Long-Term Care Insurance: Providing Choices When we Need Them the Most

By Brona Pinnolis, C.2009 All Rights Reserved

Does this scene sound familiar? You and your husband decide to meet with a financial advisor to plan for the future. During the conversation, the advisor asks about how you expect to take care of yourselves when you become incapacitated and suggests looking at long term care insurance. “What is that?” you may ask. The advisor explains that long term care is “wealth insurance,” providing income to cover nursing home care or home assistance when you become unable to care for yourself, without regard to the size of your nest egg. Your husband turns to you and says, “Honey, we don’t need that. We’ll take care of each other.”

Such a noble sentiment, one lived out in reality by countless women who care for their spouses during the spouses’ disabilities and final illnesses. But here’s the thing: It’s very easy for a man to say, “We don’t need that,” because his long term care insurance sleeps next to him every night! He wants to stay home instead of going to a nursing home? Not always possible if you are physically unable to handle his weight and size. Paying for extra help to keep him home? You have no choice but to use your personal resources.

What happens when it’s your turn? We all know women live longer than men, about five years longer according to government statistics. So you’ve cared for your spouse and now he’s gone. Are there any resources left over for you to live on for the next five, ten, even 20 years, much less pay for your own end-of-life care? Do you want to spend all you money, leaving nothing as a legacy for your family or other meaningful causes? So, ladies, what about you? What about your mothers?

Let’s take a brief look at the numbers. Average costs of a skilled nursing facility run about $60,000-$75,000 per year. These numbers are not necessarily a one price covers all, as there may be additional charges depending on the fee structure of the particular facility. Average prices of unskilled home aide assistants range from $15-30 per hour (through an agency), times up to 24 hours per day. At $20 per hour, round the clock care could cost more than $175,000 per year. If the aide was coming in the home only 10 hours a day the annual cost could mount to $73,000. It’s easy to see how end-of-life costs plow most people under and they end up in Medicaid facilities with the government paying the tab.

Long term care insurance is really choice insurance. If and when the point comes in your life that you are unable to do the so-called Activities of Daily Living (ADL’s)—and your physician certifies your inability, long term care insurance covers having someone help with those needs. Depending on the specific policy, LTCI can provide a monthly or weekly benefit for in-home aides. These aides can be qualified to help with meals, cleaning, companionship, bathing, dressing, toileting or remembering to take medication. They can be there to make sure the stove is unplugged if necessary or help you take a walk. In other words, LTCI can provide just the level of help you need to stay home if you want for as long as possible. As stated above, this type of help doesn’t come cheap. That’s why many more people than would like to end up in nursing home facilities, where government benefit programs like Medicaid pay the freight if you can’t afford it otherwise.

LTCI also covers, up to the limit you decide to buy, skilled nursing home care or even assisted living. Again, qualifying for coverage depends on your ability to care for yourself and a doctor’s certification of the need for the care. And let’s face it: there is a wide variety in the quality of care out there in nursing home land. Just ask any friend who’s been down that road with their parents. Many families want to hire private aides for their loved ones even when in a nursing home because of the chronic lack of attention too often seen in some of these facilities. Ever wonder why there seems to be a whole new niche in personal injury law advertising devoted to nursing home neglect? Remember, those lawyers have to win their cases to make money. LTCI can help stave off the need for a facility, can get you higher quality care and can help you stay where you are most comfortable for a longer period of time.

Like any other insurance, you may or may not end up using it. We buy homeowner’s insurance and may never make a claim but it is there if we are unlucky enough to have a house fire. We buy automobile insurance in the hopes we never make a claim on it. We buy trip insurance in case we have to cancel a flight. LTCI is no different and you may feel the same way about it…hope you never use it, live a long, lucid and active life up to the moment you go to sleep one night and never wake up. Of course, reality is different for most people, who do become ill from cancer, stroke, diabetes, heart disease, dementia, Alzheimer’s, chronic respiratory disease, or just plain frailty. Let’s face it. Everyone dies from something.

For many people, there is an end-of-life reality that is not easy. LTCI can help ease this period of time both for you and the family around you. It is not a panacea. There are limits in the lifelong benefit you purchase and the number of years. The more you want, the more costly the policy. And this type of insurance has a higher premium profile than you may be used to seeing. Why? Because most people who have made it into their 50s have a pretty good chance of living into old age, with all that it brings, so there is a higher chance of payout for the insurance company. Rates, thus, reflect that reality. Some people feel they can self-insure, i.e., not buy the policy, stick the premiums they would have paid into an investment account, and use that account as a resource when the need arises. Your financial advisor can run a self-pay illustration to show how far that can take you versus the reality of two to three years in a nursing facility.

Many of you may have dealt with or are dealing with these very issues with our elderly parents. That first-hand experience with the ins and outs of Social Security, Medicare, Medicaid spend down requirements, finding good care, worrying about what your parent may be doing in their condo alone, all is invaluable in planning for our own futures. It’s one more lesson we can learn from our parents. Having an opportunity to create more options for our own end-of-life needs…that is why I call Long Term Care Insurance, “Choice” insurance.


This article is an excerpt from the upcoming book, "Women, Money & Cheesecake: A New Way to Talk about Money." It first appeared on the web at womenetcetera.com in July, 2008.