Answers to the top 10 questions about private LTC insurance.

Interview with Gary Melnikoff, Master Long-Term Care Specialist, GE Capital Assurance

Everyone knows that the primary market for private long-term care insurance consists of middle-aged Baby Boomers - young enough to get reasonable premiums, well-off enough to want to protect assets, and healthy enough to qualify for coverage. Everyone also knows that these individuals may be the toughest prospects in the business. They have plenty of reasons not to lay out extra funds for LTC insurance - that is, if they can even be persuaded to think about it at all. Recently Gary Melnikoff, an acknowledged LTC insurance expert and industry "supersalesman," agreed to field the "Top 10" negative questions and attitudes from Baby Boomers about long-term care insurance, as determined (unscientifically) by Editor Richard L. Peck. So here are some of the best answers available to common questions you may be hearing about this emerging option.

Doesn't Medicare cover this stuff anyway?

Melnikoff: "Medicare does not even begin to address the needs of a society that is living longer and longer. When Medicare was first developed in the mid-1960s, we had only limited knowledge regarding the special needs of elderly people, including chronic care needs."

I can understand the need for life insurance, homeowner's insurance and automobile insurance, but what are the odds I'm going to need long-term care insurance?

Melnikoff: "The actual claims statistics on homeowner's and automobile insurance are substantially lower than data from surveys on long-term care risk. In fact, a 1991 New England Journal of Medicine study projected that 43% of people over age 65 will need some type of long-term care. A more recent analysis by the consulting firm Deloitte & Touche noted that 60% of people over age 75 will need such services. Long-term care is clearly the number one risk facing elderly Americans - and it's the one least insured for."

By the time I'm that age, we'll probably have some sort of universal national health plan in place, right?

Melnikoff: "Just about all of the discussions and legislation in Washington have been in the opposite direction from any national health plan. The recently signed Kennedy/Kassebaum legislation sent a clear message to people saying that each one of us must take responsibility for the cost of our own long-term care."

The last thing I ever want to do is go to a nursing home. I don't even want to think about it.

Melnikoff: "I understand how you feel. Other people I have spoken with said they felt the same way. But when they looked at the cost of long-term care and the financial and emotional consequences it would have for their families, they decided it was a sound decision to purchase long-term care insurance."

How am I going to afford those premiums when I've got three kids getting ready to go to college, a big mortgage, a car that needs replacing and all the usual bills to keep a family clothed and fed?

Melnikoff: "The purpose of long-term care insurance is to protect your money so it will be there for those purposes. Can you think of anything that might be more important to your family than protecting them financially should you have a change in health?"

But my need for it may be 25 years down the read! I've got more pressing concerns.

Melnikoff: "Most people like yourself don't understand the difficulty they may face in qualifying for long-term care insurance from a health standpoint in future years. Insurance companies are beginning to look at existing health problems much more carefully than they did a few short years ago. Better to have purchased long-term care insurance well before you need it, rather than take a chance and possibly not be able to get it if you really need it."

I'm already laying out big bucks to take care of my elderly mother. I don't have the money to spare for myself.

Melnikoff: "I understand your concern. And a long-term care policy should be affordable or it doesn't make sense to take one out. Assuming you have assets to protect, can you see that it might make far better sense to use a portion of the interest your money is earning to purchase long-term care insurance, rather than continue to risk all your money to pay for your care?"

If my spouse has to got coverage too, that will really pat the cost oat of the ballpark.

Melnikoff: "It really shouldn't. A well-designed plan for husband and wife should be able to be funded out of cash flow, interest on assets or a combination of the two. Knowing the risks and consequences if one of you requires long-term care without insurance, doesn't it make sense to see if we can develop a sensible, affordable solution?"

I've heard that you can do some sort of estate planning so that the state will take care of you if you really need it.

Melnikoff: "The recently signed Kennedy/Kassebaum made it a felony for individuals to transfer and attempt to shelter assets for the purpose of qualifying for Medicaid. This year that provision was upheld by Congress and further clarified by placing liability on the professionals who counsel people in this way. Even more important to you is understanding the limitations of Medicaid and other public programs. Long-term care insurance guarantees individuals freedom of choice, for example - not only freedom to choose the setting for their care, but the peace of mind of knowing that they will receive quality care and services."

How can I be sure that the coverage I buy today will be close to adequate 25 years from now?

Melnikoff: "That's a very important question. Policies written for younger people should have inflation written into them. That way, although you're paying more for this option, benefits will more than double over 20 years by building in a 5% compound growth to keep up with inflation, while your premium remains the same."

Final Comment from Gary Melnikoff:

"There is no question that long-term care insurance is as practical and valuable an investment as other types of more commonly held insurance. But, given average life expectancy in our country these days, why do such a small percentage of people own such policies? That is an excellent question that I have asked myself many times. The answer is simply lack of information on the part of the general public.

"We live in a society geared toward youth. It seems that the expression 'you're over the hill' applies to younger and younger people these days - and yet the fastest growing age group today is now 80 and up. How, then, can we help more people plan for their longevity and the unique problems of aging? The answer is, quite simply, education. All of us who are part of the long-term care industry must take a much more active role in alerting people to the long-term care crisis. That is why I would urge members of the public to contact specialists in their communities. Many would be more than happy to meet with people for the sole purpose of increasing the public's knowledge and education. We all have a responsibility to make sure that the problem of long-term care does not become our children's and grandchildren's problem in future years."

Gary Melnikoff, a nationally recognized long-term care insurance specialist, is based in Paramus, NJ. He was recently inducted into the President's Club of GE Capital Assurance Company for the third consecutive year. In addition to maintaining an active speaking schedule, Melnikoff assists attorneys, financial planners, accountants, individuals and couples in long-term healthcare planning. For further Information, 1800/238-2639 or 201/265-1958.