The Advantages Of Purchasing Long Term Care Insurance

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grandmother-comforting-granddaughterI remember the last years of my grandmother. Before she lost her ability to walk, she would walk down steep steps with a bad hip that severely needed replacing. She would have to start the journey down the stairs around 3:00am in order to get downstairs by 4:00am.  Why would she go down so early…to make the Sunday dinner of course! Her hands were so impacted by arthritis she could hardly hold the spatula to stir the macaroni and cheese.  Due to the lack of feeling in her hands, she would be burned repeatedly but would never know until someone else noticed the scare. As hard as it was for her to cook that meal…nothing could stop her from doing for her family.

My other grandmother was the same. My last memory of her was her lying in a hospital bed hardly able to open her eyes. Upon the sound of my voice she used her last bit of strength to open her eyes, look into mine, and mouth the words “I love you”.

Where would I be without their knowledge, wisdom, strength, and never waning desire to take care of their family until the day they met their maker?

“Respect for your elders” seems to be a term that nowadays is taken very lightly.  A study done by the minority staff of the Special Investigations Division found that 1 out of 3 nursing homes were cited for abuse over a two year period.  Recently, according to government figures, one out of every four nursing homes every year is cited for causing the death or serious injury to a resident.  A CBS analysis of the federal government’s nursing home inspection database found that more than 1,000 homes were cited recently for hiring staff with a history of abuse.

I could go on and on finding figures that would support that many of our elderly are treated with low regard or respect.  Where have we come as a nation where we can’t show the utmost regard to those that have paved the way before us?  I refer to the Bible that states:

Likewise, ye younger, submit yourselves unto the elder.  Yea, all of you be subject one to another, and be clothed with humility: for God resisteth the proud, and giveth grace to the humble. 1 Peter 5:5

This is our duty to submit to our elders, and to tend to their needs.  They have worked and molded our society, and deserve better than to be thrown into a random nursing home to wither and die.  This is more than a moral decision, but is a financial decision as well.  There are many out there who are put into these low conditioned nursing homes not because of choice, but because of the failure to adequately plan. (I am not saying that all nursing homes are bad, for there are many which are highly qualified.  You must take the time to research the home in which you choose.  Make sure that it will provide the appropriate care and a happy, comfortable living environment for your loved one.)

Why do we budget, plan, save, and try to be sound financial stewards?  There are only two reasons to invest.  Family/community responsibility, and to allocate for future needs (both planned and unplanned future needs).  Your parents and the elders that you love and care for fit into this category.  We must consider their needs in our plans for the future, should their resources ever fall short.

How do we do this?  Well the most common way is to purchase a Long Term Care (LTC) policy.  With medical care getting better and better, many individuals are living beyond their 90s.  However, increased life expectancy does not mean that many older individuals do not have serious health problems, because many do.  An LTC policy pays for the kind of care that is needed by individuals who have chronic illnesses or disabilities.  They can cover the cost of nursing home care, and even provide coverage for home-based care.  Unless you have upwards of $60,000 that you can afford to spend annually on a nursing home (average period of stay is three years), then you will benefit from this type of policy. (The average cost for nursing home confinement is about $3,300 per month, and can be as high as $5,000 per month.  These figures are going to continue to increase.)

Medicare is a viable option for this care as well; however, you must know that there are certain expenses that are not covered under Medicare or there supplement policies.  Medicare will cover nursing home care only if it is part of the treatment for a COVERED injury or illness, but care needed because of aging is NOT covered by Medicare or Medicare supplements.  Coverage is extremely limited for skilled nursing care (the care must immediately follow a period of hospital confinement, and no benefits are provided after the 100th day).  If you qualify for Medicaid, then you can receive payments for nursing home care (you must qualify for this program and be “needy”).  What usually happens is that most people pay for their own nursing home care, and eventually turn to Medicaid when their life savings are gone.  I don’t want to see this happen to any of you.

Although I do recommend you purchase an LTC policy, you need to be careful of how much you purchase.  Insurance was meant to be a COMPLEMENT to your savings.  Ideally, each of us should save up until we have enough saved to cover the bill ourselves (without depleting our savings).  However, in this world of forever increasing prices, we all know that it can be too tall of an order to fill.  This insurance does not alleviate you from the responsibility to cover as much as possible on your own.  Not only is this irresponsible to rely on insurance instead of saving, but you could end up paying unnecessarily high premiums.

