A Cure for Health Concerns: Long-Term Care Insurance Provides Valuable Protection for Your Family's Wealth

By Anderson, James A. | Black Enterprise, November 2004 | Go to article overview

A Cure for Health Concerns: Long-Term Care Insurance Provides Valuable Protection for Your Family's Wealth


Anderson, James A., Black Enterprise


They're not like many thirty-somethings, but Vickie Seabon-Moore and her husband, Kenneth, saw the tight three years ago when they decided to sign up for long-term care insurance. They signed up shortly after Seabon-Moore's mother died, after seeing her illness drain her resources and then pose a problem for her children.

In 1999, Seabon-Moore's mother developed acute leukemia at age 69 and was bedridden. She needed help at home, but the family had no insurance to cover the costs of a home attendant or a nursing home, services that would have totaled $40,000 a year or more. "There were six of us, but I was the only one who could really devote time," Seabon-Moore says. "It was a strain. I essentially sat out a year of work until she passed in 2000, so I saw first hand how costly care could be."

During that experience, Seabon-Moore, 35, realized that she needed backup in case she was also stricken with the disease. Now a financial consultant for a bank in Rochester, New York, she wanted to protect Kenneth, 41, and their three children, Eric, 8, Katie, 4, and Brennen, 1. "I want my kids to be free to start their own families and live their lives," she says. "And at this age, coverage comes to about $75 a month." Seabon-Moore settled on coverage that provides $300 a day for a home attendant or nursing home stay. She also opted to have her payout keep up with inflation.

Concerns like Seahon-Moore's affect millions of families every day. According to the 2000 U.S. Census, the number of people 65 and older is expected to mushroom from 35 million in 2002 to 70 million by 2030. This growing population is also expected to live longer, making it more likely that, at some point after age 65, they will require some form of additional healthcare assistance. That's where long term health insurance can help.

SURVIVING WITHOUT COVERAGE

Without insurance, trying to pay the cost of a home attendant or nursing facility--whether for a parent, older relative, or yourself-can wipe out your savings and any money you plan to leave your heirs. That's why long-term health insurance should be a major consideration when crafting your overall financial plan. According to AARP, a consumer group that represents the interests of senior citizens, the national average cost of a nursing home is $4,654 a month, or about $56,000 a year--expenditures that could be saved with long-term care coverage. "In a state such as New York, that number can easily go over $100,000 a year," says Enid Kassner. senior policy adviser for AARP. The average outlays for home care services are equally steep, averaging $37 an hour for a licensed nurse and $18 an hour for a home health aide.

While there may he some confusion over exactly what is covered by king-term health insurance policies, the need for them is undeniable as we approach old age. Consumers should understand that policies don't pay the costs of medical treatments or medications. Long-term coverage pays for the help some senior citizens need to perform the basic functions of day-to-day living, Kassner explains. This can include the cost of a home attendant to monitor daily activities or assist with cooking, eating, dressing, bathing, or getting around the house. It might also provide for the cost of an assisted living center or a nursing home.

Experts say the forces of supply and demand will likely make the limited number of home attendants, nurses aides, and space in nursing homes much more expensive in the near future. The Department of Labor, for instance, estimates that the cost of a semiprivate room in a nursing home is projected to increase to $190,600 annually by 2030, up from $52,000 currently.

With escalating financial realities like that looming, it makes sense to consider coverage sooner rather than later. AHIP reports that the average premium for a good policy with inflation protection at age 50 costs $1,134 a year, compared with $2,346 a year at 65, and $7,572 a year at 79. …

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