A policy where you do long-term care the way you want

Dear Michael: We have long-term care insurance, although our premium keeps getting higher and higher. How do we go about mitigating these costs on premiums and on our coverage? We seem to slip further and further behind in coverage as prices continue to climb for care. We have some friends paying $6,000 a month and others paying $12,000 a month. What should we do if our premiums reach a point where they are too high? – Too High

Dear Too High: Long-term care insurance companies are in the process of raising their premiums to cover the claims they are having. Many people who bought coverage 20 years ago are now seeing their premiums rise by 100 percent or more with no end in sight.

The reason for this is long-term care insurance companies 20 years ago thought 80 percent of the people would be dead by age 80 – but now 80 percent of them are still alive – and creating claims.

Based on statistics, men will spend anywhere from three months to two years in a nursing home. They receive a majority of their care at home from their spouse. Women, on the other hand, are about four to five years of care.

The thing most people hate the most about the idea of long-term care insurance is that someday they may have to use it. That is why everyone cringes at the idea of long-term care insurance – yet 70 percent of people over the age of 65 will require care.

The question you need to ask yourself is "Where do I want to receive care and how do I most efficiently manage this?" Do I want to be in a facility? "Who do I want in charge of my care – when it becomes necessary?"

Most people with long-term care insurance have traditional coverage – coverage that is like health insurance. When you need care, you file a claim, you get to talk to a Care Specialist at the insurance company and you negotiate with them the cheapest way to provide your care. The insurance company oversees your care from then on.

You might prefer a different approach.

If most men die within two years of needing care, why are you paying for a five-year policy? That is expensive.

Women may need care four to five years, but would it really be that long if they could stay in their homes – same as the man did due to his wife's care? It would seem if they could stay in their homes, the time spent in a facility would be reduced – perhaps to two years or less – if they could receive long-term care at home just as their spouse did.

However, if you had a policy guaranteeing all payments came direct to you and you decide where you are getting care, I am guessing you would stay in your home as long as possible and just go to the nursing home for respite or end of life care.

If you could combine these two types of contracts together (and you can), it would be possible to lower traditional long-term care insurance to two years for men – four years for women – saving a lot of money on premiums.

Use these savings to purchase a set benefit policy amount paid direct to you so you can delay going into a facility as long as possible. If you never use the coverage, the dollar amount you select goes to your children versus traditional insurance premiums you will never see again.

I call it the 'anti-long-term care insurance' policy because it manages things the first few years when you might need long-term care and need help paying for it. But you get to do it your way versus the insurance companies' way.