My neighbor's husband, and their experience with long-term care

This morning I took a walk through my neighborhood, with my almost 3-week old son in his stroller. He had been crying all night, so I tried giving him a stroll to put him to sleep.

Two wonderful things happened: (1) He quit crying and went to sleep and (2) I met a wonderful neighbor with a personal long term care situation.

It was nice to meet this lady, but her situation is anything but nice. The woman’s 89-year old husband is receiving long term care. He’s been receiving care since December of 2006, or for a little over 8 months. Like most people receiving care, he prefers to stay at home with his wife, instead of going to a nursing home.

I might be an insurance salesman, but I don’t bring up the topic to everyone I meet. My neighbor brought this up during our conversation. When a topic weighs heavily on your mind, you can’t help but bring it up to other people. So after she broached the subject, I told her I sold long-term care insurance and have a keen interest in the cost of care. Next thing I know, she is volunteering information about costs that I would never have asked out of politeness.

She told me that they pay over $10,000 a month for her husband’s care. That means they have been out at least $80,000 since he started receiving care in December 2006. Why is his care so expensive? Because he needs 24-hour supervision from a paid staff of nurses.

I’ve gone over the costs of long-term care before. You can see in detail what I have written by clicking here.

To sum up, the average annual cost in Tennessee for a nursing home is $59,276. The average cost for assisted living is $27,409.44. And the average cost for home health care is $42,094, based on 50 hours of care per week.

My neighbor’s husband, however, needs 24 hours of care a day, or 168 hours per week.

According to the Genworth Cost of Care Survey for 2007 the average cost of home health care in Tennessee is $16.19 an hour. At 168 hours per week, that comes out to a cost of $2,719.92 per week. With 52 weeks in a year, the total home health care cost is $141,435.84.

So if my neighbor is only spending $10,000 a month, their annual cost of home care is $120,000. They are doing better than the average Tennessee cost of $141,435.

The sad news is that they did not have long-term care insurance. They are going through their savings to pay for this. So far they’ve paid at least $80,000. Who knows how much more they’ll have to pay?

Their situation is a good example of how Medicare does not pay for long-term care. This man is 89 years old. He is on Medicare. In fact, when he first started receiving long-term care, it was hospice care. Hospice care is covered under Medicare. He was believed to be terminally ill, but he recovered. Medicare will pay for hospice care, but if you improve and are taken out of hospice, Medicare stops paying.

Now the couple is burning through savings. Please don’t let this happen to you. We all have a long-term care plan. Some of us choose the plan that costs $120,000 a year. Others choose the plan that costs a fraction of that, by getting a long-term care insurance policy. Choose the second plan. The premium payments to the insurance company are much cheaper than the actual costs of care.

The Bathtub Hoax and Other "Facts" Accepted as Truth

On December 28, 1917, H.L. Mencken wrote an article that caused much confusion for years to come. It was titled “A Neglected Anniversary.” The article told the history of the bathtub. There was just one thing wrong with the article.

It was entirely false.

He had written it as a joke. But he spoke so authoritatively, and weaved such intricate “facts” in it, that it was accepted as truth. In fact, the article was quoted in medical journals and reference books.

Mencken confessed publicly that the article was written as a joke. However, the false truth persevered.

It is now known that the article was a hoax, but it is interesting to note that commonly accepted knowledge is often times… wrong.

Times may change, but people don’t. And even today people accept as fact some things that are not true.

Today, most people think that Medicare will pay for their stay in a nursing home. This just isn’t true. Medicare will pay for skilled care. Skilled care is for short-term recovery.

There are two words to pay close attention to in that last sentence: “short-term” and “recovery.”

The first word to look at is “short-term.” Medicare skilled care will pay for short-term periods. The first 20 days of skilled care are paid for by Medicare. Days 21-100 are partially paid for by Medicare and the patient (or Medicare supplement insurance if a patient has it). After day 100 of skilled care, the patient pays the full amount of costs.

The average nursing home stay is 2.4 years according to MetLife.

That’s about 876 days. So after Medicare is finished helping pay for the first 100 days, the nursing home resident that stays for the average stay will have to pay for 776 days of nursing home care.

The average daily cost of a nursing home stay in Tennessee is $147.89. That means the daily rate of $147.89 for 776 days would be a total cost of $114,762.

That’s what Medicare won’t pay.

