BUSINESS & PROFESSIONAL Long-Term Care Insurance: The Basics L ong-term care, while not inevi- table, is a possibility for millions of Americans. In fact, the American Society on Aging estimates that Americans who are age 65 and older have a 70% chance of requiring long term care. (1) Long-term care can be very expensive. A recent survey revealed that the average annual national cost for nursing home care is over $70,000. Depending on where you live and what type of facility you choose, the cost may even be higher. (2) Home healthcare, too, can prove to be a sig- nificant drain on resources. The national average cost of home healthcare is over $52,000 annually. (3) The question becomes how do you pay for long-term care when you need it. One answer may be long-term care insurance. Long-term care insurance can provide you with the ability to meet a considerable por- tion of these costs over an extended period of time. Benefit • Other policy features such as inflation protection The features and the options of the policy can usually be customized to fit both your needs and your budget. WHAT ABOUT INFLATION PROTECTION? Long-term care costs continue to rise. To protect yourself at least partially, you may generally choose from a variety of inflation protection options that offer increased cov- erage over time. The options vary by policy. WHAT ABOUT MEDICARE, MEDICAID AND OTHER MEDICAL INSURANCE? Some consumers decide against purchasing long-term care insurance because they mistakenly believe that their medical insurance or Medicare or Medicaid will cover them. Unfortunately, these assumptions are generally not true. Traditional medical insurance typically does not cover long-term care expenses. Medicare may cover medically necessary HOW DOES LONG-TERM CARE care at home or at a skilled nursing facility INSURANCE WORK? on a part-time or intermittent Typically, a long-term care basis, but, generally, Medicare insurance policy provides ben- covers these expenses only after efits if you: a required minimum hospital • Require assistance for an stay of three days, and cover- extreme cognitive impairment age for an extended period is such as Alzheimer's disease limited. • Can not perform a speci- Medicaid provides certain fied number—usually at least types of coverage only after two—of what long-term care people have depleted most of policies refer to as activities of their assets. daily living, such as bathing Your Financial Advisor can and dressing. work with you to help you Most policies pay a maxi- decide whether long-term mum daily (or monthly) ben- care insurance is appropriate efit for a specified number of Robert Levy, for your individual situation. years, known as the benefit Sen ior Additionally, you should work period. This maximum daily Vice-Pre sident- closely with your Financial (or monthly) benefit is simply Invest ments Advisor, as well as your legal the maximum amount the and tax advisors, to make certain any long- insurance company will pay per day (or term care policy you consider is coordi- month) for nursing home or other long- nated with your investment, retirement and term care costs. estate planning strategies. Long-term care policies also include a lifetime benefit or the maximum total IMPORTANT CONSIDERATIONS: amount the insurance company will pay. • Insurance products are made avail- The lifetime benefit is typically calculated able by UBS Financial Services Insurance by multiplying the daily (or monthly) ben- Agency Inc. and by other insurance- efit by the benefit period. licensed subsidiaries of UBS Financial If your long-term care costs are less than Services Inc. through third-party insurance the maximum daily (or monthly) benefit, companies unaffiliated with UBS Financial you may receive benefits for a longer peri- Services Inc. od of time than the benefit period. But you • UBS Financial Services Inc. does not will never receive more than the lifetime offer tax or legal advice. You must consult benefit. Most policies impose an estab- your tax advisor and attorney regarding lished waiting period, called the elimina- your specific situation. tion period, before any benefits are paid. • The premiums initially listed on long- term care policies are not guaranteed and WHAT DOES LONG-TERM CARE may change over the lifetime of the policy. INSURANCE COVER? Although some basic policies cover only Rob Levy is a Wealth Advisor and Senior Vice President nursing home costs, long-term care poli- - Investments at UBS Financial Services in Farmington cies generally cover costs for skilled nursing Hills. For more information, he can be contacted at care, intermediate care and custodial care. (248) 737-5477 or robert.levy@ubs.com . You can typically receive this care at an The information contained in this article is based on sources assisted-living facility, adult-care center