By David Braze (TMF Pixy)
March 06, 2000

Over the last five weeks we have looked at long-term care definitions, highlighted how and what Medicare and Medicaid may pay for long-term care services, explored the issue of long-term care insurance, discussed some long-term care statistics, and outlined a few alternative sources for meeting potential long-term care needs. By now I'm sure you all realize this topic is quite complex. And make no mistake about it -- these brief columns barely scratch the surface of what's involved in deciding how we should handle this issue for ourselves. Still, at least as evidenced by the traffic on the Retired Fools board over these past weeks, the series has served its purpose of stimulating a sometimes spirited debate on a topic many of us may prefer to avoid. I doubt, though, that the articles have enabled many to reach a firm decision on this issue. Nevertheless, they have allowed us to reach some general conclusions, such as:

1. Long-term care and nursing home care are not synonymous. Long-term care encompasses a much wider range of services ranging from the care of personal needs through comprehensive medical support.

2. Medicare pays for very little in the way of long-term care costs. Medicaid may pay many costs, but only for those who have exhausted the bulk of their personal assets.

3. Long-term care insurance is available, but that segment of the industry is still in its infancy, premiums can be expensive, and comparison shopping is a must.

4. The older we get, the more likely we will need some type of long-term care services; however, the bulk of these services will be provided outside of a nursing home and are more likely to involve Instrumental Activities of Daily Living. Thus, these services are less likely to be covered by insurance, Medicare, or Medicaid.

5. Alternative sources for providing long-term care services outside of a nursing home exist to enable us to maintain a high degree of independence and private living for as long as possible. These sources include home care, independent living (or congregate housing), assisted living facilities, continuing care retirement communities, and local community-provided services.

I wish I could wave my Foolish wand and satisfactorily resolve the issue for all. Sadly, I can't do that. All I can do is point to the available facts. Using those, we must then decide what seems to be the best approach for us. I've laid out the facts I thought important, to include a few that are often misstated or omitted by providers, insurers, and others with different axes to grind. Now it's up to us to evaluate the factors involved. As we go through that process, we may want to answer the following questions:

1. How much will it cost and how will I pay for long-term care if and when it's needed?

2. How much am I willing to pay?

3. In the absence of family, who would provide such care for me?

4. How would my spouse's or family's standard of living be affected if I incurred long-term care expenses?

5. How do I comparison shop for long-term care insurance?

6. How much control am I willing to give others over how, when, and where I receive long-term care services?

Now is the time to think about those questions. Long-term care is an emotional (let alone potentially expensive) issue to sort through at any time. Waiting until we need such care to determine what we want to do is not a Foolish course of action. Indeed, waiting until we need such care will almost certainly result in those questions being answered for us. And in most cases, we won't like the answers resulting from such procrastination.

Arguably, the most difficult decision of all will be about long-term care insurance. Be aware that such insurance can play a vital role in defraying the overall costs of long-term care. While it may not provide a perfect solution, it can provide peace of mind as a source of funding for long-term care in many instances. It serves a need, but you have to decide how it will do so. Just remember that the more you wish the policy to do, the more the policy will cost. Also remember that all policies are not created equal, even when they appear to be so on the surface. Learn and understand policy triggering points for payment of benefits, and clearly note any limitations. Know also that the younger you are at policy purchase, the cheaper your premiums will be. And don't forget the impact of inflation. You're most likely to use the protection at an advanced age, so make sure that the daily benefit rates and any lifetime limits increase annually by a compounded inflation rate. That way you will be better able to afford the costs of future long-term care services. Buy only from established, highly rated companies, and then only after you compare, compare, and compare. And after you've done that, compare some more.

I urge all of you to do your research now, while you can calmly and rationally evaluate your options. If you do so today, then you and your loved ones won't have to make rushed decisions later. Those can be expensive, and may even provide more care than is needed at that time. Taking a deliberate approach now will help you determine how you may preserve your assets while providing for various levels of long-term care later. Do the necessary reading, talk with your family, and assess the alternatives. By doing so, you can decide on a course of action that takes most of the emotion out of the equation, and that will make your and your family's choices easier later.

So ends our long-term care discussion. No, we didn't reach any earthshaking conclusions. But I hope we got everyone thinking a bit more about this issue.

Next week: A new topic. Got one you want covered? If so, let's hear about it on the Retired Fools board.

Regards... Pixy