Federal Boost for Ltc Insurance Could Strengthen Market for It

Article excerpt

It's the boomer's nightmare: being sentenced to spend the rest of your life in a nursing home, watching your health and your money dwindle. Congress doesn't seem to be in any mood to help provide financing of long-term care (LTC) for the middle class. Medicaid, the federal-state program for low-income people, pays for nursing homes, but only after people have impoverished themselves: They must spend down to assets of just $2,000 to become eligible for the government to pick up the tab.

Frank Titus is hoping to bring some relief to the boomers' worries, at least to the 20 million people in the federal "family" -the members of the civil service, the military, their spouses and their parents, as well as the retirees. Titus is the architect of the federal long-term care insurance program, which recently finished a successful recruitment season with an enrollment of more than 200,000, making it one of the big players in the game. Only about 6 million Americans have LTC insurance, but with the pattern started by the federal program, it could become a rapidly growing benefit.

LTC INSURANCE CONFUSION

As the 76 million boomers head toward retirement, they are increasingly scratching their heads over financial and estate planning, getting headaches thinking about life insurance and shaking their heads over disputes with their HMO coverage. And when boomers begin to consider buying LTC insurance, they soon discover that they need to aquire the skills of a financial expert to figure out how much coverage they need and can afford-for a product they might not use until 20 to 30 years after they sign on the dotted line. Furthermore, prospective buyers find that they've got to know more about healthcare, learn to pay close attention to their skills and abilities in managing daily living, and consider how much of a burden they may be to loved their ones if they become incapacitated. Mix all of these knowledge sets together and older boomers find themselves shaken, not stirred, into a veritable cocktail of confusion. That's why the LTC insurance policy is such a tricky business, and why the federal government model may help move the industry in a direction that makes thing easier for consumers.

The federal LTC program features a pool-of-benefits approach. Beneficiaries can spend the money the way they need it when they need it, whether at home, in an assisted living facility or in a nursing home. Currently, family and friends provide most of the cost of care. In fact, 23% of American households are carrying some of the LTC burden. That's why the innovation from Titus is valuable-letting family and friends provide the personal care and get paid for it, just as a consumer would pay an in aide hired from a homecare agency.

Alternatively, many LTC policies in the marketplace say the cost of the homecare will be reimbursed only if it is carried out by an aide from an agency certified by the federal government. That requirement can be expensive, and it may not provide the devoted personal attention that a family member or friend can offer. …