Money in the Middle

Sandwich Generation Talking About Money Up, Down and Across Generations

Posts Tagged ‘long-term care insurance

When Your Long-term Care Insurance Rates Rise

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Over the past several months, many long-term care insurance policy holders have received unwanted news from their LTC insurance company:  your rate is going up.

There are a number of reasons prices on policies issued years ago are going up now.  The current low-interest rate environment; more people are holding onto their policies rather than lapsing (stop paying); and people are living longer so more are expected to use their benefits than originally projected. 

But raising rates?  Can they do that?  You probably don’t remember it, but your policy includes language that the rate can be increased in the future.  And many companies have held off on increases.  But to maintain a financially stable program, the rates have to support potential claims.  Those insurance through the Federal government employees long-term care insurance program found that out last year when some rates increased as much as 25%.

It’s also important to recognize that the increase does not reflect anything about you as an individual.  When companies make these changes they do so for an entire class of policy owners, i.e. people who bought a certain policy during a certain period of time.  So you aren’t being singled out. 

You’ll receive a letter from the insurance company telling you when the rate is going to increase and the options you have if you don’t’ want to pay more.  

So, what are your options?  

Cancelling should be the last resort.  Unless you have a provision in your contract that lets you stop the policy and receive the benefits you’ve accrued to date, you will lose all the money you have paid in for the insurance.  Work with the insurer to find a benefit level that you can afford. 

Buying a new policy at a lower cost usually isn’t an option.  LTC insurance is priced by the age at the time you apply – the older you are, the more it costs.  So switching probably won’t save you money if you’ve had your policy more than a few years. 

If you are happy with the policy and you can afford the rate increase that solves the problem. 

But, if you can’t afford the increase, you can change the benefits.  The letter will outline what you can change and the impact it will have on your price. 

A good place to start can be the additional “riders” you purchased.  See if they are still as important to you as they were when you bought the policy.  Be careful about cutting inflation protection if you have it (the percentage at which the daily benefit increases each year — for example, 5% compound growth.  That’s what keeps your pool of money growing to keep pace with the costs of care when you need it in the future. 

Then take a look at the core benefits: daily benefit, policy years, and elimination period (deductible).  Your agent or the company can help you work through the tradeoffs.  Ask about the average costs of care in your area.  That can help you determine how far your coverage will go.

For those in the sandwich generation, if your parent is finding it difficult to pay the higher amount you might want to consider chipping in and paying the difference.  Continuing the level of coverage may be a huge financial relief in the future for all of you.

Don’t wait until the last minute to make the decision.  Give yourself time to review and consider the financial tradeoffs.


Written by Laura Rossman

August 13, 2010 at 3:28 pm

A New Plan for Long-term Care

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Nothing like gathering around the holiday dinner table to remind ourselves we’re getting older – as in aging.

 And the older generations is, well, older too.  And caregiving, for Gen X and baby boomers,  is a huge stressor…financially and emotionally..

 So the prospect of a government sponsored long-term care program should come as good news.  And it is, sort of.  Because the fact is that so many of the facts about the program are still unknown that it is hard to tell what kind of benefit it will be for the future.

 I’m referring to the CLASS Act program in the Health Care Reform bill.  It hasn’t gotten much notice yet.  It is the first time a widely available-long term care program will be in place to help older and disable individuals who can care completely for themselves.  The timing couldn’t be better with the first of the baby boomers turning 65 next year. 

CLASS stands for Community Living Assistance Services and Supporters Act.  It sets up a new voluntary national program which you will be able to sign up for, pay a monthly premium and receive benefits after five (5) years. The benefit is expected to be $50-$75 per day.   It will generally be offered through employers and workers will have to opt out of the program.  For those working but self-employed or their employer does not offer the program, consumers will be able to sign up directly. 

The benefits of the program, the cost to consumers and how it will work are details yet to be determined.  The government has until October, 2012 to issue rules.  Detractors fear only those who need the benefits will sign up, sending premiums high and bringing the viability of the program into question.  Of course, in any insurance program like this, it only works if both the healthy and not-so-healthy sign up.  

 So, what do you do now? That all depends on your situation, your health and health history and your appetite for risk.