or believed reliable, but its accuracy cannot be guaranteed at home. Coverage can vary greatly from This article is for informational and educational purposes insurer to insurer and policy to policy. only and should not be relied upon as the basis for a Each policy has its own eligibility require- purchase decision. ments, restrictions, and determination of benefits and cost. HOW MUCH DOES LONG-TERM CARE INSURANCE COST? The actual cost of the premiums you pay depends on several factors, including: • Your age when applying for the policy • Your state of health when applying for the policy • The length of the benefit period and the elimination period • The types of services offered • The Maximum Daily or Monthly FOOTNOTES: 1. The American Society on Aging, "Americans Fail to Act on Long-Term Care Protection," May 2003. 2. Genworth Financial, '2006 Cost of Care Survey,' March, 2006. 3. Genworth Financial, '2006 Cost of Care Survey' March, 2006. Home healthcare costs based on rates for Home Health Aids at $25.32/hour and a 40-hour workweek. This article has been written and provided by UBS Financial Services Inc. for use by its Financial Advisors. ADVERTISMENT 36 March 11 • 2010 1568670 executive tips Stock Market: In Or Out? W ell, I will first empha- size that I am not a financial adviser nor am I here to recommend to you the best investment strategy. But I can share insights and common- sense methods to look at what is potentially the best way to protect yourself and your family in these rollercoaster times. We need not rehash what the 2009 markets did and how the nosedive in wealth occurred almost without "warning" and how the slow recov- ery keeps stalling along the way. What is the best strategy? Get the team. Each person and family has very different needs and wants, but the following play a key role. The team will help make the best decision with you: • Age — how old are you and your spouse? How many years will you keep working if you even have a job at this point? • What level of lifestyle do you expect when you no longer work? • What assets do you have now and, based on your responses to bullet points 1 and 2, what is the deficit that exists now? • If you are raising a family, what options do you have for your chil- dren and their education — 529s or other types of investments? • How is your health and what is reasonable when it comes to life insurance and long-term care, wheth- er for yourself or what your children may well need to take care of you? Your team is crucial; your CPA can help look at the financials you have now and, going forward, give that tactical level of advice. Your financial adviser then should get the answers to the questions; blend that with the tactical insights and offer recommendations. One item that I feel strongly about: somewhere in all the ups and downs you must have some portion of your money in the stock market. In the past 20 years, if you look at the stock market and the ups and downs that occurred, you would see the following: From 1989-2008, the U.S. stock market (based on S&P 500 Index) has gained on average of 8.4 percent per year. However, if you missed the 10 best days of the market (out of 7,300 days), your aver- age return would have been 4.9 percent. If you missed the best 30 days, your return would have been .6 percent per year. Missed the best 40 days? You lost 1.2 percent per year. This means you have to be in, stay in and know that some portion of your money is key to getting the gains this can offer. The balance in one's mix, or portfolio, is why you must have partners. The team will help you know what to put in the stocks and what to hold in cash or CDs or bonds or other investment options. The other key is to diversify. If you have not done so by now, do it — yesterday. In today's world, betting that one company will keep growing or even one industry (think Internet bubble and burst!) is dangerous. But there is a way to mix and match investments that will allow moderate risk and rewards; this is key as we see our way out of this economic quagmire. In the end, this takes time. It takes an honest look in the mirror and what you really want. Then get that team. Whether you are making $30,000 per year or $500,000, you still need the team; and the sooner you know that the better. I had my first financial adviser at age 23 when I graduated from col- lege; I spoke to her every week for years. Today, hardly a week goes by that I am not e-mailing or talking with my UBS representative, Kelly Petrocella in Birmingham. These good, consistent habits help in the good times, but even more in more challenging times. So: Diversify, buy some portion in stocks and get the team on board! F. Kevin Browett is chief operating officer of Jewish Renaissance Media, parent company of the Detroit Jewish News. He is a former executive with Kmart Corp.