The need for LTC Featured

8:00pm EDT March 26, 2009

People are living longer these days. That’s good news. But, the longer people live, the more they’re at risk for developing serious health problems. It is troublesome to consider the possibility of health problems and the need for assistance with basic daily activities, such as eating, bathing and dressing. But, statistics show that by the year 2020, 12 million Americans will require long term care (LTC).

Not only that, approximately 19 percent of Americans over age 65 will experience a chronic physical impairment requiring LTC.

LTC refers to a wide array of medical care, personal assistance and social support services for people who are physically or mentally unable to independently care for themselves for an extended period of time. This care can be provided in a nursing home, assisted living facility or in one’s home. Though LTC is generally for older people, a younger or middle-aged person who was in an accident or suffered a debilitating illness might also need LTC services.

Many employers are offering their employees LTC insurance. This insurance is designed to help pay for medical and nonmedical care services that would otherwise be paid out of pocket. Some policies cover only nursing home care while others include coverage for a range of services, including treatment in an adult day care center or assisted living facility, medical equipment, and formal and informal home care.

“Employers can distinguish their benefit plans and offer valuable LTC coverage to their employees more affordably than they may expect,” says Jessica Galardini, the president and COO of JRG Advisors, the management company for ChamberChoice. “Also, you can offer coverage to retirees, spouses, parents and parents-in-law. And generally, employees don’t have to pass any medical requirements.”

Smart Business spoke to Galardini about LTC insurance and how it can make your employees’ golden years truly golden.

Who needs LTC insurance?

Similar to auto, home and health insurance, LTC insurance is available to help protect you, your family and your assets. It is impossible to predict what type of care you might need in the future or know exactly what the costs will be.

Like other insurance, LTC insurance allows people to pay a known, affordable premium for a policy that protects against the risk of significantly higher out-of-pocket expenses. LTC services can be very expensive and the real amount you spend depends on the level of services needed and the length of time you need care. One year in a nursing home can average more than $50,000. In some regions, it can easily cost twice that amount.

For couples age 65 and over, there is a 75 percent likelihood that one partner will need LTC. Generally, LTC is not covered by health insurance plans. Nor does Medicare cover it. Medicaid, a federal/state health insurance program, will only pay for it if someone has already spent most of their savings and other assets.

With soaring health care costs, insurers increasingly restricting coverage and eligibility, plus people’s need to stretch retirement savings over more years, it is a good idea for everyone to seriously consider LTC insurance. LTC insurance can help you protect your assets, minimize your dependence on other family members and control how you receive LTC services.

When should you purchase LTC insurance?

Many people do not think about LTC until they are in their 70s and 80s and their health begins to fail. At these ages, a person may be too high a risk for an insurer to cover them, or if they do qualify, the premiums can be astronomical. Some insurance policies have restrictions on age and health status. It is best to purchase LTC insurance at a younger age, when you are likely healthier.

How much does LTC insurance cost?

The cost of LTC insurance varies widely. The premium depends on factors such as special features or riders selected, including age, level of benefits, and the length of time a person is willing to wait before benefits begin. Premiums generally remain the same from year to year. The younger a person is when he or she initially purchases an LTC policy, the lower his or her annual premium will be.

There are many factors to consider when facing the decision to offer LTC benefits to employees. It is important to explore all of your options and to work with an adviser who will ensure you are purchasing a plan that will meet your coverage and asset management needs, while remaining within budget.

JESSICA GALARDINI is the president and COO of JRG Advisors, the management company for ChamberChoice. Reach her at (412) 456-7231 or