Continuing care at home: An alternative to long-term-care insurance

RETIRE26
Raymond and Sandy Loewe have visited all seven continents, including Antarctica.

Raymond and Sandy Loewe just got back from a trip to Australia, having achieved one of their life goals: visiting all seven continents. They aren't even close to retiring, though they are in their mid-70s.

"We both go to work every day, she at a nonprofit and me at my financial-planning firm. We have no plans to retire, but we take 14 to 15 weeks off a year," Raymond Loewe said.

One thing they worried about was their care later in life: The couple have no children.

"As I started thinking about aging," he said, "I asked myself, 'Who's going to take care of us if we can't take care of ourselves?' "

Five years ago, the Loewes signed up for an at-home care service.

"Instead of buying long-term-care insurance, which works for a lot of people, we chose Cadbury at Home," Raymond Loewe said.

Cadbury at Home, which operates locally in New Jersey and Delaware, and Friends Life Care of Plymouth Meeting are commonly referred to as "continuing care at home" programs, which offer seniors the traditional services of continuing-care retirement communities while allowing them to remain in their own homes. Entry fees range from $10,000 to $50,000, and monthly service fees range from $150 to $500.

The Loewes currently live at the Four Seasons at Wetherby in Swedesboro, an over-55 development. When the time comes and they need it, they want on-call medical care, in-home assisted living and nursing services, transportation, meals, and wellness programs. (Some programs also offer seniors routine home maintenance.)

As a financial planner, Raymond Loewe was keenly aware of the need to do something: "All of my clients need long-term care somehow. They have to either buy a policy, self-fund, or do something like at-home care."

Much like continuing-care retirement communities, fees for at-home care services are tax-deductible. The Loewes paid $20,000 each up front, plus about $800 monthly.

Long-term-care insurance for a couple "costs about $15,000 a year, so this worked out to be higher," he said. "But there's no upside limit to care, there's no deductible, and there's no waiting period if I fell or was in an accident. The services start immediately."

Their rates do increase, he said, at about 3 percent to 4 percent a year, but with health-care inflation running at 8.5 percent annually, he's comfortable with paying the current rates.

Loewe estimated that their long-term care budget totals 10 percent to 15 percent of their annual expenses. "It's extremely costly, but we budgeted for that and for maintaining our house and paying taxes. It's not for everyone. Some people should sell their homes and move. But if staying in your own home is important, this is a solution."

There are caveats: You need to be in relatively good health to join, though there's no waiting period for services after you've been approved medically and financially. Such services typically do not accept people currently receiving services at home.

Services offered by Friends Life Care, a nonsectarian program developed with help from the Robert Wood Johnson Foundation and the Pew Charitable Trusts, are roughly comparable in cost with long-term-care insurance, which now typically offers similar coverage for home-based care. As with insurance, you pick a daily benefit maximum, an inflation formula, and how many years you want covered. Costs and eligibility depend partly on your medical condition and history, and premiums rise based on age when you enroll.

Friends Life Care eliminated its up-front entrance fee; members now pay the fee over the first five years, as part of the flat annual rate. Members choose a dollar amount of coverage versus the amount that they will pay themselves, which also limits the organization's actuarial risk. (Lifetime benefit limits were dropped in 2011.)

Minimum age for enrollment is 40, with 81 the maximum.

Cadbury at Home's minimum age is 60, with exceptions for a younger partner or spouse.

Care from Cadbury at Home is portable, Raymond Loewe said. "If we decide to move to California, we still take our at-home care services with us. Sandy and I could move and they'd provide services at home wherever we are, so we're not tied down."

What if you don't like your caregiver?

"The beauty of this program is that from day one, you are introduced to your care coordinator. That person gets to know you, your family, habits, likes and dislikes," said Cecily Laidman, a Cadbury spokeswoman. If you don't like the aide chosen by the care coordinator, she said, "a replacement can be made almost immediately."

earvedlund@phillynews.com

215-854-2808@erinarvedlund