, and then you go into the kitchen, eating, try to feed yourself, and then continence and being mentally impaired. So, those are the things and you've got to be unable to do two of the activities of daily living. Now you're going to ask, who determines that? Ok, usually your doctor. Also, the insurance company has an assessment team that visits with the doctor to determine that you cannot do two of the activities of daily living. So, for instance, if you had a bad back surgery, it may take three or four months before you could do your own getting up (transferring), or you'd need help going to the bathroom or you'd need help bathing. As long as there are two of the things that you can't do, then your policy kicks in.

April Howard: In home health care starts at about $16 to $17 an hour. The first visit is always $280 for that one visit because they need to determine what type of care you're going to need. When we look at nursing homes, I like my people to be in assisted living facilities and not a nursing home, because there are more activities in the assisted living facilities and they feel more independent. I like them to have their own rooms unless they want to share one. I've not met too many people who want to share a room unless it's with their spouse. In a nursing home, you're looking at $79,000 on up. The cost of care is going to go higher and higher. The reason for that is that a caregiver's life span is about two and a half years of taking care of people, of patients. They have to be trained how to take care of them. When you're looking at a nursing home, and it's a missed idea here, people think-and you've been told-that long-term care will only last two, two and a half years. The problem is, I have people on care who have been in a facility for nine years. So, a three-year policy wouldn't have done them much good. A lot of times the people really needed care, but their spouses had been doing the care for two, three, four years before they actually break down and say, "I need the care. My spouse can't provide my care anymore."

I really like the men to stay in their own home, if you give a man a remote and let somebody do the care, and let his wife be in charge, it is great. With women, we are more social animals, and we do much better in assisted living facilities.

Some people have that idea that home health care is less expensive. I'm here to tell you it's not that much less expensive. There's modifications to your home, there's all sorts of things you have to have, you have to have people coming in and out of your home, it's a big detail.

On home health care, when you're buying policies, you want to make sure you have a monthly payout for home health care because of the cost. One day it will be $280, the next day it may be you only have them in for three hours, and the next day you have them in for four hours, so it varies daily. The insurance companies, if you had say a $150 per day benefit, if you have a daily benefit, the only thing they're going to pay is up to the $150. Anything over that, you're going to pay out of pocket, or if you have a monthly plan it's rounded up for the whole month and then whatever it is-if it's over the monthly amount-yes, you would pay, but generally it's never over that amount.

Susan Graham: When you have a policy that covers care in the home, can you hire the neighbor lady to come in and provide that care, or does it have to go through another company?

April Howard: It depends on your policy. A lot of the policies that I sell have a provision to train somebody that you want to come in. I also have a policy that's fabulous for the very young people, and I have young people that are on care, that pays direct to their bank account and then they do not have to show receipts or anything and they take care of it. Remember the money you get from long-term care, for your care, is tax-free dollars, it's not something you're going to be taxed on.

Susan Graham: What are some of the ways that people pay for this care? I know they can buy insurance, but what are the other ways that people pay for that care?

April Howard: The other means you have are your social security check. If you're young, under 65, you don't have that check, and then it's going to be your assets. Maybe you've got pension checks, maybe you've got investments, your life savings, and after you use up your life savings, then you would possibly qualify for Medicaid, and that's something that you know a lot about. The other thing is, if you transfer that responsibility to an insurance company, they have to pay, and it's a great, great value for your dollar. I used to think that I could save up enough money for long-term care-and by the way I do have a long-term care policy and I've had it for years, and I'm so thankful that I have that-but, when you start using your assets, some of them are not liquid assets, some of them are property. When you need that money, sometimes it's not readily there and you have to wait to get the property sold. Then you take what we call a fire sale, you take the first offer because you're desperate to get the money. So, transferring that responsibility to an insurance company makes sense. And a policy is very reasonable considering how much they pay out.

Susan Graham: You did just briefly touch on Medicaid and Medicare; Medicare just covers a short time period if you meet all the requirements.

April Howard: Right, and they can stop that. They say they have 100 days on Medicare, however, depending on the type of care you need, if it's maintenance care, they can stop it.

Susan Graham: That's correct, because that has to be rehabilitative care and you must be improving during rehabilitation.

Susan Graham: And using the Medicaid program, that social safety net for people, is becoming more difficult to access. So, in my opinion, it certainly makes a lot of sense to look at paying for this care with insurance.

April Howard: What's really scary, Susan, as far as I'm concerned, is having more and more people needing care. The baby-boomer generation is increasing, needing care, and the question is: where's that money going to come from? We don't have enough taxpayers to pay for that--where are we going to get the money? This is not a scare tactic. It's taking care of yourself and accepting the responsibility. Yes, I want Medicaid there. I want Medicaid there for the people that cannot afford to have their own care. I know there are widows and widowers who are living off $600-$700 a month; they cannot afford that. The best time to buy a policy is in your 40's. The younger you are the less you're going to pay for it. We're being kept alive longer, maybe not healthier, but longer. With the medical technologies they have now they can keep us alive for a long while.