In the meanwhile, we must continue to love and show respect towards are elders.  Everything we are is because of them.  I will leave you with this story.

There was family.  It consisted of a mother, father, son (Jonathan), and an elderly grandfather Joe.  Joe was 85 and in his last years.  Every day the family would eat dinner together at the same time.  Joe, because he was getting old, didn’t have the dexterity that he once had.  He would try to pick up his glass of milk that he loved to drink, only to drop the glass and spill the milk on the table.  His daughter began to get tired of wiping up after Joe.  Joe would have a problem with holding liquids in his mouth, and unknowingly would drool at the table.  His daughter began to get weary of seeing the drool and grew more and more disgusted everyday.  Joe didn’t have the coordination that he once had, so when he went to pick up his plates, he would sometimes drop them.  His daughter and son in-law began to get tired of cleaning up the broken glass on the floor.

One day the daughter was fed up, and when Joe came down to eat at the normal time, he noticed that his normal place wasn’t set at the table.  When he asked if there had been an error, his daughter and son in-law both pointed to the back of the room where there stood a card table.  This card table was set with extra napkins for him to wipe his mouth, and clean any spilled milk. Also, unbreakable wooden bowls were placed there in case he dropped his plate of food.  Joe was upset by this, but he understood.  He sadly moped over to the card table to eat his dinner.

The family ate this way for the next few months.  Joe began to feel more and more distant from his family, and unwanted.  This dinner time was his only time where the entire family was home at the same time, and the only time he felt he could see all the ones he loved.  He hated sitting at the card table, but didn’t want to be a burden on anybody.  So day after day, there he sat.  He wiped his own mouth, cleaned his own milk, and picked up his own wooden bowl.

One afternoon, an hour after dinner, the son was playing in the living room.  Joe had become accustomed to going to his room after dinner in silence, so he was assuming his normal ritual.  The mother walked into the living room, and saw a 2 by 4, a hammer, a few nails and her 10 year old son in the middle of the mess.  Well, the mother immediately ran into the room, and grabbed her son taking him away from those tools.

“You could have been injured!” screamed the mother.  “Why would you go into the supply room and grab all of those things?!”

The son looked at his mother with confusion and began to cry.  He whined out, “I was only trying to help!”

“You aren’t old enough yet baby to use those tools.  You could have been seriously injured.  We just don’t want to see you hurt okay baby?”  The mother hesitated for a second.  “Baby, what do you mean trying to help?”  The child continued to cry, and didn’t hear the mother.  She asked again, “What do you mean trying to help Jonathan?”

Jonathan looked up at his mother with sad eyes and said, “I was going to make some wooden bowls, so that you and dad could use them when you are older.”

The mother, with tears in her eyes was at a loss for words.  She began to feel all the things that Joe had been feeling.  She set Jonathan down and began to cry.  How could she have been so cruel and misunderstanding?

Needless to say, that marked the last day that Joe sat in the back at the card table.  He was welcomed back to the family table, and the mother gladly wiped his chin, cleaned his milk, and picked up his broken glass.

Respect for our elders is a critical part of financial literacy.  I will leave you with three quick tips on how to purchase long term care insurance.

#1 Shop Around – Make sure that you shop around and get comparison quotes.  You should have a long-term care specialist explain the differences in benefits and premiums. Try not to purchase benefits that you don’t need.

#2 Cheap Is Not Always the Best – Be sure to do your research on the company’s experience in the market.  Many companies have a history of rate increases which can be detrimental during a life of fixed income within your Golden Years.  Many companies offer rate guarantees, which can be a plus.  Just because a policy is cheap, doesn’t mean it is the best for you…check the company’s rating.

#3 Know What You Are Purchasing – Some policies don’t offer coverage for home health care, but do offer coverage for care in a long term facility.  Also, there are many various definitions for the word “facility”.  What is the policy’s definition, and how comprehensive is the policy?  Make sure that you are aware of exactly what you are purchasing with your hard earned dollars.

Author: Ryan Mack, President of Optimum Capital Management, LLC

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