 1. If you have long-term care insurance, hold onto it. 

2. If you are in your 50s or older, waiting for the government program might be a pretty high risk plan, since the details are incomplete right now.  But it is clear that you’ll need to pay in for five years before you can receive benefits.So waiting might not be realistic.  Or, you could consider a long-term care insurance benefit level that covers some of the potential costs and leave yourself room to add the government program.  Or you could look at a higher level of premium that you could reduce later if you wanted to add the government program.  Or proceed with a long-term care plan from a private company and know that you’ll probably opt out of the government program. 

If you are younger, you need to weigh the risk, your own personal financial situation and your potential need for long-term care.

Sorry, no quick and easy answer.  Your personal circumstances should dictate your decision.  Get help from an expert who can look at your circumstances and help you think through different financial scenarios. 

3. If you can’t qualify for long-term care insurance, the CLASS Act could be a great benefit for helping to pay for care in the future. Watch for details over the next year.

 So, we’ll keep watching for details on the CLASS Act. 

And while it might not help you with today’s long-term care needs, for millions of baby boomers and those in the sandwich generation, it’s a ray of hope for how we might finance our own long-term care.

 Because if there is one thing the bill makes clear, long-term care costs will continue to be a personal responsibility. 

Some links about the CLASS Act

 Kaiser Health News   

American Association for Long-term Care Insurance

Written by Laura Rossman

April 5, 2010 at 8:27 pm

Health Care Reform: What’s in it for Sandwich Generation?

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Now that the maneuvering and rhetoric is dying down (sort of), we’re trying to figure out what health care reform will mean to us – personally.  And for most of us, there just isn’t enough information yet to understand what it will mean to our cost of health insurance or our kids.  

But there are a couple of provisions for the sandwich generation that look to have an immediate impact on older and younger generations.  If you are looking for a good summary of the highlights of the law, try these “explainer” articles from Kaiser Health News.

 Getting young adults health insurance – dependent coverage for adult children up to age 26 for all individual and group policies.  Lot’s of young adults are without health insurance as they were forced to roll off their parents policy and yet to land a job with health insurance benefits.  This give families with insurance a bit of peace of mind as those young adults find work with benefits (hopefully soon).

 Closing the Part D doughnut hole – On the other side of the “sandwich” is Medicare beneficiaries.   There’s good news for those with Part D prescription drug coverage who find they drop into the doughnut hole and facing the full expense of prescription drugs while also paying insurance premiums. If you’ve every helped someone choose a Part D plan or decipher what gets covered or not covered, you know what I mean. 

The law begins to phase out the doughnut hole in 2011 as well as require pharmaceutical manufacturers to provide a 50% discount on bran-name prescriptions filled in the coverage gap. 

This year, those falling into the doughnut hole will receive a $250 rebate.  No word yet on how it will be implemented but it’s welcome relief for Part D participants. 

Long-term Care – A government long-term care insurance program (referred to as CLASS- Community Living Assistance services and supports) was rolled into the bill and got little attention amidst the bigger issues. No details yet on how it will work or how much it will cost workers (it will generally be offered through employers and provides a minimal level of benefit ($50-$75 per day), but it gives hope to those who can’t qualify for long-term care insurance that there is a way to buy some protection against long-term care costs.  I’ll cover this more in a future post.  If you’re interested in reading more, this is a good summary from the American Association for Long-term Care Insurance (AALTCI)  

Over the next several weeks, I’ll be providing more information on what’s in the health care reform bill and how it impacts the sandwich generation. For baby boomers  planning for retirement, understanding health care costs in the future will be critical to figuring out how much money you’ll need.  A recent survey from Fidelity Investments says a 65-year-old couple today should have $250,000 socked away for health care costs in retirement –not counting long-term care costs.

 If there is something in the health care reform bill you’d particularlypleased about or would  like to hear more about, post it here.

Too High Cost of Caregiving

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If your solution to long-term care is, “my kids will take care of me,” there’s new research that shows just how high a price your children may pay in compromising their own health.

 Employees in the U.S. who are caring for an older relative are more likely to report health problems like depression, diabetes, hypertension or heart disease.

 That costs employers an estimated $13.4 billion per year, according to a MetLife Study of Working Caregivers and Employer Health Care Costs.  And some of those health care costs are borne directly by the employee.

 Here are some more findings:

 * Younger caregivers (18-39 years old) demonstrated significantly higher rates of cholesterol, hypertension, COPD, depression, kidney disease, and heart disease compared to non-caregivers of the same age.

 * Caregivers tend to skip their own preventive health screenings such as mammograms.