The second word to look at is “recovery.” Medicare skilled care is given to patients that are recovering. If the patient quits recovering from the illness, the care is no longer classified as “skilled care.” Medicare quits paying.

For example, Medicare skilled care will cover speech and physical therapy... if the patient is showing improvement. If the patient quits showing improvement, Medicare quits paying.

Many patients in nursing homes are not showing improvement. They do not qualify for skilled care coverage under Medicare.

If it is determined that you are showing no improvement Medicare will quit paying, even if the 100 days of Medicare coverage are not up yet. Medicare might quit paying after day 45 of skilled care. Then the care you receive is paid out of your pocket.

When care is no longer of a short-term recovery nature, it becomes long term care.

Forewarned is forearmed. If you have assets you want to protect from long term care expenses, don’t rely on Medicare to protect them. Your best bet is to get a long term care insurance policy for protection.

Why you need a long term care plan and where to start

Americans are finally starting to realize the importance of planning ahead for their long term care needs. They are beginning to realize that the government won’t be able to take care of them in their old age, or at least not in the capacity it is doing now.

The Baby Boomers are getting older and they’ll start taking government subsidies once they reach 65 and get on Medicare. They’ll also be on Social Security. This will be a huge strain on the federal budget.

The individual state budgets will also feel the strain. When the Baby Boomers finally need long term care, Medicaid won’t be able to handle the large number of beneficiaries. There won’t be enough working tax payers to pay for the government provided care.

Here’s a good illustration…

Are you familiar with pyramid schemes?

Here’s how they work. I charge $100 to sign up two people in my pyramid. I tell them how they can make money by signing up people under them for $100 each. I get a cut off the price of each person they sign up. And they get a cut off everyone they sign up. Everything works fine as long as we continue to find more and more people to sign up. Eventually, when people stop joining, the pyramid collapses.

The last group of folks that paid $100 each to sign up loses all their money since there are no new prospects for them to recruit.

That’s what is happening right now with government benefits.

Take Social Security for example. It started in 1935 when the average life expectancy in America was less than 65. It was a promised benefit that most Americans would never be old enough to get.

In 1950 there were 16 working tax payers supporting each Social Security beneficiary. It dropped to 5.1 workers per beneficiary by 1960. Today there are only 3.3 workers per beneficiary. And in 2032 it is estimated there will be only 2.1 workers per beneficiary.

The pyramid is running out of people to sign up. When it started it worked because there were plenty of people to support the low number of beneficiaries. But then a problem occurred. The Baby Boomers didn’t have enough kids. The pyramid is running out of blocks on which to build.

This will not only affect the viability of Social Security, but it is going to affect Medicaid budgets across all the states. Medicaid pays for approximately half of nursing home expenses in this country.

States won’t be able to raise enough tax revenues to fund the care. They’re already feeling the strain. That’s why new regulations passed under the Deficit Reduction Act of 2005 made it harder to qualify for Medicaid.

They are trying to limit the number of people that get on it because they are running out of money. And raising taxes to get enough money is not popular when trying to get re-elected.

People are starting to see that there are not enough young folks coming up to pay enough taxes to support the aged population. It’s like watching a train wreck in slow motion.

And that’s why long term care insurance has become more important. If the government can’t take care of you, then you need to take care of yourself with a long term care policy.

WHERE TO START?

When choosing your long term care policy, the best place to start is by determining the cost of care in your city. This will give you an idea of how much your benefits should be. You don’t want to buy too much in benefits if it’s not necessary. Save your money.

Currently, the cost of nursing home care in the Hardin County area is approximately $150 per day.

This is a good starting point. You know your daily benefit should at least be approximately $150. The only reason you’d want a daily benefit of less than this is if you were comfortable paying some of the price of the nursing home stay. For example, you could get a $100 daily benefit if you were comfortable paying the remainder, or $50, a day.

You’ll want to get an inflation rider on your policy that will increase your benefits as time goes by. The typical maximum inflation benefit is 5%. If you’re young when you purchase your long term care policy, I’d recommend an inflation protection of at least 5%. Long term care costs will continue to rise. Historical inflation in America for all products and services is approximately 3%. But it’s best to assume that long term care expenses will grow faster than that. As the population becomes older, more people will be needing care. This will cause long term care prices to rise faster than general inflation.

