Long-Term Thinking

Do you ever have something that keeps popping into your mind and you just can’t stop thinking about it? Things that come in threes really get my attention, and three things got me thinking about long-term care insurance this week.

First, my husband just received his annual update on his Federal Long-Term Care Insurance Program. It shows the new daily benefit amount, factoring in the 4 percent inflation adjustment he chose when he purchased the policy. I just checked the chart using the online inflation option tool and learned that when my husband is 85 years old, his $200 daily benefit amount (now $208 thanks to the 4 percent adjustment) will be worth $649 a day. This actually may not be enough to cover the full cost of care in a nursing home 30 years from now, but it certainly will help.

Even if my husband only needs care at home with me as the primary caregiver, I now know that I won’t be on my own. I can use this coverage to hire a caregiver to help out. I’m thankful that my husband decided to buy this protection -- and I did the same thing for him. It’s a gift to our children, too, since if we are not around to take care of each other when the time comes, the money will provide some relief to our children who are next in line to assume the role of primary caregiver.

But what if neither of us ever needs long-term care? That would be wonderful to me. That’s the way insurance works. Everyone pays in, but not everyone gets a benefit, so the money can be pooled and used for the claims that do have to be paid. In 2010, there were 2.5 million admissions to skilled nursing facilities in the United States. Many of these were for short rehabilitation stays after an illness or injury, but in some cases, these patients didn’t make a full recovery and needed assistance at home or in a facility.

Under the Hood

The second thing that brought this topic to mind was the 2012 Benefits Roundup conference in Dallas I wrote about last week. At the conference, Paul Forte, chief executive officer of Long Term Care Partners, which operates the Federal Long-Term Care Insurance Program under contract with the Office of Personnel Management, gave a very interesting presentation in which he compared the purchase of long-term care insurance to buying a car. When buying a vehicle, he said, it’s easy to be drawn to the cool features on the dashboard -- the gauges, the navigation system and the stereo. But you need to look under the hood to be sure the car will run smoothly and hold up over time.

The same is true of long-term care insurance, Forte said. Many people look at the daily benefit amount, the inflation protection options and the price, but fail to look under the hood. How stable is the company providing the benefit? How many people are insured by the company? How are investments protected? Here is a worksheet highlighting some of those “under the hood” qualities of the FLTCIP that you can use to compare with other policies you may be considering.

Cost Considerations

The third thing that made me think about long-term care insurance was Jane Bryant Quinn’s “Financially Speaking” column in AARP Bulletin this month. She wrote that despite the rising cost of such insurance, it’s a sound decision for those who can afford it. Without it, they may face extremely high bills for long-term care.

For increasing numbers of people, the cost of long-term care protection is out of reach. And for others, pre-existing conditions make it impossible to get such insurance. There are other options -- such as relying on Medicaid, self-insuring or hoping that family members will provide care. But remember, most federal employees retiring today will not meet the income and asset limits to be considered poor enough to qualify for Medicaid.

My husband and I have chosen long-term care coverage that will help us out if we need it. It probably won’t cover the full cost of lengthy care -- luckily, we have other resources to fill gaps if necessary -- but for us, it’s an important security blanket.

The National Institute of Transition Planning, Inc., contracts with Long Term Care Partners to produce content related to long-term care issues.