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Long-Term Care Insurance or Lifestyle Insurance? - Seniors Long Term Care & Nursing Home Issues -
Long-Term Care Insurance or Lifestyle Insurance? - Seniors Long Term Care & Nursing Home Issues -
Long-Term Care Insurance or Lifestyle Insurance?

Phyllis Shelton is author of Long-Term Care: Your Financial Planning Guide, Kensington Books. She is also President of LTC Consultants, a Nashville-based company specializing in web-based ( and live long-term care insurance training and marketing materials. Her organization has trained over 40,000 insurance agents and delivered 2,020 employee education meetings for the Federal Long-Term Care Insurance Program. You can visit Phyllis's website at to purchase her book "Long-Term Care: Your Financial Planning Guide" and to email her.

"Failing to consider long-term care needs is the #1 mistake investors are making with their retirement savings."
"Cracks in the Nest Egg", Wall St. Journal, 10/22/01

This quote may be behind the heightened interest Wall Street is showing in long-term care insurance. As a result of a recent presentation to Lehman Brothers on Wall Street, I just completed a live CNNfn interview on July 18, 2003 and as is the case with most interviews of this type, the first question centered around nursing home care, and the introductory graphic showed an elderly woman in the nursing home. Thankfully I was able to change the focus of the interview to home care and make the point that a long-term care insurance policy may be the only thing to keep a person out of the nursing home by providing money for the family to hire help and keep the patient at home. Some policies in fact provide a cash benefit that can be used however it is needed - to pay family members, friends, neighbors or even to use on medical equipment, drugs, home modifications, etc.

I jokingly tell the agents I train that you can use the money to have your dog dipped, as it is really up to the family how the money is used. After the explanation that automatically follows to the agents from colder climates without flea problems, they finally understand that I'm just describing the flexibility of the cash benefit. There is additional responsibility for IRS reporting and matching of FICA taxes for the informal caregivers, but for families willing to accept these responsibilities, the cash benefit provides interesting choices.

I was also able to steer the interview to younger ages when asked who should consider long-term care insurance. I automatically replied that LTC insurance may be of interest to anyone over age 18 who has a concern about preserving their lifestyle in the event they or someone they care about has an extended period of care to help with physical needs, such as bathing, dressing, moving around and so forth, or to help with a cognitive impairment, such as Alzheimer's. I then cited a 22-year-old college student from Nashville who had a car accident last year and sustained the same injury as Christopher Reeve; he is paralyzed from the neck down. Since he isn't married, his parents are taking care of him at great cost and time commitment.

The best question came when another reporter jumped in with some skepticism and asked if advancements in medical technology that help people live longer and healthier is lessening the need for long-term care insurance. I replied with some humor that the person who is in great health and really takes care of him or herself, may have an even greater need for long-term care insurance. Think about it - people who really take care of themselves may not have a major heart attack or massive stroke and die. Instead, the older "healthy" person may just WEAR OUT, and the healthier the person is, the longer the wearing out process can take, and the more long-term care the person may need!

Finally, I pointed out that the baby boomers are really starting to buy long-term care insurance. Why? Because baby boomers are having to take care of parents while sending children to college and save for their own retirement. They're learning that caregiving robs a family of time, money and overall lifestyle. Very few families today can manage the process without outside help, and at the national average of $18 per hour for the services of a home health aide, that outside help carries a hefty price. And parents today really don't want their children doing personal things for them, like dressing, bathing and toileting. Long-term care insurance can remove the need to do those personal things by providing money to hire caregivers.

Long-term care insurance also helps women in particular, who may wind up losing a career because it is typically the woman who is thrust in the role of primary caregiver, and maintaining a demanding career can be impossible when combined with caring for a spouse or parent 40 or more hours a week. A MetLife Mature Market Institute study showed that employees whose family members have long-term care insurance are twice as likely to keep their jobs.1

When asked the #1 thing we need as a nation to get more Americans to buy long-term care insurance, I immediately said "better tax incentives" and several major surveys from the Health Insurance Association of America confirm that answer. Both individuals and employees say that is the #1 event that would cause them to buy LTC insurance.

Unfortunately, Congress doesn't seem to connect the dots between offering better tax incentives for LTC insurance vs. providing long-term care for the baby boomers with public assistance, i.e. Medicaid. If that happens, we will have unprecedented taxation in this country. Sweden, for example, has a national long-term care program, but the tax rate comes in around 55%!

I am appealing to Americans everywhere to contact their representatives and senators and ask them to pass House of Rep. bill 2096 and Senate bill 1335. These bills provide an above the line tax deduction for an age-based amount of long-term care insurance premium and allow employees to pay that same amount with pre-tax dollars. My website has a great place to link to Congressional representatives with a suggested letter to send.

With or without this legislation, however, employees should ask employers to offer long-term care insurance and individuals should ask their insurance agent or financial planner for information. Even people who perceive themselves to be affluent are buying long-term care insurance because they are finally understanding how expensive long-term care is ($60 - $120,000 a year depending on geographical region and triple that for 24-hour care)2 and how fast it is growing (tripling in 20 years)3. When the lost investment opportunity is considered in addition to self-paying, the cost to an estate can easily run into the millions for a five year episode of long-term care. And besides, when do affluent people for 100% for anything? Automobiles, real estate, jewelry, boats? Why should they pay 100% for long-term care?

Ultimately, long-term care insurance is for the family. Half of the people receiving long-term care insurance benefits at home say they would be in a facility without their long-term care insurance policy.4 LTC insurance is keeping families together and preserving lifestyles, relationships, and financial plans for generations to come. In the really big scheme of things, long-term care insurance is preserving dignity - a priceless outcome.


1 The MetLife Study of Employed Caregivers: Does Long-Term Care Insurance Make a Difference? MetLife Mature Market Institute, March 2001

2 "MetLife Market Survey on Nursing Home and Home Care Costs, 2002", MetLife Mature Market Institute, April, 2002

3 Heffler, Stephen, et al, "Health Spending Projections For 2001-2011: The Latest Outlook", Office of the Actuary, Centers for Medicare and Medicaid Services, Health Affairs, March/April 2002, p. 208 (5.8% projected growth rate for home health and nursing home care 2001-2011)

4 Cohen, Marc A., Ph.D., et al, A Descriptive Analysis of Patterns of Informal and Formal Caregiving among Privately Insured and Non-Privately Insured Disabled Elders Living in the Community, Department of Health and Human Services, Office of Disability, Aging and Long-Term Care Policy and The Robert Wood Johnson Foundation Home Care Research Initiative, April 1999.

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