::  Point of View  ::

As we watch our parents getting older, it’s hard not to think about our own eventual need for long-term health care. We try our hardest to plan for retirement by investing in our employee retirement plans or by putting money away on our own in hopes that we will not be overly burdensome to our children in the future. We purchase life insurance policies to ensure that if something happens to us our family will not be financially burdened by our death. But how many people invest in, or have heard of long-term care (LTC) insurance? How likely are you to need health care services associated with caring for parents suffering from Alzheimer’s, Parkinson’s, diabetes or a stroke? 

Long-term care insurance is designed to pay for care-giving services for the elderly or chronically ill that can be provided in the home, a nursing home, an assisted-living home or other medical facilities. More and more seniors prefer to stay in their homes or with their children to receive medical care rather than stay in nursing homes. With Baby Boomers on the verge of retiring and inevitably needing long-term care services, the burden to financially provide for them may be overwhelming for their children. The escalating cost of services associated with long-tern care continues to rise. 

Just like life insurance, your age is a major factor to consider when determining when to buy your long-term care insurance – the younger you are when you purchase your policy, the cheaper the premiums will be; however, you must also consider that you will be paying premiums for services that you will not benefit from for a longer period of time. 

Premiums for most policies stay level each year as you age (unless they are increased for all policyholders at once). According to the Health Insurance Association of America, the annual premium for a low-option policy for a person at age 50 is about $850; at 65 that same policy costs about $1,800; and at 79, about $5,500. (You should consult with your insurance or financial advisor on current costs.) 

The best time to make the decisions about how you are going to be cared for in the future is to make the decision before you actually need the services. Planning and having an open dialogue with your family will foster an environment that will produce the proper steps to be followed to ensure maximum financial planning. 

According to the National Association of Insurance Commissioners you should not buy long term care insurance if:
• You can't afford the premiums. 
• You have limited assets. 
• Your only source of income is a Social Security benefit or Supplemental Security Income (SSI). 
• You often have trouble paying for basic needs, such as food, medicine, housing, or utilities. 

You should consider buying long term care insurance if: 
• You have significant assets and income. 
• You want to protect some of your assets and income. 
• You want to pay for your own care. 
• You want to stay independent of the support of others. 

Contact the Virginia Bureau of Insurance at http://www.scc.virginia.gov/division/boi/ or call 1-800-552-7945 for a list of companies authorized to sell long term care insurance in Virginia. And for more information on long term care insurance, see the American Health Care Association's and the National Center for Assisted Living's brochure "Understanding Long Term Care Insurance” at http://www.longtermcareliving.com/prep/insurance/ or call (202) 842-4444.

Once you have decided that purchasing long-term care insurance is right for you, make sure that you shop around for the best policy that suits your needs. Pay special attention to the levels of care and whether the policy has benefit triggers – meaning that once you become incapable of performing activities of daily living (ADL), such as bathing yourself, your benefits package should trigger activation. According to the National Association of Insurance Commissioners, research has shown that bathing usually is the first ADL a person can't do. Benefits Triggers are a set of predefined conditions that must exist prior to your benefit and coverage activating. Typically, you must have an acute medical condition that requires a skilled nurse before your long-term benefits will begin coverage; however, there are numerous policies available so you can find one that is best suited for you. 

More than 70 million Baby Boomers are approaching retirement age and are going to be confronted with the need for long-term care. A significant number of these baby boomers are caring for their parents and children at the same time, and these adults are being “pancaked” or “sandwiched” between the needs of two generations. While these future retirees have made efforts to plan for retirement, the prospect of paying for long-term care can seem daunting and intimidating. 

In an effort to assist in easing the burden on hardworking American families that need or will need long-term care, I have joined 23 of my colleagues in cosponsoring H.R. 2682, the Long-Term Care and Retirement Security Act of 2005. This important legislation proposes tax deductions for LTC insurance premiums, tax credits for LTC expenses and caregivers, and allowing for the purchase of LTC insurance with cafeteria plan and flexible spending account funds. 

Today, we are truly faced with a clear choice – either we can offset some of the costs associated with LTC insurance by providing tax deductions and credits, or we can watch our retirees spend their life savings, thereby living at poverty level and then subsidize all of their long-term care costs through Medicaid. To me, the choice seems clear.