Part of the Patient Protection and Affordable Care Act (PPACA) was designed to assist individuals in securing long term care (LTC) health insurance. The program being set up by the federal government is called the CLASS act, or the Community Living Assistance Services and Support act. In a nutshell, the program was designed with a $50/day benefit with guaranteed coverage for anyone enrolling and the benefits would be indexed for inflation. The cost was projected to be approximately $123 per month for each person enrolled. Sounds great, especially if you have health problems, right?
Well, there’s always a catch. In the CLASS act, members must be enrolled for at least five years to collect benefits and if the program is not funded properly, the government could reduce benefits, increase premiums, or terminate the program altogether at will. The law explicitly states that no taxpayer money will be used to fund the program. So let’s recap the problems here:
1. $50/day in benefits will get you next to nothing, even in today’s terms. One year in a nursing home in Virginia averages $73,000 according to Genworth. $50/day would get you a maximum benefit of only $18,250 per year, leaving you a gap in coverage of $55,000+. In other states like Alaska ($200k+ per year) or New York ($115k+ per year), the cost of care is even higher.
2. The government can terminate the program, increase rates, or reduce benefits after years of premium payments and you have no choice but to comply or quit the program
3. The premiums are too low. Just this week, Secretary of Human Health Services, Kathleen Sebellius, stated that the program is totally unsustainable as written and major changes will need to be made to make it work according to the New York Times. Medicare actuaries peg this cost at $240/month per person, not $123/month. That’s $5,760/year for a husband and wife for only $50/day in benefits.
Anyone who has ever had a relative or friend in a nursing home can tell you how important it can be to have long term care insurance. An extended stay in a nursing home can destroy all of the wealth amassed through a lifetime of work. A private long term care insurance policy from a top company like Genworth, Mutual of Omaha, or John Hancock can help preserve these assets. The benefits of a private company offering long term care are:
1. The contracts are guaranteed. The companies cannot terminate existing policies or reduce benefits at their own free will.
2. Hefty discounts are provided for spouses that enroll in a joint policy, up to 40%.
3. You can opt for a “limited-pay” policy if you are concerned about the potential for increased costs in the future. For example, a policy that is completely paid up after 10 years instead of having to pay premiums for life.
4. You choose your own option for indexing inflation
5. A survivorship benefit can provide a fully paid up policy for life if the contract is in force for 7 or 10 years (depending on the company), no benefits are paid, and one spouse dies.
6. You can opt for a “return of premium” option with some companies
If you are interested in learning more about long term care insurance or would like a personalized quote, please give us a call at 1-888-972-0024 or send us an e-mail by CLICKING HERE.
