Smart Money: Richest, poorest don't need long-term care coverage

Bruce Williams is a national radio talk show host and syndicated columnist.

Dear Bruce: My husband and I are considering long-term care insurance. Could you please suggest places that we can call or contact on the Internet to gather information? We know little about it, whether it would be right for us, what coverage and at what age we should start to consider it. S.J., via e-mail

Dear S.J.: You failed to tell me your age a rather important variable. While you can buy long-term care insurance in your 40s, it is not really appropriate or cost-efficient to purchase this coverage until you are in your 60s. The ticklish part of that is you will be required in most cases to be in good health or you will pay a very heavy premium if your health has deteriorated. Whether you should have this insurance at all is yet another matter. As I have said repeatedly, the very wealthy don't require long-term care insurance and the impoverished don't require it either, given the fact that Medicaid will pay for them. It's the people in the middle.

The other variable is for how long a period should you purchase the insurance. The hard realities are that relatively few people survive more than four years in an intensive-care facility. That doesn't mean that there aren't people who have lived for many years beyond that, but we have to deal in averages when considering insurance. If your individual income upon retirement is over $140,000, meaning each partner exceeds $70,000 a year, I doubt it's really necessary for you to purchase insurance. On the other hand, if it is much below that, you might consider covering the difference between your income from investments, pension plans, etc., and the requirements. Bear in mind that the troublesome part of the equation can be that if one spouse requires care and severely diminishes assets, it makes it very tough for the second.

This is a problem that our country, as a nation, is going to have to take a hard look at and find some type of an equitable solution so that people are not impoverished in a few months after a lifetime of saving.

Dear Bruce: My 7-month-old son has been diagnosed with a severe type of spinal muscular atrophy. There is no current cure, and we can only deal with secondary effects, which are mainly respiratory. The FDA is now testing a drug for this disease. We applied for the study but our child is too weak to travel. Our pediatrician would prescribe the drug under the guides of the study director. It will cost us $1,500 a month. We would like to set up some kind of trust fund so we can solicit money from our family and friends for this treatment, which could be lifesaving to our son. We would like to have it done in such a way that the monies contributed would be tax-deductible. How can we accomplish this? A.C., via e-mail

Dear A.C.: My heart goes out to you. The crushing expense is very difficult to deal with in addition to the personal tragedy of having a child with this type of affliction. I would explore the possibility of working with some established charitable organization where the monies could be contributed to that organization with an agreement that the funds would be spent on your youngster's behalf, perhaps with a modest deduction for administrative expenses. This way you would be spared the problems of trying to set up some type of nonprofit charitable organization. While this may not be the only way to attack this, this would be the first way that I would attempt to go. There may be some specific organization to look into the effects of this disease. You might start with the people running the study. They may already have some type of charitable organization that would qualify the donations as tax exempt. I wish you the best of luck.

Dear Bruce: I read your answer to a couple's question about early retirement. You stated they would not have to worry about health insurance when they qualify for Medicare. Surely you know that people on Medicare pay a monthly fee, deducted from Social Security and must take out a Medigap insurance policy. This year, the Medicare fee is $66.60 a month and my additional insurance is $316.26 a month. Hardly negligible. I do have dental and prescription coverage, but not everyone does. Some people get by for less, but nevertheless, it's an important expense. I noticed this in particular because the reporting about Medicare and its problems give the impression it costs the recipients nothing. P.V. Topeka, Kan.

Dear P.V.: Your points are well taken. However, when equated against the cost of medical insurance, the very modest fees that you are discussing are just that, extremely modest. You've elected to have dental and prescription coverage and, as you've mentioned, not everyone does. Medicare does not completely cover one, but the reality is that there are many people who, until they reach 65, because of health conditions, cannot be insured at all, and others who can be insured find that the premiums are completely out of range.