Why You Need Long-Term Care Insurance

The long-term care crisis is upon us -- don't say you weren't warned.

The government is already having trouble paying the cost of long-term care for the indigent elderly.

Recently, the Wall Street Journal wrote a front-page article slamming states for joining in a partnership to encourage the purchase of long-term care insurance to offset the rising strain on their budgets. It cited concerns about rising policy premiums and the difficulty of collecting benefits from some insurers.

Well, those are issues that can be addressed with regulation.

The very real concern about the cost burden to the government didn't make the headlines in the Wall Street Journal. For that, you'd have to turn to the local newspaper in the small town of East Troy, Wis.

A recent headline there: "Local Nursing Home Launches 'Save the Manor' Campaign."

"The 30 year old Kiwanis Manor nursing home there is looking for the community's help to financially keep it afloat," says the article, going on to note that the well-regarded, AAA-rated facility has "at least $400,000 in bills greater than its accounts receivable."

Bad planning? Maybe.

But it appears the big issue creating the losses is a cutback in government reimbursements. "In 2006, Medicaid payment for the care of these residents was approximately $25 per day less than the actual cost of providing the services. In 2007, funding was cut by an additional $3 per day," reports the paper.

Even more burdensome, explains the article, the state demanded that the nursing home add one certified nursing assistant to every shift -- an additional payroll cost of more than $100,000 per year, while at the same time cutting its reimbursements to the nursing home by $40,000 per year.

The baby boomers haven't even started retiring yet!

Here's a recent story from another small town Wisconsin paper, The Week, on a similar topic: "Resolution asks county to stop reducing the number of beds for Medicaid patients."

That story goes on to note that "to save taxpayer dollars, the county has gradually increased the number of beds available for patients who can pay privately ... and that means fewer beds are available for indigent patients covered by government-subsidized Medicaid."

Now, are you still counting on the government to pay for your long-term care?

Think again.

The Long-Term Care Issue

This is definitely not an issue just for older people. In fact, once you face the issue of needing care, it's too late to plan.

No one likes thinking about needing help to do basic activities of daily living, such as dressing, or bathing, toileting or feeding yourself. Or thinking about meeting those needs for your parents. But this is no time for denial.

The good news is that we are living longer. The bad news is that it costs more. If you need daily personal care, today it costs about $7,000 a month. And the cost is sure to rise faster than the rate of inflation as demand for care soars. (Not to mention the problem of finding help at any cost, if legal immigration is restricted.)