Fine print problems
If you file a claim, read the fine print. Attorney Frank Darras of Ontario, Calif., has seen some companies reject or drag out payments for obscure reasons. They might pay for home-care workers only if they keep detailed notes of all services, or they might trim days of coverage because they object to your doctor's "plan of care." Fragile seniors are in no shape to fight long paperwork battles, Darras says. "They die, and I wind up with a son or daughter trying to collect what was owed."
Also, check the fine print on deferred annuities that promise fee-free access to your money to pay for long-term care. Financial planner Bill Houck of Westwood, N.J., says that some annuities pay nursing home fees but not assisted living facility fees.
What are your alternatives to insurance, for bills that can run $80,000 or more per year? Forget the Class Act, the proposed federal LTC program for the middle class. It's been sidelined as too expensive. Medicaid, for people who have gone through most of their savings, is also under threat. It is the primary payer for an estimated 64 percent of all nursing home residents, according to Families USA. Nevertheless, its budgets are being cut by some states, and many members of Congress want to slash billions more. The health reform law expands Medicaid, but that's being challenged in the U.S. Supreme Court.
Without private insurance, access to Medicaid or a barrelful of money, you're depending entirely on good health, good luck — or if that fails — good relatives. More families will have to shoulder the costs of elder care. Fewer children will inherit anything after the bills are paid.
My view: Buy, or renew, long-term care insurance if you can possibly afford it. But for increasing numbers, that protection is out of reach.
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Jane Bryant Quinn is a personal finance expert and author of Making the Most of Your Money NOW.