Are you covered? Why California wants you to buy long-term care insurance

Excerpt from JONDI GUMZ article, Santa Cruz Sentinel

March 5, 2006

Santa CRUZ — Like most people, Beth Peterson didn't think much about getting older when she moved to Santa Cruz with her husband 26 years ago.

At the time, she was 54, a retired nursery school teacher. Her husband, Norman, had wrapped up a 40-year career with General Electric, and they had two grown sons.

Then she saw what happened when her husband's niece tried to juggle her job and take care of her mother, who had Alzheimer's.

"She felt so guilty she couldn't care for her," Peterson recalled.

The situation made her think about the future. After her daughter-in-law's parents bought long-term care insurance, she made up her mind to do the same thing. She was 71.

"I don't want someone else to take care of me and be a burden," said Peterson, who celebrated her 80th birthday Tuesday.

In eight years, she has taken advantage of the policy three times.

Peterson is among the 5 percent of Americans with long-term care insurance. Such policies, which can protect family assets, are slightly more common in California, where 7 percent of adults have coverage.

Officials with the California Department of Health Services support long-term care insurance. More than 10 years ago, the department created the California Partnership for Long Term Care. Six insurers now participate in the partnership.

In November, MetLife offered the partnership's first employer group plan for long-term care. State officials encourage employers to pay for the coverage or offer it as a benefit option. MetLife has sold 100 California Partnership policies since then, but all were to individuals rather than businesses.

As the population ages, more employees find themselves caught between workplace assignments and responsibilities caring for a parent or spouse. A study by the National Center on Women and Aging at Brandeis University found employees caring for an elderly relative had to adjust their work schedules, hampering their productivity.

The odds that you will end up in a nursing home are a lot better than the odds of winning the lottery.

One out of two women and one out of three men over the age of 65 will spend some time in a nursing home, according to statistics cited by state health chief Sandra Shewry.

That care averages about $180 a day or $66,000 a year, costs that Shewry said are not generally covered by Medicare or private health insurance. (2010 costs over $82,000)

Still, most people don't give much thought to who will care for them when they get old.

"My worst competitor is denial," said Barbara Hanson, a Felton resident who has sold more than 1,300 long-term care policies in the past 10 years, (including the Petersons’ policies)

A retail broker specializing in long-term care insurance, she has been recognized as one of the top 100 agents in the nation for the past two years. Most of the policies she has sold range from $800 a year to $2,000 a year, although customers can buy more, or less, coverage.

While that price may seem steep, the alternative can be more expensive. Home care costs vary between a few hours a day to round-the-clock assistance at $18 to $35 an hour. A residential care facility in Santa Cruz County can cost $2,900 to $8,000 a month, depending on your room and level of care.

"Most of us can visualize the need for life and health insurance, but we cannot see ourselves needing help with activities of daily living — bathing, dressing, getting up from a chair or worse, the dreaded memory loss of Alzheimer's disease," Hanson explained. "My usual clients are the ones who have seen the need up close and personal."

Hanson, who worked in long-term care facilities in Milwaukee for seven years, has seen the need herself.

"I saw my mother and grandmother need care for six years each and my aunt and uncle both died broke in nursing homes," she said. "I remember how I felt when I could not care for my mother when she was disabled."

She decided she did not want that experience for her own twin daughters.

At 49, she decided she was ready to buy a policy. But a routine health exam and a recommendation for surgery left her uninsurable. Once she was back on her feet, she got a policy, choosing one offered by the state's Partnership for Long Term Care, but it cost more (at age 50).

"My experience makes me nervous when folks put this off," she said.

Peterson also saw the need for care firsthand.

Her husband, who was 6 feet fall, developed scoliosis and heart trouble, and it was hard for her, at 5-foot-6, to help him up when he keeled over. He needed around-the-clock care.

"It was just terrible," she recalled. "My husband thought we could take care of any expenses we might have. He got a policy that didn't pay a lot. My policy was more expensive and it was very good."

It came in handy when she dislocated her shoulder, when she needed back surgery and spent 10 days at Stanford Hospital, and when she broke her elbow and got a cast at Dominican Hospital. She had the help she needed while she recovered at home.

As she visits her sons, who live in Cupertino and North Carolina, sings in the choir at her church, and participates in the Symphonic Chorus at Cabrillo College, she has peace of mind.

She only wishes she had bought the policy sooner — "45 to 60 is when you really should get it," she said.

Jill Ginghofer sees a lot of people in denial.

She is regional director of the Alzheimer's Association, which has an office at the Elena Baskin Senior Center in Live Oak. About 400 to 500 people a year seek advice about the disease, which is the fourth highest killer in the nation.

"We don't collect this statistic, but I would say that only 2 percent of those have long-term care insurance for the patient," Ginghofer said. "It's a problem."

Ginghofer said it's more likely people caring for someone with Alzheimer's has a policy than the Alzheimer's patient.

"When they learn that the average expense of an Alzheimer's patient from diagnosis to death is between $175,000 and $480,000, they buy it for themselves," she said.

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