A Checklist of 15 Questions to Ask When Shopping for Long Term Care Insurance

Why Long Term Care Insurance?

Every now and then I derive a devilish enjoyment from alerting younger people (say, under 55 years) that the two most complicated phases of my life were, by far: (1) the hour I was born, and (2) the year I turned 65.  Really.  Our Western culture and educational systems, such as family, public school, college, church, Boy Scouts, good ole Aunt Matilda, (you name it), nothing comes close to arming us for the battle with aging.  

But, heck, just being old isn't bad.  In fact, it's been a fine ride so far.  I love it.  But something about that magic "65" just unleashes a perfect storm of new, complex planning dilemmas and decisions:  Medicare.  Taxes.  Health insurance.  Social Security.  Body parts.  Prescription drug interactions. Estate planning.  AARP junk mail.

And top on the list of complications (with Medicare a close second), is the challenge of figuring out which long term care insurance coverage to buy, who to buy it from, when to start buying it, and on and on and on.   Ya know?...I'd rank the life-quiz for long term care insurance right up there with my college final exams in nuclear physics and computational statistics.

So with that context, let me offer some help, or at least a nudge to get this addressed for yourself and your family somewhere around your 55th birthday.  Or much earlier.  But not much later.  If you wait too long, you will very likely be faced with the problem that you may need to find a nursing home in a hurry without much time to plan or finance it. 

And I'll say, too, that I am not an expert.  In fact, I just can't imagine how anyone could claim to be a true "expert" when it comes to long term care insurance.  You just kinda want to minimize the "aggregate damage of omission".  

However, I've recently learned of one rare individual who comes about as close as we should want to a being an expert in Long Term Care Insurance.  That is Mr. Skip Frenzel, a Senior Specialist at Agape Long Term Care.  Skip has a great depth of knowledge, for which he has been designated a Certified Senior Advisor and a Certified Financial Planner.

It's no wonder that only about 1/10th of our older people have covered themselves for long term care, even though almost half of us will wind up in a nursing home at some point.  That is not insignificant when we consider that my father-in-law pays around $90,000 per year for his skilled-nursing private room in one of the nursing homes in Rapid City, Sturgis, Hermosa, New Underwood area.  And the national average is around $75,000 and up.

What Is Long Term Care Insurance?

It is not simply "nursing home insurance."  Far broader, it is generally for long term illnesses, a disabillity, or diminished cognition, and may cover some or all costs for in-home care, partial-day care, assisted living community or a nursing home, or a mix of those.

There is no way for anything less than a book-length document to cover all the planning and decision aspects.  So in this blog I'll just focus on a set of basic questions to ask when comparing long term care policies (and start learning how to assess the answers you get back).  I'd like to give great credit to an article I read in my latest Journal of Financial Planning.  In an extremely informative article by Dr. Karyn Neuhauser, a CPA and finance professor, you will find a wealth of facts, as well as a checklist that suggests the questions in this blog.

15 Questions to Ask in Reviews of Long Term Care Insurance

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1. What does it pay, for nursing home, assisted living, in-home?
2. How long does it cover each of those?
3. How long is the delay before coverage begins (each time)?
4. What are the maximum lifetime benefits?
5. Premium cost per year, with various options and riders
6. Is it "tax qualified"? At least partially ignored by IRS.
7. What are the guarantees of renewability?
8. How are benefits pegged to actual costs, or not?
9. Does it cover things like home safety devices, wheelchair,...?
10. What are the pre-existing conditions coverages
11. Are mental conditions such as Alzheimer's covered?
12. What patient-assessments, physician-certifications, prior-treatments are required?
13. Once benefits start, are premiums waved?
14. Which add-on optional provisions are available?
15. What is the financial health of the insurer?

Summary

As Dr. Neuhauser says, this "is the most neglected aspect of retirement planning".  I have to confess, it's been so long since my wife talked me in to long term care coverage (ten years ago, fortunately) that now I need to go back and use these questions to review my own policy.  I just can't express enough, how much peace of mind it brings me, that my wife talked me in to buying long term care insurance for us both, back when I was 57.  I hope you will consider doing the same.  And I hope you persuade at least one other person you know, to read this blog and consider it for themselves.

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