The next step is to determine your preferences on where you want to receive your care. Most people want to stay in their home as long as possible. Those people should get a policy that pays the same for home health care as it pays for nursing home care. You can now get policies that will pay home health care benefits that are 130% of what the nursing home benefit is.

For example, you get a policy with a $200 nursing home daily benefit. You could choose a home health daily benefit of $260 ($200 x 130%).

This gives you the ability to afford home health care longer, as well as avoid early entrance into a nursing home.

CONCLUSION

The need is there to protect yourself and your family. If you can avoid relying on the government in old age, then by all means avoid it.

One good way to do that is to protect yourself with a long term care policy. You can develop a customized plan with your insurance agent that meets your needs and desires.

Common Sense Strategies to Supplement LTC Insurance

By now you’re used to hearing me talk about planning ahead for long term care expenses. One way to protect your assets and family from a long term care event is to get long term care insurance. This is important when you realize that 70% of single people are impoverished within a year of entering a nursing home. And that 50% of couples are impoverished within a year that one spouse enters a nursing home.

In addition to a long term care policy, there are other actions you can take.

The first thing to do is save money. Your long term care policy will probably have a waiting period. During this time you’ll need cash to pay your expenses before the policy will kick in. The more savings you have, the longer a waiting period you can safely choose on your policy. This will lower your premiums on the policy, which will also allow you to save even more money.

Having an emergency fund to weather out the bad times is always a good idea. If you have trouble saving money, visit Dave Ramsey’s site for additional help.

Another step you can take to protect yourself is to stay in the work force longer. This will keep you active, which should keep you mentally sharper. Also, you will be a productive member of society, and will have a reason to wake up in the morning. Having a purpose in life will keep you healthier.

But if you do retire early, it's a good idea to keep active with something. Hobbies are good, but I recommend something that focuses on other people. Volunteering for a cause or getting involved in a church ministry are worthwhile goals.

If you stay in the work force longer you will be able to save more money. When you do retire you’ll have additional savings to make your retirement more enjoyable and financially safer.

Finally, get help from your family. It’s good to live near your children or someone that is willing to take care of you should you need it. Having your children around will help supplement the professional services that your long term care policy pays for.

If your kids want to support you completely, one strategy they could take is to pay for your long term care insurance premiums. You could work it out where you are their dependent. In that case, the premiums they pay for your long term care policy would be tax deductible for them.

Ultimately, you’re looking for a way to protect your assets and receive the most dignified care possible. That’s why you need to determine your game plan now. A qualified insurance agent can help you set up a plan and follow it. This will protect your family and your assets. Make sure your plan includes insurance that will protect you from being impoverished by a long term care event.

Tips for Taking Care of Loved Ones with Alzheimer’s. There is Help Out There For You!

The prevalence of Alzheimer’s disease in America is increasing as our population becomes older. Based on the Alzheimer’s Association’s study “Alzheimer’s Facts and Figures 2007”, the estimated number of Americans with Alzheimer’s disease is 5.1 million. This number is estimated to increase to 7.7 million by 2030 and to grow further to a range of 11 million to 16 million by 2050.

Short of medical technology discovering a cure or better way to treat the disease, we will see the prevalence of Alzheimer’s increase. This is to be expected as the average age of our nation increases.

We will also see an increase in families providing care for their loved ones with Alzheimer’s. Two-thirds of Alzheimer’s patients receive care in their own homes from family members. Usually the spouse provides the care. This could be a long period of time. The average Alzheimer’s patient lives for 4 to 6 years after diagnosis. Often, as the disease progresses, family members have no choice but to put their loved one in a full time facility.

But while the patient is at home, caregivers should get as educated as possible about the best ways to give care. The National Institute on Aging provides tips for caregivers. Every caregiver of an Alzheimer’s patient should take a look at what they say. You can find tips here.

Here are some common sense tips they give:

§ Be Consistent: Get in a routine on when to bathe, dress, eat, exercise, etc.

§ Wandering: Keep doors locked to minimize wandering. Also, give your loved one a medical bracelet that identifies him should he wander off. A current photo is helpful for identification purposes if the authorities must be called to search for the person.

§ Home Safety: Remove rugs that might cause a fall. Take locks off bathrooms to prevent the patient from locking himself in the room. Keep dangerous objects (knives, gun, etc) in a safe place.

