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The Importance of LTC Planning
Aaron R Eisenach, CLTCVP Western Region
Individual Commercial Brokerage, Inc.303-659-0755800-788-8205
What is Long-Term Care?
A. Protect assets
B. Remain independent from loved ones
C. Stay out of a nursing home
D. Be able afford the best facility
E. All of the above
Why LTC Planning?
Protecting Your Most Important Asset:
Your Family
Three Consequences of An LTC Event Emotional Physical
◦You cannot put a price tag on the physical and emotional consequences to the family!
Financial◦Assets don’t pay for care. Income does.
◦People don’t self-fund. They bet!
◦Nothing has been allocated to pay for care, creating chaos, confusion and hard feelings.
Paying for Care• Medicare – NO• Health insurance - NO• Veterans Administration – NO unless a severe service-connected disability
• Your own money - YES• LTC insurance - YES• Medicaid – YES, but must be impoverished• Asset test• Income test• Home equity limit• Limited choices
Needing LTC is a Substantial Risk “At least 70 percent of people over age 65 will require some long-term care at
some point in their lives.”1 7 in 10 of people 80 and older had some kind of disability in 20102
1 in 5 of people aged 45-54 55.8% of people 80 and older have a severe disability2
Lifetime Chance of Using LTCi Policy3 (assumes a 0-day elimination period) Issue age 50 = 50% Issue age 60 = 50% Issue age 70 = 51% Your chance is either 0% or 100%. Issue age 75 = 53% Issue age 80 = 54%
Lifetime possibility from age 65 on4: Men Women Major house fire 2.2% 2.6% Severe care accident 15.5% 18.0% Becoming ADL disabled or cognitively impaired 44.0% 72.0%
1) 2014 Medicare & You; 2) “The Aging of the Baby Boom and the Growing Care Gap: A Look at Future Declines in the Availability of Family Caregivers.” Redfoot, Feinberg and Houser, AARP Public Policy Institute. August 2013; 3) AALTCI 2012 Sourcebook; 4) AALTCI 2007 Sourcebook
LTC is Often a Women’s Issue• May bear the brunt of caring for a parent, spouse or child• 65% of family caregivers are female• More than 8 in 10 are caring for a relative or friend aged 50 or older
• Average caregiver• 49-year old woman• Works outside the home • Spends about 20 hours/week providing unpaid care to mom for nearly 5 years
• More than 2/3 of people over 85 are women• 2/3 of LTCi claims are for women• Twice as likely to exceed 3-year claim• Women on average live 5 years longer• At age 75, 74% of men still have a spouse• At age 75, only 38% of women still have a spouse
• 73% of women aged 85+ are widowed
AALTCI 2011, 2012-2013, 2014 AALTCI Sourcebook; “The Aging of the Baby Boom and the Growing Care Gap: A Look at Future Declines in the Availability of Family Caregivers.” Redfoot, Feinberg and Houser, AARP Public Policy Institute. August 2013.
Alzheimer’s Disease◦ 1 in 3 seniors dies with Alzheimer’s Disease or another form
of dementia
◦ 2013 cost to US = $203 billion
◦ 2050 cost to US = $1.2 trillion
◦ Who has it: 1 in 9 Americans 65 and older has Alzheimer’s 1 in 3 Americans 85 and older has Alzheimer’s An estimated 200,000 Americans under age 65
◦ The only Top 10 cause of death in US without a way to prevent it, cure it or even slow its progression
◦ Dementia is the 2nd largest contributor to death among older Americans, second only to heart failure
2013 Alzheimer’s Association Facts and Figures
Alzheimer’s Disease
2013 Alzheimer’s Association Facts and Figures
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Breast Cancer Prostate Cancer Heart Disease Stroke HIV Alzheimer's
-0.02 -0.08 -0.16 -0.23 -0.42 0.68
-50%
-30%
-10%
10%
30%
50%
70%
Percentage Change in Number of Deaths Between 2000 and 2010
A National Crisis
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The Growing Care Gap
“The Aging of the Baby Boom and the Growing Care Gap: A Look at Future Declines in the Availability of Family Caregivers.” Redfoot, Feinberg and Houser, AARP Public Policy Institute. August 2013.
• 68% of Americans believe they will be able to rely on their families to meet LTC needs when they require help
• Family caregiving has expanded from coordinating and providing personal care and household chores to including medical or nursing tasks (eg, wound care and injections) with little training or professional support
• As LTSS shift from institutional to home-based care, burdens on family caregivers will likely increase without adequate supportive services for caregiving families
Caregiver Support Ratio in the U.S.
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“The Aging of the Baby Boom and the Growing Care Gap: A Look at Future Declines in the Availability of Family Caregivers.” Redfoot, Feinberg and Houser, AARP Public Policy Institute. August 2013.
