In This Issue
What A Good Long-Term Care Policy Should Include 
As nursing home and long-term care costs continue to rise, the Deficit Reduction Act of 2005 has made it more difficult to qualify for Medicaid to pay for nursing home costs. Long-term care insurance can help cover expenses, but contracts for such insurance are notoriously confusing. How do you figure out what is right for you? Here are some tips to help you sort through the main options: Find a strong insurance company. The first step is to choose a solid insurer. Because it's likely you won't be using the policy for many years, you want to make sure the company will still be around when you need it. Make certain the insurer is rated in the top two categories by one of the services that rates insurance companies, such as A.M. Best, Moody's, Standard & Poor's, or Weiss. What is covered? Policies may cover nursing home care, home health care, assisted living, hospice care, or adult day care, or some combination of these. The more comprehensive the policy, the better. A policy that covers multiple types of care will give you more flexibility in choosing the care that is right for you. Waiting period. Most long-term care insurance policies have a waiting period before benefits begin to kick in. This waiting period can be up to 90 days, or even longer. You will have to cover all expenses during the waiting period, so choose a time period that you think you can afford to cover. A longer waiting period can mean lower premiums. Look for a policy that bases the waiting period on calendar days. For some insurance companies, the waiting period is not based on calendar days, but on days of reimbursable service, which can be very complicated. Some policies may have different waiting periods for home health care and nursing home care, and some companies waive the waiting period for home health care altogether. Daily benefit. The daily benefit is the amount the insurance pays per day toward long-term care expenses. If your daily bene fit doesn't cover your expenses, you will have to cover any additional costs. Purchasing the maximum daily benefit will assure you have the most coverage available. If you want to lower your premiums, you may consider covering a portion of the care yourself. You can then insure for the maximum daily benefit minus the amount you are covering. The lower daily benefit will mean a lower premium. It is important to determine how the daily benefit is calculated. It can be each day's Long-term care actual charges (called daily reimbursement) or the daily average, calculated each month (called monthly reimbursement). The latter is better for home health care because a home care worker might come for a full day on one day, and then only part of the day on the next day. If the cost of the home care worker is averaged over the course of a month, it's more likely that the policy will cover the entire expense. Benefit period. When you purchase a policy, you need to choose how long you want your coverage to last. In general, you do not need to purchase a lifetime policy - three to five years' worth of coverage should be enough. In fact, a new study from the American Association of Long-Term Care Insurance shows that a three-year benefit policy is sufficient for most people. According to the study of in-force long-term care policies, only 8 percent of people needed coverage for more than three years. Unless you have a family history of a chronic illness, you aren't likely to need more coverage. If you are buying insurance as part of a Medicaid planning strategy, however, you will need to purchase at least enough insurance to cover the five-year look-back period. That way you can transfer assets to your children or grandchildren before you enter the nursing home, use the long-term care coverage to wait out Medicaid's new five-year look-back period, and after those five years have gone by apply for Medicaid to pay your nursing home costs (provided the assets remaining in your name do not exceed Medicaid's limits). If you do have a history of a chronic disease in your family, you may want to purchase more coverage. Coverage for 10 years may be enough and would still be less expensive than purchasing a lifetime policy. Inflation protection. As long-term care costs rise, your daily benefit will cover less and less of your expenses. Most insurance policies offer inflation protection. Although inflation protection can significantly increase your premium, it is strongly recommended. There are two main types of inflation protection: compound interest increases or simple interest increases. We are happy to discuss your options and help assess what's appropriate for you. New Bargains Available For Life Insurance
Here are a few reasons why: • The life insurance companies have changed the tables they use in determining the life expectancy of customers. This means that even though you bought your current policy when you were younger, you may now be able to get the same coverage at lower rates. • If you no longer need the life insurance coverage, you may be able to sell
the policy for substantially more
than its cash surrender value. In
recent years, a robust market has
