Long Term Health Insurance

Gains in life expectancy and rising health-care costs are prompting more Americans to consider long-term care insurance. Such insurance covers the cost of extended nursing care, either in an institution or in the home.

By the year 2000, 7.5 million Americans aged 65 or older will need some form of long-term care. Paying for this care will require considerable resources- perhaps $50,000 to $100,000 for those retiring in the year 2000. That's why planning ahead for long-term care makes sound financial sense.

Common Misconceptions

Most elderly people, when asked by the American Association of Retired Persons how they would pay for long-term care, responded that Medicare would cover the cost. Unfortunately, they were wrong.

Medicare does not cover long-term care. It pays for some nursing and home health-care expenses, but these must be medically related and short-term in nature.

Medicare supplemental insurance (Medigap) does not pay for long-term care and Medicaid, the welfare program that does cover long-term care, requires recipients to "spend down" to the poverty level before becoming eligible.

In addition, as of January 1,1997 it is a federal crime to transfer money to become eligible for Medicaid.

Nursing Home Insurance

At an average cost of $3,000 a month, nursing home care can be an enormous financial burden.

But private insurance can help. Most long-term care policies cover the cost of skilled, intermediate or custodial care. Almost all pay a fixed dollar amount per day. You select the benefit level you want, typically ranging from $40 to more than $100 per day, and the waiting period you desire. Premiums are based on your age when buying the policy and the benefits you choose.

At-Home Care

Newer, more comprehensive long-term care policies will also pay the cost of care at home for people who might otherwise have to enter a nursing home.

These policies cover at-home services ranging from dressing and bathing to housekeeping and shopping. And usually, no prior admission at a hospital or nursing home is required.

What to Ask

If you're interested in buying long-term care coverage, whether as an ordinary policy or as a rider on an existing life policy, talk to your life or health insurance agent. If it's offered in your state, here are some questions to ask:

* How much are the daily benefits? For how long? * When do benefits begin? (Is there a waiting period during which you will have to cover all cost?) * What is covered, and are any conditions excluded? Is there a prior hospitalization requirement? * Are benefits sensitive to inflation? Will they rise as long-term care cost increase, or do they remain level? Will premiums remain level as you grow older? * Are premiums waived while you are in a nursing home? * Is the policy guaranteed renewable?

Where To Get Information

A professional life or health insurance agent can provide you with valuable information on long-term care policies. You may also wish to check with your state insurance department. Or you can contact the National Association of Insurance Commissioners, 120 W. 12th Street, Suite 1100, Kansas City, MO 64105, and ask for the " Shopper's Guide to Long-Term Care Insurance."

Another source is the National Insurance Consumer Helpline, (800) 942-4242, which provides information on all lines of insurance. In addition, some communities have Senior Citizen Health Insurance Counseling (SCHIC) programs to help the elderly assess their insurance needs. Your local life underwriters association or area agency on aging should be able to provide you with information about SCHIC.

A Few Buying Tips

If an agent recommends a policy to you, make sure to ask for the policy's "outline of coverage," which will summarize its benefits and limitations.

It is also a good idea to make sure the policy provides a 30-day free-look period during which it can be returned for any reason and you will receive a premium refund.

Ask a member of a life underwriters association or the Association of Health Insurance Agents for specific information about long-term care insurance.

This information is provided by The National Association of Life Underwriters.

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