Long-Term Care Insurance

It comes as a shock to many families to learn that neither Medicare nor their private health insurance will pay for long-term nursing-home or in-home care. Yet, without some assistance many families are not able to care for their loved ones at home. Medicaid will sometimes pay for long-term nursing home care but the care recipient must first spend down his or her own assets. Even then, relying on Medicaid often means that one ends up sharing a room or going to a facility that is miles from home.

We interviewed Phyllis Shelton, resident of LTC Consultants, a Nashville-based company that specializes in long-term care insurance training and marketing material.

What are the chances a given individual will need long-term care?
Believe it or not, the odds are greater than 50% -- more than one out of two -- that any of us will need some kind of long-term care. It might be just a few weeks for one person but for the next one, it could be 15 or 20 years. It's a risk. And that's what insurance does -- protects against risk.

But what if I pay premiums on long-term care insurance and never need it?
What if you pay the premiums on your car insurance for years but never have a serious accident? Wouldn't you consider yourself lucky? Insurance is there to protect us in the event that we need it. The probability that we'll need long-term care is much greater than the probability that we'll have a serious accident.

So why do so few people have long-term care insurance?
There are a couple of myths about LTC insurance that dissuade many who should have it. One is that it's "nursing home" insurance and the other is that long-term care insurance is basically something that older people should have.

First of all, it's the opposite of "nursing home insurance." Long-term care insurance can help you keep your independence and stay out of nursing homes. It will pay for home health care, adult day care and other services that can enable you to live independently and with dignity.

The other big myth about long-term care insurance is that it's just for old people. In fact, 40 percent of those who need long-term care are in the 18-to-64 range -- people like Christopher Reeves and Michael J. Fox. If we're lucky, we may need a few months or a few years of chronic care when we're really, really old. If we're unlucky and we're injured in an accident or we come down with a chronic disease, we may need it for a lifetime.

Long-term care insurance has a reputation of being complicated
It is more complex than many other types of insurance, no question. But it has been getting simpler over the last few years. Also, there are more options for home health care, more conditions being covered and so forth.

How it all works along with a quick guide for customizing a plan for yourself is found in Chapter 2 of my book, Long-Term Care: Your Financial Planning Guide.

More about long-term care planning (outside links) ...

• Questions & Answers. For help in penetrating the confusing thicket of health-care options, we interviewed Phyllis Shelton, a leading authority on long-term care insurance.
• Federal Long Term Care Insurance Program The federal government now provides long-term care insurance to its employees.
• Avoiding Fraud When Buying Long-Term Care Insurance The Consumer Law Page summarizes the risks and benefits of shopping for LTC insurance.