With the long-term-care industry collapsing, forcing millions of elderly Americans to choose between higher premiums or a loss of coverage, I’m reminded how little control we have over our futures.
There are no guarantees here in Geezerville. At a certain age, assumptions about the future become moot; all bets are off. I awaken most mornings vaguely grateful for the chance to meander through another day and happily oblivious to the odds that I’ll still be ambulatory next week. I understand the yearning for assurance, though, even while ignoring its protocols. Some folks just don’t feel right unless they’re prepared for the worst. Unfortunately, the worst often comes to pass no matter how well you’ve prepared.
Years ago, before corporate trend-spotters transformed aging into a growth industry, elderly Americans who could no longer live independently leaned on their children or relatives for support at the end of life. I remember my Grandma Cox showing up at our door in the late ’50s with her suitcase and camping out with us for a few days before moving on to “visit” another of her offspring. Nursing homes offered a short-term option for some, but the costs were generally prohibitive and the financial machinations brutally complex. Because there was no way to really plan for all the contingencies, they simply dealt with it as best they could with the resources they could muster.
This sort of uncertainty can be tough to swallow, a fact that did not escape the notice of companies that envisioned a lucrative market for long-term-care insurance. The premise was simple: Avoid burdening your children by paying a small monthly premium long before you need protection and be assured that it would cover your nursing-home costs when you could no longer fend for yourself.
The pitch proved to be more appealing than anyone had imagined. Some 7.3 million Americans — about one in five people over 65 — have signed up since companies began offering the policies in the 1980s. But, as Leslie Scism reports in The Wall Street Journal, the industry is now on the verge of collapsing.
“Almost every insurer in the business badly miscalculated how many claims would be filed and how long people would draw payments before dying,” Scism writes. “People are living and keeping their policies much longer than expected.”
As a result, insurance companies are bleeding red ink and policyholders are facing steep increases in their monthly premiums — more than double in some cases. Meanwhile, policy and price options have dwindled as insurers have fled the marketplace. From more than a hundred companies at the market’s peak in 2002, only about a dozen still offer policies today.
This leaves geezers in a quandary: Pay the higher premiums or lose their coverage — and all they’ve invested over the years. “Never in our wildest imaginations did we consider that the company would double the premium,” one 67-year-old policyholder tells Scism. “We feel like we are out on a limb here, and these policies are supposed to be our safety net.”
Scism notes that many of the people buying these policies were responding to the travails their parents faced when they were forced out of their homes and into costly institutional facilities. Those experiences can certainly color your view of the future and lower your threshold for uncertainty. Both of my parents were fortunate enough to die in their own beds. It was a different story for My Lovely Wife. Her dad, who became increasingly incoherent and unpredictable under the spell of Alzheimer’s, died a couple of weeks after checking into a nursing home. A massive stroke sent her mom to a series of facilities for about nine months before her death.
True to her practical temperament, MLW’s mom had purchased long-term-care insurance for herself, thus sparing her children the chore of shuffling her finances to cover the costs. Still, when MLW calculated the costs and benefits when we discussed this scenario, she couldn’t come up with a plausible rationale for spending the dough on something we may never need.
Will we come to regret that decision? Maybe, maybe not. In Geezerville, you roll the dice and just hope for the best.