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LTC Bullet:

Reporter Nails It

Monday, November 20, 2000


We are often frustrated by unfair and inaccurate media coverage of long-term care financing issues. Reporters usually criticize private long-term care insurance (LTCI) mercilessly while giving government programs like Medicaid and Medicare a free ride.

Of course, LTCI has its challenges. Rate stability and agent training come to mind. But the government programs have far more serious deficiencies related to access, quality, reimbursement, discrimination, and institutional bias. Nevertheless, private long-term care insurance is routinely lambasted in the media while the public financing programs get off scot-free.

Except . . . once in awhile a reporter gets it right with accurate and thoughtful advice. The following are excerpts from an article entitled "Nail Down Long-Term Care Now" by Pam Kelley in the November 7, 2000 issue of "The Charlotte Observer."

"Look at it at age 40. Own it by age 50. If you're over 50, buy it now.

"That advice comes from Stephen Moses, and no, he's not talking about that vacation home you've always wanted. He's talking about long-term care insurance.

"But if you're pushing 60 and you've never thought much about buying a policy, you've got plenty of company.

"'The truth is, only about 7 percent of the senior population has purchased it. And virtually none of the boomers, which are the critical generation,' says Moses, president of the Seattle-based Center for Long-Term Care Financing, a nonprofit think tank.

"Long-term care policies are relatively new to the insurance market. The first . . . were limited mostly to nursing home coverage.

"Today, though, you can buy insurance that also covers assisted living centers, home care, adult day care and hospice care.

"Arguments for buying are compelling. Nine percent of seniors can expect to spend five years or more in a nursing home. And if you reach age 65, studies show you've got more than a 70 percent change of needing some kind of long-term care before you die. . . .

"With nursing home costs averaging $50,000 a year, many people won't be able to pay out of pocket for care. But don't count on Medicaid to pay for care, Moses warns. He argues that Medicaid, the government's long-term care system, has begun to collapse. Just look at the skyrocketing number of nursing home bankruptcies, he says.

"So why aren't people protecting themselves with an insurance policy?

"Denial, for starters. You figure you'll go quickly. Or your kids will care for you. Or you'll buy a policy eventually, but not now. Many people also believe, wrongly, that Medicare covers long-term care. In fact, it typically covers care for only a short time after a hospital stay. . . .

"Lillian Chapman . . . recalls her grandfather spending years in a nursing home after a stroke. She also watched her mother care for her father for nine years when a stroke disabled him at only 56. . . .

"That's why she and her husband, Phil, bought policies a few years ago, when she was just shy of 50.

"Her husband's policy is about $1,000 a year. Hers is a little less. Both cover institutional care as well as home care.

"'It's a lot of money,' she says, 'but I think the math works and it's a good buy.',/P>

"Moses, on the other hand, pays about $400 annually for a policy [purchased at age 50] that covers only [lifetime, $200 per day] nursing home and assisted- living care. . . .

"When you shop for a policy, don't look only at price. Instead, look at a company's financial ratings and its claims-paying history. . . .

"What will it take to convince boomers to buy the insurance? Maybe a tax deduction. In a new survey, 74 percent of respondents said they'd buy a policy if Congress made it fully deductible.

"Now, most people can't deduct premiums. But Congress is considering a more generous deduction."

Kudos to Pam Kelley and "The Charlotte Observer" for getting it right.