Letter To The Editor: 50-50 fault

Tony Dillard writes: This is in response to the letter to the editor by Margie Emch in the October 2008 LTC e-Wire (Letter: Inflation option is costly). The problem of LTC policies sold at worksites without inflation protection rests on a 50-50 fault basis: 50% is the fault of the insurance company being represented; and 50% is the fault of the agent who sold the idea of a small employer-funded core benefit.

The company’s fault lies in promoting guaranteed issue for a small base plan for all employees, because the insurance carrier knows their claim exposure will be little to none. The truth of the matter is, if the employee does not buy up from this base plan, a claim most likely will never take place.

Using myself in this example, I am 39 years old and live in Dallas-Fort Worth, Tex. Our average cost of care, according to the interactive cost of care map from Genworth, Richmond, Va., is $60,640 for a nursing home and $40,704 for home health care. Let’s say I had a plan offering a 3-year, $2,000 monthly indemnity benefit, not a cash benefit. If I don’t buy up and have an earlier-than-expected nursing home claim, say next year, I would be required to write a personal check for $3,000 to go with the $2,000 from the LTC carrier to fund my care. How many baby boomers and gen-Xers have that kind of monthly income available, especially during a recession?

Also, if I don’t have $3,000 to coinsure, I will not be able to stay in the facility very long after they figure out I can’t pay the entire bill. The problem may not be as horrific with a home health claim, because most home care is part time, and the expense is less. However, the problem of coinsuring still exists.

And then there is the Medicaid question. Can you have an LTC insurance policy and qualify for Medicaid?