LONG TERM INSURANCE CARE

POORER NOW OR POVERTY LATER

By Richard Altschuler

Right now I’m deciding whether I want to become destitute if I become infirm and require "long term care," or whether I want to start a long term care (LTC) insurance policy that will make me poor now - while I’m well, and still have about 20 years or more of "life expectancy," according to the statistical tables.

That is literally the insane choice I have been forced to consider - in the name of "sensible planning for my old age." And it explains why I’ve recently been researching various LTC plans, especially those from New York Life and General Electric, two of the leaders in the area. For people in "middle age," they both require about $1,750-$3,000 a year for one person, or $3,500-$6,000 a year for a couple.

As you get older, the annual premium gets higher. If you start LTC insurance when you’re 75, for example, the coverage can be $5,000-$10,000 a year for one person.

In fact, it is at the behest of my spouse that I have even dared to think about "long term care."

What is LTC (which, by the way, I pray is an anagram for TLC, should the need arise)? In case you are not familiar with this form of insurance, in essence it pays for your nursing home care or at-home care by a nurse if you get dementia or cannot perform certain basic "activities of daily living" (ADLs) by yourself, such as bathe or eat. You pay, however, for the first 90 or 100 days, according to the basic policy, before the payback kicks in.

Once you start the policy, you must pay monthly for life - or lose what you have paid in up to the first X number of years, depending on the policy and insurance company. After that time, you can probably get a reduced amount of benefits, instead of nothing at all.

What accounts for the difference in price between, say, a $1,750 and $3,000 per year policy for one person? Seemingly endless variables. Do you want the coverage to begin to pay for nursing home costs on, say, the 91st day or from "day one" (the less the "elimination period," the higher the policy)? How much per day do you want to be covered for ($100, $200, more)? What is the maximum coverage you want to guarantee for the rest of your life (unlimited, $350,000, less)? Do you want inflation protection, so that the amount you receive per day retains it’s original policy value, no matter what the current year’s real dollar value? If yes, do you want simple or compound inflation protection (compound costs more, of course)? Do you want protection in case you can’t pay the premium for X number of months, or even at all after a point? Do you want joint coverage with a spouse or individual coverage, even if you have a spouse? Need I go on?

It’s really enough to make your head spin, to consider all the options. And then you have to pray that they’ll pay when the time comes you need the coverage. Did you get sick or injured in just the right way under the policy? LTC insurance, for example, does not cover you for dementia resulting from an injury, only from organic causes, such as Alzheimer’s Disease. Did your doctor write the note in just the right way, to qualify you for coverage?

And what about those ADLs? If you cannot feed or dress yourself, for example, but you can bathe yourself, you’re probably not going to be eligible. Why? Because the LTC insurance companies obviously consider bathing to be the most difficult activity of daily living. So if you can get in a tub, turn on the water, and rub soap around your body, then surely you must be able to cook, dress yourself, etc., for the other activities of daily living. This condition is not ironclad, but the "literature" makes an obvious point of it.

Okay, despite all the qualifications, LTC insurance seems like a great idea on the face of it. Suppose I got Alzheimer’s, for example, and had to enter a nursing home. As laws currently stand, if we do not have LTC insurance, my wife and I would have to spend every penny we have saved and invested - all our monetary assets - until we were totally destitute. Then we would be eligible for Medicaid - the U.S. welfare system that supports the impoverished - which would pay for the LTC. My social security payments would also go towards the care.

With LTC insurance, on the other hand, our assets would remain untouched. Safe. The LTC insurance coverage would pay. But wait! Suppose I get $200 per day for a nursing home, but my "home" costs $300 a day (that’s the average in New York City, where I live - the highest in the nation, and more than twice the cost of many other cities). We’d still have to pay $100 or more out-of-pocket per day - or over $36,500 per year - over and above the LTC coverage. And I wouldn’t even know what was happening, because of my dementia!

So, if the over-the-coverage costs are great enough, for whatever reason, you can still go bust in practically no time at all with LTC insurance. If you’re lucky, however, you’re totally covered in the event of a long term care situation.

Apart from what I and my wife will personally do over the next few weeks about LTC insurance (before I reach a new Golden Age Bracket that will increase our annual premium by $200 a year), this issue made me think about the great majority of people who cannot afford LTC insurance. That does not mean they don’t have assets to protect or to pass on to family, relatives, or charities in the event of their death. It may just mean they can’t handle another expense of this magnitude. In fact, all the "literature" from the LTC insurance companies tell you NOT TO START the insurance if you’re currently having trouble making ends meet or are not certain you will be able to pay the annual premium for the rest of your life. And, oh yes, the annual premium can increase - but only for the "class of subscribers" as a whole, not for any single subscriber or for any specific reason attached to a particular individual.

So LTC insurance is yet another system safeguard for the basically wealthy and comfortably well-off - and it thus also highlights the discrimination against those with lesser incomes or uncertain economic futures.

So, considering all of the above, what will my wife and I do? To get coverage or not to get coverage, that is the question! Unlike Hamlet, who could not make a decision, my wife definitely wants LTC insurance - because the thought of us being destitute while one or both of us battles with infirmities in old age scares her to death; and I will undoubtedly go along with it, too, not only for the same reason as my wife, but because if I refuse to get it, she may never allow me to have sex with her again. Now avoiding that fate is easily worth the cost of LTC insurance.