• Number of caregivers, defined as people aged 45-64, for every person aged 80+:
• Population aged 45-64 is projected to increase by 1% between 2010 and 2030.
• Population 80+ is projected to increase by 79% during the same period.
1990 2010 2030 2050
Colorado 8.0 9.3 4.5 2.7
United States 6.6 7.2 4.1 2.9
I Work with Reasonable People
• Understand they may live a long life.
• Believe that it’s possible they could become frail and need care if they do live a long life.
• Are willing to consider taking action if they understand that needing care could have serious consequences to their family and retirement portfolio.
The Goals of LTC Planning Stay at home for care without disrupting or destroying
the lives of my loved ones by protecting them from the devastating emotional and physical consequences
Preserve the retirement plan (and other assets) for its intended purpose• Supporting your lifestyle and keeping continuing
commitments to your family and community• To make sure your surviving spouse or partner never has to
turn to the children for support• Leave a legacy to those who deserve and/or need it
Avoid disrupting or destroying other planning
Claims on Individual LTCi Policies Home health care is becoming increasingly popular• 2001 = 15%• 2004 = 26%• 2007 = 43%• 2010 = 49% of new claims• 2011 = 50% of new claims• 2012 = 51% of new claims
Claims in facilities have declined• SNF 2001 = 80%• SNF 2004 = 55%• SNF 2007 = 24.1% (ALF = 32.9%)
• SNF 2010 = 27.0% of new claims (ALF 24%)
• SNF 2011 = 31.0% of new claims (ALF 19%)
• SNF 2012 = 30.5% of new claims (ALF 18.5%) 1) National Underwriter Life & Health edition, 1/14/08; 2) 2008, 2012-13, 2014 AALTCI Sourcebook15
Having a Plan for Extended Care• Answers the important questions of:• Who is going to provide my care?
• Where is it to be provided?
• How is it going to be coordinated?
• How will it be financed?
• May be a second gift of life to the caregiver
• If a LTC plan is not developed, you must still live with your planning!
The main function of long-term care insurance or other insurance solutions is…
To provide cash flow to pay for long-term care servicesand mitigate the emotional, physical and financial
consequences to my family and my lifetime savings.
Remember the K.I.S.S. Rule
1._______________Monthly Benefit
(increments of $100)
X 2.________________ Benefit Period (2, 3, 4, 5, 6, 8, 10 years)
3. Inflation Protection
4. Elimination Period
5. Shared Benefits 6. Other riders
$5000 36 Months
$5000
$7000
$4200$800 stays infor future use
$2000 self-fund
Traditional LTC Insurance
$180,000
Partnership Map
Approved State Plan Amendment State Documents Available Policies for Sale State Plan Amendment Submitted No documents available for these States
www.dehpg.net/LTCPartnership as of 9.30.13
Other Solutions• Short-term care policies• Lower premiums• Less health underwriting than traditional LTCi
• Life insurance with accelerated death benefits• Modern life insurance: use while you are alive• Less health underwriting than traditional LTCi
• Life or annuities with LTC services riders• Use life insurance or annuity account first, then• LTC insurance rider second• Death benefit if not used for care, cash value if policy is
surrendered, guaranteed premiums for life
Final Thoughts• Living a long life is likely. Planning for it is a necessity.
• Having some coverage is far better than having no coverage.
• Even if you do not have a well thought-out and funded plan, you still have to live with that plan.
• What’s YOUR plan?
Thank You!
Aaron R Eisenach, CLTCVP Western Region
Individual Commercial Brokerage, Inc.303-659-0755800-788-8205
Our Changing Industry Perfect storm
◦ Increasing longevity◦ Low lapse rates / high persistency◦ Higher claims◦ Low interest rates
Increased premiums on new and old policies Carrier exits and entries LTCi is a form of health insurance!
Not an investment Not life insurance Rates go up
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The Bright Side More solutions than ever! A LOT of people living longer…a lot MORE people! Care is expensive, and clients cannot afford it. Ever!
◦ …without disrupting lifestyle, the estate, retirement and business succession plans, and still keeping obligations to others
◦ WE are the only solution. WE have the ONLY solutions!◦ It’s not about a product. YOU are the product! You are the
educator of the clients and their advisors! Help your clients while helping yourself and family YOU are your only competition!
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Top 10 Reasons to Sell Traditional LTCi
1. Immediate liquidity2. Benefits often paid out faster - as little as one year3. Less self-funding involved than hybrids4. Unlike 101(g) riders, does not require the condition
to be permanent and always includes 2 benefit triggers5. Inflation protection6. Shared benefits7. Partnership program may greatly benefit Middle Class8. Tax incentives9. Preserves a death benefit for its intended purpose10. Pays renewals
Thank You!
Aaron R Eisenach, CLTCVP Western Region
Individual Commercial Brokerage, Inc.303-659-0755800-788-8205
