Long Term Care Insurance – Do you need it?

The debate about how beneficial long-term care insurance really is continues. Recently, the ZDNet Healthcare blog, posted comments responding to business journalist Dana Blankenhorn’s article “The running scandal of long-term care insurance,” Those comments tipped slightly in favor of some insurance as opposed to none at all.

Blankenhorn points out that the cost of care for someone with an illness such as Alzheimer’s or Parkinson’s disease, which may require many years of skilled or home care, is not realistically insurable. Blankenhorn argues that the insurance industry isn’t able to write a policy without caps because “premiums on a policy guaranteeing us quality care for however long we may need it would be too high to bear. And everything else is a scam.”

He tells the story of Martin Kenneth Bayne, aka Mr. Long-Term Care, a former insurance salesman and advocate for “properly drawn” policies, now in an assisted living facility suffering from Parkinson’s. His long-term care policy pays an annual benefit of $86,000. That provides a $400 square-foot room and care the quality of which, according to Blankenhorn, leads Bayne to “rage concerning his treatment and the failure of the insurance industry to protect anyone.”

But the truth is, most people who need it will never receive the quantity of benefits Mr. Long-Term Care doesn’t appreciate, and those who rely on shrinking government benefits would likely covet his situation.

Is this the stuff of nightmares? Not entirely. Healthcare psychologists have estimated that men turning 65 in 2005 will average up to three years of institutional, formal or informal home care in their lifetimes. Women average as much as 3.7 years of care. Only 31 percent of that population will not need any LTC, but at least 20 percent will require LTC for more than five years. Kemper, Peter, Harriet Komisar, and Lisa Alecxih, “Long Term Care Over an Uncertain Future: What Can Current Retirees Expect?” Inquiry, Vol. 42, No. 4, pp. 335-350 (Winter 2005-06).

These statistics contradict Blankenhorn’s worst-case scenario. But who can predict the state of medical science in 10 years or the baby-boomer generation’s desire to celebrate centennials.

The moral of this story is, buy the best LTC coverage you can afford, pray you never need the benefits, but be prepared to fight for them if you do.

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