Monday, July 30, 2012

Long Term Care Insurance Buyers Go For Savings

A growing percentage of consumers are selecting options that make long term care insurance protection more affordable

According to a just-published report from the American Association for Long-Term Care Insurance, the national organization that advocates for long term care insurance planning for individuals, some 23.5 percent of new individual buyers opted for a three percent annual growth of benefits. The percentage of buyers in 2010 selecting this option was 16.7 percent.

“The inflation growth option increases your benefit each year but it can dramatically add to the cost of insurance protection,” explains Jesse Slome, executive director of the trade group. “If a long term care insurance company is going to increase the value of your benefits by five percent each year, they have to invest the premiums to get that type of return something that’s really no longer possible today.”

The trade group director explains that for every half-to-one percent decrease in investment return an insurer needs to charge 10-to-15 percent in higher premiums. “That’s why the five percent inflation option has become costly and more people are selecting a three percent growth option,” Slome says. “Three percent is the new five percent when it comes to long term care insurance.

The percentage of those individuals purchasing a policy with the five percent growth option declined compared to the prior year. “Once you explain the connection between investment return and the cost of increasing benefits by five percent people understand and make a choice to reduce their cost,” Slome concludes. “It’s important protection that people want, but they also want to keep the costs as affordable as possible.

The Association report is based on their annual study of over 150,000 new individual buyers with data published in their 2012-2013 Long Term Care Insurance Sourcebook.

Based in Los Angeles, the American Association for Long-Term Care Insurance is the national trade organization with the mission of educating Americans about the importance of planning for the risk of long term care.

Monday, July 23, 2012

Alzheimer’s Disease Is Top Long Term Care Insurance Claim

Slightly over one in four nursing home claims paid for by long term care insurance are the result of Alzheimer’s disease according to a report issued today.

According to the Alzheimer’s Association some 5.4 million Americans are living with the disease and one in eight older Americans has the disease. “Americans will pay an estimated $200 billion for care received by individuals with Alzheimer’s, explains Jesse Slome, executive director of the American Association for Long-Term Care Insurance. “Long term care insurance is increasingly being used to pay for care and Alzheimer’s is the top cause of claims for those in nursing homes. Last year long term care insurers paid out $6.6 billion in claims to over 200,000 Americans.”

Data from the Alzheimer’s Association notes that Medicare and Medicaid pay for about $140 billion of the costs and project that costs are expected to grow to a projected $1.1 trillion in today’s dollars by 2050. Their website notes the dramatic rise includes a 500 percent increase in combined Medicare and Medicaid spending.

“The rate of spending is unsustainable,” declares Slome. “We explain to individuals that if they are concerned about the future ability of federal and state government programs to pay for costs, that they need to do some personal planning, including look at long term care insurance as a way to avoid dependence on whatever meager programs will exist at the point in time they need care.”

Alzheimer’s ranks as the sixth-leading cause of death in the United States. It is the only condition among the top-10 killers that can not be prevented, cured or even slowed.

“Frankly, I believe the future is scary in terms of how a nation will deal with the tens of millions of aging Baby Boomers who will live into their 80s and 90s the age when Alzheimer’s is most likely to occur,” Slome adds. “Most individuals have not given this any thought let alone done any preparation. It is the equivalent of failing to arrive at retirement age without a plan in place, you place your future into the hands of others.”

According to the Association’s national cost of care study, one year in a nursing home costs $85,045 for a private room and $76,285 for a semi-private room. “That’s the cost today but it’s only going to grow each year,” Slome concludes. “A failure to plan is definitely a plan for failure.”

Monday, July 16, 2012

Home Health Care Costs Remain Level Reports Association

The average national hourly rate for a home health care aide was $21 according to the latest study by the American Association for Long Term Care Insurance. The national average hourly rate for homemaker or companion services was $19.

“Rates for home health care have remained relatively stable over the past few years,” explains Jesse Slome, executive director of the organization that represents several thousand long term care insurance professionals. “However, costs can vary significantly from one market to another and even among service providers within a particular locale.”

Home care service costs compiled by the Association have been published in the 2012 Long Term Care Insurance Sourcebook dramatize the spread. Boston had the highest hourly rate reported for a home health aide ($39) while Dallas / Fort Worth reported the lowest ($12).

According to the Association, half (50.0%) of all new long-term care insurance claims opened during 2011 began with the policyholder receiving care at home. Less than one-third of new claims began with the recipient receiving care in a nursing home the Association reports.

“Long-term care insurance has really become nursing home avoidance protection,” Slome explains. “Today, people purchase this important protection in order to receive care in their own home for as long as possible. When costs remain stable, people are able to purchase more affordable levels of insurance coverage that will pay for longer periods of time.”

The following is a sampling of home health aide hourly rates from the Association’s 2012-2013 Long Term Care Insurance Sourcebook provided free of charge to the organization’s members.

                                            Average   Low   High
Atlanta, GA                          $21       $16    $24
Boston, MA                         $27       $21    $39
Chicago, IL                          $23       $16    $30
Los Angeles, CA                 $21       $14    $28
New York, NY                    $20       $16    $23
Seattle, WA                          $24       $20   $28