Seeking a Policy That Fills Medicare Gap
Question: I was extremely interested in the story you did recently about long-term nursing home custodial insurance, but was disturbed by your implication that “Medicare-gap” supplemental insurance does not provide such coverage. I was under the impression that the policy I have did this. Aren’t there any exceptions?--M.S.
Answer: Not really, although there is one very limited exception (wouldn’t you know?). And this is one health maintenance organization (HMO) operating strictly in the Long Beach area, according to insurance consultant Jules Klowden.
Klowden is the retired San Diego insurance man who, for the past 10 years, has served as the Medicare supplement/HMO insurance consultant for Senior World of California and who annually prepares a comparison guide of such “gap” insurance policies for that publication. (Klowden’s current guide describes the salient features of 10 HMOs and 24 Medicare supplement insurance plans, and reprints are available for $2 from Senior World Reprints, P.O. Box 1565, El Cajon, Calif. 92022). The publication, incidentally, has just launched a Los Angeles edition that is being distributed through about 900 outlets in the county, such as senior centers, hospitals and banks.
“The one exception to the rule that no Medicare supplement insurance plan covers nursing care,” Klowden said, “is Scan Health Plan, an HMO which services Long Beach and a 30-mile surrounding area. The $40-a-month premium includes the standard supplemental coverage--picking up the usual Medicare Part A and Part B deductibles--but also includes 85% of the cost of custodial nursing or home nursing costs up to $7,500. Nationally, it’s one of four HMOs being used in a three-year pilot program, and this is the third year of it. Scan is the only California HMO involved, though.”
One Exception
But with this one exception, Klowden added, no Medicare supplemental insurance plan on the market today offers custodial care, even though “skilled nursing care” coverage is commonly a part of such policies and, unfortunately, is a good part of the confusion.
What Medicare does cover is full payment for the first 20 days (and $65 a day for the next 80 days), but only when confinement in the facility is approved by Medicare as being medically necessary. Most Medicare supplemental policies pick up this coverage after the 20th day for periods of anywhere from 100 to 300 additional days. But this is a far cry from custodial care, which Klowden defines as “the kind of care which a patient needs to help get in and out of bed, bathing, dressing, feeding, help with toilet facilities or medication that does not require professional administering.”
For senior citizens, then, does this mean that well-rounded health coverage should include not only Medicare and a good Medicare supplemental policy but a third coverage as well--custodial/nursing home care?
Edward J. Andrew, a specialist in the field of long-term, custodial insurance coverage, feels that this may very well be the trend of the future. About 50% of the people now age 65 or over, statisticians estimate, will need some kind of long-term medical care, and such care now averages about $65 a day.
“If a person could only afford a Medicare supplemental policy or long-term-care coverage,” Andrew said, “it would be a hard choice to make, but you’d really have to consider Medicare supplement as the primary necessity. Still and all, the average nursing home stay is about two years, and it can be pretty ruinous. Just as important, unfortunately, is home health care, too, but under most policies you have to buy nursing home coverage to get it.”
An independent insurance broker headquartered in Simi Valley, the 70-year-old Andrew began specializing in long-term nursing home coverage in 1974, “and, at that time,” he added, “there was only one company writing it: United Equitable.”
About 30 Firms in Field
Currently, there are about 30 such companies in the field; Andrew represents five. Andrew is recognized as the nation’s second-longest-serving specialist in long-term nursing care insurance. He also tours the state extensively, holding seminars on the subject and on other aspects of retirement financial planning.
“Nursing home care insurance has suddenly gotten very big,” he added, “but it still has to be bought with care because there’s a lot of variance in both premium costs and what the insurance really covers.”
Logical Questions
Some logical questions to ask, Andrew said, include: Does the policy pay for all medically necessary levels of nursing home care--intermediate, semi-skilled, skilled and custodial? Does the policy provide first-day coverage? (Some don’t become effective until the 20th day.) Does the policy pay custodial benefits for the first day of nursing home confinement? Many policies pay such charges only after X days of skilled-care confinement.
While long-term custodial insurance coverage varies widely in both costs and options, premiums are still not as exorbitant as the potential for loss might suggest, as Toluca Lake-based financial planner Mark S. Pash of Pash International pointed out in our recent discussion.
As a case in point, Andrew cited Great Republic Insurance Co.’s Comprehensive Senior Health Care Package, which combines three options--skilled nursing care (including skilled care at home) and/or custodial care and/or home health care (any level). For all three coverages ($40-to-$80-a-day limit on skilled care; $40 daily limit on custodial and the flat home-care package without a dollar limit), a husband and wife from ages of 65 to 69 would pay a combined annual premium of $1,442.
“It’s not only the only policy that gives you the option of choosing home care, alone,” Andrew added, “but unlike so many policies Great Republic doesn’t require three days of hospitalization in order to qualify for skilled nursing care. You can go directly from home to a skilled nursing facility, and benefits begin with the first day of confinement.”
Obviously, complete health coverage for senior citizens has gotten as complicated as it has expensive.
Too complicated and too expensive, certainly, to be neatly wrapped up in any conventional “Medicare-gap” insurance policy currently on the market--with the one exception noted.
Don G. Campbell cannot answer mail personally but will respond in this column to consumer questions of general interest. Write to Consumer VIEWS, You section, The Times, Times Mirror Square, Los Angeles 90053.
