One of the features of the new government health-care plan is the option to take out a modest amount of long-term care insurance. It’s not the greatest of all possible programs, but it’s a heck of a lot better than nothing.
We’re told that almost two-thirds of Americans over 65 will need long-term care. Nor are the young immune to these bankrupting costs: 40 percent of long-term care patients today are aged 18 to 64.
The government program, called CLASS (the Community Living Assistance Services and Supports program) probably will pay about $50 a day. Compared to the cost of a nursing home, that’s a tiny drop in the bucket. In 2010, according to a survey by Metlife, the average cost of a semiprivate room in a nursing home was $205 a day.
That’s with some poor soul moaning in the bed beside you, not a desirable thing. When my mother was dying, one of the wretches in the nursing home was in such pain she believed she was on fire. She kept screaming for her husband Orville, who never showed up. She screamed and screamed and screamed. If that’s not what you’d like keeping you awake 24/7, you’ll pony up $229 a day to have a room to yourself.
The costs shown in the link above are just averages; real costs vary widely by region (as does quality of care). In New York State, for example, the median price of a private room in a nursing home was $359 a day. Here in Arizona, it’s a mere $245 a day. Texans pay $181 a day, Nebraskans $207, Californians $269.
If you’re ambulatory but no longer able to keep up a house or apartment, you’ll pay $122 a day to reside in an assisted-living community. Think you’ll try to stay in your home? A home health aide gets paid $21 an hour to come in and care for you: that would be $168 for an eight-hour day, and many elders need to have someone with them through the night. Having someone come in to clean your house: $19 an hour. The cost of adult day care, where you’re carted off to spend your waking hours in an institution and then hauled home to sleep in your own bed: $67 a day.
Before you can qualify for Medicaid, you have to spend down all your assets on health and nursing care. This may include having to sell your home and your car. If you’re married, it means your surviving spouse will be pauperized. To rescue his mother from this fate while his father was dying of Parkinson’s, SDXB had to arrange to divorce them, a painful end to a 50-year marriage between two faithful Catholics.
If you’re in your 50s, now is the time to buy long-term care insurance, which ain’t cheap itself but is a lot less ruinous than those costs. The longer you wait, the higher your premiums will be. Unfortunately, providers are beginning to reconsider the wisdom of these policies, and so it’s not so easy to find a good one. Metlife, which was one of the better providers, got out of the long-term care business last November. Policies that survive will have higher premiums; my policy, which started with TIAA-CREF but was sold to Metlife, hasn’t gone up yet, but I’m sure it will. I’m not looking forward to a stiff increase in the $75 a month I’m already paying out.
The options are not very good. For those of us who are less than wildly affluent, the projected $100 to $200 per month premiums for the government plan—assuming it survives the Republican onslaught—are way too much for way too little. I can’t afford to pay that for something that will not come close to covering my needs, especially on top of my existing plan, which also probably will not cover all my costs. Besides, if you’re already retired, you may not qualify: you have to work for three years to get the benefits. Alternatives include life insurance policies that allow you to tap the death benefit, which might help you to pay for some old-age or health-care costs, annuities that pay out either a lump sum or an income stream, or limited-pay policies in which the premium is paid once or over a period of just a few years.
Nevertheless, if you don’t already have a policy, now may be the time to look into getting one. Despite having ceased selling new policies and planning to jack up premiums through the stratosphere, Metlife at least is still servicing those policies it does have. You may want to lock in a policy with another insurer while some are still available.
Be careful, though. Like all insurance products, long-term care insurance is a field full of potholes. Learn everything you can about long-term care insurance before buying. Pitfalls include policies that won’t cover you if you move out of state; assuming the payout will cover all your costs (it probably won’t); limited coverage periods; recurring deductibles; and an array of other little surprises. Call your State Health Insurance Counseling and Assistance Program, which will provide you with unbiased information. The American Association of Retired Persons offers some in-a-nutshell consumer education, but you should be aware that AARP sells long-term care insurance and so is not a disinterested party.
Consider how much you’ll really need. If you’re not living in your home, most of your monthly expenses will go away. Thus about 90 percent of your Social Security and pension or savings income can go toward maintaining you institutionally. For me, that would come to about $78 a day. Here in Arizona I would need $245 a day to put myself up in a nursing home; thus the insurance would have to cover only(!) $168 a day.
Nursing home costs go up every year, and so you should look for a policy that offers you a chance to opt for increased coverage to adjust for inflation.
That’s about the best you can do to protect yourself. Otherwise…pray for a quick end. 😉
Image: Rest Home for the Elderly in Czechoslovakia. Darwinek. Creative Commons Attribution-Share Alike 3.0 Unported license.
I don’t know what we will do. When the site says “70% will need SOME TYPE of ltc,” I wonder about the SOME TYPE. My parents bought an in-home care policy, which I wrote about in a comment a while back. My in-laws moved near their daughter and pay her for care.
I wonder if family care will be more common in the future and not just for financial reasons.
The only person I know in long term care is 30 years old–the dear child of a dear old friend. She was hit by a car more than a year ago and I believe is still in a coma.
Also look for a policy that has an inflation rider to protect the cost benefit you are paying for. $168 today does not equal $168 tomorrow. Better policies have this rider available. Also, you can look for policies that have roll-over benefit to the surviving spouse – unused benefits can be rolled-over to the other spouse in the event someone dies before the benefit is used up.
When I saw the first 2 paragraphs I thought I was in for a post filled with “I Love Obama” rhetoric and how evil insurance companies are but WOW such a fair and balanced post.
My office sells LTCi, but wow it is super expensive with NO guarantees….the blended LI/LTCi policies are becoming more and more popular because of this.
@ Evan: With that professional insight, I’d really like to see you write a post about the ins & outs of LTC insurance, or, if you’d like, maybe add a response at FaM on the subject!
As you know, I’d been kicking this and then myself around and around, having missed my chances at it because my dad smoked so he wouldn’t be covered and then my mom’s health deteriorated drastically just before I could purchase a policy for her.
At this point, I’m back to the drawing board because, as you say, for them the options are incredibly slim if any exist at all and it’s almost certain that if they are longer lived than I expect, they will require a great deal of medical care in their later years. At this rate, my plan almost has to be: earn an incredible amount of money and stock it away safely. Mmhmm.
Great advice, especially the part about reviewing your long term care insurance plan before purchasing it. Many people do not read the ins and outs of their plans and miss something vitally important that can affect them later.
no comment, i need a question answered ,if someone can do that for me, my husband is already in a nursing home,we have medicare and our supplemental ins. but that dosen’t pay enough to cough about, so i need to know is it possible to get ltc insurance once someone is already in a nursing home, and would it really help if i could purchase it now?
No. The point of buying insurance is to bet on the come: you bet that something bad will happen to you; the insurance company bets that nothing too expensive will happen during the time you own the policy.
SDXB managed to rescue some of his mother’s assets by arranging for a divorce after his father, who had Parkinson’s, went into a nursing home. Once she was no longer married to him, the nursing home couldn’t go after her for the cost of caring for him and the SDXB was able to get his father on Arizona’s answer to Medicaid. But check into what happens to people in your state when they’re on Medicaid. One of my students, who works as an LPN, said that Medicaid patients are kept in the facility but effectively get no care — they’re just tucked away on a separate floor and forgotten. On the other hand, if you’re completely out of it, as the old guy was, and there’s no hope of recovery, what difference does it make?