Long Term Care Insurance

Eleanor W. Underwood wanted to prepare for the unthinkable--the possibility of spending years in a nursing home. Her widowed mother had to enter one, and she knew her husband's family had a history of heart problems. So, two years ago, Eleanor, then 64, and her husband, Burton, 70, bought long-term care insurance. "You never think it's going to happen to you, but you never know," Eleanor Underwood says. The policies, which cost the Wallingford, Conn.

It's a common mantra among free-market-loving conservatives that government regulations hinder business growth and cost workers jobs. That may be true for some regulations, and it never hurts to go back and rethink old rules. But it's also clear that many regulations are undeniably necessary to protect consumers from unfair, unsafe or downright reckless business practices. One example was the overhaul of financial regulations after leading banks trashed the global economy with their irresponsible dealings.

My mother, 86, and my father, 92, pay about $9,500 a year for long-term care insurance that might be needed someday if their health declines to the point where one of them must be placed in an assisting-living facility or nursing home. Thirteen years ago, both of my parents bought long-term care policies that paid a $50 daily benefit for a nursing home stay. But when the price of nursing care in their town rose to $100 a day, that $50 benefit became inadequate.

Divorce can hurt the pocketbook in ways that some people don't expect. Lost income, child support, spousal support all hurt. But there are other ways that divorce affects finances, said Samantha Fraelich, vice president of Bernard R. Wolfe & Associates, a Chevy Chase, Md., wealth management firm. Here are five of them: Legal expenses: Be prepared to spend thousands of dollars on legal expenses, even if the divorce is amicable. If it's contested, expect to spend much more.

Tom Binder wanted to prepare for the future -- including the possibility that he or his wife could be stricken by a long, debilitating illness in their sunset years. "I don't think it's a good bet that you're just going to drop dead," said Binder, 50, a Santa Monica-based art dealer. "What if you suffer a stroke in your 60s or 70s, and through the miracles of medicine you live into your 90s? "That was my worst-case scenario: that I would linger for many years."

If you are getting along in years and have a family history of Alzheimer's disease, strokes or other debilitating ailments, you should consider long-term care insurance. These policies, now offered by many big health insurance companies, often cover what no one else will--long-term custodial care for people who are not technically sick but who need help with day-to-day activities. This coverage can save a fortune for those who need it. But it is no panacea.

A House probe that sent senior citizens undercover to investigate sales of nursing home insurance found abuses by agents pitching high-priced policies of dubious value, legislators said Wednesday. "I have never seen anything as bad as these long-term care policies and agents," 73-year-old Lil Simmons, of Alexandria, Va., told two House subcommittees. "I would hate to be at their mercy when I really need help."

When workers are asked to choose among employer-sponsored benefits this fall, they're more likely than ever to be offered policies for long-term-care insurance. Long-term-care policies, which generally cover the costs of nursing home and home health-care services for people who suffer debilitating ailments such as Alzheimer's disease or stroke, have become one of the hottest offerings in employee benefit packages.

Getting old and feeble is no one's idea of a good time. Being old, feeble and too poor to pay for decent help can be a living nightmare. Yet millions of Americans may be headed for just such a fate, especially if the current long-term care system isn't changed. A group of attorneys who specialize in aging-related issues has proposed a radical solution: making long-term care part of the Medicare system.

Tom West and his wife, Jennie Walters-West, didn't worry much about retirement until they witnessed firsthand the danger of facing the golden years without ample savings. It pains them to see Tom's father struggle to care for Tom's mother, who is in a nursing home with Alzheimer's disease.

Dear Liz: I'll be done paying off my car in a couple of months. What's a good strategy for redirecting that money once it's paid off? Should I use the whole amount each month to start saving for my next car, or would I be better off splitting it up and putting it into several savings "buckets" such as retirement, emergency and my next car? I'm 35, have an emergency fund equal to four months' living expenses and only one other debt, a very low-interest student loan. Answer: If you aren't already contributing to a retirement plan, you should be. If you aren't contributing enough, that should be your priority even before you pay off your debt.

Dailey Mayo received some stunning news in the mail last week: an 85% rate increase for the long-term-care insurance he has had for 15 years from the California Public Employees' Retirement System. The retired sales manager in Pasadena said his monthly premium of nearly $400 would jump to $738, or about $8,850 annually, under this plan. "I'm 82 now and I might need this care soon," he said. "It really ticks me off that they are doing this. " More than 110,000 CalPERS policyholders are receiving similar news after the pension fund's board approved the changes late last year.

Rita Corwin, 90, conscientiously paid her premiums for long-term care insurance for 21 years to make sure that if she needed help as she grew older and more fragile, she'd get it. Yet now that she finds herself in a position to require such assistance, her insurer, Washington National Insurance Co., is denying her claims. "She bought this insurance for the same reason anyone would," said Corwin's daughter, Leni, who has been representing her mother in their dealings with the company.

The Obama administration will not implement a new program to provide Americans with long-term-care insurance, abandoning a controversial part of the healthcare overhaul the president signed last year. The move will not affect other parts of the sweeping law, including preparations for a major expansion of health insurance coverage starting in 2014, according to administration officials. But the decision to give up on what was once touted as a key benefit of the law marks a major retreat for the administration and a vindication for critics who have voiced doubt about the promises that Democrats made as they fought to enact the law last year.

The saddest lesson of recent years for the American middle class is that those who "do the right thing" are first in line to get hammered. You devote a lifetime to a single employer, only to get laid off with a cheese-paring severance package. You finance your own retirement by religiously funding your 401(k), and Wall Street lays an egg on your head. Here's a lesson baby boomers are just beginning to learn: You pay for long-term-care insurance for years, even decades, and then your insurance company changes the rules.

A government insurance plan to provide in-home assistance to the elderly and disabled is poised to become law despite a majority of senators voting against including the proposal in the healthcare overhaul bill. The so-called CLASS plan would allow workers to sign up for a payroll deduction program similar to Social Security. Participation would be voluntary, with fees and benefits to be determined by the age of the participant. The fees would be expected to cover most of the current cost of the program.

Larry and Janet Blau of Garden Grove did their homework when they set out to buy a long-term care insurance policy a few years ago. Larry, now 74 and Janet, 68, contacted several agents who made presentations. They finally settled on a policy for both of them from American Travellers that cost nearly $3,500 a year. The Blaus were surprised when, 20 months later, the company hiked their annual premiums some 17%, to $4,100. The agent, they say, never told them that rates might go up.

Dailey Mayo received some stunning news in the mail last week: an 85% rate increase for the long-term-care insurance he has had for 15 years from the California Public Employees' Retirement System. The retired sales manager in Pasadena said his monthly premium of nearly $400 would jump to $738, or about $8,850 annually, under this plan. "I'm 82 now and I might need this care soon," he said. "It really ticks me off that they are doing this. " More than 110,000 CalPERS policyholders are receiving similar news after the pension fund's board approved the changes late last year.

When I read articles on early detection of Alzheimer's [“Disease Eludes Treatment,” July 28], I am always amazed at how the proverbial 800-pound gorilla in the room can be ignored. If it is determined at an early age that you have Alzheimer's, you will never be able to get long-term care insurance or, most likely, any form of individual health insurance. Until early detection of diseases is integrated with insurance reform, there will be no meaningful progress. Robert Vogel Irvine