One of the questions most frequently asked by new residents of Piper Shores is whether or not to keep a long-term care insurance (LTC) policy upon move-in. Given that Piper Shores is a lifecare retirement community – licensed by the Maine Bureau of Insurance as a Continuing Care Retirement Community or CCRC – the question is a good one. The answer is not easy, even for a financial advisor, and new residents are urged to consult their advisor before making any decisions about their existing long-term care insurance policies.
The benefit of Piper Shores’ lifecare contract is that it provides a full continuum of care designed to meet residents’ long-term care needs as they change over time. In essence, lifecare is a type of long-term care insurance contract that provides independent living residents with priority access to onsite assisted living and nursing home care, as needed, for the same monthly rate as the independent living monthly rate.
While all policies differ, long-term care insurance policy benefits are triggered when the insured person is unable to perform two to four of the six activities of daily living (ADLs) or is diagnosed with dementia and requires specialized assisted living care. long-term care insurance policy benefits sometimes cover in-home care, community care (adult-day care), assisted living care, memory care, nursing home care, and/or hospice care. The amount and duration of the LTC benefit paid monthly is determined by the policy.
In many ways, LTC policies and the Piper Shores lifecare contract are redundant in that the costs of onsite assisted living, memory care, and nursing home care are covered in the resident fee. In this context, the cost of maintaining the LTC policy premiums as well as Piper Shores’ monthly fee may be prohibitive. However, there are some situations where maintaining the LTC policy at Piper Shores may make economic sense.
For example, let’s say that a resident requires assisted living care based upon the two ADL trigger event. The resident could move into assisted living at Holbrook for the same monthly fee as paid while living an in an apartment or cottage. The long-term care insurance policy benefit kicks in, and benefits are paid, thereby offsetting the monthly fees paid to Piper Shores. In many instances, the amount of the benefit paid exceeds the monthly fees being paid to Piper Shores, and the resident pockets the difference. Likewise, if the resident requires nursing home care at Piper Shores, the monthly fee remains the same, but LTC benefits are paid to the insured, which offsets the cost of Piper Shores monthly fees. (Note: policy benefits are paid directly to the insured and not to Piper Shores).
The same concept applies to receiving in-home care in independent living at Piper Shores if the two ADL requirement is met and the resident opts for in-home care, rather than moving to Holbrook assisted living. Here, the resident could use the policy benefit to pay for in-home care, while staying in their apartment or cottage. Similarly, if a resident requires specialized care while in assisted living or nursing home care, which is beyond the scope what Piper Shores provides, LTC benefits may offset out of pocket costs for such residents.
Whether or not a new resident retains an LTC policy when moving into Piper Shores depends greatly upon the terms of the LTC policy and the individual financial circumstances of the resident. Piper Shores strongly advises each resident to consult with their financial advisor in order to determine the best course of action.