Insurance Can Prevent Long-Term Nightmare Preparing For Old Age Early Can Help Avoid A Lot Of Misery Later

Even though he is only 58, retired periodontist Jack Saxonhouse, of Boca Raton, Fla., is a firm believer in long-term care insurance. He learned its importance in the worst way: from what happened to his mother.

“Five years ago, she broke her hip in New York,” Saxonhouse said. “She had no long-term coverage, and Medicare didn’t cover much at all.”

After seeing her spend thousands of dollars for care, Saxonhouse persuaded his parents to buy long-term care policies. But early last year, his 95-year-old mother canceled the insurance because of the cost. Then, she had to be hospitalized with heart trouble. That meant her husband, who has Alzheimer’s disease, had to be cared for at home by nurses and aides. That cost $1,100 a week.

“They’re still paying for some home care, and they’re paying through the nose,” said Saxonhouse, who holds long-term care insurance for himself and his wife. “They say they can afford it, but I fear that a serious illness could cost them a great deal of money.”

Not many Americans under 65 are thinking the way Saxonhouse does. Only 20 percent of the 5.8 million long-term care policies sold through mid-1999 are held by those under 65, according to the Health Insurance Association of America.

At a time when nursing homes can cost up to $50,000 a year, and home health care can eat away tens of thousands of dollars a year, long-term care insurance, even if pricey, can be a solid investment for those with assets they want to protect. It’s also a good investment for people who don’t want to become a financial burden to relatives.

Unlike other forms of insurance, in which policies are standardized or pretty straightforward, long-term care insurance is a complex product. Virtually every company’s policy differs on such matters as qualifications for coverage, when coverage kicks in, who determines eligibility for benefits, the amount of coverage, the term of the policy - and, of course, the premium. Even the most experienced agents can’t immediately answer every question from prospective buyers.

Some wonder why those who have Medicare and Medigap coverage, a Medicare HMO or can get Medicaid need a long-term care policy.

Medicare does not cover “homemaker services” unless a patient is homebound and also gets skilled care such as nursing or therapy. The homemaker services must relate to treatment of an illness or injury, and even then, only limited care is available each week.

Medicare supplements, or Medigap policies, do not cover long-term care costs, either. While some plans pay up to $1,600 a year for services for people recovering at home from illness, injury or surgery, recipients must qualify for Medicare-covered home health services.

Medicaid pays for nursing home care for the poor. Most people buy long-term care policies so they do not reach that level.

One crucial factor is having a good agent who sells a lot of long-term care policies. Agents who specialize in long-term care insurance have a lot of tips to help select a plan. But it’s a good idea to do some homework before contacting an agent. There are several books on the topic, as well as Internet sites. Be prepared to spend hours, days or weeks sorting it out. The outcome will be worth the effort.

Among the tips from agents:

If you can afford the coverage, the earlier you enroll the better.

In general, the cost of a policy purchased at age 60 will be two to three times as much at 70 and double again at 75. The younger you are, the lower the premium you’ll pay during the life of the plan.

Also, it’s a good idea to buy a policy before your health diminishes. There’s less chance you’ll be approved for long-term insurance if you’re already sick.

Pay attention to companies’ financial ratings, and seek firms that specialize in long-term care insurance. Also, make sure the agent represents several companies, so the policy can be tailored to your needs.

Find out who makes the decision about when someone is entitled to long-term care benefits. Such a determination often is based on whether a patient is unable to carry out specified acts of daily living, such as dressing and bathing, but there can be a difference of opinion.

“The best case is when your own personal physician, not the company doctor, can certify you need extended care,” Rubin said.

Think in terms of buying three years of coverage rather than a lifetime policy. You will save a significant amount of money, and usually will have an option to renew.

Don’t rely on friends for advice on what policy to buy.

“They’ve bought a policy and put it away in a filing cabinet. Chances are they don’t even know what coverage they have,” said agent Alan Cohen, of Boynton Beach, Fla.

Remember that home health care is a very important part of long-term care insurance.

“I never sell a benefit with less coverage for home health care than for nursing home care,” Cohen said. “Home health care is used 80 to 90 percent of the time when someone needs long-term care.”

Consider avoiding policies with elimination periods - often 20 to 100 days - meaning that benefits don’t kick in for that number of days after you begin receiving long-term care.

“Policies with elimination periods are cheaper, but what if you need long-term care for a month or two? With an elimination period, you might have to pay out of your pocket for all of the care,” Cohen said.

This sidebar appeared with the story: Long-term care Q&A

Here are some frequently asked questions about long-term care:

Q. What is long-term care? Doesn’t that mean a nursing home? A. Someone with a long-lasting physical illness, disability or cognitive impairment, such as Alzheimer’s disease, requires assistance for an extended period. This can include help with the activities of daily living, home health care, nursing home care and care in an assisted-living facility.

Q. Why consider long-term care insurance?

A. You should consider the insurance if you have significant assets and income to protect, and if you want to pay for your own care, rather than rely on the support of relatives.

Q. Under what circumstances would buying long-term care insurance be unwise?

A. You should not consider such insurance if you have limited assets and cannot afford the premiums.

Q. Are there standardized plans? How much will I pay a year?

A. There are no standardized plans, and the cost of coverage varies widely depending on the company, the plan’s quality and age of insured.

Q. What are “benefit triggers?” How are they activated?

A. “Benefit triggers” help a company decide when to pay benefits. This is an important part of the policy; look at it carefully. A key question: Who determines that long-term care is needed? Your doctor or the insurance company?

Q. How do I pick a company?

A. Select an insurance agent who specializes in long-term care policies. Then ask which firms are writing the most policies and which have strong financial ratings. Ask how often they’ve raised rates and how long they take to pay claims.

Q. What about benefits?

A. Ask your agent about the amount of daily benefits and how long benefits will continue for each type of long-term care. Does the policy have inflation protection? Is there an elimination period? (That is the waiting time before any benefits begin.) Q. How long should coverage last?

A. Many people buy policies for three or four years, and most of these plans are guaranteed renewable. Some people buy lifetime coverage, but that is much more expensive.

Q. What are some shopping tips for buying long-term insurance?

A. Do your homework, and don’t be afraid to ask questions. This type of insurance is highly complex. Check with several companies and agents. Then take your time and compare outlines of coverage. Make sure you know what the policy covers and what it doesn’t. Make an outline for yourself for reference.

Sources: Local insurance agents, National Association of Insurance Commissioners.