0303

Introduction to Financial Security Systems

• AS 1021B

• Date: March 3, 2025

Long-term Care

• Definition: Long-term care (LTC) refers to a range of services designed to assist individuals with chronic illnesses or disabilities needing help with activities of daily living (ADLs) over an extended period.

• Examples of ADLs:

  • Eating

  • Bathing

  • Dressing

  • Going to the bathroom

  • Transferring (e.g., moving from a chair or out of a bed)

  • Maintaining continence

• Types of Long-term Care:

  • Skilled (Professional) Care:

    • Medical attention from trained personnel like registered nurses or therapists.

    • Can be administered in a nursing home or a patient’s residence.

  • Personal Care:

    • Assists individuals in performing essential ADLs.

  • Supervisory Care:

    • Designed for individuals with cognitive impairments (e.g., Alzheimer’s or dementia) who need verbal reminders, supervision, or protection.

  • Note: 88% of LTC comprises personal care and supervisory care.

Demographics and Coverage

• Self-Care among Elderly: While many elderly can care for themselves, a significant number will require assistance later in life.

• Statistics:

  • 43% of those over age 65 will need long-term care.

  • Average nursing home stay: 3-4 years; 20% stay more than 5 years.

• Insurance Coverage: Provincial health insurance plans cover medical services but not long-term care, which varies by province and often faces cutbacks.

• Economic Impact: LTC is costly and can lead to economic insecurity in old age.

Nursing Homes

• Services Provided:

  • 24-hour medical care and assistance with daily activities for individuals with significant health issues or disabilities.

• Funding and Costs:

  • Personal and nursing care provided by LTC homes are funded by government; patients pay for room and board.

  • Ontario nursing home costs (effective July 1, 2024):

    • Long-stay Basic: $66.95/day ($2,036.40/month)

    • Long-stay Semi-private: $80.72/day ($2,455.24/month)

    • Long-stay Private: $95.65/day ($2,909.36/month)

    • Short-stay: $43.34/day (N/A for monthly)

Retirement Homes

• Definition: Places offering accommodation and support services for older adults who can live independently but may need assistance.

• Waitlist Policy: Those on a nursing home waitlist may stay in a retirement home in the interim.

• Financial Considerations: No government subsidies; costs may range from $25,000 to $70,000 or more annually.

Private Home Care

• Overview: Services allow individuals to receive assistance with daily activities and medical care at home.

• Costs for Private Home Care in Ontario:

  • In-home meal preparation: $15 - $34/hour

  • Personal care (bathing, dressing): $15 - $35/hour

  • Skilled Nursing: $30 - $100/hour

  • 24-hour live-in care: $9.58 - $54/hour

Long-Term Care Insurance

• Types of Policies:

  • Reimbursement Policies:

    • Reimburse policyholders for actual expenses incurred for LTC up to a specified limit.

  • Indemnity Policies:

    • Provide a fixed daily or monthly benefit regardless of actual expenses, as long as qualified expenses have been incurred.

  • Income Policies:

    • Offer a regular income if the policyholder cannot perform specific ADLs or requires LTC, based on pre-need income.

Challenges in LTC Insurance Sales

• Reasons for Slow Adoption in Canada:

  • Lack of understanding of provincial plans for LTC needs

  • Difficulty in predicting costs

  • Restrictive policy provisions

  • No premium guarantees

  • Competition with products like critical illness insurance and retirement income products

  • Limited availability from Canadian insurers

Exclusions and Limitations

• Common exclusions from LTC insurance policies include:

  • Mental or nervous disorders/diseases

  • Alcohol or drug addictions

  • Illness or injury caused by acts of war

  • Intentional self-inflictions (including attempted suicide)

  • Pre-existing conditions

  • Treatments covered by government

Policy Coverage

• Most policies have limits on payments, including maximum amounts per year or a lifetime limit.

• Benefits are usually paid daily, weekly, or monthly.

  • Example: Up to $100/day for nursing home benefits, or up to $350/week for home care benefits.

Benefit Triggers

• Definition: Conditions that must be met for benefits to be paid

• Common triggers include:

  • Activities of Daily Living (ADLs): Benefit is paid when unable to perform 2 of 6 ADLs.

  • Cognitive impairment assessment: Benefits may activate based on memory tests.

• Waiting Period: A specified time must pass before claims can be paid after becoming dependent.

Quiz Questions

1. About Long-term Care:

   • Which statement is true?

   • A. Exclusive to hospitals?

   • B. Fully covered by universal health care?

   • C. Guarantees immediate admission?

   • D. Funded through a mix of government funding and user fees?

2. Nursing Home Features:

   • Which is a common feature?

   • A. Independence for residents?

   • B. Social and recreational programs?

   • C. Medical supervision and assistance?

   • D. Recreational outings?

3. LTC Insurance Information:

   • Which statement is correct?

   • A. Cover services in multiple settings?

   • B. Primarily funded by government subsidies?

   • C. Premiums unaffected by health status?

   • D. No exclusions or limitations?

Sample Contract Section

• From Sun Retirement Health Assist of Sun Life Assurance Company:

  • Identify policy type:

    • A. Reimbursement policy?

    • B. Indemnity policy?

    • C. Income policy?