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Weldon R. HazlewoodInsurance Outreach Coordinator

Life and Health Division

1-877-310-6560(804) 371-9389

BUREAU OF INSURANCE STATE CORPORATION COMMISSION

COMMONWEALTH OF VIRGINIA

1300 EAST MAIN STREET (23219)P.O. BOX 1157 (23218)

RICHMOND, VA

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State Corporation Commission

The Bureau of Insurance provides free professional information and complaint services to all residents of Virginia. Over 2,400 formal complaints were handled last year resulting in a savings of over $13,622,165.00 to consumers.

Consumer Service Hotline - Insurance Outreach – 1-800-552-7945 1-877-310-6560

Address - Website1300 East Main Street www.scc.virginia.gov/boiRichmond, VA 23219

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State Corporation Commission

The Bureau of Insurance is the largest division within the SCC(approximately 200 employees). There are approximately 11,890 agencies and 158,000 agents that are licensed here.

Regulates insurance companies, agents and agencies doing business in Virginia.

The regulatory functions of the Bureau of Insurance are divided into the following divisions:

● Financial Regulation ● Life and Health ● Property and Casualty ● Administrative Services

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Are There Any Risk You Haven’t Already Insured?

● Have you insured your home?

● Have you insured your car?

● Do you have medical insurance?

● Do you have a plan to pay for long-term care expenses?

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Walls of Protection Most people invest in many forms of insurance but neglect the most important—long term care.

This graphic illustrates that without a plan to pay for long term care, you’ve left a hole in the wall of protection surrounding your finances.

Long Term Care is the greatest uninsured financial risk for older people.

--The Labor Department5/11

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Insurance is an important tool for protectingyourself against risk.

A person may need this care if they suffer from:● prolonged illnesses● disabilities, or● cognitive impairment (such as Alzheimer’s disease)

Long-term care is different from traditional medical care. It helps one live as he or she is now; it may not help to improve or correct medical problems.

What is Long-Term Care?(LTC)

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What is Long-Term Care Insurance?

Long-term care is a relatively new type of insurance introduced in the 1980s as nursing home insurance.

● Private insurance companies offer individual or group long-term care policies that provide benefits for a range of services not covered by your health insurance, Medicare, or Medicare

supplement insurance.

● You can buy an individual policy from an agent or through the mail.

● You can buy a group policy through an employer or through membership in an association.

As of July 2000, long-term care became available to state employees, retirees, and certain family members.(Aetna – Genworth)

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What are your Options for Long-Term Care?

● Family and Friends as Caregivers

● Pay Out of Your Pocket for Care

● Medicaid - “Spend Down” to Poverty Level

● Purchase a Long-Term Care Policy

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Common Assumptions

● Medicare will cover all of my long-term care expenses.

● When Medicare payments end, I can rely on Medicaid.

● I’ll give away my assets and become eligible for Medicaid.

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Where Can I Get Long-Term Care Services?

● Your Home● Assisted-Living Facility● Adult Day Care Facility● Nursing Home

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Costs of Long-Term Care Insurance

● Variables:○ How many years of coverage (pg. 18)○ Daily benefit (pg. 18)○ Length of elimination period (pg. 20)○ Inflation protection (pg. 22)○ Non-forfeiture benefit (pg. 25)

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Factors Affecting Premiums

● Daily Benefit Amount - How much is your daily benefit amount going to be? In 2010 the average cost of a private room in a nursing

home per day was $229 which is an annual cost of $83,585. In Virginia the average cost of nursing home care is $213 per day for a private

room or approximately $77,830 a year.

● Age – How old are you at the time of purchase? The younger you are the cheaper it will be.

● Benefit Period – How many years of coverage should you buy? 3 year, 5 year, or even lifetime. (pg. 18)

● Elimination Period - How long before your benefits begin? 30, 60, or 90 days. Sometimes this is referred to as your elimination or deductible period. The number of days at the beginning of a claim you agree to cover yourself before benefits begin. (pg. 20)

● Inflation Period - How are your going to be protected against future inflation? Purchase an inflation protection rider, if age 70 or younger. (pg. 22)

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Virginia-State Median: Annual Cost in 2011

Home Care

Homemaker ServicesHome health aide

$39,033$42,328

Adult Day Health Care

Adult day health care $14,170

Assisted Living Facility

Private, one bedroom $44,460

Nursing Home Care

Semi-private roomPrivate room

$69,715$77,380

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Eligibility for Benefits

● Most LTC policies use a trigger to determine when benefits are payable under the provisions of the policy. Following are the most common benefit triggers.

● Activities of Daily Living (ADLs) - payment of policy’s benefits is triggered by the loss of a specified number of activities of daily living most commonly the loss of 2 or more ADLs. The basic ADLs are defined as bathing, dressing, eating, transferring, toileting, and continence. (pg. 19)

● Impairment of Cognitive Ability - payment can be triggered by an individual’s inability to maintain self awareness of time and place. (pg. 20)

● Doctor’s Certification - regardless of the benefit trigger, the policies may require certification by a physician before the policy will begin benefit payments. (pg. 21)

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Create your own policy

Daily Benefit amount: Supplement to your income. (pg. 18)

Elimination or waiting period: How long can you afford to pay the full cost of care? (pg. 20)

Number of years of coverage: What’s realistic? (pg. 18)

Inflation protection: 5% rider or provision for adding to coverage. (pg. 22)

Pooled benefits for a couple. (pg. 14)5/11

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Services Not Covered

● A mental or nervous disorder or disease, other than Alzheimer’s disease or other dementia.

● Alcohol or drug addiction.

● Illness or injury caused by an act of war.

● Treatment the government has provided in a government facility or already paid for.

