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Answers about long-term-care policies


New York -- If you're wondering about nursing-home insurance for yourself or your parents, you're not alone. About 140 insurance companies are gearing up for a brand new market, the first generation of Americans to be fearful not of dying too soon, but of living too long.

Here are the answers to some of your questions about long-term care (LTC):

* What are the odds of needing nursing-home care? One in four people over 65 will enter a nursing home for at least a year, and one in 10 for five years or more. Singles are more likely to need nursing homes, since they're usually not living with anyone who can take care of them. The same is true for wives, who tend to outlive their husbands.

* What do nursing homes cost? Plenty. The average cost in 1990 was $86 a day, or $31,000 a year, more than double the price in 1980. The range is from about $20,000 in rural areas to $60,000 for red-carpet care in the major cities.

* Who needs protection? People with assets of $100,000 to $1 million (not counting your home) who want to preserve it for their heirs. If you have more than $1 million, you can afford to pay your LTC bills out of pocket. Under $100,000, look to Medicaid, which picks up the tab when your money runs out.

* What type of coverage do you need the most? Protection against the catastrophic costs of long-term care. Many seniors are drawn to ward home-health-care insurance in hopes it will keep them out of nursing homes. But if you become disabled enough to trigger home-health payments you're not likely to stay at home very long. Buy LTC first, then add a home-health rider if you can afford it.

* What basics belong in a good policy? According to Stephen Moses, director research for LTC Inc. in Kirkland, Wash., you need:

(1) The amount of the daily nursing-home cost that exceeds your discretionary income from pension, Social Security and so on. If your income is $30 a day and the nursing home costs $100, insure for $70.

(2) Guaranteed renewability so that the company can't cancel and an inflation clause that raises your coverage every year.

(3) A waiver of premium, which continues coverage at no further cost while you're collecting benefits.

(4) Coverage for any level of LTC, from custodial to highly skilled, and no requirement that you be in a hospital first.

(5) Coverage for mental disorders such as Alzheimer's disease and for frailty that keeps you from walking, dressing, bathing, eating or going to the bathroom without help.

(6) A 100-day wait before coverage begins. The longer the wait, the lower your premium.

For help in evaluating policies, send $10 for Susan Polniaszek's Long Term Care, United Seniors Health Cooperative, 1331 H St. N.W., Suite 500, Washington, D.C. 20005.

* What does coverage cost? For the basic policy outlined above, a 55-year-old might pay $231 a year, a 68-year-old, $889 and a 75-year-old, $1,652, Moses says. The premiums can be paid automatically from your bank account.

* What are the risks?

(1) That your insurer will go broke -- so stick with those rated A-plus and up by rating agencies.

(2) That your annual premium, which is supposed to stay level during your lifetime, will unexpectedly soar, perhaps pricing you out.

(3) Rotten insurance salespeople, who misrepresent the policies they sell. In a random test of 14 agents who sell nursing-home insurance, done last year for the House Subcommittee on Health and Long Term Care, not one agent told the whole truth about the coverage to the investigator posing as a client. So don't buy without taking the policy in hand and reading it yourself.

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