Retirement News : Seniors : Long-term-care insurance important part of your total retirement ...

Long-term-care insurance important part of your total retirement ...

Date Added: 15-03-2005

NORTH COUNTY ---- Life expectancy in the United States ---- 77.2 years, according to the National Center for Health Statistics ---- is nearly double today what it was a century ago.

But as America's baby-boom generation, the population bubble that was born between 1946 and 1964, approaches retirement, it comes face to face with a hard reality: Its income years are likely to end long before its spending years.

That simple fact begs the question: How does one provide for the possibility that advancing age will lead to very costly care needs, even as the ability to pay for that care slips away?

"If you only have $40,000 in savings, that would be depleted in less than a year of nursing care, and you would qualify for Medi-Cal," said Enid Kassner, a senior policy analyst for AARP. "But if you have $150,000 or $200,000, you should look at insurance."

Kassner was talking about long-term care insurance, a specialty product designed to insulate someone from some or most of the financial burden of getting on in years. Insurance against a long life ---- that's what it amounts to ---- is not the only way to plan for the future, however.

A common misconception about long-term care is that it takes place in a nursing home. While patients in nursing homes do receive long-term care, so can people who continue to live in their own homes and people who live in a variety of alternative residential arrangements.

Another common misconception is that only the elderly need long-term care. Actually, the California Department of Insurance says only about half of all persons receiving long-term care are elderly. But it is the people who do not need it until they age who have an opportunity to buy insurance to help pay for it.

Long-term care, as defined by the department, is the assistance or supervision someone may need when he or she cannot manage the basic activities of daily living, which may include bathing, dressing, preparing food, moving about or leaving home.

People sometimes are unable to do these things because of injury or illness, frailty, or because they have suffered a stroke.

Some people also lose the ability to do for themselves because of cognitive impairment, the long-term mental deterioration typical of Alzheimer's disease and other brain disorders.

It is an oddity of long-term care that it may be needed only for a short period of time. That might be the case, for example, during the period of recovery from a surgical procedure or a broken bone.

It also may not be limited to personal care, but may include homemaker services for someone who cannot clean a home or wash laundry or dishes.

The question of who pays for the long-term care these conditions often require has a simple answer: If you need care, you pay for it.

That care can be expensive. According to the National Center for Policy Analysis, a nonpartisan Dallas-based public policy advocacy organization, more than half of all people who enter nursing homes spend between $65,700 and $328,500 per year.

That poses a problem because in California the average total personal income of people over age 65 is about $28,000, according to information available on the Web site of the California Department of Health Services. Men over 65 earn an average of $32,300 and women earn $23,900, it states.

Many retired Californians count on the accumulated value of their homes to provide a financial cushion in the event that they need long-term care, either in a nursing home setting or even at home, where they can be cared for by visiting caregivers. And they count on Medicare and Medi-Cal to pay their bills.

Still others cash-out their home equity and buy into continuing care residential communities, or CCRCs.

Carlsbad-by-the-Sea is such a community, a not-for-profit corporation that provides a range of living options for seniors. Independent living, with one-, two- or three-bedroom apartments, coupled with activity programs, restaurant-style meal plans and on-site medical options, cost hundreds of thousands of dollars and require monthly fees of as much as $4,000. But the continuing care contract provides for continuing residence, and even care in assisted living plans or nursing facilities, even if the residents outlive their assets, according to Carlsbad-by-the-Sea Executive Director Dawn Larsen.

People have different reasons for wanting to buy into a place like Carlsbad-by-the-sea, For Jim Sharp, 77, and his wife Kay, 78, it was easy: "We didn't have children," she said.

"We couldn't rely on them because we didn't have any, so we moved here from Chicago and bought here," said her husband. "Kay's mother was in a CCRC in Illinois and we liked what we saw there."

"We were bent in this direction after having taken care of two very dear friends and seeing what they went through," said neighbor Jim Espy, 80.

"We were very active in the Lutheran Church in Yorba Linda, where we lived," said his wife, Mildred, 79. "We retired from jobs that required a lot of work, but then we found that retirement required a lot of work, too," said the former telephone company employee.

For 88-year-old Nancy Smith, the issue was peace of mind.

"I had been a widow for 15 years," she said. "When this place was rebuilt, I moved here because I have a lifelong love of the ocean."

For More Information: http://www.nctimes.com/articles/2005/03/13/business/news/19_35_183_12_05.txt