"Aging Deliberately" columnist Liz Taylor talks about why it's important to have a long-term-care insurance policy.
I have a love-hate relationship with long-term- care insurance.
As readers know, I strongly recommend that most comfortably well-off Americans consider buying a policy. I bought mine almost a decade ago, and, as much as I don’t like forking over $200 a month for it, I’m glad I bought it. The main reason: I see no alternatives. Here’s why:• My career in aging has paid poorly, and I haven’t saved enough for my retirement, much less any serious-care needs. My mom died of Alzheimer’s disease, and she and my dad, who also needed care, spent around half a million dollars over eight years. I have nothing like that to rely on — and never will.
• I have no children, the number one source of free care as people become frail. Those of us without children, or children we can count on (they must live near by), will pay sooner and longer than those who have family to help.
• I know the good, the bad and the ugly quality in long-term care, and I’m going to demand the good. That means I have to pay for it. We know the power of paying for our needs all our lives — why do we think the rules change when we get old?
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• With skyrocketing federal deficits and a public that refuses to pay more taxes, relying on the government to pay for your care is one of the dumbest things you could do. Our eldercare payment mechanisms were in bad shape 20 years ago, and they’re much worse today. Imagine what it’s going to be like when nearly 80 million boomers reach old age (compared with 35 million elders today).
Here’s the other side of the coin — my reasons for disliking the industry:
• Long-term-care insurance is the most complicated insurance in the market — far more complex than home, car, life or disability — yet many providers seem to go out of their way to keep their policies mysterious. Why aren’t companies having a race to see who can come up with the easiest-to-understand brochures and marketing materials?
The jargon in long-term care is mind numbing, and most policies are filled with it. I have readers who don’t know what their policies cover — just as they need care — and don’t know how to follow the rules to get coverage.
Here’s a common example. Many policies today cover in-home care — but only under certain circumstances. Some will pay if you hire staff through a “home health care agency,” but not a “home care agency” (without “health” in its licensure); few will let you hire a friend or relative, and many won’t cover if you hire someone who’s not part of an agency. But rarely do I see this spelled out in policies.
• There are other traps, and even some employers — well meaning but unaware of what makes a good plan — are offering policies that don’t measure up. For example, one of the most important options to buy in a policy if you’re under age 75 is an automatic inflation rider. The key here is “automatic,” meaning the coverage will increase automatically over time without increasing the price of the policy. Thus your buying power increases as the cost of care increases. However, the group policy that Microsoft makes available to its employees doesn’t offer an automatic inflation rider. Employees can purchase a guarantee to buy more coverage later on, but at much higher rates. In the group policy offered to Washington state employees and retirees, the assisted-living benefit pays at only 75 percent of the nursing-home benefit, and home care (often the most expensive care if you need a lot) is reduced to 60 percent. Worse yet, it will only pay for homemaker services (such as cooking and cleaning) for a maximum of 21 days per year — easily the benefit that’s needed longest and most often.
I believe in long-term-care insurance and I don’t sell it. I also know it’s possible to buy a good policy if you’re careful. When it’s in the government’s self interest to get more of us to pay for our own care someday, it’s amazing how few safeguards are available to protect us.
Most of us age accidentally,
without planning or forethought. Aging Deliberately tells us how
to age on purpose. You can reach Liz Taylor at firstname.lastname@example.org or write to P.O. Box 11601, Bainbridge Island, WA 98110.
Her Web site is www.agingdeliberately.com. More columns