Response by Phyllis Shelton
to article by Kim Lankford
in Kiplinger’s Personal Finance
March Issue “Arm Yourself While You Can”
The March issue of Kiplinger's Personal Finance has an excellent
article by Kim Lankford, "Arm Yourself While You Can", about
people on claim with LTC insurance.
Two things immediately stuck out to me:
1) "Among the nursing home residents, even those with inflation
protection clauses were shelling out an average of $1,000 per month out
Comment: I've been training agents for years to estimate about
20% above the room and board cost for drugs and supplies, which most reimbursement
policies won't pay. When consumers agree to self-insure part of the cost,
I'd say very few of them take that into consideration and they base their
daily benefit decision just on the room and board rate in their area.
For example, I'm using $157 as average cost in my 2001 update (MetLife
2000 survey shows an average of $131 for semi-private room and board,
so $131 x 20% = $157).
2) "The survey also found that policies cover only about the
first 36 of the 59 hours of home care the average policyholder receives
Comment: Now we're seeing the impact of all those 50% home health
care benefits. PLUS I've been saying for ten years that people will want
8 hr. shifts, not visits every other day. I'm saying now that
families will want more like 10 or 12 hr. shifts as that is what it really
takes to give a primary caregiver adequate rest. At an average of $16
an hour (MetLife 2000 study), a 10-hour shift costs the same as semi-private
nursing nursing home care, and as 12 hour shift will certainly cost more.