What is long-term care?
Long-term care is the human assistance and accommodation people need when they can no longer completely care for themselves. This can be due to an accident, disability, cognitive impairment, prolonged illness, or simply by the process of aging.
Most long-term care is provided to assist people with basic activities of everyday living, such as bathing, eating and dressing. It can be provided in your home, an adult-day care centre, an assisted-living facility, a long-term care facility, a hospice and/or a palliative facility.
What are the different levels of long-term care?
There are three levels of care: skilled, intermediate and custodial.
- Skilled care includes nursing care and physical, occupational, respiratory and speech therapy from licensed professionals.
- Intermediate care represents skilled care services as described above that are not received on a daily basis. Rather, they are received intermittently.
- Custodial care, also known as personal care, includes help with day-to-day activities such as eating, bathing and dressing. It also includes the assistance provided for people suffering from dementia.
Custodial care accounts for the vast majority of all long-term care administered in Canada today.
How is long-term care different from traditional medical care?
Traditional medical care, also known as acute care, treats physical problems (such as a broken arm) directly in an attempt to permanently cure them. It is generally administered by health-care professionals in a hospital or doctor’s office and is often short term and high tech.
On the other hand, long-term care – also called chronic or custodial care – is on-going personal assistance which helps a chronically ill or injured person maintain his or her ability to perform normal daily activities and remain as independent as possible. It is providing care as opposed to offering a cure. Long-term care is most often performed by non-professionals and is high-touch versus high-tech.
What causes a need for long-term care?
Typically, a person needs long-term care when they suffer either a physical or cognitive impairment.
A physical impairment is measured by a person’s inability to perform basic activities of daily living such as bathing, dressing and eating.
A cognitive impairment occurs when individuals can complete physical activities, but may not remember how or when to do them. Examples of a cognitive impairment include Alzheimer’s disease, senility and dementia.
What are some of the leading conditions requiring long-term care?
The 10 leading health conditions that result in a person needing long-term care at home or in a facility are:
- Circulatory ailments
- Nervous system and sense organs disorders
- Respiratory illnesses
- Digestive and genitourinary systems conditions
Source: Society of Actuaries, Long Term Care Experience Committee Intercompany Study, November 2007.
What is Alzheimer’s – and how likely is it to affect my family and me?
According to the Alzheimer Society of Canada, the number of Canadians living with cognitive impairment, including Alzheimer’s and dementia, stands at 747,000. That represents nearly 15 percent of all Canadians 65 and older.
Alzheimer’s is an irreversible, progressive degeneration of brain cells that causes thinking ability and memory to deteriorate. The cause is unknown and there is presently no cure or treatment to prevent or delay it. Once diagnosed, you progress through different stages until the final stage of life, usually after seven to 10 years.
How likely are Alzheimer’s and other forms of dementias to affect you and your family? Consider these facts from the Canadian Alzheimer’s Society:
- You face a 50% chance of developing dementia by the age of 85. And if you are lucky and don’t get Alzheimer’s, chances are you will be caring for a loved one who does.
- It’s projected that just over 100,000 Canadians will develop Alzheimer’s or a related dementia this year alone. That means about one person will be diagnosed with the disease every five minutes.
- 70,000 Canadians with Alzheimer’s disease are under the age of 65 despite the fact that advancing age is the greatest risk factor.
- Because they typically outlive men, women make up over 70% of those living with Alzheimer’s.
- Caregivers for those with Alzheimer’s or dementia are usually spouses or other family members. The physical and psychological toll on family caregivers is considerable. According to the World Health Organization, up to 75 per cent of family caregivers will develop psychological illnesses and up to 32 per cent experience depression.
These statistics are startling. And when you combine them with the fact that the cost of care for a person with Alzheimer’s can quickly erode a lifetime of savings, the scenario becomes alarming.
Have you considered how Alzheimer’s would impact you and your loved ones? What steps have you taken to protect yourself, your spouse and your family?
What types of long-term care services are provided in Canada?