 * Caregivers are more likely to miss days of work and often switch from full-time to part-time to care for their elder.

 * Employees providing eldercare were more likely to report fair or poor health in general.

 * Female employees reported higher stress levels at home than non-caregivers.

 * Eldercare may be closely associated with high-risk behaviors like smoking and alcohol.

If you know anyone who is or has been a caregiver, you know this first-hand. 

While eldercare is often thought of as an issue you hit in your 50s, this survey shows caregiving responsibilities across all age groups, with some of the heaviest health toll taken by those ages 18-39.

The report, directed toward employers, calls for better coordination of wellness and eldercare programs, more work time flexibility and stress reduction seminars, among other benefits.  And while reducing employer health care costs is a lofty goal, we can’t help but wonder if in the current economic environment the call for more resources will fall on deaf ears.

But, this report can be a wake-up call to anyone thinking that having their children care for them as they age is a long-term care solution with no consequences.

It’s good reason to figure out now how to finance your own long-term care, whether though your own assets or long-term care insurance. I know the current economy makes that difficult for many of us. 

But after all the years of keeping them healthy, getting them to eat their vegetables, and get exercise — the loss of their good health for elder caregiving is too high a price  to pay.

Written by Laura Rossman

February 3, 2010 at 7:53 pm

Cost of Long-term Care Continues to Climb

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Long-term care costs continue to rise whether care is for a nursing home, assisted living facility, home care or adult day care. The increase in costs reinforce the need for long-term care planning:  how you want to receive care and how you’ll pay for it. If you are a member of the sandwich generation this is an important issue for your future and your aging parents.

 According to the 2009 MetLife Market Survey of Nursing Home, Assisted Living, Adult Day Services, and Home Care Costs.

  • Private room nursing home rates rose 3.3% to $219 per day or $79,935 per year.
  • Assisted living costs also rose 3.3% on average to $3,131 per month.
  • Home health care aides now cost an average of $21 per hour, a 5% increase;
  • Adult day services run $67 per day, a 4.7% increase.

 Many of us think that we’ll just get care at home which will be less expensive.  It all depends.  If you need assistance most of the day and night, then it is not less expensive than other alternatives.  But, home care is what most of us want, so at least use these hourly figures to help map out realistic potential costs for long-term care.

 If you think you are going to need to assist an aging parent with their care, these figures can help you better plan for financial assistance you might want to provide.

 When it comes to paying for long-term care, there are basically three choices:

You can purchase long-term care insurance to cover those costs, you can look at self-funding and wall off some of your assets into very safe investments so the money will be available when you need it, or you can hope you don’t need it and if you do deplete your retirement savings and then count on government programs.

Remember, this is custodial care not medical care.  So don’t count on Medicare or your health insurance to pay the costs of care.

Rates for care vary dramatically in different parts of the country, and even different parts of the state.  For example, in Maryland where I live, the average rate for a private room in a nursing home is $258; assisted living averages $3,873, a home health aide averages $20 per hour; a homemaker aide $18 per hour; and adult day services $75 per day.

Head up to Maine or Massachusetts and the daily rate of nursing care can hit $300. The MetLife survey provides rates for all states.

So it is very important to plan based not only on where you live now, but the costs of the area you might be moving to in retirement. 

If you are working, your employer may offer long-term care insurance as a voluntary benefit which means you pay the costs, but the policy may have some additional benefits such as less stringent underwriting.

If you are retired and interested in long-term care insurance, check out individual policies through a local agent or membership groups which may offer a discount.  Just make sure you compare a couple different policies since rates can vary dramatically.


2009 MetLife Market Survey of Nursing Home, Assisted Living, Adult Day Services and Home Care Costs.  

Long-term care insurance quotes in Maryland.

Written by Laura Rossman

October 29, 2009 at 2:26 pm

Making Smart Health Insurance Choices

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Health insurance open enrollment season will be upon us soon.  If you are working and have health care benefits, tempting as it is to set aside the “big envelope” with your 2010 health care insurance choices, take some time to look at plan changes.  Look at the premium, but also the out-of-pocket costs you’ll be responsible for in 2010.

