by Lori Myers
This is Part I of a series that informs about the realities of living old in this country—a country where families may be spread out over thousands of miles, where healthcare might be administered in one’s own home or elsewhere by strangers, where the costs of healthcare and home aides keep going up. Who will take care of us? What should we do to prepare? What are the legal and insurance implications of getting older? How will we take care of our parents? What if your father refuses to go into a nursing home? What are his rights? Your rights?
These are tough questions, yet real ones that many of us will face.
Mike Moser remembers a time four years ago when he had told his father about a new boat he had just purchased. He grew up boating but this was the first boat he’d owned as an adult. And although it was twenty years old, it was a seaworthy twin-engine cabin cruiser. He was excited about it and told his father that he couldn’t wait to get both parents out to California, take it out on the water, and enjoy the Pacific coastline near his home in San Diego. Five days later he mentioned it to his father again. There wasn’t even a glimmer of memory, not even a small sign that his father had remembered the conversation. Moser began to wonder. He checked with his siblings—a brother who lived in Maryland and a sister in San Francisco—and they, too, had noticed that their father’s short-term memory wasn’t what it used to be. This was a brilliant man, an highly regarded orthopedic surgeon only in his mid-60’s, well-liked and respected in his small New England town. He had been clear-headed, active, a man who loved to go kayaking, skiing, and bird watching. A change was happening, and Moser didn’t like it.
“He would get angry,” Moser recalls. “He never got angry.”
After visits to the doctor and starting a new memory medication the family hoped that maybe things would improve, but they didn’t. A year later, Moser and his siblings sat their father down and told him he had to retire, for the good of himself and his patients. A hint of defiance and anger bubbled to the surface—an anger that would become much worse later on. He had been a doctor for more than three decades. He told his children that he hadn’t forgotten how to do surgery. He could do it blindfolded! He loved his work and thought he would surely go crazy if he didn’t have patients to care for and talk to. His patients loved him and depended upon him for their care. What was worse was that the other doctors in the medical practice also noticed some subtle changes, but didn’t confront their senior partner. He continued to be active in his practice while being ably assisted in all of his surgeries by his partners. “Trying to get him out of the operating room was like getting a drunk driver off the road,” says Moser.
“Finally, one of my dad’s ex-partners called and said ‘It’s about your dad. He cannot be operating anymore.’”
This is only the start of Moser’s story. It’s similar and, at the same time, different from the stories playing out all over the country as medical advances are giving millions of us the promise of longer and healthier lives. But despite all of these medical breakthroughs, we still eventually slow down, wake up with more aches and pains than we’re accustomed to, then perhaps get a prognosis that stops us cold. Most of us will, either for ourselves or with our parents, enter a new world with new terminology we never imagined as kids: nursing home, long-term care insurance, continuing care, adult daycare, living wills.
The oldest baby boomers are now in their early sixties. Many are part of the sandwich generation, like Moser, a financial advisor, who had their careers and families to look after when their parents began to decline. In Moser’s case, and in the case of many adult children who live perhaps hundreds or thousands of miles away,that care has to take place long distance, through phone calls, contacts with neighbors or organizations, a personal visit when possible to make sure all is well. But whether the adult child lives close by or far away, adult children who are part of this sandwich generation experience stress, guilt, and fatigue.
There are things people can do to prepare for, and ways to maneuver through, the maze of facilities, organizations, doctors, and lawyers who all contribute to the decision of how care should be administered, by whom, and who is going to pay. Steering through this maze is not easy, but there are things that can be done to prepare yourself and your family for the inevitable.
Care for the Long-Term
Along with, perhaps, purchasing that beach house in a warmer climate or sitting down to do some other sort of retirement planning, people need to think about how they will provide for themselves financially if they should become infirm or need assistance with bathing, eating, or dressing. Many people assume that the government will take care of us in our old age. There’s nothing to worry about, they reason, as long as Social Security, Medicare, and Medicaid are around. That’s our cushion, our “insurance,” We won’t burden our families, our neighbors, our friends. The government will watch over us.
Guess again. Medicare does not pay for custodial care, only for skilled and rehabilitative care for up to 100 days. Recipients have to be indigent in order to qualify for Medicaid, and Medicaid patients have few choices for the type of care they receive and where they can receive it. Government officials want consumers to be aware of their healthcare expenditures and not simply think they can go to any doctor or undergo any sort of surgery without examining and comparing costs. They are urging workers to participate in health savings accounts, they’ve been open and honest about the troubles plaguing Social Security, and have taken steps to make sure Americans take more responsibility for their own well-being and old age. Not far behind is the not-so-gentle urging to consumers, particularly the burgeoning baby boomers population, to consider buying long-term care insurance.
