Dear AFE Members,
As you know, ADB took the welcome initiative to have Vanbreda prepare a plan for long-term care (LTC) insurance for staff, retirees, and spouses. Pursuant to members’ many inquiries regarding the insurance, AFE commissioned a small study in order to be able to provide some information on such plans. The study was done quickly and is not exhaustive, but it is informative. Because Canada and the US were the main countries for which the consultants were able to find information on a variety of offers, the study is largely shaped by comparison between Vanbreda’s offer and these.
The main findings are as follows:
1. Private LTC insurance is not available in most ADB-member countries, and is of limited availability in others. Government-supported LTC is available in some member countries.
2. To make an informed decision each pensioner needs to determine what is available in his or her own geographical area of residence/retirement and to compare these with the Vanbreda option. For countries where LTC insurance is not available, the alternative is to pay the cost of LTC out of pension or other income, or to provide for LTC needs (arising from physical and mental disabilities associated with ageing) through savings or purchasing annuities programs for such contingencies. The study therefore also compares the benefit stream from the Vanbreda LTC insurance with such alternatives.
3. While it is not possible to predict one's future physical or mental abilities, cogent statistics from US are available for reference. These indicate that the proportion of age cohorts with cognitive impairment or loss of 2 "activities of daily living" (ADLs) is 3.7% for 65–69, rising to 35% for 85 and over. Evidence suggests that children in families where one or more parents have Alzheimer’s disease are more likely to develop Alzheimer’s disease than others in the population. These statistics may also be taken into account in evaluating the Vanbreda offer.
For the full study, click on Initial Research and Long-Term Care Insurance Study. For information on the Vanbreda offer, click on Long-Term Care Insurance Offer and for the premiums for 76 and on, click on LTC Premiums 76+.
Initial Research: Long-Term Care Insurance
In response to the many questions raised by members, we have put together some information pertaining to long-term care (LTC) insurance. We stress that the decision to sign up for the LTC insurance Vanbreda is offering is a highly personal one, and that the information provided here is intended only to feed into any decision making process, and not to otherwise influence that decision.
The information necessarily was gathered in a short time and is therefore incomplete and general in nature. The full information is presented on the AFE website.
1. Activities of Daily Living. To qualify for benefits, one must be considered cognitively impaired or be unable to perform 4 of the 6 following ADLs:
a. Continence—the individual’s ability to control bowel or bladder functions; or adequately perform needed person hygiene, including taking care of a catheter or colostomy bag, when unable to control bowel or bladder functions.
b. Dress—the individual’s ability to put on and take off all items of clothing; and any needed braces, fasteners or artificial limbs.
c. Eating—the process of putting food into the body from some receptacle, such as a cup or plate; by means of a feeding tube; or intravenously.
d. Toileting—getting to and from the toilet; getting on and off it; and performing associated personal hygiene.
e. Transferring—moving into or out of a chair; bed; or wheelchair.
f. Bathing—washing oneself in a bath tub or shower (including the ability to get into or out of the tub or shower), or by sponge bath.
2. Prevalence of disability: A study in the US (Cohen 2005) found that the prevalence of disability in people 65 and older (that is, people with 2 or more ADLs) was as follows: 60–69=3.7%; 70–74=4.6%; 75–79=8.9%; 80–84=15.4%; 85 and over = 35%. “Disability” is defined as having limitations in ADLs that lasted 90 days or more, or having cognitive impairment.
3. Living with ADLs and cognitive impairment. The Cohen study indicated that people with 4 or more ADLs live for an average of 4.5 years. Other (later) studies indicate it may be 5 years. Generally, one would expect longevity with ADLs to increase with time. (Cohen, M. et al (2005). Becoming disabled after age 65: The expected lifetime costs of independent living. AARP 2005-08 [June]).
Overall, the average survival time in a study of people diagnosed with Alzheimer's disease or dementia was 4.5 years, although women lived longer than men, and people diagnosed when under age 70 lived 10.7 years compared to 3.8 years for people over 90 when diagnosed. (Xie J, Brayne C, Matthews FE; and the Medical Research Council Cognitive Function and Ageing Study collaborators. Survival times in people with dementia: analysis from population based cohort study with 14 year follow-up. BMJ. 2008 Jan 10.)
4. The availability of LTC insurance varies widely, from being unavailable in most countries, to limited availability in some, to being widely available in the US. Where it is available, the range of conditions, premiums, and benefits may vary considerably, and if you reside in an area where it is available, you should investigate the options thoroughly. Where it is not available, there is very little for ADB retirees other than the Vanbreda offering. People may opt to set aside money in the bank (perhaps with specific instructions as to its use and power of attorney to handle it), or to investment in annuity funds; however, such plans are not equal to LTC insurance.
5. Factors influencing whether one signs up for LTC include
- family longevity and medical history (e.g., likelihood of developing Alzheimer’s, etc.);
- family situation;
- current health status;
- finances—e.g., can one afford the expenses without LTC insurance? can one afford to pay the premiums over time while keeping up with other necessary payments, such as outlays for health care, housing, food, etc.?
6. Cost–Benefits. The benefits are likely to far outweigh the costs if you need the benefits, but the costs are sunk—there is no recovery if you don’t need the benefits.