When a good friend of mine inquired where he could obtain information about medical insurance for his out-of-state elderly mother, I told him to try the Internet.
He reported back to me about a week later. In desperation he said, “I am giving up. I am too confused.” He had taken on an overwhelming project with his widowed mother.Following the sudden death of his father, it was his responsibility to care for his mother.
In this world of technology, the family unit is often living in different geographical areas. Usually they are quite involved with their own lives, careers and families. In addition, when both parents are alive, often ore or both parents are quite independent and not requiring a lot of assistance. As time goes on, things of course change. Sometimes very suddenly, there is a crisis with regard to the health care needs of one or both parents.
With the Baby Boomers facing this problem in ever increasing numbers along with the information highway in full bloom, there is a definite need for planning; to protect parents’ assets and health is a huge and daunting undertaking, which requires a tremendous amount of education and practical application.
Our seniors face many diverse responsibilities upon reaching the age of 65. Estate planning, taxation, Medicare, Social Security, wills, insurance and various and sundry other legal and financial matters. All of these different areas require expertise from accountants, lawyers, estate planners, insurance agents, home brokers, financial advisors and a host of other professionals.
The Internet is a good starting point for most people to find resources for your questions and solutions for your problems. However, there is still no replacement for good, solid, intelligent advice from an expert.
Twenty years ago, “Senior Insurance Specialists” sold insurance for elders with just a handful of companies in each state. The programs were most often Medi-Gap or Medicare supplement policies, which covered the expenses, not covered by Medicare, (hospital and doctor deductibles, durable medical devices and non approved Medicare costs). Ironically, these specialists did not sell a lot of nursing care policies even though Medicare paid a national average of less than 2% of these expenses.
With the advent of “Financial and Estate planning” and more insurance companies entering this market, a more broad and diversified product line became available to agents, brokers, planners and seniors. Part of this new diversification was the “Home Health Care” plan sold by itself and in conjunction with senior health insurance products. The appeal of the “Home Health Care Policy” was that a senior could stay at home and still receive medical and custodial benefits; thus allowing a person to recuperate in the comfort of their own home. This was the answer to a huge problem. The last place an older person wanted to go was a “Retirement Home” or God forbid, the “Nursing Home”. It appeared that seniors could now rely on this new innovation without the worry of having to move out of their own home environment in the event of a major health problem.
As with most things, ” if it is too good to be true,” the “Home Health Care Policy” is no exception. The problem is: there is not enough coverage for a lengthy illness or recuperation time. The fact is, the new trend is toward an “all in one” type facility, allowing for a variety of levels of care all in one location.
A senior could start off with little or no health care concerns in a less expensive area and then go to an assisted living or nursing care facility, all within the same compound. A nursing home requires a nurse on the premises 24 hours per day. Assisted living is just eight hours per day. The advantages to this are financial. The patient or senior is only charged according to the care level required during the time he or she is admitted to that facility. Another benefit is that it alleviates a lot of planning because the care is delivered, as it is needed. The medical attention is available to all residents regardless of their current health. Some people are offered a lifetime package, which covers their care for the rest of their life, regardless of their current age. It also allows for social outlets to an otherwise somewhat isolated group.
Online shopping services have become a huge business. It is definitely here to stay. Many insurance policies are purchased from the Internet quotes and online applications. There are literally hundreds of thousands of insurance agents and brokers advertising on the Internet. Most of them will provide instant online quotes and even applications for the potentially insured. I highly discourage a layperson to purchase insurance in this fashion. A little knowledge can be dangerous.
The Federal Government has mandated to all states through legislation the standardized senior health insurance policy guidelines, which are governed and regulated by each state’s insurance department. There are plans for almost every level of health. Some are designed and priced for a less than healthy individual. Others are for a person with minimal health concerns.
The concept of insurance is to provide protection for “unanticipated” sickness or injury; especially those catastrophic expenses that could and would devastate a person’s net worth. The more of the small expenses a person is willing or able to pay (self-insure), the lower the rate. I recommend this strategy when evaluating your insurance options.
Another consideration when reviewing various insurance plans is to look at the company, itself. How long has the company been selling this type of insurance? Do they have a lot of complaints filed with the local Department of Insurance? Are the rates stable? Does it pay claims on time? Does it service?
Most agents talk about the rating. These ratings are as follows:”A+” “A” “A-” “B+” “B” “B-” “C+” “C” and “C-“, or “unrated”. Do not be fooled by just the rating alone. It is good to have a high rating. However, it is far better to have a company that has longevity, stability, innovation, service and expertise rather than a good rating.
The problem is that some companies enter into a market and quickly leave without explanation. This does not give security. explanation. . This doesn’t give security to the policyholder. The most important consideration should be a review of the profit/loss ratio for that product. This will establish stability and longevity in the market. An insurance company with a moderate profit in a particular line of business will remain in that market. On the other hand, a company with losses will make changes and possibly even withdraw. This is information that isn’t normally available to Internet users.
Before entering into an insurance contact, the senior person, the family and other advisors must be realistic. A careful evaluation of the entire picture must be examined: the health of the senior, the financial resources, the personality and attitude of the senior and most importantly, the desires of the senior should all be considered. Early planning is important. As qualification does become increasingly more difficult as the applicant’s health declines.
The “senior health care market” is complex. I will offer some words of advice to attempt to alleviate potential pitfalls:
- Choose a well-informed, seasoned and service oriented agent or broker to assist your decision making process. The professional can offer invaluable information; but do not be afraid to ask a lot of questions and even get a second opinion.
- Do not wait until your parent or loved one is sick or inured. Plan ahead and take the time needed to cover all the options that are available to you.
- Choose an experienced insurance company. A company that has been in the marketplace for a significant time has shown to maintain a balance of rates and benefits and sound risk selection with moderate rate increases over time is your best bet.
- The plan itself should be flexible, with a broad range of options and benefit selections to the insured. There should be no tricks or complicated language for the coverage. An incredibly low rate is a red flag for trouble in the future.
- Do not rush or be rushed by an over aggressive sales person. This policy will not be inexpensive and will need to be read and reviewed for a clear understanding of the contents. This is on advantage to the Internet. You are allowed to read indefinitely before you act.
- A long-term care program, with or without insurance coverage will only work if the senior has input into the care selection process. If there are any questions about the accreditation of a facility, please call the “Continuing Care Accreditation Commission” at: 202-783-7286
By William Pritchett