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Make A Plan For Health Care In Long Term

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The Tampa Tribune

Published: November 18, 2007

A number of surveys show that many people are unprepared for the cost of a prolonged illness, especially in their senior years.

By unprepared, the surveys mean that not enough folks are buying long-term care insurance, which can cover the cost of nursing homes, assisted-living facilities and in-home care. The insurance also covers expenses for those who need assistance with daily activities or who have a severe cognitive impairment.

A recent survey released by America's Health Insurance Plans found that one in four baby boomers assumes he or she has coverage for long-term care expenses when, in fact, he or she doesn't. People think Medicare pays for it. Generally, it doesn't.

Medicare pays for a stay in a nursing facility or for home health care. To get that coverage, you have to meet certain conditions. Medicare doesn't pay for custodial care, which involves helping someone with daily activities.

Who Needs Long-Term Care?

About 9 million men and women older than 65 will need long-term care this year, the U.S. Department of Health and Human Services says. By 2020, the number will jump to 12 million.

A poll recently released by AARP found that while 69 percent of baby boomer women are concerned about whether their parents will be able to live independently as they get older, only 40 percent of respondents said they or their parents have begun to plan for any living assistance the parents might need.

Even those who have the insurance aren't always sure how long to carry it. I recently received an e-mail from a reader who wrote: "I am a 72-year-old woman still working but currently on medical leave due to a corneal transplant. Should I continue paying for the long-term care insurance I started a few years ago?"

Why was she asking? Her policy costs $1,788 a year. This is expensive insurance. The price varies greatly and depends on the policy type and where one lives.

Many Advantages

But given her age and that she already has a policy in place, she should continue her coverage, says Ernest Burley of Burley Insurance and Financial Services in Maryland. He offers a few reasons:

•Long-term care insurance "protects assets and helps relieve some of the financial strain from her and family members."

•She has locked into a plan and shouldn't have to go through medical underwriting again. The plan stays in place as long as she pays the premiums. Now that she has a policy, she doesn't have to worry about health conditions that may make her ineligible for coverage.

•There is a 60 percent chance she will use this plan. Six of 10 Americans who reach age 65 will need long-term care.

•She may be able to take a tax deduction for most (if not all) of her premiums. Check with a tax professional.

An option for the woman is to contact her insurer and see whether she can scale back coverage in exchange for a smaller premium, perhaps reducing the length of coverage to three years, suggests Mary Beth Franklin, retirement editor at Kiplinger's Personal Finance magazine.

Kiplinger's Web site recently added a section devoted to long-term care insurance (www

.kiplinger.com/yourretirement/longterm). It includes a seven-part video underwritten by John Hancock Life Insurance Co. but written and produced by Kiplinger editors.

I highly recommend you view this video if you're considering long-term care insurance.

John Hancock recently conducted a survey asking people what they know about long-term care. The majority of respondents failed a 14-question quiz, with most answering only six correctly.

The video presentation is in a question-and-answer format, featuring real consumers who have had long-term care issues.

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