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This LTC Insurance Policy Not Enough To Cover
Jan L. Warner & Jan Collins

Question: My parents are in their late 70ís. Dad had a stroke a year ago, and Mom kept him at home until he fell and broke his hip. He was treated and sent to a nursing home for rehabilitation. Unfortunately, he will not be able to come home again because Mom takes six medications herself and canít care for him. They bought long-term care insurance when they were in their early 70ís because they did not want to be a burden, either on us or on society. But the coverage they scrimped and saved to buy pays only $50 per day toward Dadís care which, including the extras, will cost nearly $200 daily.

Dadís monthly income from Social Security and a small pension is $1,000; Mom receives only $540 per month. They have only $35,000 in cash, their home, and two small life insurance policies that wonít even cover their burial expenses. I became incensed to learn that they were actually going into their meager savings to buy this coverage, which was quite expensive because of their ages when they bought it. When I finally located the person who sold them the policy, he told me that was all they could afford, and that it might be a good idea for Mom to put a reverse mortgage on the house to pay for the balance of Dadís care. It seems to me that my parents were really rooked. Is there anything we can do?

Answer: The ďadviceĒ Ė if you can call it that Ė which you and your parents have received is, in a word, obnoxious. First of all, your folks should not have been sold long-term care insurance. Second, your mother should not put the remaining assets at risk.

While many people are descending on Congress Ė and rightfully so Ė to encourage Americans to purchase long-term care insurance by giving tax credits and other incentives for premiums paid, there are tens of millions of Americans, like your folks, who are either uninsurable or simply canít afford to pay for the coverage. Tax credits wonít help people like your parents who are perfect examples of people who should not be sold long-term care coverage. They are part of our nationís most vulnerable population who will be forced to rely on Medicaid, the joint federal and state program that pays a significant percentage of nursing home costs each year.

While making sure your father receives appropriate care is important, your mother canít be forgotten. With a home, little money in the bank, and a small recurring monthly income, your mother is a member of the fastest-growing segment of the aging population. Since most women of your motherís age donít have pension benefits, they will depend on Social Security, which is generally insufficient. As an older woman, she can statistically ďlook forwardĒ to living alone, spending a large part of her life disabled or in a nursing home, and being impoverished. In fact, women make up nearly 75 percent of all older Americans with incomes below the poverty level.

Taking the NextStep: You should engage a qualified attorney (www.naela.org) for your parents. Your mother should not be required to spend one penny of their remaining assets or put the home equity in jeopardy But be aware that Medicaid is underfunded each year by billions of dollars, and the deficits are growing. These deficits are attributable not only to increasing costs, but also to shrinking tax revenues due, in part, to recent tax cuts and fewer workers per retiree. As the Baby Boomers begin to retire, the number of Americans needing governmental assistance with long-term care costs will grow. We believe it is dishonest and disingenuous for politicians on both the federal and state levels to refuse to face the facts. They must fully fund the Medicaid program for people in need like your parents.



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