Silver Linings

Simone Desrochers, 78, plays cribbage last month with her caregiver Monika Kehas in Candia.

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Long-term care insurance can take fear of the unknown out of financial planning for worst case health scenarios.

And it can ease the burden on family members who might feel beholden to provide the care out of love or a sense of obligation, sometimes interrupting or sacrificing their careers to do it.

Three years before she was diagnosed with Alzheimer’s disease, Simone Desrochers of Candia purchased long-term care insurance that now pays for her home health aides and the adult day program she attends while her daughter and son-in-law are working.

“It would have been a lot tougher without it, a lot harder on everyone,” said the 78-year-old’s eldest daughter, Kathy MacDonald, her family caregiver, who continues to work full time.

“You don’t realize how much you need it until you need it, said Melissa Grenier, New Hampshire regional manager for the Alzheimer’s Association. “It’s such a blessing when someone can create a positive physical environment, with family supports (such as in-home care), and have the ability to pay for it.”

Long-term care insurance covers nursing home, assisted living, and rehabilitation or skilled nursing care, and pays for home care for elders diagnosed with disabling or long-term conditions, who aren’t able to perform activities of daily living.

But it’s not the right purchase for everyone. That depends on a variety of factors, including your health, age, income, and assets — and it’s best to make that decision with professional guidance from a financial planner with insurance expertise, and consult an elder law attorney.

David Sky, chief life, accident and health actuary at the New Hampshire Department of Insurance, said he thinks of long-term care insurance as a way to protect assets. He refers to suitability standards outlined by policy carriers: “If your assets are less than $30,000, you may wish to consider other options.” Those include spending down your assets to pay for care then qualifying for coverage through Medicaid.

It’s also important to do financial soul-searching to determine your long-term ability to shoulder the ongoing expense. In New Hampshire in 2016, the annual cost of long-term care averaged $1,870 per individual, Sky said. Unless the policy has a forfeiture clause, which significantly bumps up the price, you will lose the money you paid in if you can no longer afford to make the premium payments.

It’s important to buy before you have documented signs of memory loss or chronic health conditions, and can more easily pass the mandatory health screening exams. It’s also considerably cheaper when when you’re younger, and can be purchased as early as age 30, said Ben Woodhouse, a financial planner at Edward Jones in Portsmouth.

Most people buy between ages 55 and 65. “That’s when people are making enough money and have low enough expenses” to budget the payments, Woodhouse said. The ideal purchase time is in your 40s or 50s, according the Association for Long Term Care Planning.

The typical daily benefits of $150 to $190 can go a long way to covering in-home care, especially when compared to nursing home stays that run $35O to $400 daily. In the Manchester area a home health aide costs $25.25 an hour on average, a rate that’s expected to reach $29 per in the next five years, according to projections from Genworth, an insurance carrier that tracks health care costs. The current statewide average is roughly $27 an hour.

“It’s partly what you can afford. You want to make sure it covers all care settings — home, assisted living, and nursing homes,” said Sarah Ambrogi, an elder law attorney in Manchester. It’s critical to compare the total benefit dollar amount, the daily benefit and the period of time over which it will be paid — usually three to five years.

“You definitely want a policy from a reputable company,” Ambrogi said, “one that other people have heard of. Make sure to ask your agent, ‘Is this insurance company going to be here 10 years from now?’ So many companies have left the business” because people are living longer with more complex conditions, and insurers have had to pay out for longer periods than anticipated.

A common alternative to long-term care insurance is a life insurance policy with long-term care benefits attached, which covers those costs by draining the cash value and ultimately the death benefit. Some hybrids from Lincoln Financial and Pacific Life devote most of the premium payments to chronic care, and a substantially smaller amount to life insurance.

“There’s no blanket policy that’s right for everyone,” Woodhouse said.

The free “Shoppers Guide to Long Term Care,” a primer on options, is available from the National Association of Insurance Commissioners at www.naic.org. The website also allows consumers to look up the insurance company’s financial health and any complaints filed against it.

Silver Linings is a continuing Union Leader/Sunday News report focusing on the issues of New Hampshire’s aging population and seeking out solutions. Union Leader reporter Roberta Baker would like to hear from readers about issues related to aging. She can be reached at rbaker@unionleader.com or (603) 206-1514. See more at www.unionleader.com/aging. This series is funded through a grant from the Endowment for Health.

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