An Ounce of Prevention

We've all heard the old adage that an ounce of prevention is worth a pound of cure. This applies to many areas of life, but perhaps none better than in the area of long term care. Nobody likes to think about the possibility of needing this kind of care and, as a result, many people put off preparing for it until it is too late. Here's a real life story that will hopefully motivate any procrastinators out there into action.

A dear friend of ours, whom we'll call April, has been helping her 88 year old mother recover from some fractures in her spine caused by osteoporosis. After living independently and refusing any kind of assistance for years, she has now decided she does not want to go back home from the rehab hospital, but would rather go straight to a nursing home facility.

As often happens with the elderly, declines in health and mental attitude can come on quickly and such is the case here. April's mother has been a widow for several years and did not even want her own children dropping by to help her with housekeeping. But when her severe back pain turned out to be three fractured vertebrae requiring surgery, she had a sudden change of heart. Now, she would rather have others care for her and not have to deal with keeping up a home.

Fortunately, 18 years ago when April's mother was 70 years old, she purchased a long-term care insurance policy. While it only covered nursing home care and not assisted living, it promised that premiums would not increase over the life of the policy. Her premiums were $1,800 a year, which seemed like quite a sum to her and her husband back in 1990. But given the longevity on her side of the family, they felt it was a wise decision.

They didn't buy a similar policy for April's father, because he was a World War II veteran. In those days veterans knew that they could live out their days in a V. A. nursing home should the need arise. As the years went by, the couple remained in relatively good health. When a letter from the V. A. arrived years later, he didn't understand exactly what it said and didn't realize that the once-promised nursing home benefits for veterans had drastically changed.

His family didn't realize this either, until the father developed severe Alzheimer's a few years ago. That's when they discovered that the V. A. would only cover nursing home care for the first 90 days. After that, you were on your own. Unfortunately for him, his ability to swallow went away quickly and he died soon after. Had his illness progressed more slowly, his condition would have financially devastated his wife's financial security.

But because of the policy bought 18 years ago, April's mom will be well cared for. While $1,800 a year seemed so expensive back in 1990, today it's an absolute bargain. With nursing home care in our area costing about $175 a day, the $32,400 she's paid in premiums will be recovered in less than 6 months. Think about that. She's paid premiums for 18 YEARS and will get it all back with only 6 months care.

It's true that if she recovers well enough to handle most activities of daily living and goes into an assisted living facility instead, she will have to pay for it. But given her age and current condition, even if that is the case, most likely the need for nursing home would simply be a matter of time. But her policy gives her options she would not have otherwise and will allow her to choose a quality facility without having to consume her nest egg.

There are several lessons we can all learn from this story. While we can't predict our future, the increasing of life spans and medical advances means most of us can expect a longer life than our parents, increasing the likelihood of needing some kind of long term care. Medical costs continue to outpace inflation. If you wait too long to apply for long term care, you may have developed conditions that will medically disqualify you for it.

So don't put off this very important aspect of your financial plan. An ounce of prevention is certainly worth a pound of cure.

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