Long-term care insurance could avert financial disaster, experts say

Look around your work place. Statistics show that one of every two persons -- half the people you work with -- will at some time in their lives need help eating, dressing, bathing, or the simple task of moving from one place to another.

They will need to spend some time in a nursing home or have skilled help provided at home.

"Medical science continues to prolong life, but doesn't always guarantee the ability to fully live life," said David L. Hahs, of Northwestern Mutual Financial Network in Cape Girardeau.

Consumers should consider the possibility that losing the ability to care for themselves will eat up their savings or place demands on their family members they hadn't counted on.

Or, Hahs says, they could transfer that risk to long-term care insurance.

Long-term care has been available only in the last decade. It is not the same as long-term disability, which covers a person who is unable to work, said Paul Stuckey, of Health Insurance Specialists in Cape Girardeau. Long-term care insurance pays for nursing home care based on the home's cost per day. Riders are available to account for inflation or for at-home care. Policy holders can buy a return-of-premium option which will refund money paid in to a customer's family after his death if he did not use the benefits.

Long-term care does not pay for prescriptions. Long-term care insurance is expensive, but Stuckey said that as more people buy into it, the premiums will decrease.

Stuckey suggests people buy it before they turn 65 to take advantage of the best rates. Most insurance companies however will sell it to customers until about age 79, but at higher premiums. Hahs agrees with Stuckey that the earlier one buys, the better.

"As one gets older, conditions may have crept into their medical history that would prevent them from being able to secure insurance and transfer that risk to an insurance company," he said.

Premiums are based on age, mental and physical wellness, and family history as well as such other variables as the costs of care in one's community and the lifetime of the policy. Those in the early states of memory loss that might lead to Alzheimer's disease would not qualify, Hahs said. Those with uncontrolled hypertension or diabetes would not qualify, although those who have controlled those diseases would.

Some clients considered to be in remission or cancer free after treatment have qualified for long-term coverage.

According to figures Hahs provided, a person age 40 buying a lifetime benefit would pay $43.25 for a $120 daily benefit. At age 50, the same benefit costs $67.62. By 60, it jumps to $113.13.

"If you buy a policy you will typically spend about as much for that policy over your lifetime as you would spend for one year in a nursing home," Hahs sad. "If you need it, that expense will be a very, very appropriate investment."

Hahs also provided the current costs of skilled nursing care in a private room at various local nursing homes, ranging from a low of $114 a day to a high of $137. The standard rate for in-home personal care is $20 an hour; homemaking service, which is extra, is $17 an hour.

A long-term care policy also gives families a choice. With a policy in place, family members can choose which nursing home the policy holder will go to and what kind of care he will get. Not having planned for it might mean the need to sell a person's assets that he might have wanted his family to inherit. Or it might mean being dependent on Medicaid, where the state will make all the choices.

Consumers are encouraged to make the decision about a long term care policy with an accountant or with their family. Stuckey suggests calling the Missouri Department of Insurance Consumer Hotline to seek information about an insurance company before entering into a contract. The toll free hotline number is 800-726-7390.