The Elder Law Forum

The Elder Law Forum Editor's Note: The Elder Law Forum is a public service of the University of South Dakota School of Law, an extension of the SENIOR LEGAL HOTLINE available at no cost to persons 60 and older at 605-677-6343 and mmyers@usd.edu during regular business hours. The Elder Law Forum delivers information and educational material by radio, a weekly newspaper column, and Law School research papers placed on the USD School of Law Web site. Professor Myers teaches Elder Law at the School of Law.

A Checklist for

Long-Term Care Insurance

Long-term care insurance. What are the chances you will need it? Is it a good investment? When should you buy it? Have you waited too long and now it's too expensive?

Whether you will need it is a statistical forecast, embedded in the laws of probability. One thing is certain � the longer you live the more likely it is you will spend some time in a long-term care facility.

According to one survey, about 40 percent of persons over 65 will use a nursing home before they die. One out of four will spend a year in a nursing home, and one out of 11 will spend up to five years in a nursing home.

On the other hand, on any given day only 5 percent of persons over 65 are residing in nursing homes. In part, that is because an increasing number of elderly persons are capable of living in an assisted living or congregate environment.

Once you make a decision to purchase long-term care insurance you need to make some key inquiries, according to Jay Bogen, Watertown, a long-term care planning specialist who lectured this week to my ElderLaw class at the law school. First, he says, examine the financial strength and rate history of the insurance carrier.

Second, verify the daily benefit rate. It can range from $40 to $300 per day. The average daily rate for South Dakota nursing homes in 2003 is $128. Brookings has a $160 daily rate. Sioux Falls reports an average daily rate of $157. Make certain, says Bogen � and this is crucial � that your policy includes an inflation rider.

And, know the difference between "periodic," "deferred," "simple," and "compound" interest inflation riders. You want a "compound interest" inflation rider.

Other crucial items on your checklist: Know the benefit period. It can be two, three, four, five, six, 10, or unlimited years. The most common benefit period is three years, a time frame that accommodates the current three-year "look-back" period for Medicaid eligibility. Long-term care insurance is often used as a Medicaid planning tool.

Be aware of the elimination period, the amount of time before the insurance company begins to pay. Elimination periods range from zero days to 100 days. And, check the home care provisions of your policy.

Other possible features and benefits contained in today's long-term care policies include waiver of premium, bed reservation (14-60 days), respite care, adult day care, return of premium, and rate guarantees.

If you need help reviewing your policy call toll free 1-800-747-1895, the USD Senior Legal Hotline, during business hours Monday through Friday.

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