• A few days ago my dad called me with a big question.

    He’d received a notice from the university where he’s currently teaching: an offer to purchase long-term care insurance. He was looking for advice.

    Long-term care insurance is a product that helps provide for the cost oflong-term care beyond those covered by private health insurance, Medicare, or Medicaid.  Long-term care insurance is notoriously expensive – prohibitively expensive for most people who try to buy it after the age of 55. Premiums have skyrocketed 25-30% in the last five years, many former providers have left the market altogether, and those companies that have stayed in the market are jacking up premium prices right and left.

    Nevertheless, LTC insurance is widely considered the most important ingredient to economic security for American seniors. The annual cost of assisted living in the US is close to $42,000 per year, and nursing homes average over $86,000, according to recent statistics from Met Life.  That puts annual premiums of $3,000-$6,000 into perspective.

    For context, here are the options available to my dad through the university plan:

    Monthly cost:

    $156.02

    $208.04

    $364.06

    daily benefit:

    $150

    $200

    $350

    total coverage:

    $165,250

    $219,000

    $382,25

    My dad is 67 years old and semi-retired. His case is complicated by the fact that his main residence is outside of the United States, in the U.K., where he lives with my step-mom, a British citizen. They plan to live there throughout their retirement. My dad would only need long-term care in the U.S. if he outlives her, a scenario the LTC insurance option is forcing them to consider.

    “She says if I get the insurance then she’ll just ship me home to the U.S. if I ever need that kind of care,” he says lightly on the phone.  “So, do you think I should get it?”

    Looking for some answers, I went to a workshop on Long-Term Care Insurance organized by the Jewish Board of Family and Children’s Services Tuesday evening.  As expected, there are few straightforward answers – as with most insurance products, deciding on LTC insurance is basically a personal crapshoot. But I learned a few new things:

    1. If an insurance provider leaves the LTC insurance market, the policy must be transferred to another provider – so there’s no danger of paying premiums for policies that will be unilaterally cancelled when a provider backtracks.
    2. Insurance providers must apply to the state Department of Financial Services or equivalent in order to impose a major premium increase – again, it can’t be done unilaterally.

    3. In New York, the Department for the Aging’s Health Insurance Information, Counseling and Assistance Program (HIICAP) is dedicated to helping older New Yorkers better understand available health care coverage options, including Long Term Care Insurance. HIICAP’s Complete Guide to Health Care Coverage for Older New Yorkers can be downloaded here.

    4. Most LTC insurance policies provide coverage in states other than where the policy was purchased.  An exception to that is the  New York State Partnership for LTC Insurance, which allows New Yorkers to protect some or all of their assets, depending on the insurance plan purchased, if their long-term care needs extend beyond the period covered by their private insurance policy.

    5. The place to go for ratings of LTC insurance is AM Best, which is like the Kelly’s Blue Book of insurance products. Another good resource is the National Clearinghouse for Long-Term Care Information, which guides you through considerations and options in shopping for LTC insurance.

    Check out our other links & resources about LTC insurance & let us know what we’re missing.

    Read our other blog posts about LTC insurance;

    Retirement Planning for the Single Ladies, by Adina
    Can We Manage Long Term Care More Conscientiously? by Heather Bates

    For the experts out there, what do you think: should my dad buy this LTC insurance? Which option?

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    This entry was posted on Thursday, May 10th, 2012 at 1:14 pm and is filed under Communication & Planning, Policy & Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
  • 3 Comments

    Take a look at some of the responses we have had to this article.

    1. [...] with my dad about Long Term Care insurance. I’m still feeling conflicted about the choice (and seeking advice)- but at least we’re having the conversation and starting to make informed decisions as a [...]

    2. I think the question should be, would he be willing to take the risk of buying an insurance plan that he may not need. Yet, with studies that people of his age are likely to need long term care, his decision will lie on whether he want to be assured that when the time comes he’ll need it, he has a plan that can provide him coverage

      • Adina
        Aug 15th
        Reply

        Thanks for your comment Adam. Any other factors he should consider in choosing a policy?

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