The Reason Behind People's Uncertainty in Purchasing Long Term Care Insurance

It isn’t news that Americans are reluctant to buy private long term care insurance. Only 7 million have policies and few people are buying new ones. But why don’t we plan for the risk of needing assistance at some point in our lives? After all, 7 of every 10 of us will need care sometime after we reach age 65 and others will need it at younger ages due to injury or illness.

An important new survey has found some answers. There is no magic bullet–no single concern that, if addressed, could convince us to plan for old age. Instead, the study found multiple–and sometimes puzzling reasons–why people don’t buy. And that suggests it won’t be easy to get them to either save more or purchase this insurance.

The researchers, Jeff Brown of the University of Illinois, Gopi Shah Goda of Stanford, and Kathleen McGarry of UCLA, based their conclusions on responses of 1,512 people over age 50 in a survey taken in May and June.

The single most important reason people don’t buy: Long term care insurance costs. With 60-year-olds paying average annual premiums of around $2,500, this is no surprise. In one 2007 industry survey, more than 8 out of every 10 non-buyers cited cost as the main reason why they passed up long-term care insurance.

But while 57 percent cited price, others cited a potpourri of reasons why they don’t own insurance. About 12 percent felt they don’t need it: Some said they were too young to buy (remember these were people aged 50 and older) and others felt they’d never need assistance.

Special Report: Health, Wealth & Aging

Some non-buyers were unaware that long-term care insurance is available, some thought they’d be rejected due to health reasons, and 4 percent thought they were covered by other insurance. About 9 percent who said they have long-term care coverage believe it is included in their health policy–though that is unlikely. Btw, whenever I speak to consumer groups, I always ask how many have long-term care insurance. It turns out that most who think so actually have Medicare Supplement (Medigap) insurance, which does not cover long-term care. These policies may cover limited home health services, but not long-term assistance.

Interestingly, only about 4 percent of the uninsured felt they had other ways to either pay for care or believed family or friends could care for them. In other words, they understand they are not prepared, but still are not doing anything about it.

Finally, a substantial number of the uninsured say they have not bought because they believe carriers will go out of business, refuse to pay claims, or raise premiums. Not a great sign for private carriers.

The role of Medicaid in this decision is very important. Jeff Brown wrote influential papers in 2007-2008 that concluded the availability of Medicaid long-term care benefits could explain why most Americans did not buy private insurance. But this survey tells a somewhat different story. It turns out that people who are aware that Medicaid covers long-term care are slightly more likely to buy than those who do not. Oddly, those who (incorrectly) think Medicare pays for such personal care are slightly less likely to buy private insurance than those who don’t.

Medicaid coverage may still crowd-out private insurance for low-income buyers, but it did not matter much for those in this survey (who were on average 61 and in good health).

Some people will buy private insurance: If they think they can afford it, believe they’ll need care, are reluctant to have family members help them, plan for the future, or want to leave an inheritance. The problem is, not a lot of people fit in these categories.

Long Term Care Pharmacy in Atlanta

Guardian Pharmacy, LLC, one of the largest long-term care pharmacy companies in the U.S., in partnership with Matt Hopp and Kathy Gibson, announced the opening of Guardian Pharmacy of Atlanta. The pharmacy serves residents of long term care facilities and group homes, assisted living and skilled nursing communities in metro Atlanta and surrounding areas.

According to Matt Hopp, owner and president of Guardian Pharmacy of Atlanta, “Guardian has a reputation for exceptional customer care which was extremely important to Kathy and me when selecting a partner to help build our business. Guardian’s unique “local autonomy” business model enables us to focus on superior customer service to meet the specialized needs of our residents, while the company’s corporate team assists with the time-consuming business operations like payroll and IT, as well as the complex revenue cycle.”

Based in Marietta, the nearly 10,000 sq. ft. pharmacy opened with 11 employees. Hopp expects to grow that number by the end of 2012. They have invested heavily in technology including eMars and robotic systems to help serve patients faster and more efficiently.

In metro Atlanta, there are more than 1,000 long-term care homes serving approximately 80,000 residents.

No strangers to the long-term care industry, Hopp and Gibson met while working in another pharmacy where they discovered they had similar business philosophies and goals. Hopp has a degree in health administration with an emphasis on geriatrics and an MBA from Georgia Tech. Gibson, who serves as chief pharmacist and director of operations, is a graduate of Samford University in Birmingham, Ala. She oversees the pharmacy’s consulting services, which focuses on quality care through appropriate use of medications and patient education.

Fred Burke, CEO and co-founder of Guardian Pharmacy, LLC, said “We’re excited to partner with Matt and Kathy in opening Guardian Pharmacy of Atlanta, which expands our footprint in the Southeast and provides a pharmacy in one of our core markets. Their experience in long-term care pharmacy and passion for this industry makes them ideal business partners.”

Guardian Pharmacy, LLC has a reputation for superior customer attention, rapid response to client needs and continuous 24/7 service. The company completed a record-breaking 2011 adding five new pharmacies and boosting revenue 35 percent over 2010. The combined Guardian entity serves more than 42,000 long-term care patients nationally through 18 pharmacies across 11 states.

Long Term Care Insurance for Couples

It’s the financial protection that many will need in retirement but few are willing or able to buy. Expensive long term care insurance costs scares off most people.

