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Get On The Good Foot

February 1, 2007

 We lost several greats in 2006: James, Brown, Gerald Levert, Bebe Moore Campbell, and Ed Bradley.   Even in my personal life, I lost an unbelievable friend; John W. Jones, General Counsel of Radio One (may he rest in peace).   With loss comes a lot of reflection.   It might not be on your mind, but consider that, “One Day You’re Gonna Be Old” (the late, Lou Rawls 1966).   Over the next few weeks, I’m bringing you tips on various types of insurance.   This week, I’m talking about Long-Term Care Insurance.  

      Have you given any thought to long-term care insurance?   Do you think the federal government will have your back in your old age?   Think again.   Consider this:  

· Women in the United States are far more likely than men to need long-term care — 3 out of 4 nursing home residents are women.

· Long-term care isn’t just for the elderly.   40% of those that are functionally impaired are between the ages of 18 and 65.

· The cost of one year’s stay in a nursing home ranges from $30,000 to $110,000, and the annual costs for limited care at home start at $36,000 and go up from there.

      “Many people rely on their savings and their kids, but these resources will dry up quickly,” says Annette Allen, LUTCF, CSA, insurance specialist and owner of Wellington Newport, California-based T.A.G. Insurance Services, LLC. “I’ve seen cases where people have to quit their jobs to take care of a sick loved one; causing serious stress and financial hardship for the caregiver.”

      Allen adds that people also assume that government programs will pay for their long-term care.   This means people are relying on Medicare and/or Medicaid. Allen explains that there are several reasons why this won’t work for the masses.

      Although Medicaid pays almost half of the nation’s nursing home bills, to qualify you must meet the federal poverty guidelines. “Poor” means you can’t own anything of real value. If you own a house and a car, you probably don’t qualify.   Next, if you’re renting and living paycheck-to-paycheck, you still aren’t poor if you have more than $100 in your checking account and $50 in your monthly savings account.   So, if you can afford to get your hair and nails done at least once a month, you probably don’t qualify!  

      How about Medicare?   Well, Medicare pays for only 7% of residents at assisted living facilities. Why is the number of people getting this aide so low?   Because Medicare has a very limited amount of days that it will pay for custodial care.  

      Finally, even if you somehow got coverage, we’re not talking the Ritz Carlton here.   Allen adds, “Medicaid facilities can be far from your home and may not be up to standards that you’re used to.”  

      The bottom line:   When you need custodial care the most, whether that be due to old age, a disability or other impairment, your choices are either to shoot through your savings account, or rely on the help of friends and relatives.   This is certainly not how you are used to living, and it can have you singing “Good Morning Heartache” (Jill Scott 2006, Billy Holiday 1944).    

      Long-term care insurance can help alleviate this pressure.   It gives you the dignity of choice and the funds available so you have options. You will need to talk to an insurance professional; but make sure that person has the specific background in long-term care insurance.  

      Also, from a financial standpoint, it’s a no-brainer.   Considering that long-term care costs an average of $54,000 a year to stay in a nursing home, and about $43,000 a year for care at your house (this is in today’s dollar), imagine what it will be like once you need it.   Do you even have enough money now to cover this?  Next, consider that the cost of a policy can be a low as a couple hundred dollars a year. Of course, this will depend on factors like:

§ age,

§ the level of benefits you desire (“$100 a day for 5 years versus $50 a day for 3 years),

§ the length of time you are willing to wait until the benefits begin. ( i.e.,  a 90-day deductible), and/or

§ the state you live in.  

      Allen explains, “It’s best to get insured while you are young and still healthy. The rate at which you purchase the long term care insurance policy is locked for life, and you can start with a partial plan and increase later as necessary.”  

      She adds that in addition to looking for your own policy, you may also want to check into a policy for your parents particularly if you know that you will be their primary caregiver.  

      The next time you start going “Back Down Memory Lane” (Minnie Riperton 1979), consider how much fonder these memories will be if your standard of living is intact.   Long-term care insurance allows you to receive the care you need at home; after all Allen says, “people are more, comfortable receiving care at home for one simple reason – it’s where they’d rather be.”   For more information and to get quotes, see the following websites.

Originally published for Lee Bailey’s EUR Web.

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