There are basically three types of long-term care provided in Canada: home care, community care and facility care.
What is home care?
Home care is exactly what the name implies – long-term care services provided in your home rather than a facility. Spouses and other family members typically administer home care with assistance from outside, professional caregivers. The goal of home care is to allow the person receiving care to live as independently and safeily as possible for as long as possible.
Home care providers offer two types of services: skilled and custodial.
- Skilled, or professional caregivers include registered nurses and physical, occupational and speech therapists. They are licensed, regulated and trained individuals who come into the patient’s home and provide a specific service. Once they have completed their task, they leave. Usually a skilled caregiver will be in the home for about an hour.
- Custodial, or informal caregivers include home health aides, personal care attendants and personal support workers. They do such tasks as preparing meals, light housecleaning, laundry and assisting with baths and personal hygiene. They generally spend four to eight hours daily with the patient.
Obviously, most people want to remain in their own home as long possible. Home care providers help Canadians do just that.
What is community care?
Community care goes hand-in-hand with home care. Whereas home care is provided in the home, community care is provided in community facilities outside the home on a temporary basis.
Basically, there are two types of community care: adult-day care and palliative care.
- Adult-day care is used to relieve the caregiver or his or her duties for the day while ensuring that the care recipient will still receive the proper care in a safe, friendly environment. These centres usually operate during normal business hours five days a week, and some centres also offer additional services during evenings and weekends. In addition, adult-day care centres provide care recipients health-promoting opportunities to socialize with others in a community centre or facility.
- Respite care is short-term care designed to provide temporary relief for a primary home caregiver, usually an unpaid family member. Many times, palliative care is provided in a nursing facility or assisted living centre.
What is facility care?
When care at home or in the community is no longer an option, facility care may be considered. Basically, there are three types of facilities that provide long-term care: assisted-living facilities, long-term care facilities and palliative facilities.
- Assisted-living facilities provide apartment or condominium-like settings and 24-hour assistance for those who can, for the most part, live on their own but who also need assistance with personal and custodial needs. Assisted-living facilities are fast becoming the top choice for facility care because they provide a combination of independent living and on-demand care services. In essence, they allow people to remain as independent as possible.
- Long-term care facilities provide daily, 24-hour skilled, intermediate and custodial care. LTC facilities provide the highest level of long-term care available and, as a result, can be the most expensive. The level of care one needs at this point is greater than what can be provided at home, in the community, or in an assisted living facility.
- Palliative facilities provide humane and compassionate palliative care for people in the last phases of incurable disease so that they may live as fully and comfortably as possible. Palliative care may be provided in a hospital, an LTC facility, an independent palliative facility, or one’s home.
It’s estimated that 80% of all long-term care is provided at home, with a majority of that care provided by unpaid caregivers such as family or friends.
How would my spouse and family be affected if I needed long-term
Most Canadians think of long-term care in terms of how it would affect them personally. Ironically, it’s not the care recipient who typically suffers the most, but rather his or her caregivers.
According to Statistics Canada, over 8 million Canadians currently provide unpaid care for a loved one. In most cases, the caregivers are family members – and they struggle to provide the care necessary to keep the care recipient at home or in the community for as long as possible. This effort usually exacts a damaging toll on the caregiver's physical and emotional health, typically a spouse or an adult child. It can also upset relationships with other family members, usually those who do not share the day-to-day burden.
Ask yourself: Could your family care for you on an on-going basis? More importantly, would you want that?
How much do long-term care services cost?
In its 2012 consumer publication, A Guide to Long Term Care Insurance, the Canadian Life & Health Insurance Association (CLHIA) reported that:
- Accommodation in a long-term care facility typically costs $900 to $5,000 or more per month, based on the type of room and the level of government funding available.
- Private home-care services can cost from $20 to $90 per hour for personal care or at-home nursing care.
If you or a loved one were to require long-term care, your costs could easily add up to between $35,000 to $65,000 per year, according to CLHIA. And if that lasted for five years, your out-of-pocket expense could go as high as $195,000.