§ Driving: If your loved one is no longer able to drive, take the keys away, but handle the situation sensitively. Also, don’t let the person drive only on “good days” and not on “bad days.” As discussed above, consistency is important.

Caregivers should also look for outside support from other family members, friends, community support systems, or churches. This helps the caregiver avoid too much physical and psychological stress that could cause them to become ill.

Caring for a family member with Alzheimer’s is hard and stressful on a family. At difficult times like that, a long term care insurance policy is very helpful. The financial support it gives helps the family hire certified caregivers to come to their home and help provide care. It keeps the Alzheimer’s sufferer out of the nursing home longer.

If Alzheimer’s disease runs in your family, you may want to consider applying for a long term care policy. You’d be doing your family a big favor.

In one example I’ve seen, a son got to see the contrast between a family with long term care insurance and a family without. His mother needed care and had insurance. The son’s siblings were able to afford care for their mother, and this eased the stress they all experienced during that trying time. The son’s mother-in-law did not have long term care insurance. The man’s wife and all her siblings were at each other’s throats trying to find ways to care for their mother. The second family had much more stress to deal with than the first family, and relationships were strained.

If you are caring for a loved with Alzheimer’s, make sure you don’t let yourself get too stressed out. Take advantage of support networks in your area to ease your burden. It may be too late for your loved one to get insurance, but at least the tips and links listed above should help you create a better environment and help you provide better care.

Are you like most Americans? Take the test. Compare yourself.

Genworth conducted a national poll to see how Americans felt about long term care in the future.

The results remind me of Aesop’s fable about the grasshopper and the ants. The ants diligently worked all summer to store up food for the winter. The grasshopper did not save up for the winter. When winter came the ants were prepared; the grasshopper was in trouble. According to the Genworth poll, most Americans are the grasshopper.

The prophet Isaiah spoke about this mentality:

Come ye, say they, I will fetch wine, and we will fill ourselves with strong drink; and tomorrow shall be as this day, and much more abundant. (Isaiah 56:12)

In other words, let’s drink and be merry and not save for the future. And somehow (let’s not think about exactly how) there will be much more drink and abundance tomorrow.

Most people are not planning for long term care needs, but they are worried about how they will pay for it.

Here are some quick facts from the Genworth national poll. See how you compare to the average American.

75% of people have made no preparations for their or a loved one’s long term care needs

59% of people are worried about how they will pay for long care for themselves

44% believe their health insurance (either Medicare or a private health plan) will pay for their long term care needs. Neither program generally covers long term care

So how did you stack up? Are you like most Americans?

People are right to be concerned about the cost of care. It can have devastating financial and emotional effects on a family. When people purchase long term care insurance, they have their reasons: To avoid these bad consequences.

Specifically, these are the 5 biggest reasons people buy long term care insurance. Do any of these apply to you?

I want to protect my family – I don’t want to be a burden on my children. I don’t want them or their spouse to have to quit a job to bathe me, dress me, or help me on and off the toilet.

I want to protect my money – I worked hard for everything I own. I know how expensive long term care can be. I also know that I’ll have to spend my money down before Medicaid will pay. I don’t want all my wealth wiped out.

I want to keep my independence – If I go on Medicaid, I’ll have to receive care on their terms. He who pays the piper calls the tune. Since Medicaid would pay, I’d have a low likelihood of getting care at home or in an assisted living facility. I’d be on the fast track to the nursing home, and I’d have no say in the matter.

I want access to good quality care – I know that not all caregiving services and institutions accept Medicaid. I’ll have to go to one that does accept Medicaid if I become impoverished and can’t pay my own way. I know that Medicaid will only reimburse a nursing home a fixed amount, not what it costs the nursing home to provide me care. If I cost the nursing home more than Medicaid pays them, they might not give me the attention I need.

I want to protect my children’s inheritance – I have some assets that I want to stay in the family. I’d hate to have to spend them on myself in old age.

If you are like most Americans wanting long term care insurance, you’d probably agree with one or more of these reasons.

If any of these reasons seem applicable to you, I recommend you begin today to develop a plan that will protect your future. It doesn’t have to be the purchase of long term care insurance, but that is still a good choice. There are other actions you can take.

You could buy a house next to one of your children so he/she could have easy access to you if you need care. This could help minimize costs for professional care. If your child lives in the same city, you won’t even have to uproot yourself from a town you're familiar with. If your child is in another city, are you prepared to leave you hometown behind?

