!BUSINESS

Crisis In Aging

Insurance Industry Is Looking
At Long-Term Plans For Elderly

KIMBERLY LIFTON

Staff Writer

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56

FRIDAY FEBRUARY 17, 1989

ylvia Serwin has been
working in the aging
business for 25 years —
long enough to know the
golden years can become
financially burdensome
without proper planning.
National statistics compiled
by Princare, a long-term
health carrier, reiterate Ser-
win's concerns. Skyrocketing
health care costs and
Medicaid and Medicare cuts
have contributed to higher
costs of nursing homes across
the country.
"It is a false sense of securi-
ty that Medicare will take
care of you because it won't,"
Serwin said.
Nursing home costs are ris-
ing at an average of 12 per-
cent a year, and more than 50
percent of all private nursing
home patients exhaust all
their financial resources
within one year. Accordingly,
the issue of purchasing long-
term care insurance, which
has been on the market since
the mid-70s, has come to the
forefront.
"I became sensitized from
being in the business. I see
what happens!" said Serwin,
65, associate vice president
for Comprehensive Aging
Services for the Jewish Home
For Aged. "Somebody who
has worked all his life can go
through savings in no time."
Fearful that she, too, some-
day could deplete her savings,
Serwin two years ago pur-
chased a long-term health
care policy. For $800 a year,
insurance will cover full costs
for home health care services
or any kind of nursing home.
She is one of a small 1 per-
cent of the 29 million seniors
in the United States who
-have opted for extra protec-
tion — insurance that aging
officials and financial con-
sultants say-is becoming a
necessity.
lb date, no patients at the
Jewish Home For Aged's
three facilities are covered by
extended care insurance.
Some companies are beginn-
ing to offer this type of in-
surance as an additional ex-
pense to the employee.
The Health Insurance
Association of America
estimates that the 108 com-
panies which write long-term
care policies have issued
about 1 million policies. This
has increased substantially
from five years ago, when 16
companies offered insurance

Sylvia Serwin found an alternative.

for long-term care, and
120,000 policies were sold.
By 1991, financial planners
project, 5 million extended
care policies will be in place.
Policies range in cost $800
to $3,000 a year, depending
on age and health. As with
other insurance policies, con-
sultants advise people to shop
around carefully to make sure
the policies give adequate
coverage.
Tim Bell, a financial and
benefit planner with Network
Financial Services in Farm-
ington Hills, said premiums
for long-term policies do not
increase once the policy is in
place. He said insurance
preserves assets and does not
force people in need of expen-
sive home or nursing home
care to go on welfare.
Insurance protects estates
and inheritance, Bell said, ad-
ding that it is a way to reduce
the need for more Social
Security tax increases.
Jewish Home For Aged of-
ficials estimate that living at
their three facilities — Pren-
tis Manor, Borman Hall and
Fleischman Residence —
costs $30,000 a year for each
resident.
For those who meet
Medicare standards, the

social security reimburse-
ment is 80 percent for 100
days in a skilled nursing
facility like Borman Hall or
Prentis Manor. But, officials
said, Medicare standards are
hard to meet, and the govern-
ment rarely certifies anybody
for the full 100 days.
"People are being stripped
of their life savings because
funds must be depleted before
qualifying for Medicaid," said
Franklin Ellias, a health care
and benefits consultant. "Of
the 80 percent of those who
believe they are covered when
entering a nursing home or
extended-care facility, fewer
than 2 percent actually meet
Medicare standards!'
The number of people age
65 and older is expected to
more than double in the next
40 years from a projected 32
million in 1990 to 65 million
in 2030. Without proper plan-
ning, these people could
become totally dependent on
limited government funds
during their retirement
years.
Bell and representatives
from the Jewish Home For
Aged are planning an educa-
tional seminar this spring on
extended care health
insurance.

