The Foreign Service Journal, March 2003

care costs will be covered; further- more, nothing beyond 100 days of care is covered. Medicare will cover the first 20 days at 100 percent, but for days 21 through 100, one must pay a $105 (as of 2003) per-day deductible before Medicare will cover the rest of the costs. Nor are Medicare supplements designed to cover LTC costs. In effect, Medicare covers less than 18 percent of nursing home expenses. It also is restricted to skilled care and not custodial care, even though 95 percent of people in nursing homes are receiving care at the custodial level. Moreover, Medicaid is a particu- larly remote option for Foreign Service personnel, since it pays for nursing-home expenses only after an individual has exhausted his or her assets and needs financial assistance. The Health Insurance Portability and Accountability Act of 1996 makes it a crime to transfer assets for the purpose of qualifying for Medicaid coverage. Some flexibility exists in LTC costs. The length of the waiting period, the choice of how benefits will be paid and the length of the coverage will all affect premiums. Policies come with a variety of coverage periods. You can choose unlimited, two-, four- or five-year periods from most insurance carri- ers. The longer the coverage peri- od, the higher the premiums will likely be. The size of the daily ben- efit and whether it has an adjust- ment for inflation also affect the size of the premium. In certain cases, some portion of long-term care premiums is eligible for a tax deduction. Furthermore, expenses not covered by insurance may be tax-deductible. Even so, LTC is not feasible in every case. The annual insurance premiums of $1,000 to $10,000 may be prohibitive for many individuals and families. At the other extreme, some with sizable assets might prefer to self-insure and draw down their assets over time (though this requires a large asset base). Still another special case where insur- ance requirements may be smaller would be those people who could draw on family or another network of caregivers for assistance with long-term care. What to Look For in a Long-Term Care Policy Let us assume that you are con- sidering purchasing an LTC policy. Here are some things to keep in mind as you analyze the various plans: Shop around. All long-term care insurance policies are not the same. According to the Health Insurance Association of America, there are currently more than 115 private insurance companies that offer long-term care insurance products to individuals. These poli- cies are far from standardized and offer a wide variety of benefits and coverage. For example, one compa- ny offers LTC and life insurance as one package. It is important, there- fore, to take the time to find the policy that best fits your situation. Consult a knowledgeable adviser about specific needs. Know the insurance company. Examine the financial health of the insurance company under consider- ation. Select a company that has received high financial ratings from A.M. Best, Moody’s and Standard and Poor’s. Many industry experts recommend choosing a company that has already paid significant claims. Generally speaking, going with a stronger company does not mean you have to pay higher premiums. Ensure that the insurance company is licensed in your state. Insurance companies must be licensed in your state in order to sell long-term care insurance there. If you are not sure, contact your state insurance department. Study the policy and know its main provisions. Take the time to become familiar with all the policy benefits associated with the insur- ance contract under consideration by reading the outline of coverage that should be sent with any product proposals. The outline not only helps explain the conditions of the proposed coverage, but also pro- vides information about how bene- fits will be paid. Some of the key policy provisions include the choices of care facilities that the contract provides and the additional features that are available. Check to seewho can be covered. Some policies may provide dis- counts if more than one person is insured, but the discount usually depends on the relationship. Some policies offer spousal dis- counts of 10 to 25 percent. Others provide discounts for people such as two sisters or two same-sex partners living together but of the same generation. Ensure medical eligibility for 16 F O R E I G N S E R V I C E J O U R N A L / M A R C H 2 0 0 3 F S F I N A N C E S Shop around and compare policies carefully; all long-term care insurance policies are not the same.