Monday, October 29, 2007

AARP and Genworth offer long term care insurance: does it compute?


Today, I received a piece of mail from the Genworth Life Insurance Company in Richmond, VA offering long term care insurance to AARP members in the 50-79 age bracket. The mailing did not specify premiums, but included a business reply mail form, which I sent in out of research curiosity. The form letter notes that the average cost today of a year in a nursing home is over $69000 and is not covered by Medicare, and that Medicaid pays it only when one has depleted assets – a topic (along with filial responsibility laws) that I have been developing on this blog.

I looked up a premium calculator (here) and found that at my age, a maximum lifetime benefit of $109500 and daily benefit of $100 would cost about $80 a month at my age (64). So a year’s benefit would cost about $160 a month and the payout would last only about two years. I sent away the reply envelope to El Paso, TX and I suspect that the AARP rates are better. But it’s obvious that long term care insurance isn’t very affordable if started late in life.

This begs another public policy question. States are experimenting with mandatory personal health insurance; Hillary Clinton wants to experiment with that at a national level. Suppose there were mandatory long term care insurance? The mandatory aspect to stop at a certain age (since it so quickly becomes unaffordable from an actuarial point of view). It’s even possible that a particular state could, in combination with filial responsibility laws, could make it mandatory only for the childless or at higher ages for the childless. How do you like ‘dem apples? Scary. But imagine where this debate can go. At least into the land of Jonathan Swift novels.

It's also notable that today, The Washington Times has an article on p A1, "AARP magazine targets 'new 50': Boomers spur 'youth' move", by Andrea Billups.

Update: There is a follow-up on Jan. 16, 2008
on this blog.

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