On behalf of Robert C. Adamski, Attorney at Law
Many more people should be buying long-term care insurance than are actually buying it. Why should people buy it? Because aging parents are likely to need it for an extended nursing home stay. Or, they may need it for assisted living or to have an aide at home each day. Children of those parents may want to buy policies for the parents to shield themselves from the costs of the parents’ care. Planning for the future seems to demand better readiness for long-term care.
So why aren’t more people buying the insurance? Ron Lieber recently spelled out some reasons in a New York Times column. He sees nine main reasons people do not invest in long-term care insurance. Some are good reasons, some not:
Medicare: 37% percent of people think that Medicare will cover their long-term care costs. It won’t. Not in a nursing home, and not at home.
Maybe it won’t be needed: Fair enough, but what are the actual chances that it will or won’t be needed? According to consultants, looking at people age 65 and older who have long-term care insurance, there is a 45% chance of making a claim. Of those who make a claim, there’s a 14% chance of needing to make claims for more than three years, and a 4% chance of needing to make claims for over five years.
Maybe I can pay for everything myself: Nursing homes cost around $229 a night ($83,585 per year). Home health aides are $21 per hour.
One estimate says the total cost if you needed five years of care at age 75 would be about $1.5 million.
Medicaid: It will pay for nursing home costs, but first you have to qualify, and that usually means spending most of the money you have.
Medicaid will not pay for many of the things a long-term care policy will. And Medicaid restrictions are likely to grow.
Adult children as caretakers: Seems like a reasonable idea, until you actually think about the children changing their parents’ diapers. Plus, relatives who take on another relative’s care are usually physically, emotionally and financially exhausted by it.
Maybe adult children will pay: If you are expecting this without asking, you’d better actually ask. The children may not have the same plan. And, even if they do agree to pay in the future, what will you do if they no longer have the money when the time arrives?
The government will help with new plans: There is a new part of the health care bill called the Class Act. Enrollment will not start until 2012, and may not pay more than $100 per day (after five years of paying premiums). You may or may not be able to wait for this plan to kick in.
Long-term insurance is expensive: Individuals are paying $2180 annually. That may be too steep for some.
The price may go up: True. Insurance companies are raising rates. But partly because the coverage has been good, and people have been living longer.
Source: New York Times “Ignore Long-Term Care Planning at Your Peril” 11/5/2010
Robert C. Adamski, Attorney at Law
Burandt, Adamski, Grossman & Powell, P.L.