Long Term Care Insurance
In the Phoenix-Metro area, the average cost of a private room in a skilled nursing facility or nursing home is $94,896/year.
Long Term Care insurance (LTCi) helps cover those costs to make these facilities more affordable.
Traditional vs. Hybrid LTCi Plan Designs
Traditional
Traditional Long Term Care insurance (LTCi) policies are not equally designed. There is no standardized map for insurance companies to follow. So when considering Traditional LTCi, you will want to consider these seven features, at the time of your application, to make sure you are getting the care you deserve.
Benefit Period
How long will your benefits last? Most policies are designed to provide benefits for 1, 2, 3, or 5 years. While it varies by region, the average stay in a long term care facility is 22 months.
Waiting Period
Along with the Benefit Period, an applicant must decide how many days will pass, once a diagnosis has been made, that benefits become available. 30, 60, and 90 days are the most common timeframes.
Benefit Triggers
Almost universally, if a person is unable to perform at least 2 of the 6 Activities of Daily Living (ADL), the policy is set to being based on the Waiting Period and Benefit Period.
The 6 ADL are: Bathing, Dressing, Transferring, Continence, Toileting, and Eating.
Daily Benefit Amount
Simply put, this is the maximum amount an insurance company will pay on a daily basis. A Daily Benefit of $100/Day will equate to $36,500/year.
Pooled Benefit
The daily benefit amount can be pooled. For example, if you elected a $200 Daily Benefit, for 3 year Benefit Period, you would have a Pooled Amount of $219,000. Once your benefit triggers, and you find yourself using $100/Day, instead of the full $200/Day, your benefits would last for 6 years.
Inflation Protection
If a LTCi policy was purchased many years ago, the benefit elected might not be suffice in today's dollars. Inflation Protection increases benefit amounts (usually 3% or 5%) on an annual basis.
At-Home Care Coverage
Most people who need medical assistance would prefer to have it taken care of in the comfort of their own home, if possible. An At-Home Benefit allows this to happen for as long as it is sustainable.
Hybrid
These policies combine long-term care insurance with permanent life insurance policies such as universal life insurance, where the two types of policies are intertwined (this is not to be confused using a life insurance policy with a simple long term care rider attached to it). Unlike Traditional LTCi designs, most Hybrid plans are universal in having a 0 day Waiting Period, a Pooled Benefit Design, offer some type Inflation Protection, and cover all three phases of medical assistance: At-Home, Assisted Living, and Skilled Nursing.
In a nutshell, a Hybrid LTCi policy contains three solutions.
1. Long Term Care
At its core, a Hybrid LTCi policy provides tax-efficient, dedicated funding to meet your Long Term Care needs whether its At-Home Care, Assisted Living Care, Skilled Nursing Facility Care, or a combination of all three.
2. Life Insurance
One aspect of Traditional LTCi that many people do not like is the "use it or lose it" feature, which means if you purchase a Traditional LTCi policy, but never use it, the policy disappears. A Hybrid LTCi policy, if never used, offers a death benefit to be passed along to your beneficiary.
3. Return of Premium
Most Hybrid LTCi policies allow you, after a certain timeframe (usually 10+ years), to cancel your policy (via a surrender option), and receive a certain portion of your premiums back (50%, 75%, or 100%).