"Get your Finances Ready for Retirement"-Long Term Care
Monday, February 09, 2009SUSIE GHARIB: The longer you live, the better the chances are that you'll need long-term care. Long-term care costs can really put a dent in your pocketbook. That's because they're generally not covered by Medicare. But there is long-term care insurance. So as we continue our series "Get your Finances Ready for Retirement," Connie Hicks has a buyers' guide.
CONNIE HICKS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Rona Bartelstone thinks of her family as a real-life commercial for long-term care insurance. Less than three years after buying a policy, her husband, Alan Markowitz, had a stroke at the age of 62. Among other things, the insurance helps pay for his health aide. Nearby, Rona's mother Hazel Canarick is getting care through the policy she bought more than 20 years ago. Without the policies, Bartelstone says the burden of care would have been difficult.
RONA BARTELSTONE, SR. V.P., CARE MANAGEMENT, SENIORBRIDGE: I don't know what would have happened because I'm not sure that I could have managed my business and my parent care issues and my husband all at the same time. So I'm really grateful for the insurance.
HICKS: Bartelstone should know. She arranges health care services for the elderly. For this family, long-term care insurance seems to be a good idea. But experts suggest that before you take out a policy, there are a number of things you want to consider. Among them: your family's health history, which could indicate the chances you'll need long-term care; and the type and length of the care you'd want after an injury or an illness. That's because long-term care insurance is expensive. The cost depends on what a policy covers, your age and whether you're in good health at the time of purchase. Marianne Harrison is president of the long term care division at John Hancock Insurance. She notes that at age 50, a healthy person might be able to get a policy for under $1,000, but...
MARIANNE HARRISON, JOHN HANCOCK INSURANCE: If you're 55 years old, that same policy would cost about $1,100. And if you're 65, it would cost you $2,000. So it really varies depending on your age.
HICKS: Still, having a policy doesn't necessarily mean the premium price will be locked in and it doesn't ensure benefits will be adjusted for inflation. Those guarantees often are sold as extras or riders to a policy, which can add to the cost by 5 to 50 percent. Insurance agent Tobe Gerard thinks long-term care insurance is worth it if you have financial assets to protect.
TOBE GERARD, PRES., TOBE GERARD INSURANCE: You want to transfer the risk to the insurance company as opposed to dipping into everything you saved for your whole life: your 401(k) or you 403(b), your pension, your IRA, your cash value in life insurance. That's really where you would have to go if you needed to find care. So it's a lot easier to pay the premiums for the rest of the insurance company.
HICKS: And long-term care specialist Jay Zandell says the cost of the insurance needs to be weighed against the alternative.
JAY ZANDELL, Z-PLANNING GROUP: What's more expensive to you, writing a check for $5,000 to $6,000 a month as long-term care costs or writing a check to an insurance company for $5,000 a year? What's more expensive?
HICKS: But if you're struggling to make ends meet and have few assets to protect, long-term care insurance may not pay. In that case, you might qualify for state-run Medicaid. If so that would pick up the tab for long- term care when your assets run out. But Rona Bartelstone notes Medicaid has major limitations.
BARTELSTONE: Medicaid is not a great option if you, unless you absolutely need it, because you lose control of where and how you get your care. And I didn't want that to happen to either my mother or husband or God forbid myself sometime in the future.
HICKS: The bottom line: long-term care insurance is expensive; not having it means taking some major risks. Either way, be sure to have a plan to deal with the costs of long-term care should you need it. Connie Hicks, NIGHTLY BUSINESS REPORT.
