Long Term Care Insurance Medical History

Does Health Insurance Pay for Long Term Care? (Part 3 of 6)

On the individual side of long term care, people have to health qualify to secure the coverage, money pays for it, but it's your health that actually buys it. The carriers have to be clear on your ten year medical history, ten year surgical history of medications that you've taken or are taking.

If a client has their medical history, that is a huge and significant card that they have. They will have many options underwriting wise in the marketplace to go to, they may decide, hey, I have a budget of X dollars per month or X dollars per quarter or X dollars twice per year to pay or annually.

As an aside, the less times you pay for your long term care, the less you're going to pay. For instance, the least amount of money you will pay, generally speaking, is if you pay annually, if you pay semi-annually, there is a factor. Sometimes it's 2 to 3%. In other words, the carrier charges you 2 to 3% because you're paying more times than annually. If you pay quarterly, generally the factor can range between 4 to 6%, which means you're paying 4 to 6% more because you're paying more often.

Finally, if you pay monthly, generally speaking, the carriers can charge a factor of 6 to 8%. It doesn't matter to us how often the client pays. It does matter to us that they understand that the more times they pay, the more premium they will actually pay. As for gearing a plan to a specific plan design, we know from talking about the main planning metrics that essentially, if a client has their health, they're making four decisions. One decision is on the daily benefit amount. A client can generally purchase between 50 and $500 a day of coverage. You may ask, well, how much do we buy?

Well, part of the consideration here is to use the Genworth tool to develop the cost of care for your area that you're in now or where you may be. Another component of this could be your net worth and could be your income. So people always want to know, well, gee, what should I buy?

Well, the general tool that we've referenced is available to everybody. And it's extremely useful in determining what kind of a daily benefit the client should purchase. In a worst case scenario in the Atlanta area, that number is roughly $250 a day. A client that has done well, or that has a high income may purchase $200 a day because they figure that they can shoulder part of that burden on their own. Regardless, there is a range a client can buy between 50 and $500 a day of daily benefit. The second planning metric that people have a choice on is the benefit period.

If the client accesses benefits, this simply says, how many years does the carrier pay? Two years, three years, four years, all the way up to unlimited. And there is a range just like there is on the daily benefit. The third main planning metric is the elimination period. That's another way of expressing the client's deductible in terms of the number of days, it could be zero days could be 30. It could be 60, it could be 90.

Keep in mind the products they're individually filed in each state. And there can be some variances across state lines. The final planning metric is inflation. Now, when you look at the Genworth tool that discusses the cost of care, it will tell you how much the cost of care has increased over prior year. One of the reasons that purchase of inflation is important is to maintain your buying power.

The way that you do that is you can generally purchase several, all kinds of inflation, but the main kind of inflation that's out there now is some form of compound inflation. It can be 1%, 2%, 3%, 4% or 5% compound inflation. Again, like the other three planning metrics, there is a range of options available.

One of the things that can help shed light on what kind of inflation to buy or how much to buy is the use of that Genworth tool, because it does reference how much the cost is increased in the area that you're living in or could be living in. When you need these services in future videos, we'll cover additional reasons why clients don't contemplate or purchase long term care or long term care insurance. If you have any questions or topics you'd like me to cover in upcoming videos, please leave a comment below.