Discontinuance of long term care insurance?
Medical Practice Management, Physician Financial Management Services
Dec 05

Discontinuance of long term care insurance?

To all of our clients and loved ones…Please read this carefully – a word from Sean Tinsley

It has come to our attention that recent increases in the cost of medical care have risen to the point that the insurance industry can no longer make a profit selling long term care insurance. As of this December 22, 2011 many of the best known insurance companies in the United States, including Guardian, will
discontinue these products indefinitely.

Long Term Care is generally not a very well known type of insurance but it is actually one of the most often needed and executed types of policies. In fact, you are seven times more likely to need some form of long term care assistance in the future than you are to die prematurely and recapture your premiums from your term life insurance policies.

The most pressing concern with the discontinuance of Long Term Care insurance is the impact it will have on our client’s retirement plans. The average cost per day for qualified long term care assistance is about $150 per day. At a cost of roughly $4,500 per month for care it is easy to see how spending an additional $54,000 per year can easily eat through your retirement savingsand completely derail and financial planning that has been done up to that.

Here’s a brief look at what you can expect to receive for $150 per day should you need assistance in any way:

In home assistance: The average cost for an in home assistant is $18 per hour. This person will cook, do some light cleaning/laundry, bathe and dress, drive you to your doctors’ appointments, dispense medications, assist with toileting, change the bed sheets, and any other normal daily functions that you nee help with. If you require assistance 24/7 there is usually a discount on the $18 per hour.

Facility Care: There are two types of facilities that are most used during periods when long term care is required…assisted living facilities and nursing homes.

Assisted living is basically a hotel style retirement community with onsite staff. They will coordinate group activities, provide all daily meals, & maid service (in most cases). This type of facility will give you your own apartment/room and let you come and go as you please. This usually costs about $4,000 to $5,000 per month. Although, I have seen facilities that are “luxury” assisted living and can run $100,000 per year or more. Respite care is also a popular feature of these facilities. What this means is that if you have a family member still living at home who requires assistance and you want to leave to go on vacation, you could drop your family member off for a week or two at the assisted living facility for a short stay while you’re gone.

Nursing homes are for those who require 24/7 supervision and they provide nursing care onsite. These facilities generally do not let come and go as they please. They dispense medications; provide all long term care needs which include eating, bathing, dressing, transference, and toileting. Medicare will pay for beds in these facilities…However, only 2-3% of the beds in these facilities are designated for Medicare patients and therefore the waiting lists can be more than a year in most cases. Private pay patients will always get preferential treatment in the long term care world.

This is a growing concern in our industry and will create drastic changes in the retirement plans that we have already designed and implemented for everyone. I would highly recommend that you at least consider filling out an application for this insurance before the deadline even if it is only to give you additional time to consider whether or not you want to move forward and buy the coverage. It never costs anything to fill out an application but it could end up costing you your retirement savings if you don’t. In many cases the cost of the Long Term Care insurance can be deducted from your taxes at the end of the year but your exact tax deduction is determined on an individual case by case basis.

I understand how annoying it can be to be “pushed” into buying insurance. I receive countless spam emails and phone calls urging me to switch my car insurance, home owner’s policies, etc…. Please don’t mistake this offer for Long Term Care insurance for something so trivial. It really is worth a conversation at the least.

Please feel free to contact either Sean Tinsley at (512) 659-0643 CELL or (512) 651-3126 at any time should you feel the need to discuss your options. I look forward to walking you through your options personally.

About Reed Tinsley, CPA

As a top advisor to physicians, I help increase practice profits by delivering hands-on, expert medical accounting/tax support, practice counsel, and revenue-building strategies. Read more →