Long-term care insurance

Metlife sends a notice inviting me to designate someone who can be alerted if a payment on my long-term care insurance is missed. Good thought: obviously, if you get into a predicament where you need long-term care, you may not be competent to pay your bills. I have the premium, which comes to about $75 a month, paid electronically, and so its unlikely the bill will go unpaid unless M’hijito has to take over my affairs and changes things around.

This policy, which I originally bought from TIAA-CREF but was sold to Metlife, will not cover the exorbitant cost of nursing-home or nursing care 100%. However, it does cover enough that my Social Security and (if my mutual funds ever recover) a 4% drawdown from savings will take up the slack. Because my house is paid for, if the utilities are turned off the house will cost nothing while I’m incarcerated in a nursing home. Well, that’s not so: it will cost the property tax and Gerardo’s bill to come around and clean up the desert landscaping once every month or two.

The cost of nursing care in this country is just astonishing, and because much of it is delivered by minimum-wage workers laboring in extremely difficult conditions, it behooves you to get yourself into the highest-quality nursing home available. And of course, the higher the quality, the higher the cost. By 2004, the average annual cost of nursing home care was over $70,000. This amount increases at about 6% a year; the annual cost is now said to hover around $76,500. In the Phoenix area, if I get sick this year it will cost me about $76,200 to get myself cared for.

Home nursing care, which sounds ever so much more desirable if you’re lucky enough to find someone competent, honest, and caring to do the job, runs about $43,885 a year nationwide and $45,800 in the Phoenix metropolitan area. Assisted living would cost me around $29,700, significantly less than the nationwide average of $33,100.

Is there any question about why some old folks ship out on luxury liners in their sunset years?

Neither Medicare nor health insurance will cover nursing care, at least not for any length of time. In theory Medicare will cover 100 days following an acute illness, but you have to show signs of recovery to get even that much coverage—and of course if your problem is acute senility, “recovery” is not in the picture. When my mother was dying of cancer, we found that Medicare and Blue Cross did everything they could to get her off their rolls, to the extent that my husband, who was a lawyer, and I spent so much of our time and energy fighting bureaucrats that I was left with almost no time to spend with my mother in her last weeks. SDXB had to arrange to have his mother divorce his father when the old man was dying of Parkinson’s, in order to force the VA to cover the his care and avoid pauperizing her.

Medicaid will cover nursing home care, but only after you have utterly pauperized yourself. You must be left penniless, meaning you have had to sell your home, your car, and expendall other assets on medical and nursing home bills. In Arizona, if you’ve made the mistake of gifting your children, as is allowed under federal law, with a few thousand inheritance-tax-free bucks over the two years prior to your falling ill, you can be disqualified from this state’s equivalent of Medicaid on the theory that you must have been trying to cheat the system.

So as you can see, if you’re “lucky” enough to make it to advanced old age, you’d better have long-term care insurance. Fourteen percent of people over 71 suffer from dementia, and that doesn’t count strokes, broken hips, chronic heart failure, Parkinson’s disease, or any of the multitude of other causes that put the elderly out of commission.

The problems with long-term care insurance are a) there are lots of shysters out there selling products that will not provide adequate care; b) premiums are high and must include a provision to adjust upward for the skyrocketing cost of care; and c) the older you are when you buy a policy, the pricier the premiums will be.

In general, you should plan to buy long-term care insurance in your early fifties. Obviously, if you purchase a policy when you’re too young, you’ll pay premiums over a long period when your chance of needing the coverage is almost nil. If you wait until you’re too old, you may be disqualified from buying a policy or pay an exorbitant premium.

You need to investigate any insurance company carefully before buying a long-term policy from it. Be sure it is financially sound and highly rated by Moody’s and A.M. Best. In addition, it’s important to fully understand what you’re buying. Most states have an agency on aging or an insurance commission. These agencies can provide you with information on what to look for and what to avoid in long-term care coverage. AARP also offers a lot of valuable information, but you should be aware that this organization is in the business of selling long-term care insurance.

It’s never too early to look into this issue. And if your parents are baby-boomers, now is the time to find out whether they’re covered and to urge them to get coverage if they’re not. Ten million baby boomers are expected to develop Alzheimer’s disease, and as we’ve noted, that’s not the only ailment that can render an elder helpless. The cost and anguish entailed in having to care for an adult who is fully disabled by senility or other illness are devastating—you should not assume that you will be able to care for your parents in your home, especially since you and your spouse will probably have to work to keep a roof over your heads and you will be trying to deal with raising children at the same time.

My insurance covers nursing home care and in-home care. It also will pay a relative or friend a small stipend to care for me at home, and pay to have the person trained in caregiving. As I look at the budget items I can cut if I’m laid off in the next few weeks, one of the items I do not consider to be an option is the long-term care insurance.