Consumer misconceptions abound about funding long-term care

Life Insurance Selling

• Paul Hogan

Published 12/2/2009 
…[According] to a recent Home Instead Senior Care study … conducted by the Boomer Project (www.boomerproject.com) among 166 seniors and 444 adults, revealed that both seniors and adult children would use Social Security and Medicare to pay for senior care. The truth is, neither of these options is a viable funding mechanism for long-term care. The study participants were less likely to identify those sources of funds typically used to pay for senior care such as personal savings and retirement plans. …
“The reality is the best-laid retirement plans will be wiped out by a long-term care event,” Bill Comfort, a long-term care insurance specialist, broker and trainer who owns Comfort Assurance Group in St. Louis,says. “People fail to consider the extra costs associated with a long-term care disability in retirement, and that nothing will pay for the kind of care they want except their own money.”
The idea that Medicare and Social Security will pay for senior care is rooted in the misconception that … a government entitlement program … will cover such costs. “Many people do see the government taking care of disabled seniors in nursing homes,” Comfort says. “…Medicare only covers short-term acute and rehabilitative costs. When a nursing home is needed, Medicaid — a ‘means tested’ welfare program designed to help the poor of all ages — will pay. But that’s only when a senior has exhausted almost all of his or her own resources. And Medicaid generally pays only for care where a senior least wants to go: A certified nursing home.”
Medicaid not only requires seniors to deplete their assets, but once qualified, they must pay any remaining monthly income, including Social Security or a pension check, to the nursing home. Medicaid only pays the difference between the senior’s remaining income and the nursing home’s monthly charge. …
Comfort relates a story about a client who pays for long-term care insurance for her father as a result of an experience with her stepmother. “Her step-mother needed Alzheimer’s care and she qualified immediately for Medicaid. What the family didn’t realize is that they couldn’t choose the nursing home they wanted so she was placed farther away from her home,” Comfort says. “The daughter is paying for long-term care insurance now so that her father has more options if he needs care. …”
…“Growing older, which we all hope to do, will create some need for care, and that costs money…,” Comfort says. …
Paul Hogan is co-founder and CEO of Home Instead Senior Care. Home Instead Senior Care is among the nation’s largest providers of at-home care for seniors and has served more than 400,000 clients through a network of 800 franchise offices in the U.S. and 15 other countries. Hogan and his wife, Lori, are co-authors of Stages of Senior Care: Your Step-by-Step Guide to Making the Best Decisions (November 2009/McGraw Hill).  For more information, go to http://www.stagesofseniorcare.com/.