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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
2008-03-01 09:38:00
How does one know?
Answer: We get that question quite frequently. The answer is more simple than one might realize. In some situations it’s going to make sense... in others... it will not. It’s strictly a matter of risk management, and there are only 4 ways to manage a risk. You can ‘avoid’ the risk... ‘retain’ the risk... ‘reduce’ the risk... or ‘transfer’ the risk. Sometimes using another situation as an example can make things easier to understand. Suppose you want to get a package across a busy street without going to the pedestrian crossing. The ‘risk’ of course is getting ‘hit’ by a passing car or truck. You can ‘avoid’ the risk by deciding not to cross. You can ‘retain’ the risk by crossing the street and accepting the consequences. You can ‘reduce’ the risk by going to the pedestrian crossing, waiting until the light says ‘walk’, and then crossing. You can ‘transfer’ the risk by asking someone else to take the package across the street for you. While the decision on a Long Term Care insurance policy is similar, the options are not quite as clear-cut. The ‘risk’ of course is the cost of the care. Today, the average cost of nursing home care in the counties surrounding Wichita (Sedgwick, Sumner, Butler, Harvey, Cowley and Reno), varies from $110 per day to $190 per day, depending upon the type and amount of care one needs. The odds of entering a nursing home at some time during one’s life are real. (Sources: Nursing Home Utilization by Current Residence: 2007; Publication #PB 90 163 015, National Center for Health Statistics, October 2006; Aging America, 2006 Ed.; U. S. Department of Health & Human Services; Health Insurance Association of America, 2006): * Of all persons past the age of 65, 7 out of 10 will need care at some time during their lives. * Of all persons past the age of 70, 8 out of 10 will need care at some time during their lives. * Of all persons past the age of 80, 9 out of 10 will need care at some time during their lives. The average length of care for men is about 3.8 years, women average approximately 50% longer. As you can see, avoiding the risk is seldom in the control of the individual. Long term care is very likely to happen to most of us. The second way to manage the risk is to retain it. This means that if some illness, injury or affliction causes you to need long term care, you make the decision to pay for it yourself, out of your own resources. If you determine you can afford to retain the risk there are a couple of questions you need to ask yourself before making your final decision. 1. Is it important I leave anything to those I leave behind? and.... 2. Will it bother me to write a check each month for $3,000 to $6,000 or more (considerably more in the future)... and never know how long I will be writing these checks? Most of us who are faced with the decision of whether or not to purchase a Long Term Care insurance policy grew up in a time when a few cents or a few dollars meant everything. While some of us may have accumulated a sufficient amount of income and assets to retain the risk, the thought of writing a check each month for these kinds of amounts would be unbearable. For some reason, the memory of how we got what we got seems to be indelibly impressed upon our minds. If however you can answer ‘no’ to both of the above questions, retaining the risk may make the most sense for you. The third way to manage the risk is to reduce it. This means you stay healthy, eat right, take your medication, and follow your doctor’s orders. It also means that you explore every avenue from Medicare and your Medicare supplement to obtain as many benefits as possible. Unfortunately, this method of managing the risk does not make it go away. It merely delays it. If you refer to the 20086 Guide to Social Security and Medicare, 36th edition, you will find that benefits are payable in a nursing home for Skilled care only... and for a maximum of 100 days if all of the conditions are met (between Medicare and your Medicare supplement) per benefit period. There are no benefits paid for Simple, Personal, Custodial, Intermediate or Supervised care. Nor are there benefits paid for Assisted Living. It might be interesting to note that only 22% (on the average) of all people who enter a nursing home are receiving Skilled Care. In doing everything possible to reduce the risk, it is always advisable to designate a family member, who is knowledgeable of the benefits under Medicare and one’s Medicare supplement, to investigate all areas of benefit recovery. The fourth way to manage the long term care risk is to transfer it. When transferring the risk to an insurance company, you pay them a small certain loss every month (the premium... for which you can plan for and budget), in return for them paying all or most of the large uncertain loss (the claim... which is the $36,000 to $75,000 or more per year, which would be most difficult or impossible to plan for and budget). If you have income, assets and an estate to protect... if the peace of mind of knowing you have done everything possible to protect these things is important to you... and if you treasure your independence... transferring the risk will probably make the most sense. If on the other hand, you do not have that much to protect... and you can qualify for Medicaid under the income and asset guidelines (to be detailed in a later article)... retaining the risk until your resources are exhausted... then applying for Medicaid... may make the most sense. If you would like to consider transferring the risk to an insuring company... in other words, buying a Long Term Care insurance policy... there are several things you should know... There are approximately 27 insurance companies offering different ‘individual’ Long Term Care insurance policies in the state of Kansas. There is a difference between ‘individual’ and ‘group’ policies. Perhaps one of the biggest differences is that all ‘individual’ policies must conform to The Kansas Long Term Care Act of 1988 (“KLTCA88”) and are regulated by the Kansas State Insurance Commissioner’s Office. The KLTCA88 provided for some uniform guarantees from all policies sold in the state. The Kansas’ Long Term Care Act of 1988 (KLTCA88) applies to all individual policies and guarantees you: * All Long Term Care insurance policies are prohibited from requiring a higher level of care on initial confinement before benefits are provided for a lower level of care * All Long Term Care insurance policies are prohibited from requiring a hospital stay prior to nursing home confinement * All Long Term Care insurance polices may require that care be ordered by a Physician * All Long Term Care insurance policies must be guaranteed renewable * All Long Term Care insurance policies must include a 30-day ‘Free Look’ So, since all policies must conform to these guarantees... they all must be equal, right? No. Next month we will discuss some terms that make a big difference in policies.
 
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