For married couples, an increasingly popular option called ‘‘shared care’’ may make it more feasible by providing expanded coverage for less money than would otherwise be the case.

Under these joint policies, couples purchase a combined pool of benefits that can be used by either or both spouses. Like most everything in the world of long-term care insurance, it’s complicated. But what’s clear is that fast-rising costs have made shared care a more appealing option.


Q. What does long-term care insurance cover?

A. It pays for personal care received at home, assisted-living facilities, adult day care or nursing homes. Benefits typically kick in when a person needs help performing at least two of the basic activities of daily living, which include bathing, dressing, eating, transferring to and from a bed or chair, and using the toilet.

Q. Who needs it?

A. Long-term care insurance is considered essential for those who can afford it but don’t have the resources to pay for years of future care. Health insurance and Medicare do not cover long-term care needs. And the financial burden is heavy for those without coverage. A semiprivate room in a nursing room costs an average of $76,285 a year, an assisted-living facility runs $40,200, and a year of part-time home care typically ranges from $18,000 to $25,000, according to the insurance association.

Q. How does shared care work?

A. Instead of purchasing a future pool of benefits for each spouse, the policies are combined into a pool they can each use. So, buying a three-year shared care policy each gives a couple up to six years of benefits; each buying a five-year policy gives them 10. If one spouse develops a need for extended long-term care, such as from Alzheimer’s or a stroke, he or she could access most or all of the benefits. And if one dies without having used any coverage, the full benefits generally transfer to the surviving spouse.

Q. So what’s the typical overall cost?

A. Let’s use as an example a 55-year-old couple in good health who purchase a fairly representative amount of insurance with a current value of about $200,000 — or a $180 per-day benefit for three years each of future coverage including 3 percent compound inflation growth. They would pay an average yearly premium of $1,950 for two standard policies without shared care, according to the American Association for Long-Term Care Insurance.

Attaching a shared-care rider would push the cost to $2,260. But it could save them money by ensuring that one can get five or six years of coverage if needed — more than the length of the policy. Couples over 60 or 65 will pay significantly more.

Draw the Limits of Your Long Term Care

Anyone who bravely faces the high cost of care without a financial backup is bound to lead an impoverished life.  Meanwhile, an individual who is currently planning his long term care should study his long term care insurance benefit period very well lest he experiences the same fate as the person without a financial plan. 

Long term care (LTC) costs do not cease to increase year after year and this is why the public is being egged on to get themselves a long term care insurance (LTCI) policy, as this is the only insurance product that will protect their money and other properties from being wiped out by the soaring rates of in-home care, assisted living, nursing home care, and hospice care to name a few.

If only all Americans can veer away from LTC costs they would but unfortunately around 70% of the elderly population 65 years old and older will require care says the Department of Health and Human Services.  If you happen to be one of them but you procrastinated on LTC planning until you ended up with no clear plan at all, prepare that portion of your assets that you need to hand over to estate recovery so that you can receive Medicaid coverage.    

Meanwhile, if you do not wish to turn to Medicaid and receive limited coverage, start weighing your LTCI policy options.  Forget the rumors that this insurance product will eat up your resources.  That will only happen if you wait another year before buying your policy. 

What is it About the Long Term Care Insurance Benefit Period?

Aside from the maximum daily or monthly benefit amount, your policy will stipulate a maximum benefit period.  This is the period in which you will receive your insurance benefits. 

Your LTCI benefit period can run for three years, four years, five years, or forever.  The longer it is, the higher the premium of your coverage while the shorter it is, the smaller your premium. 

It is always ideal to have a longer benefit period but you have to take your budget into consideration, otherwise you might not be able to maintain your annual premium and you will be forced to drop your coverage. 

If you are wondering how you can choose your policy’s maximum benefit period correctly, LTCI experts simply advise that you have your family physician look over your family’s health history so that you will know if you are at risk of developing a debilitating disease that will necessitate more years of care.   

Should that be the case, you can sit down with your LTCI specialist and discuss the probability of adjusting the components of your coverage so that you can live with a longer benefit period. 

If the adjustments do not reap good results and you’ll still be compelled to pay a high premium because of your long term care insurance benefit period, you might want to consider a policy under the Partnership Program. 

For more information about Partnership qualified policies, engage your specialist in another round of discussion.      

Long Term Care Cost in Arizona

Everyone in Arizona probably has heard that long term care is very expensive especially if one chooses to move to senior facilities. But how expensive? Will your long term care insurance cover everything? Are your savings enough? These are the questions that people have and as for the answers, below are the rates of long term care services in Arizona:

Home Care: Homemaker Services (Licensed)
Medial Annual Expense

$41, 184

Home Care: Home Health Aide (Licensed)
Median Annual Expense

$44,044

Adult Day Health Care
Median Annual Expense

$20,800

Assisted Living Facility: One Bedroom/Single Occupancy
Median Annual Rate

$36,000

Nursing Home: Semi-Private Room
Median Annual Rate

$63, 875

Nursing Home: Private Room
Median Annual Rate

$79, 114

These rates can give everyone an idea how much they will spend in the said long term care services. These can also help those who are still shopping for long term care quote and thinking about purchasing a policy. They now have an idea what type of policy can greatly benefit them in the future. This is very important since long term care insurance costs today are very expensive so every penny should be worth it.