Insurance for long-term care seen as step toward solution

Friday, May 1, 1998 | 10:04 a.m.

In an effort to avert the disaster that long-term health care is facing, the American Health Care Association is developing a plan it hopes will receive the support of Congress and the general public.

"We want to be part of the solution, not part of the problem," said Tammy McDermott, president of the Nevada Health Care Association and a member of the American Health Care Association's legislative subcommittee. "So we are taking a proactive approach. We want to say, as an industry, we recognize changes need to be made and we are working on solutions."

The American Health Care Association, of which the Nevada Health Care Association is an affiliate, represents nursing homes and the long-term care industry.

AHCA's solution is a proposal called SecureCare, which, among other things, urges people to buy long-term care insurance.

Long-term care insurance has been available for about 10 years, according to an insurance industry spokesman, but relatively few people have taken advantage of it because they don't see the need.

But, say most people in the long-term care industry, it is time to begin taking out long-term care insurance just as responsible people take out life and car insurance.

"About 4.3 million long-term care policies have been sold since 1987," Richard Corsh, a spokesman for the Health Insurance Association of American, said.

That represents a very small percent of those eligible.

Without insurance, Corsh notes, a husband and wife may one day find themselves in the position of having to choose between paying for a child's education or nursing home care for their parents.

On an average, the cost is about $41,000 a year for a nursing home stay or $89 per visit by a home care registered nurse.

"Long-term care is so prohibitively expensive," Corsh said. "But if the family has insurance, they may not have to choose between the nursing home and college."

Costs of long-term care insurance, which is now offered by most major insurance companies, varies according to where the insured lives and the age of the person taking out the policy.

"It is important to sit down with an agent from your local area," Corsh said. "The premiums are level, by and large, assuming you maintain continuous coverage. That is to say, your premium payments remain what they were when you got in."

Quoting national average figures, Corsh said a person taking out a basic long-term care plan at age 50 might pay less than $400 a year. If you wait till age 65, the cost is more than $1,000 a year and someone taking out a policy at age 79 would pay in excess of $4,100 per year.

A basic policy would provide payments of $100 per day in a nursing home, with the first 20 days a deductible period. The coverage would be about four years.

The average need for long-term care is less than five years, with the person receiving it either recovering and being released from care or dying.

Las Vegas attorney James O'Reilly, a specialist in issues involving the elderly, supports the idea of long-term care insurance.

"It's a matter of dignity and autonomy," he said, "not just a matter of care."

According to O'Reilly it isn't unusual that elderly long-term care patients who are forced onto welfare to receive Medicaid find themselves shipped to different communities or even different states because there is no available space in their hometowns near their family and friends.

"This type of insurance is a timely product," O'Reilly said. "It's very much a legitimate tool.

"People looking for this kind of product should start by looking at the October 1997 issue of Consumer Reports."

O'Reilly said 10 years ago he would not have been as supportive of long-term care insurance.

"But in the past five to seven years it has become far more beneficial to prospective clients," he said.

He said people mistakenly believe Medicare and Medicaid is a kind of insurance policy, but they aren't.

The financial burden for those suffering from strokes or Alzheimer's disease is even worse because those patients may live eight to 12 years, and the cost of medical care becomes devastating.

"The average cost of nursing home care for an Alzheimer's patient is in excess of $300,000," he said.

Echoing the sentiments of others, O'Reilly said most people don't think of themselves as welfare recipients, but it becomes a reality once you are forced to accept Medicaid.

O'Reilly said a policy should cover at least $125 per day and include an inflation protection provision. And it should cover in-home care for those who don't need or want nursing home care.

He said a policy should cover three to five years.

"It's not necessary to have a lifetime policy because most patients are going to recover and be restored to home or perish in three to five years," O'Reilly said.

He noted that premiums are tax deductible and the benefit paid is income-tax free.

Corsh said employers now are looking at long-term insurance coverage for their employees, since it is a deductable expense.

"Prior to the passage of the 1996 tax law some employers would set up the coverage, but not contribute to it, just pass the cost on to the employee," Corsh said. "But with the change in tax status, employers now have a reason to contribute as well. It's a write-off."