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Charlie Traffas
Charlie Traffas has been involved in marketing, media, publishing and insurance for more than 40 years. In addition to being a fully-licensed life, health, property and casualty agent, he is also President and Owner of Chart Marketing, Inc. (CMI). CMI operates and markets several different products and services that help B2B and B2C businesses throughout the country create customers...profitably. You may contact Charlie by phone at (316) 721-9200, by e-mail at ctraffas@chartmarketing.com, or you may visit at www.chartmarketing.com.
What's New
2005-02-01 11:24:00
Long-term care - it's always a matter of risk management
: Is long-term care a serious threat to most people?
ANSWER: If you already have a condition that forecasts a high likelihood of needing long-term care, you've gone a long ways towards answering the question yourself.  These conditions might include but not be limited to such things as high blood pressure, heart conditions, arthritis, cancer, memory impairment, etc.  But what if you are in good health… how big is the threat then?  I answer it the only way I know how… it is a matter or risk management.  For instance… 1 in 88 houses will have a major fire this year.  1 in 70 cars will be involved in a major accident.  1 in 2 people will need convalescent care after age 65.  If these numbers are not staggering now… they will be soon.  A nice home might be valued from $100,000 to $200,000.  The value of a vehicle is of course much less.  Most people mean it when they say they would not be able to sleep at night if they did not have insurance to replace their home or vehicle in the event it burned down, blew away or was totaled for some reason. Yet, the potential loss of a home or a vehicle pales in comparison to the loss incurred for a long-term care confinement… and the loss is apt to occur as much as 4,400 times more often!  A long-term care confinement at today's costs (these costs are rising at a pace of approximately 3 and 1/3% a year) could easily reach as much as $400,000 or more over the term of the confinement.  Over 94% of all persons past the age of 65 have no insurance to cover any of this loss!  It makes you wonder why some people so diligently plan their retirement, yet leave it all exposed to something that could be remedied for so little.Here are just a few comments I have heard from people thinking about getting a long-term care policy, or from the kids trying to counsel Mom and Dad:"Upon my disability, my wife will take care of me.  I weigh over 200 pounds and my wife weighs about 120, but she's a strong woman.""My kids will maintain the house, the property and watch after Mom.""Mom can't drive so our daughter will take time from her professional career to do our grocery shopping, run us to the doctor's office, and around town.""Our son will abandon his career and move his family back to town to take over our small business.""The grandkids will stop by weekly to mow the lawn and shovel the driveway.""Mom and Dad do not need a policy because us kids are going to take care of them.  Everything will work out just fine."The truth is… none of the above will continue for very long, if at all.  A 120-pound, 70 year old woman, is not going to throw a 200-pound man over her shoulder and carry him to the bathtub, scrub him down, dress him, and carry him down the stairs to breakfast.  The real issue here is people never see themselves leaving their home.  Since they are not going to leave their home, why would they require long-term care insurance?  They know the statistics.  They all have friends or family in nursing homes, but it isn't going to happen to them.  I am sure the kids' intentions are good… but that's not the way it happens.  The kids are glad to take care of Mom and Dad… as long as they are okay, but when an illness or affliction sets in… somehow… things turn out much differently.  Although there may be several siblings, most have a reason why they just can't do it today.  It doesn't take long before those that are carrying more than their share of the load are bickering with those that are not.  Stress mounts… for not only the siblings… but Mom and Dad as well.  After years of watching these types of situations, I feel I am qualified to say… if at all possible… get a policy!  If the kids want to be involved on a daily basis… fine… but have the policy to take care of the times they don't… or can't.Then too, many people believe they are covered under Medicare for a long-term care confinement.  They are always surprised to find they most probably have no coverage at all under Medicare.  If they do… it's very little.  As you might remember from earlier articles, Medicare only pays for Skilled Care, and for only the first 20 days of this type of care.  Most people do not need Skilled Care at the onset of an illness, injury or affliction.  They most generally need a lower level of care, and then… as their condition worsens… need more care.  Nearly 80% of all people receiving long-term care are receiving a care less than Skilled Care, (i.e. Simple Care, Personal Care, Custodial Care, Assisted Living, Supervised Care, Intermediate Care) thus Medicare pays nothing.  If one does need Skilled Care, and if all of the conditions are met, it is possible that Medicare will work with one's Medicare Supplement to pay up to an additional 80 days of this type of care.  After this… there is nothing else.  There are only 4 ways to cover the costs from that point forward:• You use your own income and assets• Your family pitches in and pays the costs• You exhaust your resources and then try to qualify for Medicaid (Social Welfare)• You have a Long-Term Care policy that will pay all of or most of the costsSo, we're down to the four ways of managing a risk: Avoid, Reduce, Retain, TransferAvoid: (Sources:  Nursing Home Utilization by Current Residence: 2003; Publication #PB 90 163 015, National Center for Health Statistics, October 2002; Aging America, 2002 Ed.; U. S. Department of Health & Human Services; Health Insurance Association of America, 2002)• The average length of stay for men in a    Nursing Home is 3 years, 10 months;    women average approximately 50% longer    (Note:  Does not include  time spent at    home prior to confinement).• Of all persons past the age of 65, 7 out of   10 will enter a Nursing Home some time in    their lives.• Of all persons past the age of 70, 8 out of    10 will enter a Nursing Home some time in    their lives.• Of all persons past the age of 80, 9 out of    10 will enter a Nursing Home some time in    their lives.It's not too likely that one can avoid the risk.Reduce:About all you can do to reduce the risk is to do your best to keep fit and stay in shape.  Take your medication.  Get regular checkups.  In the event of a Long Term Care confinement on one or both spouses, be sure you (or a member of your family) do everything possible to exhaust all benefits available from Medicare and your Medicare supplement.  Your income and assets however are still exposed as illustrated below.Retain: You will see above that one of the options to pay for long-term care costs is to use your own income and assets.  This would be called 'retaining' the risk in risk management.  Unfortunately, this is what most people end up doing.  They understand, but fail to act on the premise that it is much easier to plan and budget for a small monthly amount now, than it is to plan and budget for several thousand dollars a month later.  The worksheet below will assist in letting you know how long you could last… by paying for your own, and/or your spouse's long-term care costs.Annual Costs per person for Nursing Home Confinement: $30,000 to $60,000 or moreMonthly Costs per person for Nursing Home Confinement: $2,700 to $5,000 or moreDaily Costs per person for Nursing Home Confinement: $90 to  $160 or moreCan you afford to retain the risk?  Complete the following and find out.  All income must be figured 'net' or after taxes.
 
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