Family Finances: Take a Closer Look at Long-Term Care

By: Alan Lavine and Gail Liberman

Source: Post Gazette Date of Article: 07/28/03

We got some e-mail from a recent column we did on long-term care insurance, so we decided to provide more information on the subject ("Never too early to take close look at long-term care post gazette," June 30, 2003) . Long-term care consists of "assistance with essential and routine tasks of life," says the Georgetown University Long-term Care Financing Project. These may include bathing, getting around the house and preparing meals.

"This care may occur in private homes, adult day care centers, assisted living facilities, board and care homes and nursing homes," the university says. "The bulk of formal paid care is provided by home health aides, certified nursing assistants, and personal care assistants, often under the direction of nurses."

The federal Medicare program, which provides health insurance to people who are at least 65 as well as some disabled people under age 65, may cover some long-term care. For example, it typically pays for the first 20 days, and in part for an additional 80 days of care in a "skilled nursing facility" following a hospital stay of at least three days.

However, if you haven't been hospitalized, and need nursing home care, or, of you exhaust your Medicare or other insurance benefits, you could face serious financial problems. The average cost of nursing home care runs $52,000 annually for a semi-private room, Georgetown University reports. Meanwhile, the average hourly rate for home care provided by a home health aide runs $18. "At this rate, four hours of home care daily would total about $26,000 annually," it says.

If these numbers astound you, you can take comfort in the fact that you have some back-up. If you have less than $2,000 in assets and minimal income, you typically can qualify for Medicaid, which likely will cover your long-term care. However, warns Stuart D. Zimring, president-elect of the National Academy of Elder Law Attorneys, whether you're covered until Medicaid approves you could be another question. State laws vary on this issue. Also, if you have more than $2,000 in assets, it's possible that you won't qualify for Medicaid. So what do you do?

We believe that long-term care insurance is a great option for anyone who can afford it. Based on the policy you select, it can cover you in a variety of settings -- including assisted living, home health care, a nursing home or Alzheimer's facility. So it is important that you select a policy that covers your preferred way of obtaining care

Unfortunately, though, long-term care insurance can be extremely expensive. So you need to evaluate the cost in relation to what you can afford. That was the reason for our column a few weeks ago. We wanted you to get the most coverage for your money.

We personally have long-term care insurance -- even though we don't meet many of the criteria outlined in our previous column. We're not 60, for example. However, we chose it because:

The younger you are when you get it, the cheaper it is.
We have our own business, so if something happened to one of us, we would not be able to carry on if the other had to provide 24-hour care.
We can write off the cost of our policies against our business on our federal income tax.
We have seen close relatives, who did not have long-term care insurance, suffer.

William Browning, president of the National Academy of Elder Law Attorneys, tells us his organization unequivocably suggests that people buy long-term care insurance if they can afford it. Unfortunately, "by the insurance industry's own studies, only 15 to 20 percent of the population will be able to buy it," he says.

So our goal is to help you get the most for your money if you do buy it. The expert that we interviewed in our previous column offered some suggestions toward this goal. He advised that you select a 90-day waiting period due to the fact that Medicare frequently covers 100 days of your stay. Good advice if money is tight.

Some of you disagreed with that. In fact, our own experience prompted us to personally select a 30-day waiting period for our own long-term care insurance. One of our mothers needed long-term care for two months following a hip fracture -- a very common injury among the elderly. Medicare did not cover her "custodial" care. If she had not had long-term care insurance, we would have had to take care of her 24 hours-a-day. It would have been very difficult for us to run our business.

"The average length of a stay at a skilled nursing home facility, covered by Medicare, is 31 days," said Mary Kahn, public affairs specialist for the Centers for Medicare and Medicaid Services. She admits that figure has been declining. However, she stresses, the decline is not due to any cuts in Medicare benefits. "There's been an increase in alternate care modalities," she told us. "More people are relying on getting care in their own homes."

So you be the judge.