The Performance of Long-Term Care Insurance

The relatively slight chance that an elder will need three or more years of nursing facility care means that the insurance industry has not had to pay out on its policies to nearly the extent that it suggested when they were sold. And when the policies’ conditions, exclusions, and benefit limits are figured in, the performance of these policies—at least in the decade of the 1990s, for which complete statistics are available—has been quite poor.

• About 50% of all policies lapsed before any benefits were paid; people were unable or unwilling to continue paying their premiums.

• Of those people who bought the insurance and later entered a nursing facility, about half never collected a dollar from their LTC policies.

• No benefits were ever paid to the many who bought nursing facility coverage but instead received home care or entered a residential facility, not covered by the insurance.

• When benefits were paid, they were far below the actual cost of care.

• For many of the longest-term residents, benefits were used up before the nursing facility stay ended.

In all of these situations, the LTC insurance failed to live up to its promise to help people avoid using up their savings, or relying on Medicaid, to pay for long-term care. In other words, it was a lousy investment.

Assess Medical Needs for long-term care

Because a specific physical or mental condition often leads to the need for long-term care, one of the first things you should do is get professional advice both about the need for immediate care and about likely changes in the condition over time. Talk with your primary care physician first; he or she may refer you to a geriatric specialist for further consultation.

An additional resource to help you assess medical and personal care needs is a geriatric screening program. Local hospitals have them, as do community and county health centers. If you have trouble finding a geriatric screening program, check with your county social service agency or local or Area Agency on Aging, or call the senior referral number in the white pages of the phone book.

Some important things to consider when assessing an older person’s need for medical care are:

• Specific medical requirements. The doctor or other health screening personnel can discuss the elder’s specific medical needs (such as monitoring and administering drugs or providing physical therapy), explain how they can be met, and let you know who can do it. The doctor or health care worker can also discuss the level of ongoing care that would be required to deliver those medical services: Family members supplemented by occasional visits from home care aides, a more sophisticated home care program, or various levels of residential nursing facility care, for example.

• Changes in care over time. The doctor or other health care worker can also discuss the medical prognosis—that is, what the future is likely to hold: Whether to anticipate a short or long recovery period, whether a condition is likely to stabilize over a long period, or whether it will become worse over a short or long period. Knowing of likely developments in the medical condition will help you plan the right level of care and allow for these changes.

• Mental impairment. A thorough geriatric screening and evaluation are particularly important when the elder seems to have a mental impairment. An older person’s physical problems may become much more difficult to manage because of added symptoms of forgetfulness, disorientation, or general listlessness.