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 of pocket."

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 each week."

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.