Susan Graham: I saw some statistic that said we all have a 70% chance of needing care before we die.

Susan Graham: Whether you're at home or some place else, of course, nobody thinks they're going to be in that 70%.

Susan Graham: You've already explained why somebody needs to purchase long-term care, but what does that cost?

April Howard: If you're 40 years old, you're going to pay $1,200, at the most, a year, and you would start out at probably $120-a-day benefit. It just depends on your health, your age.

For people with diabetes or heart trouble, it's going to be very difficult to get that type of a policy. There are companies that will insure people, but their rates are so much higher.

We really take a look at what you can afford. It has to be affordable. That's a must. It just has to be.

And then you have to look at the company, is that company going to be here when you need the coverage? That's a concern for me. I really look at my companies. They have to be stable, and, just like my very own company with C.N.A.; C.N.A. no longer sells long-term care insurance. You wonder, as an agent, what happens to all those policies that I sold with C.N.A.? They're in a trust where they won't get a rate increase. They will be paid out just like anything else. They will be taken care of and another company has taken over that responsibility. I have people now on claims with C.N.A., so it was a great education for me because that's my own company with my personal long-term care and it did worry me. I'm a professional in this industry and if it worried me, you can imagine what it would do to my clients. Therefore, I had to go to each one and make sure they understood what was going to go on.

Susan Graham: And when they get that long-term care insurance, is there an automatic premium increase, or is the premium frozen?

April Howard: You have to add that to the policy. It's an option to add inflation guard. There are several different inflation protections. In Idaho it's five percent, and it's five percent for years so your money grows five percent every year. Even when you're on care, it still grows. If you just bought a policy with no growth on it, you're going to pay much less, but you're not going to have the money you need because the cost of care continues to grow every year, too.

Susan Graham: Right, that just makes sense. Because the cost of care used to be around $4,000 amonth and now I have clients paying $7,000 a month.

Susan Graham: How can you be denied a long-term care policy? What are the features that an insurance company looks at that would cause them to deny someone purchasing a policy?

April Howard: They're looking at your health. Like I said, diabetes. If you had Multiple Sclerosis, you could not get a policy. If you had a major heart problem. Anything that the companies are looking at, such as how long you might live in the nursing home. They used to really grade hard on cancer. They've backed down on that now because the cancer patients are being cured or they're living for a long time and they can do everything that they've always been able to do. So, cancer's been one issue that they've backed down on. But Multiple Sclerosis has been the hardest one, or Parkinson's, or if you have something already that you had that's been diagnosed, then no, they would not let you have the insurance. After they have the policy issued, and then you are diagnosed with Parkinson's, too bad, they've already issued the policy, they cannot change their mind and say, "Well, you have the policy this year and you got Parkinson's, sorry, we're canceling you." They can't do that.

April Howard: No. The only way that a company can increase the premium rates is if they increase the rate for everybody they've got on the books. Other than that, no they cannot increase your rate just because you've got an illness. No, they cannot do that, it's against the law.

Susan Graham: Most of my clients don't even think about long-term care insurance in their 40's. Many people wait to consider long term care insurance when they are in their 60's.

April Howard: Well, I think we're going to have to re-educate them because right now people are learning the money's not going to be there when they need it. By starting younger, you're going to pay less out of your pocket for the care. I had one lady that was 83 when she took out her policy. The premium was over $10,000 a year. I was looking at that and she just laughed at me and she said, "You know, if I would need this, they're going to pay a lot more for my care than me paying $10,000, that's cheap." I kind of worried about it. Well, she had her policy for a little over three years, and now she's been in a nursing home for over five. And they've paid out way more. She paid $30,000, and they've been paying out almost $80,000 a year. The more people that buy their policies and take care of it the way the premiums stay low, so it's not inexpensive but it's just like life insurance. We all know we're going to die. We don't know if we're going to need long-term care insurance, but it's a big gamble that we're going to, because they say that two out of every three people are going to need long-term care. If you plan for it, then you protect your family and that's the biggest reason to have long-term care. Protection of your family. Let them continue living in the lifestyle that they have currently. I tell people that you don't want your family to take care of you. You want them to be your family. You don't want them doing the medical lifting and changing diapers and doing things like that. You want them to be happy. It's very important that people realize how important long-term care is now.

Susan Graham: I understand that they get a lot more choices with long-term care as well because they can stay at home or choose which facility they stay in.

Susan Graham: And under the Medicaid program there are limited numbers of facilities that you can participate in and some of them are quite modest.

