POSTED: 1:30 a.m. HST, Jun 11, 2011
During my medical training, a trauma patient came in by air ambulance from the island of Hawaii. A successful businessman, he had been riding his motorcycle to the office. An oncoming truck crossed the center line and hit him head-on. He sustained a major head injury and multiple open fractures. He was at death's door by the time he arrived. Several months and multiple surgeries later, the swelling in his brain had abated, his infections were controlled and his fractures were mended. He was able to talk and walk and to feed himself, but his mind was not the same. It proved unsafe to leave him alone at home. Ultimately, his wife had to place him in a long-term care facility.
When she finally placed him, his spouse, also a successful and thoughtful professional, learned about the gap in their insurance benefits. Although they had spent considerable time planning their estate and purchased multiple insurance policies to cover any eventuality, they had omitted long-term care benefits. My patient was only in his 40s when he crashed. The combination of his lost income and the costs of his long-term care drained their estate.
Everyone who drives is required to carry car insurance. The majority of people have health insurance through their work or a government-subsidized plan. Those with means and foresight purchase life insurance. Yet, too often we overlook the possibility that we or our loved ones might suffer a prolonged period of profound incapacity. At first glance, long-term care insurance seems quite expensive for what you get and, as a result, tends to be given low priority. Some come to regret it.
Medical causes of incapacity are myriad. The need for long-term care might be the result of trauma. It also results from chronic disease such as Alzheimer's or Parkinson's. Regardless of the cause, if one cannot perform the activities of daily living, such as dressing, bathing, eating or using the bathroom, the burden even on a loving, caring and available family member can become overwhelming. There are five major settings in which long-term care can be received: skilled nursing facilities, adult day care, assisted living, hospice and home care.
Unfortunately, the cost for long-term care is rising rapidly as the baby boomers are causing a spike in demand and a shortage of facilities and caregivers.
Improved underwriting is also driving up the cost for long-term care insurance. The industry is relatively young, 25 to 30 years old, and initially underestimated risk. Carriers such as John Hancock are beginning to increase premiums by as much as 40 percent. Today a policy to cover a husband and wife 55 years of age, offering access to any caregiver or facility in Hawaii, will cost between $4,000 and $7,000 annually. Yet, out-of-pocket costs for assisted living facilities range from $4,500 to 6,000 per month, while a skilled nursing facility costs $8,000-$10,000 per month.
The downside is "if you do not use it, you lose it." If premiums are paid but the beneficiary dies without making a claim, security and piece of mind will have come at a high price. As it stands, only 10 percent to 15 percent of the population has some long-term care insurance.
The prolonged incapacity of a loved one is tough enough without having to choose between optimal care and saving the family home. Although premiums for long-term care insurance are substantial, if they are affordable the ability to remove the financial burden for care in a time of need is a profound relief.
Ira Zunin, M.D., M.P.H., M.B.A., is medical director of Manakai o Malama Integrative Healthcare Group and Rehabilitation Center and CEO of Global Advisory Services Inc. Please submit your questions to firstname.lastname@example.org.