YONKERS, NY - How can I help care for my aging parents? How should I plan for my own old age? Whether long-term-care insurance is a realistic answer to these questions is the subject of a major investigative report in the October issue of Consumer Reports. The article, "How Will You Pay For Your Old Age?" gives consumers questions to ask and answers they need before deciding - and rates 114 policies to provide the most comprehensive guide to long-term-care insurance available.
Half of all women and a third of all men who are now 65 will spend their last years in a nursing home at a cost of $40,000 a year. Medicaid will pay the bill for those willing to first "spend down" all their assets. Not surprisingly, however, many Americans balk at forfeiting a life's savings to qualify for Medicaid and living their last years in poverty. Others want to leave something for children or grandchildren. For them, long-term-care insurance is an option.
Consumer Reports Looks at
Medicaid, and the Insurance Policies.
Because long-term-care insurance is a complex product that many consumers do not fully understand, Consumer Reports divides the issue into manageable sections with questions and worksheets consumers can use to decide what to look for-and what to insist on-in a policy.
| The section What Can You Expect from Medicaid? includes a worksheet for figuring the assets a single person or couple can keep and still qualify for Medicaid, which varies from state to state. |
| How should you judge a policy provides advice on how to identify the (usually expensive) features a policy must include for the buyer to avoid a "spenddown." |
| Ratings of 114 policies for overall cost,
value and flexibility. Consumer Reports read the fine print. |
Long term-care insurance is not for everyone. Consumer Reports advises against it for those who qualify for Medicaid or will qualify soon after entering a nursing home. Nor is it for those who can afford to set aside roughly $160,000 or more for their care and still have enough left over to provide for their spouse. However, for the majority of non-rich, non-poor Americans between these income extremes, long-term-care insurance is an option worth considering.
Consumer Reports found that the best
policies-giving the best bet against "spenddown"-are expensive (i.e., likely to
cost a sixty-five year-old couple about $3500 annually) because they contain these
features:
| Inflation protection. Compounded five percent inflation coverage is the single most important element any policy can offer given inflation in nursing home costs, though it may increase the price by up to 70% at some ages. |
| An Adequate Daily Benefit. Daily benefits, varying from $20 to $300 per day will determine your premium, and it is vital to choose a benefit at least as high as the average price of nursing homes in your area. The daily benefit for home care is typically half that for nursing home care, but policies vary. |
| An Adequate Benefit Period. Because you don't know how long a nursing-home stay will last, and because lifetime coverage is expensive, you might need to play the odds with a four or five-year benefit. |
| An Affordable Elimination Period. Long-term-care policies have "elimination periods," the first 20 to 100 days of care you must pay for yourself. The longer the period, the lower the premium -- but don't let a low premium tempt you into a policy with a long elimination period, or you may end up spending everything anyway. |
| Flexible Benefits Triggers. Policies that require you to fail only one or two of a long list of "activities of daily living" to trigger benefits are better, especially if the list includes bathing, the activity a disabled person is most likely to need help with. |
| Flexibility of Location. A policy should provide coverage in a variety of care settings, either a nursing home or an assisted living facility, a term defined differently from policy to policy. |
Consumer Reports recommends that those considering coverage purchase it by age 65, or sooner if a medical condition, such as diabetes, could worsen and make you uninsurable. Coverage is much more expensive after 65.
The October issue of Consumer Reports, copies of the full report covered in this release will also be available by fax or mail starting September 30, under code number 9612 via Consumer Reports by Request, 1-800-419-9824, at a cost of $7.75 per report.
