| by CARRIE
TEEGARDIN - Atlanta Journal-Constitution, author Most middle-class families wouldn't dream of going
without health insurance, homeowner's coverage or a life insurance policy. But when it
comes to long-term care --- a stay in a nursing home, say, or a move into assisted living
--- few have insurance and most think they don't need it. That's because many people
believe, mistakenly, they are already covered.
People who need nursing
home care for months or years often are shocked by the truth: They must pay for the care
themselves or they must turn to Medicaid, the government program for the poor. "The
public is confused," said Steve Moses, president of the Center for Long-Term Care
Financing, a nonprofit organization. "They don't know who pays for long-term care ---
Medicaid, Medicare or the tooth fairy." Half of baby boomers have given no thought to
how they will pay for long-term care if they need it, says the American Health Care
Association. And 85 percent can't name the program that pays the vast majority of nursing
home bills.
Reliance on Medicaid,
created as a safety-net program for the poor, pays the bills for 80 percent of Georgia's
nursing home residents. It has become the de facto insurance policy for nursing home care
for the nation. Here is what most people don't know about Medicaid: Your care must cost
more than you can afford. That means that, if you have savings, you have to spend most or
all of it before Medicaid will cover your bills. Even if your assets are exhausted, you
still have to turn over any retirement income, such as Social Security, to pay whatever
portion of your nursing home bill that income will cover. Medicaid will cover the rest.
All of this is a shock to
many who suddenly need nursing home care, said Rich Armentrout, the chief financial
officer for Presbyterian Homes of Georgia, a nonprofit corporation that operates nursing
homes and retirement communities. "We're viewed many times as the big, bad wolf
because the mindset of the individual is that if they do have any private assets, the mean
old nursing home wants to take everything they've got," Armentrout said. The public
has become so reliant on Medicaid that many estate planners recommend transferring an
elderly person's assets to children in advance. That way, the children still get an
inheritance --- rather than watching their parent's savings be swallowed up by nursing
home bills --- and the parent's long-term care needs are covered by Medicaid. (See Volume
II issue of Elder Life Planning News about the "Perils of Medicaid Planning" at www.elderlifeplanning.com).
This reliance on Medicaid
for long-term care has placed a huge burden on taxpayers. It has also contributed to the
poor quality of care in many nursing homes, because so many people are served by the
government program. In most states, Medicaid payments for nursing home care are relatively
low and the system is focused on keeping costs down, not on providing high-quality care.
If people started paying
for their own care, primarily through long-term care insurance, many of the problems in
long-term care would be solved, according to leaders in the nursing home industry and some
advocates for consumers. The burden on the public would be lessened and consumers with
private coverage would find more options for the kinds of care that Medicaid generally
does not cover. "If you want access to quality care in the private market at the most
appropriate level --- home care, assisted living, and nursing home care only as a last
resort --- you have to be able to pay privately, " Moses said. "That's the
message that hasn't gotten through to the public."
Martin K. Bayne, widely
recognized as one of the nation's leading authorities on long term care issues, has
written a dramatic illustration-from his own personal experience- of the value of owning a
long term care insurance policy.
"I purchased a
Lifetime Benefit long-term care policy at the age of 42. Premiums are less than $1,000/yr.
This year, at age 51, I went into claim to reimburse expenses associated with Early-Onset
Parkinson's Disease. Assuming I live until my life expectancy (not uncommon with PD), and
my policy pays its maximum benefit schedule, here's the final tabulation: I will have paid less than $9,000 in premium and
received more than $2,190,000 in reimbursed expenses."
Bayne adds "…
With rare exception, we don't "invest" our money in insurance; we purchase
insurance from a large risk pool, so that when we have to indemnify a contingent liability
(cover a future financial loss), the risk is diluted over the entire pool rather than just
one person.
But putting all that
gobbledygook aside for the moment, I can safely say that the purchase of my LTC insurance
was the wisest and most forward-thinking financial decision of my life."
Editor's note; For a User
friendly interactive Consumers Guide to Long Term Care Insurance go to www.elderlifeplanning.com and
you'll find a link on the home page. |
