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By John M. Bigler This month I'd like to revisit the subject of long term insurance. It's become increasingly popular with seniors and is something that should be looked at carefully by those people who don't have a medical condition which would make them ineligible and who have assets and/or income that make the policy affordable.
There are two important considerations for long term care: Is it affordable? And what's the quality of the policy? If an individual or a couple have less than $200,000 (apart from their home) and don't have unusually high income such as a teacher's pension, then I'd advise them against a long-term-care policy. In such a case, I believe the premiums are simply too expensive and individuals in that situation would be best off looking at Medicaid planning. If the couple or an individual have significantly more assets, then they might consider the possibility of self insuring and investing their assets to get as great a profit as possible. The key question for anybody considering insurance is simply: Is the premium for this policy an affordable expense? For those people who have more than roughly $200,000 in liquid assets, that is the question. If an individual or couple find that the premiums are acceptable, then the question is what type of benefits to look for in a policy. Long-term care policies typically have two requirements before benefits are paid. The first is an inability to perform a specified number of up to six "activities of daily living" or ADLs. These include bathing, dressing, eating, transferring, toileting and incontinence. An individual must also have a medical condition requiring long-term care or a cognitive impairment that requires supervision. The typical policy will require that a client must be unable to perform some number of the ADLs. A good policy will require an inability to perform two ADLs and the more restrictive policy will require an inability to perform at least three ADLs. A hidden issue is whether bathing and transferring are on the list. If a policy doesn't list all six ADLs, then the fact that it requires an inability to perform only two may be misleading. Bathing and transferring are typically two of the first things that become difficult to do, but if they aren't listed, then the policy will not be affected. A second requirement is how "medical condition" or "cognitive impairment" are defined. Who will make the decision as to whether a person meets the requirement? Ideally, the client's treating physician will make the decision. There is always a concern that a gatekeeper for the insurance company will make the decision and that decision may be an excuse for the insurance company to deny coverage. Another key question is for how long a period a client should purchase coverage. Although coverage for a lifetime is ideal, it is typically very expensive. Applicants should have a minimum of three years of coverage so that Medicaid planning could be undertaken at the time the benefits of the policy commence and planning could be accomplished within the three-year period. Another question is the elimination period, which is a waiting period during which an insured pays his or her costs before the policy kicks in. The longer the waiting period, the lower the premium. I normally suggest 100 days so that if a person enters a nursing home from at least a three-day hospital stay, it will be possible for that person to obtain Medicare coverage the first 100 days in the nursing home. Another key question is the amount of daily benefit once the policy benefits trigger. Long Island has the distinction of having the most expensive nursing homes in the country. The typical cost is approaching $300 per day. I advise applicants to have policies to cover them for at least $200 per day and possibly $250. This way, the policy along with income can meet the cost of the nursing home. There should also be inflation protection because it does not appear that the cost of the nursing home is going to decrease. Other considerations are whether or not the policy premiums can be deducted as a medical expense under federal guidelines. Also, it's always a good idea to check the financial ratings of the company selling the policy. In New York, we have strict requirements for insurance companies, so the danger is not as great as it might be in other states in purchasing a policy from a less than a reputable company. The bottom line: If the insurance is affordable, it could be a fine way to avoid Medicaid planning with all its negative implications. I advise shopping around. Insurance brokers are only too happy to meet with you and give you detailed information. Also, have your attorney review the policy before making any commitments. I typically advise my clients that the coverage they have is not enough and that it should be broader. Reprinted with permission of the Suffolk Times © 2000 [ Contact Us ] [ Guestbook ] [ Email ]  The Law Offices of John M. Bigler, Attorney At Law 1421 Wantagh Avenue, Wantagh, New York 11793-2206 1-888-ELDER-LAW · 516-409-6565 · Fax: 516-409-6522 E-Mail: info@biglerlaw.com · Web Site: www.biglerlaw.com |
There are many benefits to long term insurance, but it's not for everyone. The policies are erroneously described as nursing home insurance policies, but they could just as easily be described as staying out of the nursing home policies. In addition to covering a stay in a nursing home, the current policies also have very good community coverage. They can pay for home health aides to come to the home as well as for adult day care. They can also pay for assisted-living facilities which are becoming increasingly popular. These facilities aren't medical institutions and so are not covered by Medicaid, but the cost can be covered under the insurance policies.