We can’t escape aging and the possibility of needing help, so it’s a good thing Medicare pays for long-term care, right?
That is wrong because Medicare DOES NOT pay for long-term care.
So how can we pay for the cost of care as we grow older? And how does this impact agents during your daily work activities? We need a plan in place NOW, so here’s what you can consider as options for long-term care payment options.
Government Provided Options
Medicaid
Medicare does not pay for long-term care when we’re older, but another government program does: Medicaid.
Medicaid is a government partnership between Federal and State governments that provides coverage for various health issues and aspects of daily life for lower-income individuals across the nation.
States set up coverage, programs, and benefits, with the Federal government providing financial and regulatory support to these programs. Generally, states cover and pay for long-term care within Medicaid.
The challenges for Medicaid-paid long-term care include:
- Qualifying for these services requires earning a low income to access long-term care coverage and payments, resulting in a lower quality of life for Medicaid participants than their peers.
- The quality of long-term care providers is often lower due to the lower reimbursement rates Medicaid pays, causing higher quality providers to skip working with Medicaid.
Do we want a lower quality of life and a care provider to pay for this service we may need when we age?
What Should Agents Do?
Recommend this program as a last resort only if clients have no other possible options. If you don’t have an excellent understanding of Medicaid for your state(s), find a Medicaid specialist in your network you can direct clients to in this situation to educate them about what to expect.
Veterans Administration (VA) Aid and Attendance Benefits and Housebound Allowance
This benefit program within the VA allows US Armed Forces veterans to access long-term care services at home or through other venues. It reimburses qualifying veterans for the long-term care they receive due to their military service.
There are specific criteria requirements veterans must meet to qualify for the program:
- Active-duty status in the military,
- When their service occurred (the dates served),
- Was service during specific times of “war,”
- Individual income requirements to scale benefit availability to an income cap that cuts off the benefit.
As great as this program is, it’s still limited to veterans and, in some instances, their direct families.
What Should Agents Do?
Find VA experts to add to your network who know how this benefit works and can help your clients apply for it. Completing an application takes a lot of information and time, and the VA’s processing time is quite lengthy, too. There’s extensive follow-up and interaction with the VA to get a final answer, and these experts know the process very well to make it happen as quickly as possible for your clients.
Long-Term Care Payment Options for Individuals
Reverse Mortgages
Many of us don’t realize we’re living inside a piggy bank, but this is the case for homeowners! Home mortgages enable homeowners to build equity through their monthly payments.
All the money we pay in monthly payments is there to access in the form of equity. We hope to access 100% of this equity when we sell our homes and use the sales proceeds to pay for long-term care.
If you want to stay in your home when you retire, there’s another way to access this equity: reverse mortgages.
Reverse mortgages facilitate access to home equity as funds we use to cover living costs after retirement, including long-term care in our homes.
Each reverse mortgage program has rules and regulations you must follow, but generally, you stay in your home, receive the care you need, and pay for it using the funds from the reverse mortgage.
Homeowners need to know how these programs work to determine if they’re a good resource for paying long-term care costs and staying in their homes.
What Should Agents Do?
Find reverse mortgage resources for your network that will help clients learn about this resource and whether it’s an option for them to use when they retire.
Long-term Care Insurance
For homeowners who don’t want to take out a reverse mortgage or those who don’t own homes, long-term care insurance is another viable option for paying long-term care costs.
This coverage pays for long-term care in assisted living locations and, in some policies, long-term care in your homes, too. Each policy sponsor has its rules and regulations for coverage, including “elimination periods” before payments begin, but this coverage does the job.
It’s not cheap; the earlier this coverage is purchased in life, the lower the costs can be.
What Should Agents Do?
- Add this coverage to your product portfolio if you don’t already offer it now.
- Talk to younger clients about it as well, emphasizing the need to prepare for the future when expensive care costs happen, and you need this coverage to pay for it. Also, mention that this coverage is less expensive the earlier it is purchased.
- If you don’t want to add this coverage to your direct portfolio, add it through a network contact so you can refer people to this contact for assistance.
Life and Annuity Hybrid Plans
Life and Annuity Hybrid products offer traditional life and annuity benefits while providing additional coverage for long-term care.
These products and long-term riders added to traditional life policies can have “elimination periods” before coverage payments begin. These periods are to confirm with physicians the need for assisted living or long-term care the coverage provides.
This coverage is expensive but less expensive than traditional Long-Term Care Insurance. Riders are less costly, and benefit amounts and coverage timeframes are lower than the other options.
However, both options provide more flexibility, with life benefits included to maximize return on investment as a policyholder.
What Should Insurance Agents Do?
- If you don’t have these Life and Annuity Hybrid plans or long-term riders in your product portfolios, add them for your clients to access.
- Talk to younger clients about these products using the same talking points mentioned above for long-term care insurance. It’s also a good idea to include the flexibility and increased return on investment that these options deliver.
Costs are rising due to increasing demand for long-term care from the retiring Baby Boomer generation. This issue will only grow in the number of people who need to pay for the care and the increasing costs. Agents need to be ready to meet this challenge.
Agility Life Insurance expert Chris Gaston is ready to make this challenge easier by finding the best products to meet this growing demand. For this free brainstorming session, contact Chris at (817) 291-9898 or email cgaston@enrollinsurance.com. You can also visit our Life Insurance contracting website to contract with the best life products in the nation. Chris can add you to our free weekly email list for tips and other vital information.