Could you afford to pay $100,000 or more for long-term care?
What are the odds I, or someone close to me, will need long-term care?
Nobody can say for certain, but according to Statistics Canada, the chances of requiring long-term care are:
- One-in-10 by age 55
- Three-in-10 by age 65
- Five-in-10 by age 75
What are the factors that increase my risk of needing long-term care?
Factors that increase your risk of needing long-term care include your:
- Age – Your risk of needing care increases as you get older.
- Marital status – Single people are more likely to need care from a paid provider because they generally don’t have a partner living with them that may provide informal, un-paid assistance.
- Gender – Women are at a higher risk than men, primarily because they tend to live longer.
- Lifestyle – Poor diet and exercise habits – not to mention drinking alcohol in excess and/or smoking – can increase your risk.
- Health – If you already have health issues, or a family history of certain chronic medical conditions, your risk of needing long-term care rises.
Ignoring your risk won't make it go away. It will just make it more expensive and more of a challenge for your family if it happens.
How long do most people need care?
It is estimated that a person age 65 today will need, on average, three years of long-term care services. Women need care longer than men – an average of 3.7 years versus an average 2.2 years respectively. One-in-five will need care for more than five years.
For a couple who are both age 65, there is a 75% chance that at least one of them will need care for more than a year.
Source: Kemper, Komisar, Alecxih. Long-Term Care Over an Uncertain Future: What Can Current Retirees Expect? Inquiry 42:335-350, Winter 2005/2006
Is long-term care covered under the Canada Health Act?
Long-term care is not included under the Canada Health Act and, therefore, is not available to Canadians on a universal basis.
Unfortunately, many Canadians mistakenly believe government programs will cover their entire long-term care expenses. While there are government programs aimed at assisting Canadians with long-term care needs, they vary by jurisdiction and may be income-based and means tested.
Bottom line: Canadians need to understand and accept the fact that, in many cases, they will be largely responsible for the cost of their own long-term care needs.
What is the best way to pay for long-term care?
Basically, you have three options when it comes to paying for the long-term care. You can either:
- Pay for these services out of your own pocket and risk depleting a lifetime of savings.
- Apply for government assistance, but you may be required to spend your income and assets to meet the provisions established by federal, provincial and/or territorial requirements in order to be eligible.
- Purchase private long-term care insurance, which transfers the financial risk to an insurance company in exchange for annual premium payments.
Which of these options makes the most sense for you and your family?
For many Canadians, the most prudent, cost-effective solution is to secure private long-term care insurance.
What is long-term care insurance and what does it cover?
Long-term care insurance helps pay for the care you need when you can no longer care for yourself.
Today’s comprehensive long-term care policies cover all levels of care – skilled, intermediate and custodial – in a variety of settings:
Your own home
An adult-day care home
An assisted-living facility
An LTC facility
A palliative-care facility.
Long-term care coverage can help protect your financial security and your family’s future peace of mind. While life insurance provides protection against dying too soon, long-term care coverage provides protection against living too long.
What are the benefits of owning long-term care insurance?
Quality long-term care coverage can help you:
- Protect your income and assets
- Maintain your independence and dignity
- Remain at home or in the community as long as possible
- Assure access to the highest quality care in the setting of your choice
- Avoid burdening your family with caregiving responsibilities
- Avoid spending all of your retirement savings to qualify for government assistance.
In short, it gives you peace of mind.
And keep this in mind: Once this risk is insured, you’re free to spend your money on the things you want. That’s because you no longer have to worry about becoming physically or financially dependent on your family or the government.
What are the most important factors I should consider when shopping for long-term care insurance?
Here are 10 important factors to consider when shopping for long-term care coverage:
- A highly rated, financially stable, experienced insurance company. Since most people buy this coverage only once in their life – and generally don’t need it for many years – choosing a large, reliable, experienced insurer is important.
- Comprehensive coverage. Since it’s impossible to predict what type of care you might need in the future, it is generally good to look for a policy that covers care in your home, an assisted living facility, an adult-day care centre and an LTC facility.
