Helping Your Parents Decide on Care
by Jan Greene


Q: I am considering recommending long-term care insurance to my parents, but they tell me they are thinking of moving to a continuing care retirement community. They are each 79. How do these options compare?

A: You and your parents are to be congratulated for searching out all the options available for long-term care. Your decision will rely in part on your parents' health and lifestyle preferences, but even more on their finances.

      The two options you're considering are really quite different. Long-term care insurance could really be known as "asset protection insurance." Basically, it's an insurance policy that pays benefits if the holder needs to go into a nursing home or requires in-home health care. It is most often recommended to middle income people who don't want to spend their children's entire inheritance on a potential nursing home stay. Lower-income people are better off relying on Medicaid, and more well-to-do people can simply "self insure" by setting aside enough of their own money to cover long-term care costs.
      On the other hand, a continuing care retirement community is a residence where an elderly person can live while healthy, but later take advantage of on-site skilled nursing care without relocating. Your parents would pay a large one-time fee ($50,000 to $100,000) to guarantee a permanent spot in the community, then pay a monthly fee that varies depending upon the services needed. Depending on the type of contract signed, all or part of the entry fee may revert to the participant's estate upon his or her death.
      In terms of comparing the options, your parents need to consider where they want to live and how much money they have to protect. If they're both in good health and feel strongly about continuing to live in the old homestead, they should consider long-term care insurance. Of course, keep in mind that at their ages the premiums will be quite high, perhaps around $3,000 to $4,000 per year. At the same time, they could eliminate some of the bells and whistles on the policy they choose, since they won't have quite as many years to use the benefits. For instance, they wouldn't need to pay for cost-of-living adjustments to the benefits, as would someone in their 50s, notes San Francisco insurance broker Stephen Roy.
      If your folks are looking for a secure future and are willing to relocate, they could go in search of one of the approximately 2,100 continuing care retirement communities in the United States. “You're buying a lifetime commitment to your comfort,” explains insurance broker Roy. Because it's such a major commitment, he recommends that you carefully examine the community's financial stability, its mission and purpose. “If after a year you don't like it, where do you go now?” he points out.
      These communities offer a variety of residency agreements. Extensive contracts provide both housing and unlimited health-related services, with higher fees during the early years of residency. There are also fee-for-service agreements that include housing, with health care services paid for as you go. It's also possible to find communities that charge only a monthly fee with no entry charge. More information on these options is available by checking out American Association of Homes for the Aging.
      When looking into the world of long-term care options, it's easy to become confused by all the terminology. Keep in mind that a nursing home or skilled nursing facility is basically the same thing, and offers round-the-clock nursing care for people whose medical problems are too severe -- or who are too frail -- to care for themselves. Note, however, that not all nursing homes necessarily have doctors available all the time, or even every day.
      You may also hear about "assisted living." This refers to a facility or program that helps people perform the tasks of daily living, such as getting dressed and making lunch. It's possible to move into an assisted living facility that provides such help, but does not actually offer the kind of medical care that a nursing home would. Sometimes assisted living facilities are also known as personal care, residential care or domiciliary care.
      Now that we've got all that straight, you'll probably still need some more assistance choosing from the growing array of services for the elderly. Here are some good sources for help:

bulletThe October 1997 issue of Consumer Reports. This is an in-depth, detailed look at long-term care insurance that includes comparisons of policies from a number of different insurers. Keep in mind, though, that the policies profiled may not be available in your state, and they may be the most generous policies offered by those companies. Check your library for back copies of Consumer Reports. Online access requires a subscription.
bulletYour local HICAP, or Health Insurance Counseling and Assistance Program. Check your local phone book or senior center for the one near you. You also can try the Medicare directory or call the Eldercare Locator at (800) 677-1116.
bulletThe United Seniors Health Cooperative. It offers a comprehensive, updated guide called "Long-Term Care Planning," which helps you compare features of different insurance plans. The 100-page book costs $18 and is available by writing to USHC at 409 Third St. S.W., 2nd floor, Washington, D.C. 20024.
bulletFinally, you might want to try the book, "Beat the Nursing Home Trap, A Consumer's Guide to Choosing and Financing Long-Term Care," by Joseph Matthews, (Nolo Press, 1997).


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