Long-Term Care Insurance Gets a Makeover

By Lou Carlozo | Reuters EG – Wed, Sep 14, 2011 3:00 AM EDT

Less than two decades ago, Meryl Comer and her husband Dr. Harvey Gralnick embodied the American Dream: He was a physician, while she had built a career as an Emmy-winning reporter, producer and broadcast journalist. Everything looked perfectly in place for their careers to soar, their nest egg to grow.

Then came the news any couple would dread: Gralnick was diagnosed with early-onset Alzheimer's Disease at 57. Soon he couldn't recognize Meryl, and the couple went into financial free-fall as Comer took over his round-the-clock care.

"Here we have two people without income, and all the financial planning we have in place has disappeared," Comer recalls. "It's a straight financial bleed. With dementia, you're easily looking at $9,000 a month."

How does she make it, then, considering the couple had no long-term healthcare plan? "I don't," she says. "I'm going broke. The house will go next."

Comer, who serves as president of the Geoffrey Beene Foundation Alzheimer's Initiative, has become an outspoken advocate of long-term care insurance — an option barely understood, if not downright ignored, by most American consumers, including an alarmingly large percentage of Baby Boomers.

With long-term care policies, the costs of assisted living facilities, in-home care and private nursing homes are covered, in many cases with inflation protection. But since not many people are signing up for policies, the companies that offer them are trying to make them more palatable. Genworth Life Insurance Company recently launched Privileged Choice Flex, a long-term care solution that allows consumers to more easily choose an insurance plan that best suits their lifestyle and budget.

"It's been 24 months in development and it will be another eight months before it's fully available across the United States," says Matthew Sharpe, Genworth's long-term care product manager. "It takes a long time. We had three different products in the marketplace and combined them into one offering."

Some features of Privileged Choice Flex include a shared benefit where a husband or wife can reach into their spouse's portion of the policy for additional coverage. Even if a sick spouse exhausts the total benefit, the well spouse still maintains 50 percent minimum coverage, Sharpe says.
Privileged Choice Flex also allows access to Genworth's new Live+Well, a wellness program run in partnership with the Mayo Clinic that provides tools, resources and services to long-term care policyholders, and their spouses or partners.
"We wanted to provide a feature that would be available immediately, and that fills the gap between employer benefits and a long-term benefit," Sharpe says.

Genworth has been in the long-term care business more than 35 years, and was the first such provider in the U.S. Even so, the company has faced challenges educating consumers about long-term care policies because most people avoid the subject.

"Long-term care is definitely under-penetrated, there's no doubt about it," Sharpe says. "About 4 percent of the population that is eligible actually has a policy. But it's a tough topic to broach. We're still fighting this battle."

"Long-term care is a growing, looming threat to retirement security," says Whit Cornman, spokesman for the American Council of Life Insurers in Washington D.C. He cited figures from Genworth's 2011 Cost of Care Survey, which shows a private nursing home stay rising 3.4 percent over the last year to $77,745 annually. That cost, Cornman says, "is only going to go up" — to a whopping $330,000 in 2040.

"It's incredible," Cornman says, "and really the only product that can help people pay for it is long-term care insurance. When you're looking at retirement savings, a 401(k), or a pension if you're lucky, it's still going to be very difficult to save for retirement and still pay for long-term care."

The eye-popping numbers explain why Jim Darguzis, a State Farm Insurance agent based in Shorewood, Illinois, bought a long-term care policy for his wife two years ago. The couple is healthy but Darguzis, 67, wants to make sure any potential health problems won't impact his children and grandchildren.

"My mother was in a nursing home for two years and the cost at that time, 11 years ago, was $100 a day," Darguzis says. Now it's $175. He tells people that they've worked hard all their lives to accumulate a nest egg, and "the long-term care policy is designed to protect that nest egg, so they don't have to spend what they've accumulated."

Darguzis says a policy with 5 percent inflation protection for a 50-year-old male, offering $127,750 in lifetime benefits today, would more than double to almost $323,000 in benefits if long-term care begins at 70. The annual premium would start at $2,261, or less than $190 a month.

Those counting on the Affordable Care Act of 2010 to provide long-term care coverage shouldn't wait. Such protections won't be announced until later this year at earliest. "The law is still being written, and a lot of questions are being raised by the Congressional Budget Office and the American Academy of Actuaries," Cornman says.

Meanwhile, Comer has a warning for those who'd rather roll the dice and hope their assets can cover a crisis like the one she's endured. Today she not only cares for her husband, now in his mid-70s, but also a second family member with Alzheimer's: her mother, who stays in the family dining room.

"If you're 60 and rather act like 40, go for it, but don't kid yourself," she says. "Anticipate the future. Who wants to be remembered as a burden to their kids?"

Comer draws a long sigh. She pauses. Her voice conveys equal parts pain and imperative: "Anticipate, anticipate, anticipate."
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