Flexibility, Key to an Effective Long-Term Care Policy
An interview with Kansas Insurance Commissioner Sandy Praeger
By Betty Gibb, Kansas Senior Press Service
A project of the KU Center on Aging
Kansas Insurance Commissioner Sandy Praeger believes strongly in long-term care insurance. “With people living longer, and more options opening for care when a person can no longer take care of him/herself, long-term care insurance is offering solutions that benefit both families and the state,” she says.
“Without long-term care insurance, the State of Kansas will really struggle in the future to cover the costs of nursing home care as our population ages so rapidly,” Praeger says.
What’s missing in the system right now is some kind of partnership that makes long-term care insurance affordable for middle- and low-income families. Four states have such partnerships, New York, Connecticut, Indiana and California. In New York, for example, if you use three years of nursing home care, or six years of home care (or some combination) you can then apply for Medicaid benefits and still retain all your assets.
That’s not available in Kansas yet, but Praeger is hoping and pressing for a similar accommodation. Long-term care insurance now is really asset protection, she says. Whether or not you should purchase it depends on your assets and income, your family situation and your personal risk factors. Long-term care insurance is relatively expensive. You should certainly NOT buy a policy if you are having trouble stretching your income to pay for utilities, food or medicine.
If you do have sizable assets you wish to protect or you want to increase your care options, she offers these tips:
- Get as much flexibility as possible in the policy. You don’t know what the future holds and what your needs may be. It used to be that long-term care insurance primarily covered some of the costs of nursing home care. Now policies can cover in-home care, some assisted living costs, adult day care, and other options. “Flexibility is crucial,” says Praeger. “You may have to pay a little more for that flexibility, but it’s the only way to be sure you can choose the care that best fits your needs and wants later on.”
- Check to see if the policy you are considering is “Tax Qualified.” If it is, you may be able to deduct all or part of the premium as a medical expense (depending on your total medical expenditures), and the benefits paid out by the policy will generally not be taxable as income.
- Nonforfeiture benefits can be important. With them, some of your premiums will be returned to you if you cancel the policy or stop paying the premiums.
- Be sure to have your lawyer or financial advisor look over the policy before you buy. Don’t buy a policy that you don’t understand. Remember that the insurance company will not pay for anything that is not spelled out in the policy. Also be sure the health information you provide is absolutely correct. If you provide inaccurate information, the insurance company can void your policy.
- In Kansas you have a “free look” for 30 days in which you can get a complete refund if you change your mind.
“Long-term care insurance is still relative new,” Praeger says. “There are about 9 million policies nationally that have been issued over the last 12 to 14 years. Most of them are not yet paying benefits—the policy holders are not ready—so we don’t know yet what the major problems will be. In 2003, insurance companies paid out approximately $1 billion in benefits.”
The Insurance Commissioner’s office has a helpful shopper’s guide that is in the updating process. It will be available this spring. The information will also be available on line.
“Also,” Praeger adds, “our insurance counselors are here to help you. If you’re considering a particular policy or company, call us. We can provide you with some basic information about the company and answer your questions. The telephone number for Consumer Assistance Division of the Insurance Department is 1-800-432-2484. The Insurance Department’s web site is www.ksinsurance.org.
Human Services & Aging
11811 S. Sunset Drive, Suite #1300
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