March 1, 2022 —When people consider Life Plan Communities (formerly known as Continuing Care Retirement Communities (CCRCs) such as Kendal-Crosslands communities, one of the questions often asked is how a long term care insurance policy works with the community.
Life Plan Communities like Kendal-Crosslands, provide health care and assistance for residents as needed, as they age in place, as an integral part of the contract agreement, for the duration of a person’s life, with no caps. While this means a Life Plan Community could be thought of as a home with a long term care insurance plan attached, there are some important differences.
Let’s Start By Understanding Long Term Care Insurance
Long term care insurance is a product more and more people have, either through their current or former employer or by purchasing a separate insurance policy, that is designed to help defray the costs associated with care for seniors who need assistance in activities of daily living.
Typically, activities of daily living are: bathing, dressing, toileting, transferring from one location to another, typically from a bed to chair and vice versa, meals and remembering to take medications. Some policies dictate that when you can’t perform two or more of these tasks independently, you can make an application for your long term care benefits.
Different policies cover different things, and have different elimination periods before they begin paying benefits. You will probably need to pay out of pocket for a certain period, usually somewhere between 0-100 days, before the coverage begins.
Care in personal care or assisted living facilities, home care aides, and adult day care can add up to be in excess of $50,000 a year. That often ends up being anywhere between $3,600- $5,000 a month, and over $7,000 a month if you need memory care for people with dementia. Nursing home care can cost between $300-$500 a day, and semi-private rooms in nursing homes can run well over $110,000 a year with private rooms over $120,000 per year. [1]
Your insurance company will want to review a plan of care with your doctor before beginning to pay benefits. Benefits are paid up to a daily maximum until the maximum benefit runs out. Some policies might have shared care options when covering a couple, and one spouse can draw benefits from the other’s policy until the lifetime benefit reaches its maximum. Plans typically cover care for three to five year periods.
Long Term Care Pros and Cons
As you would probably expect, care prices vary based on location, quality and what’s offered. You can, of course, pay out of pocket for costs in excess of what’s covered by insurance to choose a better quality of care. Once you run out of insurance coverage, however, you will be expected to pay for costs out of pocket solely and/or apply for Medicaid coverage from the government. Not all facilities take Medicaid, so you might be forced to move into another facility that accepts government coverage if you outlive your insurance coverage.
Long Term care policies clearly provide peace of mind if you end up needing long term care, but because of their limited scope, they have limitations as well. And of course, the type of coverage you have will affect the level of care and options you have.
I’ve Paid All Those Premiums for Long-Term Care Insurance, But I like the idea of a Life Plan Community. Can I use my Long-Term Care Insurance at Kendal-Crosslands?
For people with long term care insurance policies, we offer a modified, or Type B contract. Under this plan, you would get an initial discount off the entry fee for the community that can range from just over $56,000 for a single person with a three year plan to $124,000 for a couple who both have plans that cover a 5 year period.
When you need personal or skilled nursing care, you can pay the per diem rate- currently $6,205 a month for personal care and $12,410 a month for skilled nursing care, through your insurance plan, for the duration of the plan. Or, If the plan runs out and you still require care, all you would need to pay is the regular monthly fee for the duration. Even if you run out of assets, care is guaranteed for the duration of your life at whatever level you require. You can also add a refundable entry fee into the modified Type B contract if you like.
Let’s Give an Example
This can be confusing, so let’s take a typical example. Mary and Joe Smith decided to move into a large 1 bedroom cottage with a den at Kendal-Crosslands Communities. Both have great 5 year long-term care policies that pays a daily benefit of $300 per day, and they are interested in a Modified Type B Contract.
An initial entry fee for the couple would be $333,660 with monthly fees of $6,922 to cover both people for a Large 1 bedroom with den, type K cottage. With a Type B Contract, their entry fee would be reduced by $124,000 to only $209,660. Their monthly fee would remain the same at $6,922 per month.
If Joe gets sick and needs skilled nursing care, he would move from the cottage over to the skilled nursing section of campus. There he would use his long term care insurance which would pay $300 per day for his care. Joe would have to cover the difference between his long term policy of $300 per day and the daily rate of $408 per day in skilled nursing which is $108 a day for up to the policy maximum, for up to 5 years. Mary’s monthly fee in the cottage would be reduced down to the single rate of $5,378 per month and she does not have to move. If Joe still needs care after the five years, the couple would revert back to the double rate of the cottage and only have to pay the regular $6,922 monthly fee, and Joe would still get the enhanced care he requires for the duration regardless.
As you can probably see, long-term care policies can make the entry fee more affordable for many Seniors, and you also have the peace of mind that regardless of what happens down the road, you are guaranteed high-quality care in a community you have chosen. For married couples, that means it’s only a quick walk to spend time with your spouse who may be in the personal care or skilled nursing section, and you can go to a concert, take in a movie, eat together in the main dining room every night, and enjoy life together. Each spouse is guaranteed care and gets the benefits of their insurance coverage on the front end, with a reduced entry fee, and with a reduced monthly fee for the other spouse while the insurance is in full effect.
Even if a person needs additional assistance in the personal care or skilled nursing areas, they still have access to all of the benefits, programming, most dining options and more that Kendal-Crosslands has to offer.
To compare, let’s take a single person we’ll call Jane Smith. Jane has a great 5 year long term care policy that pays a $250 daily benefit as part of the benefits from her job, and is considering a one bedroom with den, a type F cottage. The entry fee would normally be $217,400, but she could reduce that by $79,000 to only $138,400. Her monthly fee would be $4,697 per month as a single. If she needed to move into the personal care building for an extended period, she could use her long term care insurance policy to cover 100% of her monthly expenses for five years as her policy pays more than the daily rate in personal care, up to the policy maximum. After the long term care insurance cap is reached, and any time thereafter, she would only have to pay the normal monthly fee of $4,697 regardless of whether she needed additional personal care or skilled nursing care. And, of course, she could still go to activities, attend dinner with friends and do everything she wanted, taking advantage of everything Kendal-Crosslands has to offer, regardless of where she was residing.
There are Tax Benefits as Well!
Don’t forget that depending on your financial situation, a portion of the initial entry fee and a portion of the monthly fee may also be tax-deductible as a medical expense as well. We issue tax letters every year for our residents, to help them and their accountants maximize any tax benefits available.
In Summary
Continuing Care Retirement Communities like Kendal-Crosslands communities are known as Life Plan Communities because our goal is to make sure you have an active, vibrant retirement, accompanied by the guarantee of the highest quality of care, available when you need it, at the level you need for your entire life. You can take advantage of your long-term care insurance to help reduce the entry fee, and to reduce or eliminate monthly fees for a period when your long term care insurance is needed. This provides tremendous peace of mind both for couples and for singles who want to make sure they will get the best care available and don’t have to worry about trying to find care when needed, or being forced to move to another facility if insurance coverage runs out.
As you will discover, Kendal-Crosslands communities are more than just a home with a long-term care plan in place. By moving in while you are healthy and active, residents form close friendships and relationships not only with other residents but also with staff, making sure your long-term care is given with the love and kindness you would get from family. This is why we have children of former residents now deciding that Kendal-Crosslands is the place they want to retire themselves, and there’s no better endorsement we could ever ask for!
References:
Genworth: Compare Long term Care Costs Across the US [2017 costs for Pennsylvania] https://www.genworth.com/about-us/industry-expertise/cost-of-care.html