Long-term Care Conundrum

The Experts Weigh In

It was clearly time to call in the experts. My first call was to my original agent who told me I had nothing to worry about. “If your company folds, the Georgia Life and Health Guarantee Association will step in and guarantee your policy,” he said cheerfully.

I wasn’t convinced.

My next call was to the Georgia Insurance Commissioner’s office where two investigators gave me conflicting information. One agreed with my insurance agent. The other said unequivocally, “No way. Your company is no longer licensed to sell policies in Georgia.”

Call three was to the Georgia Guarantee Association, where Executive Director Mike Marchman carefully straddled the bridge. The agency “will guarantee outstanding benefits in accordance with our statutes,” he said. But the statutes are extremely complex and narrow. Since my company’s license had been revoked, I could easily fall into the chasm. “The one thing to look for when buying long-term care is the A.M. Best rating of the company,” he chastised.

Clark Howard, a consumer advocate who appears daily on radio stations across the country, agrees. “Only use companies that have been rated A++ or at the very least, A+,” he advises on his Web site. He also suggests that people purchase policies in their late 50s or early 60s and select a lifetime benefit rather than one with limited years of coverage. Individuals who are either wealthy or have limited assets should not consider LTC. Those at the top end can handle their own needs and people without assets will likely be covered under Medicaid.

Points to Ponder when considering a plan:

How many activities of daily living are required for eligibility? Policies generally require needing help with two activities of daily living—such as bathing, dressing, eating, or toileting—for benefits to be provided. A doctor must concur that you need this help.

How long is the elimination period before the benefits kick in (generally sixty to ninety days)? An elimination period is the number of days a patient is responsible for before receiving LTC benefits. Medicare pays for up to one hundred days following a hospital stay.

Is the policy limited by a time period (i.e. three years, the average time LTC is needed) or a “pool of money” (computed by the selected payment per day times the number of years, for example, $100 a day for three years or $109,500) as many years as the money holds out?

How much coverage will you need based on pricing in your community?

Does the policy include automatic compounded inflation protection?

Does it cover home care, an adult day care center, nursing home and assisted living (all must-haves because you don’t know what your situation will be)?

Will the premiums fit your budget now and after you retire?

There are no easy answers, no “apple to apple” comparisons, so this time around, I’m relying on the experts.