Long-Term Care: Long-Term Care Insurance
Guest: Barbara Franklin – Owner, Franklin & Associates. Long-term care Planning
Host: Sally Hughes Smith - Artist, Author; The Circle – A Walk with Dementia
Sally Hughes Smith: Welcome to Age to Age. I’m Sally Smith. Let’s talk. Today, we’re lucky to have with us, again, Barbara Franklin, who is a long-term care specialist. She has given us a little insight into what that means in helping people plan how to, basically, finance their dreams for the end of their life, and how that might, in fact, play out with all the unknowns that come with that territory; health, financial, and every other way. Now, you say that one of the vehicles for financing this is long-term care insurance. Everybody reads about it. We’ve all heard bits and pieces. But, you, as a professional, having dealt with it for 18 years, what is long-term care insurance?
Barbara Franklin: Sally, long-term care insurance is a special category. It’s not to be confused at all with health insurance, which pays for care that gets you better. It’s not to be confused with disability insurance, which replaces income. Long-term care insurance pays for care outside of the hospital, and it’s essentially what we call custodial care; care that doesn’t get you better, but care that is necessary to keep you going, with specific things like bathing, dressing, eating, day-to-day tasks.
In a time when people weren’t living as long as they are today, I guess we didn’t need to think about long-term care insurance, but it is a part of the fabric of our society today. The industry has been around since 1975, but has developed substantially over the years. At this time, in South Carolina, there are 45 long-term care insurance companies, and billions of dollars have been paid out in claims very successfully. The coverages that were available years ago, when I started, in 1990, were primarily for nursing homes. But, today, we really refer to long-term care policies meaning that they can be used not just for care in a nursing home, but in an assisted living facility, and most particularly to help someone age in place; to help someone stay in their own home. What you get, essentially, with long-term care insurance, Sally, would is a pool of funds that is very flexible; that you can use wherever you and your doctor, and your family think would be the most suitable venue for you to receive care, for those custodial needs.
Sally Hughes Smith: So, really, you’re not limited; there’s flexibility? So then, I would go out there and actualize what I want to have happen, and then I would submit a claim the way you do with, like, Blue Cross Blue Shield, or something?
Barbara Franklin: Exactly. It operates on the basis of a claim. It’s completely different, though, from health insurance in that the money is not paid to the provider. The money is reimbursed to the policy holder. So, it does provide a choice in terms of how the care is provided. But, of course, it’s provided within a certain framework, depending on the design of the policy.
Sally Hughes Smith: I’m interested in the variety in the framework. Are some of them just for so many years and then it goes away?
Barbara Franklin: Well, no, Sally. I think the essence of your question is how do you access a long-term care policy? And that is a really important one. It’s based on triggers that are specified in the contract. And the government stepped in a number of years and specified that in order to trigger a long-term care policy, you either must have cognitive impairment; need supervision due to cognitive impairment, or need assistance with two out of six activities of daily living. So, if you meet either one of those two conditions, you then have access to the funds that had been predetermined in your policy. You incur the expense, and you’re reimbursed by the insurance company. So, you know, it functions very differently than the health insurance model that most of us expect. You’re in control of the funds.
Sally Hughes Smith: So, when I talk about; as we’ve been fortunate to do, hospice, how does someone get into hospice? There are certain, very strict, criteria. Certain doctors have to say that someone has this issue. Who says that I need assistance on two out of six? Maybe I want to dress myself, but I can’t quite do the zipper up the back. But, maybe somebody else is like a newborn baby. Who determines whether I’m impaired or not?
Barbara Franklin: That’s interesting, because, in my experience with claims, I find that the carriers do get medical records from a physician, so that would play into it to some extent. But, more importantly, they require, in most cases, an assessment by an independent nurse; social worker, someone not connected with the insurance company, who observes you and determines your ability to perform those ADLs (activities of daily living), as well call them. So, it’s a fair process, in my opinion, because it’s done by a third party who makes that determination.
Sally Hughes Smith: Now, insurance is a gamble. We all know that. Life insurance is a good example. You know, you buy the life insurance, you die the first week, and they pay you. You die, you know, 30 years later, they pay you, but it’s a different situation. I’ve heard that some of these go away at some point. You have them for a certain number of years, and then do you re-up, or do they change? How does that little part of the puzzle work?
Barbara Franklin: Well, if you remember, Sally, we’re talking about a pool of funds; a pool of dollars. So, a long-term care specialist is going to help you figure out what that pool of funds should look like. You can actually have a policy that is unlimited. That’s going to be a more expensive program, and not what people typically do. But you’re going to have a pool of funds. The utilization of those funds is going to determine how long it lasts. If you’re using it at home, and maybe have the help of volunteers, or friends and family, the money might last longer than if you’re using it in a nursing home and have to use it up at the fastest rate.
Sally Hughes Smith: So, there is a ceiling?
Barbara Franklin: There usually is. But there is a policy that’s unlimited.
Sally Hughes Smith: I see. Okay. So then, when you meet with someone, you would talk about these different issues. Obviously, some of it can’t be decided, because nobody knows, you know, whether I’m going to be able to be in charge of myself in 20 years, or not. So, some of that, you’re making your best guess, and you move forward.
Thank you so much. It’s wonderful to hear, kind of, how that works out, because, you know, it’s like buying a new car, or anything. You don’t really know what’s out there unless you talk to a professional, like yourself. So, thank you, Barbara. Thanks to all our listeners, too, for joining us today. We always welcome your suggestions and comments on our Web site. This is Sally Smith, Age to Age, saying good-bye and wishing you courage and joy on your journey. We are all connected.
If you enjoy listening to Sally Smith, you can buy her book; The Circle. It’s the story of how she personally responded to her mother’s journey with Alzheimer’s disease. It’s a wonderful gift of hope for anyone with a parent with dementia. Just click on Sally Smith’s name under the health professionals tab on the podcast homepage. All profits from sale of The Circle support research at the Center on Aging. Thanks.
If you have any questions about the services or programs offered at the Medical University of South Carolina, or if you’d like to schedule an appointment with one of our physicians, please call MUSC Health Connection at: (843) 792-1414.