Consumers : A Gap in Insuring the Elderly

Frances Katz, 72, insisted for more than a year that her friend, author Wesley J. Smith, write a book telling her “how to be old.

“Nobody really prepares you to become a senior citizen,” Katz said. “I thought Wesley could do it well because his books teach readers how to empower themselves. They show you how to take care of yourself.”

Though Smith’s newly published work--”The Senior Citizens’ Handbook: A Nuts and Bolts Approach to More Comfortable Living”--covers many topics, one of its most illuminating and disconcerting discussions concerns a subject of increasing scrutiny by consumer groups and the elderly: the long-term care insurance some seniors have purchased in case they become ill and must go to a nursing home.

What about such policies? Under what circumstances will they pay? Do they have so many exclusions that seniors may be paying high premiums for policies--ranging from $100 to $260 a month--that won’t cover their nursing home bills?

Smith--a 40-year-old former trial lawyer whose previous how-to works include “The Lawyer Book” and “The Doctor Book”--concluded from his research that long-term nursing care insurance is woefully inadequate.

Medicare and Medi-gap policies--those paying the part of a senior citizen’s medical bills not covered by Medicare--do not pay for long-term nursing home care. And long-term insurance policies may not pay either.

Smith asserted that for seniors “with limited means,” premiums for these policies are too expensive; besides, when seniors in nursing homes have exhausted their finances, they become eligible for Medicaid, which does pay nursing home bills, he said.

When considering long-term care insurance, “It’s clear that unless you’re very careful in picking a policy, it’s probably not going to pay,” Smith warns seniors.

Although there are about 100 insurers nationwide now offering long-term nursing care policies, most have been criticized by consumer activists for offering an expensive coverage that has little chance of paying for what seniors will eventually need in nursing home care.

A 1988 study by the United Seniors Health Cooperative, a nonprofit consumer group based in Washington, D.C., found that fewer than 50% of long-term nursing care policies paid off for seniors.

“Most of the (long-term nursing care) policies out there are not great,” said Susan Polniaszek, the co-op’s executive director. “But it’s getting better. All of these policies should cover skilled, intermediate and custodial care. If you’re going into a nursing home because you’ve gotten old, not because of an illness or injury, we’re not sure the policy will pay off.

Policy Restrictions

“There are so many policy restrictions,” she continued. “Those that require a hospitalization or require a skilled level of care before they pay for custodial care won’t work for most people. Most people will not meet those conditions.”

A recent Consumers’ Union study showed that 60% of all nursing home patients enter those facilities without being hospitalized beforehand.

Polniaszek said seniors should assess their financial situation to discern whether a long-term care policy is for them. She recommended that seniors have more than $50,000 in life savings, because if they have less, “chances are they don’t have enough to cover the premiums or their assets would be drained, even with the policy.”

Many national, state and local consumer groups are beginning to focus on the issue of what to do about nursing home care as America’s population ages. There now are more than 30 million people 65 or older and 13 million people 75 or older. Last year, it is estimated that 2.3 million seniors were placed in American nursing homes for some period.

An AARP Priority

The American Assn. of Retired Persons is making the issue of long-term health care a priority--supporting passage of federal legislation, a spokeswoman said. The AARP--with the Alzheimer’s Foundation and the Villers Foundation, which sponsors research on aging--has begun a national lobbying campaign for federal long-term care insurance by the end of next year.

Consumer advocates recommend that seniors checking out long-term nursing care insurance should look at some key aspects of their policies and coverages.

They should, for example, insist that a policy cover custodial or nonmedical care, in addition to skilled and intermediate care, in a nursing home or in their own home (in-home care may cost extra).

Be sure the policy has guaranteed, lifetime renewal, meaning the insurer must keep it up no matter your health--or an insurer could cancel the policy.

Check that the policy will pay for nursing home care--even if a patient is not being transferred directly from a hospital or has been under “skilled-care treatment,” which is given around the clock by a licensed medical professional. It’s advisable to have a policy covering any nursing home, not just those Medicare certified.

Insurer Buzzword

Be certain there’s coverage for Alzheimer’s disease, senility dementia or other “organically-based mental conditions”--the last classification being an often-used insurer buzzword for Alzheimer’s, allowing firms to assert that it is a mental, not a physical disorder and is not covered.

Try to find a policy with a standard deductible period before it pays--usually about 21 days. But be wary of those that have an increased deductible period of a year or more.

Ask for inflation protection to cover rising costs of long-term care; most policies pay a fixed amount, say $50 per day, unless they specify a benefit adjustment to increase payments per day as costs increase over the years. This may add to the premium’s cost.

And make sure you know the waiting period for coverage on pre-existing conditions; most policies have an average waiting period of six months before coverage takes effect.

Financial Rating

It’s wise to check if the insurer has a good financial rating--A+ is the best. Ask the agent for the company’s rating from A. M. Best & Co. or check with the state insurance department.

For more information, consumers might wish to consult Smith’s book (Price Stern Sloan, $9.95). If you can’t find it in your local bookstore, call (800) 227-8801 in California; (800) 421-0892 outside California.

In California, call the state Department of Insurance at (800) 233-9045 for its new, free booklet, “Long-Term Care Insurance: A Consumer Guide for Californians.”

Or write to the United Seniors Health Cooperative, 1334 G St. NW, Suite 500, Washington, D.C., for its $6.95 booklet, “Long-Term Care: A Dollars and Sense Guide.”

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