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News
Care for the elderly
August 4, 1999: 9:46 p.m. ET

Two in five people will need a nursing home, insurance could be worth it
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NEW YORK (CNNfn) - Over 54 years of marriage, Jean and Bob Morris made a lifetime of beautiful memories. They raised three children, traveled extensively and bought a home in Atlanta. But today, memories are almost all Jean Morris has left of her life with Bob.
     In 1994, Bob was diagnosed with Alzheimer's disease. As he became more and more ill, requiring constant attention, Jean and her children made a tough decision to put Bob in a nursing home.
     "We didn't anticipate anything like this happening," Jean said.
     Bob and Jean Morris are not alone. A recent Gallup poll shows that 76 percent of Americans believe they will never have the need for a nursing home, an assisted living program, home- or community-based care, or any other type of long- term care service. But the fact is, two out of every five Americans will need nursing home care at some point in their lives.
     When Bob retired 11 years ago, his company offered him long-term care insurance. The Morrises declined, because, at as much as $2,000 dollars a year per couple, the premiums seemed too expensive.
     "At the time it seemed like it was an astronomical amount of money," Jean said. "We just couldn't handle it."
     For three years, Jean struggled to pay for Bob's nursing home care. The fees, somewhere between $42,000 and $45,000 a year, nearly wiped out the couple's retirement savings.
     "Very few people plan for a stay in a nursing home," Jean said. "And I think that is because they think it will happen to someone else, or that they'll be able to live out their natural lives at home."
     Betsy Hill, an administrator at Manor Care Nursing home in Decatur, GA., where Bob Morris now lives, sees people in the Morris' predicament all the time.
     "I would say we're on the brink of a long-term care crisis, as a nation," Hill said. "Unless we do significantly better in planning for our aging population, and in levels of care and in financing that care, yes, we are on the brink of disaster."
     One way for individuals to avert disaster is buying long-term health care insurance. June Witt, like Jean Morris, has a husband, Don, diagnosed with Alzheimer's disease.
     June also tried to care for her husband alone, then placed him in a home. But the Witts had long-term healthcare insurance.
     The coverage cost the Witts $300 a month when they took out the policy 10 years ago, on the advice of their financial planner. In August of 1997, Don moved into the Presbyterian Village nursing home in Atlanta. By then, the couple had paid some $30,000 dollars in premiums.
     June estimates the insurance company has paid out between $45,000 and $50,000 this year alone.
     "It has made my life bearable because I've had the security of being able to keep my home, have a nice care, not have to work, travel some," June said. "I'm able to go to Japan and visit my son. I'm able to do things that I would not be able to do if I did not have the long-term health insurance."
     Jean Morris is getting along OK financially, she's even managed to hang on to the family home. But it's not the retirement of her dreams. Jean decided to apply for Medicaid, but in order to qualify Bob for the program in the state of Georgia, the Morrises had to prove they had exhausted their savings down to the last $2000. So in the end, their carefully saved nest egg did not go where she and Bob intended.
     "The toll on the families is horrific," Jean said. "It is difficult enough placing someone in a nursing home, there is guilt, there is concern about care."
     But before you start shopping, there are a lot of confusing choices to sort through.
     Many Americans wrongly assume that Medicare will cover a nursing home stay. However, in most cases it only covers a maximum of 100 days. Another common, and costly misconception is that your health insurance policy covers long term care. Long-term care insurance must be purchased separately.
     Most insurers offer long-term health care policies starting at age 40, but most people buy it when they are closer to age 65. If you're wondering what all this will cost, first of all the type and length of coverage significantly impacts the premium price. But generally the younger you buy the cheaper the premiums and the less expensive it will be in the long run.
     Let's say you have a crystal ball, and you know you'll enter a nursing home at age 85. If you buy a low option policy at age 50, your premium is about $400 a year, and by the time you're 85, you've paid a grand total of around $14,000.
     Bought at age 65 the premium will cost you about $1,100 a year, a total of $20,000 paid out by the time you are 85. If you buy this insurance at age 79, the premiums cost about $4,400 dollars a year. But even at that age, it's a worthwhile investment. The total you pay over six years, $26,000, is still less than the cost of one year in a nursing home.
     When buying long-term healthcare insurance, financial planner Kay Shirley has these tips.
     "When you are considering buying a long-term care insurance, you can buy at any dollar denomination that you wish," financial planner Kay Shirley said. "You can buy benefits that would cover $50 a day, $100 a day, or $200 a day. Shop around your general area and find out what the going cost is and buy only what you need."
     "Look at the company you're buying from, make sure it's a stable company, and the way you determine if it's a stable company is you look at how long they've been offering that product, and make sure that they've been offering it for at least 10 years," Shirley added. "It's been said that if they haven't offered it for 10 years, they may still be practicing."
     "Make sure that you don't buy more insurance coverage than you need," she warned. "You'll be presented with a lot of riders, and evaluate whether you really need that rider."
     But Shirley said the one rider you should consider is to cover inflation.
     What are the odds you'll need this kind of insurance? Industry statistics show there's only a one in 1,200 chance you'll ever need to collect on your fire insurance. For car insurance, the odds are one in 240. It's estimated that the odds of using long-term care insurance are one in three.Back to top

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.