- The policy features and benefits you prefer. With long-term care insurance, you design a plan to fit your needs and budget. Our LTC Insurance Professionals can help you design a policy to fit your needs and budget.
- Flexible coverage for care at home. Most people who need long-term care want to stay in their own home for as long as possible. Look for policies that cover both formal and informal care at home – and one that allows you to use independent professional care providers.
- An attractive built-in, automatic inflation protection option. This is one of the most valuable policy options. It increases your benefits over time to help maintain the purchasing power of your insurance despite future inflation.
- A reasonable waiting period – including a consumer friendly method for satisfying it. This is the number of days you forego benefits when you first need long-term care. Look for a plan that offers the choice that is right for you – and make certain you understand how it works.
- Free, optional and independent care coordination. Care coordination is specialized help you receive when you file a claim. Care coordinators help arrange and manage care services. Look for a policy that covers the cost, makes it voluntary and allows you to choose your care providers.
- Affordable premiums. Rates can vary between insurers by as much as 30% for similar coverage, so it pays to shop around. Of course, your final cost will be based on your age, health, gender and benefit choices.
- A rigorous health screening, or underwriting process. It is important to find a carrier that has fairly stringent underwriting guidelines. This helps protect the carrier’s long-term financial viability and, as a result, the price of your coverage.
- Reasonable exclusions. These are specific provisions under which benefits will not be paid. Many relate to self-induced conditions such as care needs resulting from alcoholism and drug addiction. Be wary of plans with a pre-existing condition exclusion.
How do long-term care insurance policies work?
You pay an annual premium – which is based on your age, sex, health and the policy benefits and options you select – and in return, the insurance company gives you access to a pool of money when you qualify for coverage.
When you apply for coverage, you can design a plan to fit your needs and budget. To do so, you make four choices. You select:
- A benefit period. This is the total length of time your carrier will pay for your care after you qualify (i.e., your claim has been approved by your insurer and you’ve met your waiting period).
- A benefit amount. This is the maximum amount per week or month the insurer will pay for your care after you qualify.
- A waiting period, or deductible. This is the number of days after you first qualify that you must wait before your policy will begin paying benefits. How you satisfy the deductible varies between policies and is important to understand.
- An inflation protection, or benefit increase option. Available for additional premium, this will automatically increase your weekly or monthly benefit amount each year to help keep up with inflation. If you are 70 or younger, this is an important option to consider.
How do I determine my policy’s total amount of insurance?
Your total insurance amount is the maximum amount of proceeds you have available to you throughout the life of your policy. To determine it, you simply multiply your weekly or monthly benefit amount by the number of weeks or months in your benefit period.
Here are two examples:
- If you selected a monthly benefit of $3000 and a 60-month (five-year) benefit period, your total insurance amount on day one would be $180,000 ($3000 x 60 months).
- If you selected a weekly benefit of $500 and a 240-week (five-year) benefit period, your total insurance amount on day one would be $120,000 ($500 x 240 weeks).
Of course, you'll want to consider adding an inflation protection option to help your benefit amount keep up with the increasing cost of care due to inflation.
What is inflation protection?
Most insurers offer consumers an inflation protection option for additional premium. An inflation protection option, or benefit increase option, automatically increases your monthly or weekly insurance amount each year. It is designed to help ensure your coverage amount keeps up with the increasing cost of long-term care services due to inflation.
Basically, there are two types of inflation protection:
- A built-in inflation protection option that automatically increases your monthly or weekly coverage each year; or
- An option that guarantees you the right to purchase more coverage in the future without having to qualify from a health standpoint. Note: You pay an additional premium for each increase you elect to receive based on your age at that time.
How are my benefits paid?
The answer depends on what type of policy you purchased. Basically, there are two types: reimbursement and cash.
Reimbursement policies reimburse you for the actual expenses you incur up to your total monthly benefit amount after you qualify. If the cost of your care is less than your benefit amount, the remaining amount is left in your policy to cover the cost of future care. If it’s more, you pay the difference out-of-pocket.
