Long-term care insurance: What urologists need to know

August 1, 2010

The average U.S. citizen is living longer primarily because of advancements in medical care. This means a higher likelihood of needing long-term care.

Key Points

Q: My insurance agent recommends that I purchase a long-term care insurance policy. Is this a good strategy?

Long-term care (LTC) insurance is designed to pay for long-term care services at home or in an institution, with either skilled or unskilled care. The benefits of LTC insurance vary greatly among the different major insurance carriers.

Choosing a policy

The decision to purchase LTC insurance generally must be made while you are still healthy. When shopping for a policy, be sure that you are familiar with the common elements within most policies, as well as the differences of these policies:

Amount of benefit. Most policies pay a fixed dollar amount for each day you are eligible for the benefit.

Inflation protection. Since health care costs are increasing, a policy without a provision for inflation may be inadequate over the long term.

Guaranteed renewability. Similar to disability insurance, almost all long-term care policies available in the insurance marketplace are guaranteed renewable, meaning that the policy cannot be canceled as long as you pay the premiums on time and as long as you were truthful when completing the application. Keep in mind, however, that just because a policy is guaranteed renewable does not mean the premium cannot be increased. Most insurers reserve the right to raise premiums for an entire class or group of policyholders.

Place of care. It is important to know whether the policy requires that a nursing home be licensed or certified by the state to provide skilled or intermediate nursing home care. Additionally, many long-term care policies can provide coverage in the insured's home. If home health care is not covered in the policy, it may be available as a rider for an additional premium cost. The insurance company will reimburse the cost of long-term care received at home based on certain limitations.

Level of care. "Skilled care" refers to daily nursing and rehabilitation care under the supervision of skilled medical personnel. "Intermediate care" is the same as skilled care, except that it requires only intermittent or occasional nursing and rehabilitative care. "Custodial care" deals with assisting with one's daily activities, including eating, bathing, dressing, toileting, etc. Typically, persons assisting the insured do not need to be medically skilled, but the care is usually based on the physician's certification that such care is needed.

These are just some of the many factors to consider when implementing a long-term care insurance program. As is the case with other types of insurance, policy features must be compared and weighed. Typically, the more benefits included in the policy, the higher the premium.

Q: Should the asset size of a mutual fund be a factor in deciding whether to invest?

A: Mutual funds range in size from tens of millions of dollars to hundreds of billions of dollars. As a fund grows, the list of companies that it invests in also tends to grow. This can be an advantage, since it creates greater stock diversification, which may reduce price fluctuations within the fund.

Remember that all funds start out small in size. A new fund has the ability to build a portfolio that reflects the manager's view of attractive investments. A new, smaller fund is not burdened by tax issues related to previously held investments.

Some funds like being small and don't want to become large. To preserve this perceived investing advantage, some funds close to new investors once they have attained a certain size. As a rule, when smaller-sized mutual funds gain in popularity due to stellar performance, they also gain in asset size. The unknown variable is how that fund will manage its growth.

Joel M. Blau, CFP, is president and Ronald J. Paprocki, JD, CFP, CHBC, is chief executive officer of MEDIQUS Asset Advisors, Inc. in Chicago. They can be reached at 800-883-8555 or blau@mediqus.com
or paprocki@mediqus.com
.

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