If you don’t have any kids you may have to seek other options. A reverse mortgage on your home might be possible to fund your expenses, and in this case you wouldn’t be worried about leaving an inheritance.

The bottom line is this: Develop a plan for the future that is realistic and workable. If your children can’t take care of you because they are financially incapable or geographically far away, don’t make your long term plans around them helping you. You are setting yourself and your family up for a difficult road. Don’t dismiss the help of a long term care insurance policy because of unrealistic alternative plans.

Why do women appreciate long term care insurance more than men?

There is actually a difference in the way the sexes view the importance of long term care insurance. But why do women find it more important than men?

Because of this reason…Women have so much more to lose by not having long term care insurance than a man does.

Think about this. The average woman will outlive her husband by five years. This causes a dilemma for her in two ways:

1) The older you get, the more prevalent disabilities and the need for long term care are

2) She won’t have a spouse around to take care of her

She gets hit from both sides. A woman that reaches the age of 65 can expect to live an average of 20 more years. A man that reaches 65 can expect to live until age 81. This is reflected in the fact that over two-thirds of Americans over 85 in this country are women.

The older we get, the greater our likelihood of needing long term care. That’s why more than 70% of nursing home residents are women. And approximately 66% of people that receive some type of home care are women.

No wonder women see the importance of long term care insurance. They are at the most risk of needing it. But the situation is even more serious than that. Many older women live alone.

About 70% of women age 75 and up are widowed, divorced, or never married. And 48% live alone. This means they don’t have someone ‘in house’ to help them out if a long term care situation ever arises.

A lot of this has to do with the fact that women outlive their husbands. So while the average husband will enjoy receiving some sort of care from his wife, the average wife cannot expect her husband to still be around to give her care when she needs it.

Here’s how a situation can turn out. The husband’s health deteriorates, and the wife has to care for him until she needs outside help for his care. She’ll pay to get that help, whether it be nurse aides that come to the home, or she puts the husband in a nursing home or assisted living facility. The kids may also pitch in if they are financially able or if they are geographically close to their parents. The wife’s caregiving will take an emotional and physical toil on her. After she has spent all their assets caring for him, there won’t be any assets left for her to use when she needs to pay someone to take care of her. The kids will do what they can to help their mom, but sometimes they just can’t do enough. Then if she needs care she’ll have to rely on Medicaid since she is impoverished. This means the likelihood of her staying at home is slim to none. She will be admitted to a nursing home that accepts Medicaid.

This is an example of what can happen, and it’s not far from the truth. Benjamin Lipson wrote a fantastic book on how to choose the right long term care policy. It was aptly titled Choosing the Right Long-Term Care Insurance. In it he tells the story of a couple that came to his office to purchase a long term care policy.

When the couple walked in, the husband was soaking wet from his daily jog. He let Mr. Lipson know immediately that he was healthy and didn’t need long term care insurance. The wife was interested. The husband didn’t apply for coverage, but the wife did. She was approved for a policy but at a higher than standard rate since she had had cancer. This upset her, and her husband’s negativity toward long term care had rubbed off on her. She decided not to get the plan.

Two years later the husband became ill and needed long term care. Since they didn’t have any insurance, the wife had to take care of him herself. She developed back problems helping him on and off the toilet. She also had to spend all their assets to hire home care so he wouldn’t have to go to the nursing home. After the husband died, she had no assets left to provide home care for herself. She prematurely ended up in a nursing home on Medicaid. The husband cost his wife her independence because he was too proud to admit that he wasn’t invincible.

This story illustrates a truth we all know. Men think they are invincible… until they get sick. This man assumed he would die on the track or on the golf course. If it were up to me, I’d want to go quickly too. Preferably on a tennis court right after I win the match.

However, most people won’t be so lucky. Instead, the march toward the end of life can be a slow, expensive one. John Mellencamp said it best when he sang, “Oh, yeah life goes on. Long after the thrill of living is gone.”

So for any of you wives reading this… make your husband read this article. His pride could rob you of your independence in old age.

And for you husbands reading this… remember, even Muhammad Ali succumbed to a disease that made brushing his teeth a challenge. No one’s invincible.

Long term care insurance would have helped the couple in the example above. It can help your family avoid these hardships too.