 Employers are looking for ways to control costs so you may not see big differences in costs, but that doesn’t mean the plan is the same.  Here are some benefits switches to watch for as you calculate what’s the best plan for you and your famil, according to research company the Segal Group: 

  • reduced coverage for some brand name drugs/classes of drugs
  • reduced copayments for primary care visits,
  • increased copayments for visits to specialists
  • reduced copayments for certain preventative screenings/tests
  • financial rewards or penalties for wellness and disease management program results
  • mental health benefits – a new law may require your plan to upgrade its mental health benefits

 MetLife suggests that workers consider the following tips when making their benefits choices this year:

  • Take time to do your homework: Make sure you thoroughly research which employee benefits are right for you. The benefits you select for the coming year can have a significant impact on your family’s finances.
  • Read the proverbial “big envelope,” use online tools: When employees understand their benefits, they make better choices and tend to be more satisfied by and confident in the open enrollment process. Therefore, it’s important for you to read your company’s open enrollment materials from cover-to-cover. Many companies also encourage workers to read about their benefits offerings online, and some even offer web-based calculators and tools.
  • Consider making some changes each year: Very few people have the same benefits needs year-after-year. The fall open enrollment period is an opportunity to reevaluate your options and make changes. Make sure you consider changes or coverage increases, particularly if you’ve experienced a recent life event, such as getting married, having a baby or purchasing a home.
  • Don’t assume that a challenging economy means you’ll have fewer benefits choices: Most employers are planning to maintain – and some are even planning to expand – the breadth of their benefits offerings, especially when it comes to voluntary benefits. Voluntary benefits are paid for by the employee, typically at a significant cost savings due to group rates. Aging parents? Think about long-term care insurance. Sole breadwinner? Consider disability insurance. Buying a home? Access a legal services plan. New apartment? Don’t forget renters insurance.
  • Explore the advantage of pre-tax accounts: If your employer offers a flexible spending account for health care, vision and dental out-of-pocket expenses, consider that pre-tax savings can reduce your taxable income.

 If you have a young adult in the household with their first job, encourage them to bring the package home and help them through the process.  With health care costs continuing to rise, making the right health insurance choice can save you money.

Written by Laura Rossman

September 4, 2009 at 1:23 pm

Shop for the Best Insurance Deal

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Working or retired, one of the best things you can do for your pocketbook is to shop and compare when you purchase insurance or before you renew an insurance policy. It’s a lesson worth teaching your young adult or new driver as well.  Inertia may be costing you hundreds of dollars a year

 So can you really save a bundle like it says on the TV ads?  Maybe.  But you need to make sure you are comparing apples to apples, and consider benefits beyond price.

 The one insurance it may not be worth shopping for is health insurance if you have access to a good group plan at work.  But for auto/home, life and long-term care –and if you are buying health insurance or Medicare health plans it is worth taking the time to shop and compare.  Prices are often dramatically different between companies – just make sure you dig into the differences and understand the tradeoffs.

 Here are some tips on what to look for when you shop for insurance:

 1.  Look for a highly rated company.  You want an insurance company that will stand behind you when you file a claim.  Some lower rated companies offer lower rates, but is it worth the risk?  Here information on what the insurance ratings mean.

 2.  Special group rates may not be the best deal.  You’ll find insurance plans through a variety of groups and associations such as AARP, AAA, alumni associations, and professional associations.  Sometimes it is a set discount off of a standard policy (like 5%) or it may be a special policy designed just for the group (not necessarily a discount).  This is where it is really important to compare benefits and rates.  If you are looking at AARP programs, take a look at the series CBS is doing on AARP’s programs.

 3.  Online or local agent.  Decide what’s important to you and how you think you’ll want to interact with the company in the case of a claim.  Some companies offer their program both through a local agent and online or by phone.  It’s a personal preference and the rate may or may not be different. 

4.  Health conditions may limit your options. For life insurance, health and Medicare plans and long-term care insurance, your health is an important factor in the price of the policy.  For example, some term life policies require limited underwriting but cost more than a term life policy with full underwriting.  So when you speak with an agent, make sure you mention any chronic or serious health conditions upfront.  You’ll save time and frustration.  Group policies, like life insurance you buy through an employer, are usually more expensive, but if you have a health condition may be a good buy.  Same for long-term care insurance.

 5.  Loyalty discounts.  If you are dealing with an insurance company that has multiple types of products, you may be eligible for a discount because you own one of their other products.  For example, many of the long-term care insurance companies offer loyalty discounts on their policies if you have another type of policy with the company.

 Don’t let inertia stop you from saving on your insurance costs.  and never cancel a policy until you are sure the new one is in place.

Written by Laura Rossman

August 27, 2009 at 2:26 pm