With all that said, the government is sending a loud and clear message: don’t depend on us to take care of you.
In February 2006, President George W. Bush signed into law new legislation that established a long-term care Partnership Program in which all states can choose to participate. This new Partnership legislation legitimizes long-term care insurance as an important financial planning tool by weaving the product into the nation’s public long-term care strategy. What does this mean for Medicaid? A lot. Part of this same legislation resulted in stricter rules when it came to asset transfers. The look-back period to see when an individual transferred assets was increased from 36 months to 60 months. It also deems individuals with home equity above $500,000—or $750,000 at the state’s option—as ineligible for Medicaid long-term care. This makes access to Medicaid tougher.
The new Partnership Program also allows consumers to receive dollar-for-dollar Medicaid asset 
protection by purchasing a tax qualified long-term care insurance policy. Individuals seeking to qualify for Medicaid are permitted to retain assets equal to the dollar amount of long-term care insurance benefits received.
“Long-term care insurance is a solution to the problem,” says Ann Weisman CLTC independent agent with Metropolitan Financial Group in Oak Park, California. “I ask clients ‘When you get sick, where do you want to receive care?’”
Weisman explains that there are generally two scenarios going on when people see her about long-term care. One is the person who is realistic and knows that something might happen because they have either directly experienced it or know of someone who did. The other is the person in denial.
“More men than women are in denial,” says Weisman. “They think their wives will take care of them. I attempt to educate them. I tell them that she will take care of him longer, better, and keep him in good health if she can bring in people to help her. She’ll still be able to be a partner. Her physical health won’t be degraded.”
It used to be, according to Weisman, that the average age of clients purchasing long-term care insurance was 65. Now she’s selling it to those in their 50’s. Weisman’s experience reflects what is happening across the country. According to a recent study by the American Association for Long-Term Care Insurance, the average age of people buying long-term care insurance dropped to younger than 60 for the first time after falling steadily for more than 10 years to an average age of 58. That’s down from an average of 61 in 2005 and 69 in 1995. According to the study, about 8 million Americans now have long-term care benefits. That’s a slight upturn from a year ago and about 60 percent more than in 2000.
“They feel it’s going to happen to the other guy,” says Weisman. “Long-term care insurance is not about them, it’s about your family.”
It goes without saying that the older you are when you purchase long-term care insurance, the higher the premium amount. That premium amount also is dependent on where you live. Healthcare services in California, for example, are more expensive than those same healthcare services in Missouri. One criteria that will affect the premium amount is the elimination period. The elimination period is the total number of days that covered long-term care services must be received after you are determined to be chronically ill and before the benefits covered by the policy are payable. Usually, the number of days may be accumulated within any time period after you are determined to be a chronically ill individual before filing a claim. Those days used to satisfy the elimination period generally do not need to be consecutive. The elimination period need only be met once during your lifetime. Elimination periods may range from zero days to a full year. Of course, the longer the elimination period means a lower insurance cost but a much higher out of pocket expense should the need for care arise. Think of the elimination period as working the same way your deductible does on your car insurance.
The costs of care, whether in-home or in a nursing facility, are skyrocketing. According to Weisman, the average annual cost nationally for a private room—single occupant—is $70,912 per year or $194.28 per day, reflecting a 2.2 percent increase over 2005 rates of $190.20 per day. The average annual cost for a semi-private room—double occupancy—is $62,532 or $171.32 per day, a 2.3 percent increase over 2005 rates or $167.44 per day. Across all home care provider types, the average hourly rate for home health aids is $25.32, a 13 percent increase over 2005. The average hourly rate for homemaker services if $17.09, a 3 percent increase over 2005 results.
Long-term care insurance gives you the option to receive care in your home, go to a nursing home, assisted living, or adult day care. According to Weisman, most claims start at age 85.
“Over 60 percent use the insurance,” she says. “At age 65, there’s a fifty percent chance that you’ll use it.”
Steve Moser made sure both of his parents had long-term care insurance in the event something happened. It prevented the family from making difficult decisions having to do with the selling or redistribution of investments or the possibility that the healthy spouse might not have enough money for day-to-day living. It gave the entire family peace of mind, he says. Moser was glad his parents had it—even though they never used it. But Moser’s story doesn’t end here.
“Insurance does not replace the family unit,” Weisman says. “It just enhances the family unit.”