News Release

New Jersey Department of
Banking and Insurance

Acting Commissioner Ken Kobylowski

For Immediate Release:
July 26, 2012

For Further Information:
Ed Rogan or Marshall McKnight (609) 292-5064

TRENTON, NJ – New Jersey Department of Banking and Insurance Acting Commissioner Ken Kobylowski today offered tips to consumers so that they can make more informed decisions about long-term care insurance coverage. The U.S. Department of Health and Human Services (HHS) reports that approximately 70 percent of people over age 65, some 21 million citizens, will need long-term care services in their lifetime.

“Long- term care insurance is something to carefully consider for those New Jersey citizens interested in protecting assets, minimizing dependence on family members and controlling how they receive nursing or home care,” said Acting Commissioner Ken Kobylowski. “This is a very complex and personal decision that necessitates a close examination of many factors, such as family health history, dependent relationships and personal finances.”

Long-term care insurance basics

When an array of services available to people with a prolonged illness, a disability, or cognitive disorders becomes necessary, long-term care insurance can provide coverage for the costs of such services. This can include health, medical, personal care and social services. Personal needs for care may require part-time assistance or around-the-clock nursing care. Those diagnosed with a chronic illness, such as Alzheimer’s disease, Parkinson’s disease, multiple sclerosis, or diabetes may have expenses paid by a long term care insurance policy. Standard health insurance policies and Medicare usually do not pay for long-term nursing and home health care costs. Medicaid pays limited long- term care benefits only after a person has drawn down most of his or her assets.

Long term care insurance is not for everyone

Consumers who may qualify for state aid should carefully weigh the pros and cons of long-term care insurance. Those who have planned ahead and made a lifelong habit of saving may find that the best way to pay for possible long- term care is to set aside a portion of their assets for that purpose. Other alternatives, including life insurance or annuity products, may be a better fit for some consumers who plan ahead regarding possible long term care expenses.

Tips regarding long term care insurance

• Check with a financial services professional - Consumers should make sure they have guidance from a certified financial advisor, insurance agent, or accountant on whether long-term care insurance is appropriate for their situation.
• Understand coverage - Knowing what is and what is not paid by a long-term care insurance policy is a key step toward ensuring proper coverage. Find out what out-of-pocket expenses are likely and be certain to understand daily expense limitations. To accomplish this, consumers need to ask questions and read the policy thoroughly.
• Understand your premium obligations - Premiums on long-term care policies are typically lower when bought at a younger age, but the premiums are not fixed for the life of the contract – they can change if they are changed for everyone in a class.    
• Pre-existing conditions exclusion - For those with a current medical condition, expenses due to that condition may not be covered for a period after the policy is effective. Consumers should verify if any such exclusion applies to the policy they are purchasing.
• Do not divulge personal information by phone - Social security numbers, health condition, Medicare status, and private insurance policy numbers are examples of the types of data consumers should never give to strangers over the phone.
• Be wary of advertising - Unscrupulous fraudsters may suggest through ads that Medicare is associated with a long term care policy. Medicare does not endorse nor sell long-term care insurance. Consumers should disregard mailings about long-term care insurance that seem to be from a government source.
• If rates increase - For those who have purchased a long-term care insurance policy and face a large increase that may cause them to drop coverage, consumers should first check with their carrier to find out what options they may have in making changes to their plans to make them more affordable, including adjusting their coverage levels.

Shop around

Consumers who decide that long- term care insurance is appropriate should shop around for the right coverage at the best price. Group contracts (like those offered through an employer), may have lower administrative costs, but the rates may not be reviewed by state regulators as individual rates typically are.

Deal with a Licensed Carrier and Agent

Long-term care insurance shoppers should make certain any sales professional, long term care insurance, annuity or life insurance carrier is licensed by the State of New Jersey.

To verify that your long-term care insurance provider or financial services advisor is licensed by the State of New Jersey, consumers should go to: Licensee Search.

“It is easy for consumers to protect themselves from scammers peddling fake long-term care insurance policies,” said Acting Commissioner Kobylowski. “Before buying a policy, consumers should spend time to stop, call and confirm with the Department that the company is authorized to sell such insurance in New Jersey.”              

Consumers can visit the Department’s long term care guide online at www.state.nj.us/dobi/ins_ombudsman/ltcguide.htm for more information.