developed for so-called "life settlements." In general, buyers are look • If you have a "second-to-die" policy - insurance to be paid when the second of a husband and wife passes away - and one of the other insured individ uals has already passed away, you may be able to trade in the policy for a new one on your life alone at favor able rates. • Finally, if your net worth is high, a new market has developed that can get you free life insurance for two years. Known as "premium financed" life insurance, it's complicated and not available to everyone. You have to be at least 70 years old and in good health. Some companies require you to have a net worth of at least $3.5 million, while others will go as low as $1 mil lion. In either case, for as long as it lasts it offers the possibility of getting some thing for nothing, or at least noth ing other than going through the process of a medical exam. If you fit within any of the four categories above, it's time for an insurance review. Contact your insurance agent or attorney, who can put you in touch with the right insurance professional. QUESTION. I am one of five children of a mother who has been diagnosed with severe dementia. Upon mother's release from the hospital several years ago, a social worker gave the child handling mother's medical care (claims, billing, etc.) the forms for establishing power of attorney for medical care. Three of the children are fine with giving the power of attorney to this child, but the other two are adamantly opposed. So far, they insist that all five children should be equally empow ered. How can we resolve this situation? - D.A
ANSWER. It sounds like it's too late for your mother to appoint anyone to represent her since she is no longer competent to do so. The only solution may be guardianship, which can be expensive and time-consuming if the children are in disagreement and end up fighting it out in court. Before seeking guardianship, it could be useful for all the children to sit down with an elder law attorney or family mediator in an effort to seek a solution. New Reverse Mortgage Products To Hit Market Soon Reverse mortgages are gaining in popularity, but if you are considering getting one, you might want to wait a little while. Better deals may soon be available as competition heats up between companies entering the market. A reverse mortgage is exactly what it sounds like - instead of paying the bank money to build up equity, you use the equity in your home to take out a loan. You must be 62 years or older to qualify for a reverse mortgage, and the loan does not have to be paid back until you sell the house or die. The loan can be used for anything, including providing money for retirement or to paying nursing home expenses. Costs for reverse mortgages have traditionally been high, but more companies are beginning to offer reverse mortgages, and the competition is driving down prices. Companies are also offering more options, such as flexibility in payment and higher loan amounts. All the changes mean more options for consumers. If possible, experts suggest waiting until late 2007 or early 2008 before getting a reverse mortgage. But keep in mind that while reverse mortgages may look like no-lose propositions on the surface, they also have some significant downsides. If you are considering one, talk it over with your elder law attorney beforehand.
Longer Life Spans Alter Estate Planning As the life expectancy for Americans lengthens and the country grows grayer, plan ning for retirement, long-term health care needs and inheritance is changing as well. The National Institute on Aging predicts the number of people at least 65 years old will double in the next 25 years to some 72 million people. Today, the fastest growing age group in the U.S. is what demographers call the"oldest old" - people 85 and older - and their numbers are also expected to double in the next 25 years, to about 10 million. The U.S. Census Bureau says about 70,000 centenarians now live in the U.S., and predicts that by 2040 there will be 580,000. Not long ago, the concept of living out the final years of one's life was a simple matter. At age 65, people would retire with the expectation that they'd die in a few years and leave an inheritance to their children. But for a growing number of older people the span of years after retirement is expanding. More and more people, as they reach retirement, see many healthy years ahead of them, and they're making decisions that are quite different than the ones that their parents and grandparents made. Many of them are visiting trusts and estates lawyers with a dual purpose in mind: planning for their parents and planning for themselves. Often an aging parent is facing a medical or mental health problem that needs legal attention. For example, a parent may have dementia, and an adult child doesn't want the parent making medical and financial decisions. This means estate planning documents need to be changed, with a focus on advance directives, health-care proxies, medical powers of attorney, financial powers of attorney, and living wills. At the same time, baby boomer children now reaching their 50s and 60s often begin to take a hard look at their own retirement planning - including asset protec tion and long-term care insurance. Another important issue to address relates to end-of-life decisions. Perhaps the single most important document to have is a durable power of attorney for both financial and health care matters. The durable power of attorney provides that when the individual can no longer make his or her own medical care and financial decisions, a designated loved one would make those decisions instead - including desired end-of-life decisions.
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Have you owned the same life insurance policy for a number of years? If it's a whole life policy, or a term policy that can be converted to whole life, and the answer is"yes,"it's time to have that policy reviewed. 