● Attempted suicide or intentionally self-inflicted injuries. (See pg. 17)

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Requirements for Long-Term Care Insurance Policies Issued in Virginia

1. There can be no requirement for a prior hospital or skilled nursing home stay as a trigger for benefits.

2. All pre-existing conditions must be covered after six months.

3. Policies must be guaranteed renewable or noncancelable.

4. Inflation protection coverage must be offered.

5. After age 65, no attained age rating is allowed.

6. Policies must provide benefits for a minimum of 12 months.

7. Policies may not use waivers or riders to exclude coverage for pre-existing conditions.

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Requirements for Long-Term Care Insurance Policies

Issued in Virginiacontinued…

8. Policies cannot require that home health care be provided by an RN or LPN.

9. All policies must have a 30 day “free-look” provision.

10. No policy may exclude or limit benefits based on Alzheimer’s disease, senility, dementia, organic brain disorder, or other similar diagnoses.

11. An option for an insured to designate an individual to receive a notice of policy lapse or termination.

12. Rate revisions must be approved by the Bureau prior to implementation.

13. No new waiting period for pre-existing conditions when replacing policies.

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Health Insurance Portability and Accountability Act (HIPAA)

● You should know that a federal law, the Health Insurance Portability and Accountability Act of 1996, or HIPAA, gives some federal income tax advantages to people who buy certain long-term care insurance policies. These policies are called Tax-Qualified Long-Term Care Insurance Contracts, or simply Qualified Contracts.

(See page 15)● If you bought a long-term care insurance policy

before January 1, 1997, that policy is probably qualified. HIPAA allowed these policies to be “grandfathered”.

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Your AgeMaximum Amount That

You Can Claim

40 years old or younger $340More than 40 but not

more than 50$640

More than 50 but not more than 60

$1,270

More than 60 but not more than 70

$3,390

More than 70 $4,240

(See page12)

2011 Federally Tax-Qualified Long-Term Care Rates

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What Does Long-Term Care Insurance Cost?

● An average policy providing a $100 a day benefit for 4 years for care delivered in a nursing home or at home, 20 day elimination period; and 5% compound inflation protection:

○Age 40 - $798○Age 50 - $1,087○Age 65 - $2,130○Age 79 - $7,000

(See page 29) 5/11

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Choosing a Company

● Large companies with experience in long-term care and/or life insurance.● Good ratings with independent rating companies (page 35, Shopper’s Guide).● Compare 2 or more policies or outlines of coverage. Use worksheet chart beginning on page 47 of Shopper’s Guide to compare policies.● Use the 30-day free-look period to review policy carefully.5/11

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• By 2030, when the last of the Baby Boomers are retiring, the number of people age 60 and older will have doubled to 70 million. By 2025 there will be 2 million Virginians in this age range.

Who Will Need The Care ?

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What are your Long-Term Care experiences?

● Who?○ 60% of people who may need long-term care are 65

or older.

● Who provided the care?○ Among 22.4 million families in the United States, nearly one forth of all households provide care to elderly relatives.

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The Virginia Long-Term Care Partnership

(See pages 11-12)

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Virginia’s Long-term Care (LTC) Partnership is a public private venture designated to encourage and reward Virginians for planning ahead for future long-term care needs.

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Partnerships are an alliance between the private insurance industry and state government to help Virginians plan for future long-term care needs.

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Partnership programs began in Virginia on September 1, 2007.

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“Dollar-for-Dollar Model”

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For every dollar that a LTC Partnership insurance policy pays out in benefits, a dollar of personal assets can be protected (disregarded during the eligibility review) if the individual chooses to apply for Medicaid.

(See pg. 11)5/11

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Bureau of Insurance Resources for Assisting the Consumer

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2. A Shopper’s Guide To

Long-Term Care Insurance

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3. Facts About Long-Term Care Insurance

in Virginia

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Is Long-Term Care Insurance Right For You?

● You should NOT buy Long-Term Care Insurance if:○ You can’t afford the premiums○ You have limited assets○ Your only source of income is a Social Security benefit or Supplemental Security Income (SSI)○ You often have trouble paying for utilities, food, medicine, or other important needs.○ You are on Medicaid

● You should CONSIDER buying Long-Term Care Insurance if:○ You have significant assets and income○ You want to protect some of your assets and income○ You can pay premiums, including possible premium increases, without financial difficulty○ You want to stay independent of the support of others○ You want to have the flexibility of choosing care in the setting you prefer or will be most comfortable in. Pg. 8

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Tips for Buying Insurance(See pages 32-35)

● ASK QUESTIONS.● Contact your state insurance department or insurance counseling program.● Check with several companies and agents.● Check out the companies’ rate increase history.● Take your time and compare outlines of coverage.● Understand the policies.● Don’t be misled by advertising.● Don’t buy more coverage than you need.

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Tips for Buying Insurance(See pages 32-35)

● Be sure you accurately complete your application.● Never pay in cash.● Be sure to get the name, address, and telephone number of the agent of the company.● If you don’t get your policy within 60 days, contact the company or agent.● Be sure you look at your policy during the free-look period.

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Tips for Buying Insurance(See pages 32-35)

● Read the policy again and make sure it gives you the coverage you want.● Think about having the premium automatically taken out of your bank account.● Check on the financial stability of the company you’re thinking about buying from.

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1-800-552-3402 (804) 662-9333

VICAPVIRGINIA INSURANCE COUNSELING

AND ASSISTANCE PROGRAM

VIRGINIA DEPARTMENT FOR THE AGING1600 FOREST AVENUE, SUITE 102

RICHMOND, VA 23229

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KNOWLEDGE

IS

YOUR BEST POLICY5/11