Cash policies offer you the most flexibility as they pay your entire weekly or monthly amount once you qualify. There is no need to submit invoices. You are free to spend your cash benefits as you see fit. Note: Cash plans are significantly more expensive than reimbursement plans.
How do I qualify for benefits?
With most plans, you become eligible to receive benefits once a physician has certified that you are chronically ill and after you’ve met your waiting period.
Being chronically ill means either:
- You are unable to perform two or more activities of daily living (i.e., bathing, continence, dressing, eating, toileting and transferring) without substantial assistance from another person
- You require substantial supervision to protect yourself from threats to your health and safety due to severe cognitive impairment, such as Alzheimer’s disease.
Am I insurable?
Not everyone is.
Each applicant for long-term care insurance goes through a health-screening process called underwriting. Note: In most cases, there is no physical exam or blood test required. Underwriters generally consider the following:
- Your ability to independently perform basic activities of daily living, such as bathing, dressing and eating
- Your ability to live independently
- Your cognitive ability
- Your height and weight
- Your current health status
- Your medical history
Bottom line: You must be mentally and physically healthy enough to qualify for long-term care insurance. So the sooner you apply, the easier it is to secure coverage.
How are policies treated from a tax standpoint?
While there is no specific law that addresses the tax status of long-term care insurance, it is commonly accepted that your insurance proceeds are paid to you income-tax-free.
Note: We do not provide tax advice, so please consult with you accountant or tax attorney for guidance on this matter.
Will my premium increase as I age?
In general, premiums are guaranteed not to change for the first five years and they’re projected to stay the same every year thereafter.
Going forward, you cannot be singled out for a rate increase due to advancing age or declining health. However, companies do reserve the right to increase premiums in the future if they do so for the entire class of policyholders.
Are there steps I can take to help ensure I get the lowest premium?
Yes. Here are eight steps you can take to help ensure you get the lowest premium possible for the coverage you desire:
- Shop around since premiums vary widely for similar coverage.
- Apply sooner rather than later. The younger and healthier you are when you apply, the lower your premium.
- Closely weigh all riders, or optional features, against their cost. An optional feature might sound good but, in reality, they rarely come into play. Our LTC Insurance Professionals can help you decide.
- Go with a longer waiting period, or deductible, which can save you 20% or more per year.
- Select a lower benefit amount, the amount of insurance paid to you on a weekly or monthly basis. This is referred to as co-insuring and requires you to assume some of the financial risk. Remember, some coverage is better than none.
- Pick a shorter benefit period, the length of time your policy will pay you benefits.
- Lock in all available discounts, such as a spousal discount or group discount.
- If you’re 70 or older, consider forgoing a built-in inflation protection option.
What is the best age to apply?
The sooner you apply, the better. Here are three good reasons not to delay:
- Your premiums are based on your age and health at the time you apply. So the sooner you apply, the less expensive it will be to get coverage.
- Once you’re approved, your premium cannot be increased based on your advancing age or declining health. (It can, however, be increased if the company does so for everyone with the same policy.)
- The longer you wait, the greater your chance of becoming uninsurable. Approximately one-in-four applicants are declined due to pre-existing medical conditions.
What is required to apply?
You complete an application and submit it with one month’s premium. Again, in most cases, there is no physical exam or blood test required.
In addition to the application, the insurer will review your medical records and have a nurse interview you by phone. That’s it.
Note: Any premium you submit with your application is 100% refundable if you change your mind within your 10-day free-look period.
How do I find the best policy?
That’s easy. Contact one of our independent, licensed LTC Insurance Professionals today by calling 888-959-0717.
If you prefer, you can click here to get a free, no-obligation policy-and-price comparison instantly online.
And please keep in mind that at CLTCI, we impartially shop the leading long-term care insurance carriers to find you the best value for your money. Plus, no agent will call or visit – and there’s absolutely no obligation.