Editor’s note: Farmers are usually “long on assets and short on cash” throughout their career. Part of risk management is to protect those assets from potential loss that can result from long term health care costs. This is often an area that is overlooked in financial planning.

A loved one in need of long-term care services is an emotional event that we all would like to avoid. Yet, in increasing numbers, many of us are facing the necessity of arranging care for our loved ones suffering from a chronic health condition. It is one of those situations where we feel “It could never happen to me.” But the fact is that it could!

In fact, the prevalence of long-term care need in the community increases from 11% for those in the 65-74 age group to 49% for those in the 85+ age group, the fastest growing segment of the population. And statistics show that at any given time, 22% of those age 85 or older are in a nursing home.

Have you given any thought to what you would do should you find yourself in a similar situation? Do you know how your spouse feels about his/her risk of needing long-term care or potential risk-protection options? It is important that family members plan together for their long-term care needs.

Protection is available: The improvement in long-term care insurance policies over the last few years has made this product a viable option for many mature individuals with assets to protect. Indeed, the long-term care insurance policy has become the program of choice for those planning ahead for their financial future, although there are other options. It allows individuals to: maintain their independence and dignity, protect their family from the catastrophic costs of long-term care, retain control of their own assets and provide an inheritance for their loved ones if so desired, and increase their chances of receiving their preferred choice of care.

How do you know if you should even consider shopping for long-term care insurance? The guidelines, according to “A Shopper’s Guide to Long-Term Care Insurance” by the National Association of Insurance Commissioners, include:
? Having more than $30,000 per person in assets to protect, excluding a house and car;
? Having a minimum annual income of $30,000 each; and
? Being able to afford the policy premium (which should not exceed 5-7% of your annual income). When you’re considering a long-term care insurance policy, you should determine not only how much of a premium you can afford now but also how much you can afford 15-20 years from now when you’re likely to be retired and need to access the benefits.

Long-term care insurance is available through groups (i.e. AARP, employers, etc.) and to individuals from 18 different insurance companies licensed to sell in NYS. Choosing a policy requires careful shopping because coverage and costs vary from one company to another and depend on the benefit levels you choose.

Today many companies offer integrated policies or policies with “pooled benefits.” This type of policy provides a total dollar amount that can be used for different types of long-term care services (i.e. home care, adult day care, assisted living, hospice and nursing home). Nonetheless, you can also purchase nursing home only, home care only or nursing home and home care insurance if you wish.

Most policies are either indemnity (a “per diem” policy that pays a fixed amount regardless of the daily expense) or expense-incurred, where you’re reimbursed for actual expenses for services received up to a fixed amount you’ve elected. There are no policies that guarantee to cover all expenses fully.

Cost is age related: The cost of long-term care insurance varies and depends on the options you choose. The actual premium you will pay depends on many factors, including your age, the level of benefits and the length of time you are willing to wait until benefits begin. For example, for the same long-term care insurance policy, a policy premium purchased at age:
45 might cost $1,155/year;
50 would cost $1,284/year;
55 would cost $1,531/year;
60 would cost $1,968;
65 would cost $2,587;
70 would cost $3,817.

In general, premiums will stay the same each year. If they do increase, it will be for a whole class of policyholders and only upon approval by the NYS Department of Insurance.

Long-term care insurance policies are medically underwritten so the best time to shop is while you are healthy. If you already have health problems that are likely to mean you will need long-term care (i.e. Parkinson’s disease, arthritis, diabetes), you likely won’t be able to buy a policy but the medical underwriting standards do vary company to company.

NY Partnership incentive: There are two general types of long-term care insurance in New York State: insurance sold under the New York State Partnership for Long-Term Care and traditional non-Partnership insurance. The New York State Partnership for Long-Term Care is a unique program combining private long-term care insurance and Medicaid Extended Coverage. The program allows New Yorkers to protect some or all of their assets (depending on the insurance plan purchased) if their long-term care needs extend beyond the period covered by their insurance policy. The Partnership website can be accessed at www.nyspltc.org

Long-term care insurance offers significant improvements in quality of life for policyholders and their families as it often delays or prevents the need for institutionalization, provides easier access to home care and/or assisted living, and eases the financial and emotional burdens on families providing care. In addition it offers peace of mind gained from knowing that there will be sufficient resources to pay for care if needed.

New York State has a statewide Long-Term Care Insurance Education & Outreach Program that features a Long-Term Care Insurance Resource Center in every county. The Resource Center offers consumers a place to go for objective, unbiased information in the form of educational literature or a one-to-one educational consultation. In addition, you may access their website at www.planaheadny.com or phone 1-866-950-PLAN or attend a free public workshop sponsored by your Resource Center.

You may contact your Long-Term Care Insurance Resource Center at: Erie (716) 858-7883, Genesee (585) 343-1611, Monroe (585) 244-8400, Niagara (716) 438-4020, *Ontario (585) 394-3977 Ext. 433, Orleans (585) 589-3191, *Seneca (315) 539-9251, Wayne (315) 946-5624, *Yates (315) 536-5123.

*Cooperative Extension Centers

If you would like to receive a free informational packet on shopping for long-term care insurance, please call Pam Chiverton at (585) 393-3977 Ext. 433 or e-mail her at pwc5@cornell.edu