Look at benefits in choice of long-term care policies

If you are like many Americans, you are concerned about what to do if you can no longer live independently or become ill. While few people look forward to living in a nursing home, the average number of Americans who now reside in these and other long-term care facilities continues to rise.

Long-term care, and other topics facing older Americans, was the focus of a recent national video teleconference, "Estate & Financial Planning for the Retired," cosponsored by the American Society of Certified Life Underwriters and Chartered Financial Consultants, and the International Association for Financial Planning.

To protect oneself from financial ruin and receive the highest quality of care, Neal A. Slafsky, CLU, ChFC, of Seitlin & Co., in Ft. Lauderdale, Fla., suggests purchasing long-term care insurance. He also advises consumers to "start saving early and often" for their future long-term care needs.

"Nobody wants to go to a nursing home," Slafsky said, "however, more and more older Americans, who are unable to care for themselves, are going into these long-term care facilities where they stay up to five years." In 1995, 7.6 million women and 2.3 million men lived in these facilities, according to the U.S. Census Bureau.

For years, consumers have assumed incorrectly that Medicare would take care of them and their families when they needed long-term care, Slafsky said.

Medicare, a government health care program provided to citizens over the age of 65, is not based on financial need. Medicare does not provide for long-term care and relates primarily to hospital costs and physicians' fees.

Another program, Medicaid, a federally funded, state-administered program for the financially indigent, is not a solution for most people. To qualify for Medicaid, you must have less than $2,000 of "available resources" or "be categorically needy," which means you are eligible for Supplemental Security Income, Slafsky said.

With more than 120 insurance companies now offering long-term care insurance policies, it is important to consult with a professional insurance agent or financial adviser to determine the best policy for your needs.

Consider the various types of long-term care coverage:

?Home care only: Provides for skilled, intermediate and custodial care in the home, but does not meet the standards of a tax-qualified, long-term care policy.

?Comprehensive long-term care coverage: Provides for care in the nursing home, assisted living facility or in the home, and may qualify for tax benefits.

?Deposit-based long-term care insurance: Provides for care in the nursing home, assisted living facility or at home. Death benefits are paid if no care is ever needed. This is a single-premium insurance policy.

When it comes to selecting long-term care benefit payments, there are many options to consider that may affect your premium payment:

?Maximum daily benefit: Ranges from around $50 to $200 per day to cover the cost of care in a facility or at home.

?Benefit period: Ranges from two years to a lifetime benefit.

?Elimination period: When payments start is determined by the number of days you are willing to pay for care out of your own savings and/or investments 0, 30 or 90 days are typical elimination periods.

?5 percent inflation adjustment: this option applies to the maximum daily benefit, which increases the dollar value of your benefit by 5 percent each policy year to keep up with the rising costs of long-term care.

Slafsky recommended that consumers look for a stand-alone long-term care insurance policy that:

?is tax-qualified

?provides at least $130 per day of benefits

?offers 5 percent inflation protection

?has at least a 5-year benefit period

?covers Alzheimer's disease.

Home care policies are frequently not adequate, Slafsky said, because this type of long-term care policy does not protect against the full range of long-term care risks.

He recommended that consumers consult their insurance agents to find out what could be done now to provide for future long-term care needs.

(The preceding article was provided by the American Society of Chartered Life Underwriters & Chartered Financial Consultants.)

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Consumers have assumed incorrectly that Medicare would take care of them and their families when they needed long-term care.[[In-content Ad]]