April Howard: Well, not only that, you have no choice about who your roommate is. If you have a long-term care policy, you have choices. And, as I said before, I found that my people--especially men--if they are left in their home, they are so much better off than having to go somewhere else and not have their wife or their children carrying them or taking care of them. Just have the children or family in charge. And they like that.

Susan Graham: If someone wants to look into purchasing long-term care insurance, what steps should they take? What are series of steps that you would recommend that they take to be able to determine if it is right for them?

April Howard: There's a lot of information and I usually sit down with them and we go over their income. You know, is this going to be reasonable for them? I like them to have a lot of publications that I use, and I like them to really understand what long-term care is about. They also, in this day and age, need to look at their friends or family that have had care before. How did that turn out? What went on? Life is changing. I said the worst thing that ever happened to us was to remember the Waltons. In the Waltons, Grandma and Grandpa lived with you, but Grandma and Grandpa were healthy. If you remember, Grandma and Grandpa did a lot of work, and the Waltons were supposed to be realistic. But in all facts, it wasn't very realistic.

Susan Graham: You have a handout that you gave me this morning, which is entitled, "What is it, and do I need it?" We're going to put that handout on our website to make it available to anybody who wants it. It's also available on April's website which is: http://howardinsuranceagency.com.

Are there some additional things that people need to know about long-term care insurance that I forgot to ask you today?

April Howard: You need to really check the policies. I like to give my people like three different companies so they can look at the benefit of each policy. Some policies have a benefit for a remodel of the house, not in the house per say, but fixing it so that it is conducive for the handicapped. Your bathrooms-I don't care what house you're staying in-are not built for handicapped people. Ramps may need to be built and we need a policy that has that. The other thing, a lot of times people are living alone and they need an emergency alert system, and some of the policies pay for that. My own mother has a medical alert system that is just fabulous, and they call and check to make sure every month that it is working. You never know if you're left alone and you would fall--you need that medical alert system. We look at the monthly benefit for home health care versus a daily benefit, my caution is, is when people have a long-term care benefit on your life policy, the problem is with that, how do you get the money out to pay for care, and how does the facility or the heath care facilities bill a life policy? It's a very difficult process. So I wouldn't be lured into that, thinking that you've got long-term care, because there will not be enough money in there for care. My lady, the older lady I told you about, was shipped down to Arizona. She was in a home here in Boise, but her daughter lives in Arizona and she wanted to be near her daughter. Can they be transferred from one facility to another or one state to another? Yes, they can.

Susan Graham: I too have long-term care insurance. I bought it a number of years ago, and I was intrigued by how many different ways there are to pay for that. You can certainly keep paying on a monthly basis, or you can pay over a limited time period and be done with it by the time you're 65, or 70, or 80, or whatever age you want.

April Howard: You need to put the math to that. Some people buy their long-term care policy when they are 60, but if you paid it off by age 65-you would be paying a tremendous premium. We used to have, and there's only, I think, one company now that did a one-time pay, and I had five of those that paid just one time. It was a very high premium, but they wanted it done and over with, and I'm thinking, wow, that was a lot of money. Now I look back, nobody can ever increase your rates, everything grows, it's perfect. And a lot of people are looking at a 20-year pay, and then there's lifetime pay. Now, I have some of my people say lifetime pay makes sense because you don't know when you're going to need it, and you may pay less. So, it just depends on how you feel about it.

Susan Graham: If you, the listeners, would like to investigate the use of long-term care insurance for yourself or your loved ones, I'd encourage you to call April. I greatly appreciate her sharing this information with us today. Her phone number is: 208-345-4171. Or, go to her website which is: http://howardinsuranceagency.com.

Susan Graham: There is no charge for meeting with April. She just wants to share information with you and see if she can help you. Also, if you would like to make an appointment with me to review your circumstances and see if there are some steps that you can take to improve your position, call my office at 344-0375 to set up an appointment. There is no charge for that first appointment unless we are doing planning to qualify for Medicaid.

If you want to print out the handout provided by April, again go to my website or her website.

If you would like to participate in future programs, call my office and make a reservation to do that. The next one is Tuesday, February 19^th, at noon. We will be talking about "The Benefits of Hospice" with Wendy DelGrosso, of Harrison Hope Hospice. And then on Tuesday, March 18^th, at noon, Tom Prohaska of Idaho Trust National Bank will be talking about "When to Use a Corporate Trustee."

April, I greatly appreciate you spending your time today and sharing your wisdom. I appreciate you, the listeners, for giving us the opportunity to give you the information to help improve your lives.

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

Copyright © 2008 by The Graham Law Office, P.A. All rights reserved. You may reproduce materials available at this site for your own personal use and for non-commercial distribution. All copies must include this copyright statement.

THE GRAHAM LAW OFFICE, P.A.

Boise, Idaho