More Reasons to Beware L.T.C. Insurance

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The New Old Age | Caring and Coping

December 9, 2008, 6:00 am

More Reasons to Beware L.T.C. Insurance

By Jane Gross

http://newoldage.blogs.nytimes.com/2008/12/09/policyholders-at-risk/

Few subjects have generated more interest here than long-term care

insurance. And I’ve found myself both alarmed and amazed at how many of

you think that such a policy is the all-purpose solution to exorbitantly

expensive nursing homes, assisted living facilities, home health aides

and other forms of “custodial care’’ for the frail, demented or

otherwise incapacitated elderly.

My mother had such a policy, a new product in the 1970s and one that

looked very different from the policies of today. Because of her age

when we bought it, the annual premium was $7,000. I can’t recall how

many years we paid for it and prefer not to check my records to find

out. What good would it do me now? Leaving aside the eye-glazing

technical details, nothing she needed was covered. The policy gave me

peace of mind but otherwise was an utter waste of money.

Still, I have my own policy now, one of eight million Americans who do,

most bought by people in their 50s and 60s, for an average cost of

$1,950 a year. My annual premium is $1,700, and the benefits include

many things my mother’s didn’t, including home modification, a small

portion of the costs of assisted living (although not the apartment

itself), greater flexibility in the choice of home health aides,

inflation protection and other bells and whistles I can’t recall.

But, often I think about canceling it, because my gut tells me once the

huge baby boom cohort starts filing claims, not even the biggest players

in the field will be able to cover the costs. Laziness stops me, and the

drumbeat of opinion from my financial advisor, my friends and

colleagues, many of the eldercare lawyers and geriatric care managers

I’ve interviewed over the years — and now, also, from you, dear readers.

The consensus seems to be that any of us fortunate enough to be able to

afford a policy will be just fine.

But some formidable journalists are warning us otherwise. Last year, in

The Times, my colleague Duhigg reported that thousands of

policyholders, many with coverage from Conseco and Penn Treaty America,

two of the nation’s largest insurers, were finding it difficult, if not

impossible, to get their claims paid. A Congressional committee quickly

took up the issue.

And last week The Wall Street Journal’s Web site described a new problem

at Conseco, which, according to reporter M. P. McQueen, “dumped a chunk

of its long-term care policies into an independent trust, putting tens

of thousands of policyholders at risk of reduced benefits or big premium

increases.’’ Mr. McQueen writes that Conseco’s move came because the

policies were a “drag on earnings because they were underpriced and

required constant capital infusion to meet the long-term needs of

policyholders.’’

My repeated advice has been “buyer beware’’ when selecting a policy or

even deciding whether to buy one. Clearly, I’ve not been persuasive,

since comments come in almost every day from readers who consider these

policies a foolproof private sector solution to a growing public policy

crisis. So ignore my caveat emptors, which after all are based on little

more than my mother’s experience and my own neurosis. Instead, read the

stories by Mr. Duhigg and Mr. McQueen. They are way smarter than I am,

and their reporting is not based on a sample of two.

--

ne Holden, MS, RD

" Ask the Parkinson Dietitian " http://www.parkinson.org/

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