| Death,
Taxes and Long-Term Care Insurance |
| We're all familiar with Ben Franklin's adage: "Nothing
can be said to be certain in this world except death and taxes."
Now, there's another somber certainty we must consider: long-term
care insurance (LTCI). |
| Thanks to the miracles of modern medicine, more and more
of us can look forward to celebrating our birthdays into our
80s, 90s and beyond. There are so many centenarians nowadays,
even Willard Scott, the TV weatherman, had to stop giving
his cheery birthday greetings to persons reaching the magical
1-0-0. It's no big deal anymore. |
| Before you break out the party hats and the bubbly in anticipation
of many future birthdays, let me insert some reality. All
too often, with every joy, there's a downside. We're living
longer, but ultimately, with old age, many of us will face
lengthy periods of illness and debilitation, requiring us
to seek help with activities of daily living. In the "olden
days," oldsters could rely on relatives and the community
to provide shelter and succor during their waning years. Grandparents
were welcomed into their children's homes and became an integral
part of an extended family. Old age was associated with wisdom
and respect. |
| Now, let's move fast-forward to the 21st century to see
what we can anticipate as survivors of the "Greatest
Generation," as Tom Brokaw calls us. Today's houses are
smaller; they don't have attics to hide a quirky Granny. |
| Don't rely on your kids to help, because they're scattered
to all corners of the earth. Retirement is great, but let's
face it: it's not all fun and games. Certainly, nobody looks
forward to becoming a burden to next of kin, but without the
traditional support of family and community, the financial
costs and emotional stress of extended care can be overwhelming. |
| To solve this problem, or at least reduce it, long-term
care insurance (LTCI) was introduced by the insurance industry
in 1965. The concept was slow to catch on, with early subscribers
in their 60s. "LTCI ownership really took off in the
mid 1980s and the average age has now dropped to around 58,"
explains Donna Flanagan of the USAA insurance company. |
| This is attributed largely to the increase of baby boomers
in their 40s who are buying LTCI for themselves as they become
more aware of their mortality and the challenges they will
face as they step up to being the older generation. |
| Another growth factor is the recent entry of the federal
government in sponsoring LTCI for employees, annuitants and
various relatives, including the parents-in-law in some cases.
The Feds offer the program, but it's actually run by two private
insurance companies: John Hancock and MetLife, with a discount
of about 15 to 20 percent. |
| Trying to figure out whether LTCI meets your needs is a
task that makes tax preparation look like kid stuff. Fortunately,
help is available. It's called "A Shopper's Guide to
Long-term Care Insurance." The booklet was prepared by
"... state insurance officials to protect the interests
of insurance consumers." It covers all aspects of LTCI,
the pros and cons, and provides worksheets to help you work
your way through the maze of variables you must consider.
|
| There's no techspeak, so even I, a confessed computer-illiterate,
was able to understand it. To get a copy of the guide and
a list of insurance companies licensed to sell LTCI in Virginia,
just phone the Virginia Bureau of Insurance, at 800-552-7945.
They're free. Or, contact your favorite insurance agent or
company, who by law must furnish a copy of the guide to help
you decide which, if any policy to buy. |
| While you're waiting for your booklet, here are a few basics
to consider: LTCI, like all insurance plans, comes at a price.
Two groups of people may not want this coverage: if you're
wealthy, you may decide you don't need it and self-insure
instead. If you're at the other end of the income scale, check
with your Area Agency on Aging to see if you qualify for public
assistance. In Fairfax County, phone 703-324-5411. In Loudoun
County, the number is 703-777-0257. |
| That leaves the vast majority of us who fall somewhere in
the middle-class bracket between affluence and poverty. If
you're not sure whether you need LTCI, look at these numbers
put out for the Fed's plan. |
| The national average annual cost of home care in 2002 is
well over $20,000. By 2030, this is projected to be $68,000.
Nursing home care is even more scary, with an average annual
cost this year of $52,000, jumping to $190,000 by 2030. You
can see with numbers like these, it wouldn't take long to
eat up a nest egg. |
| One way to reduce the bite is to scale back your expectations.
It's like buying a car. You start out with a basic model and
then consider options. The more bells and whistles you add,
the more you'll have to pay. Stan Jordan, from GraceFul Care
in Reston, notes that, "It's not just nursing homes anymore.
There are a lot of excellent choices for care." |
| His philosophy is that we should try to remain independent
as long as possible. The Fed guide reports that more than
80 percent of people under LTCI opt for less expensive home
care or assisted living as an alternative to a nursing home. |
| Another major factor to consider is timing. LTCI premiums
are directly related to a person's age. It'll cost you a bundle
the longer you wait. For example, at age 50 (using AARP's
definition of a senior and picking the lowest Fed option),
the monthly premium is $14.20. |
| The cost of that same option at 65 years of age is $41.80
and jumps to $115.40 at 75. By buying sooner rather than later,
you lock in a lower rate. Also, you may avoid disqualification,
as you're more likely to develop major health problems the
older you get. |
| A turndown for standard coverage isn't necessarily final.
Some companies offer a customized plan at a higher rate. |
| You've got some pretty serious, heavy-duty homework to do,
but you'll be glad you did, and so will your spouse and kids. |
| |
| Senior
Moments: To Tax or Not to Tax |
| You may remember that last December, this column FOCUSed
on the battle of Northern Virginia businesses to fight for
a sales tax increase to pay for road and transit improvements.
Well, here it's almost one year later and the battle has been
joined with both sides slugging it out with point and counter-point.
During the past 10 months, we've also witnessed a deterioration
of federal and commonwealth budget resources, accompanied
by a continuing slide of the economy and jobs. |
| A salient issue not covered in the debates is the abdication
of responsibility by our locally elected delegates and senators.
Both Republicans and Democrats complained frequently that
our road and transportation problems were caused by those
nasty, uncooperative legislators from down-state who refuse
to give us a fair share of state tax revenues. Their agreement
to double-tax northern Virginians is a cop out to southern
legislative bullies and sets a bad precedent. |
| Then to add insult to injury, our legislators propose to
raise revenues by increasing the sales tax, the most regressive
and cruel tax of all! While they're debating over a Band-Aid
to cover the symptoms instead of trying to fix the causes
of this horrific road-transit mess, the economy has been going
down the tubes. |
| Most hurt by an increase in the phantom sales tax are the
unemployed, seniors on a fixed income and persons working
at subsistence levels. Before pushing for tax hikes, the legislators
should step up to the challenge and boost the tobacco tax
(Virginia has the lowest tax in the U.S.), and force the developers
and special interest groups to pay their fair share for creating
the additional costs that accompany sprawl. |
| To paraphrase President Eisenhower in his farewell radio
address to the nation in 1961: In the councils of government,
we must guard against the acquisition of unwarranted influence
that is sought by the business-developer-political triumvirate. |
| What we need is for our leaders to solve these long-standing
road and transit problems in the public interest by coming
up with bold and creative solutions without burdening those
least able to pay for it. |
| Vote "NO" on the referendum to increase the sales
tax. |
