The Tax Attic with Jerry Coon

One of the reasons I love baseball left us last week. Ernie Harwell passed away last Tuesday from cancer. Ernie and his partner, George Kell, were the voices of baseball when I was growing up in Coopersville in the 1950s and 1960s. Ernie had a special way of bringing the game alive for me and George was among the best third basemen ever. Back then, there was no ESPN, no Fox Sports, and no cable TV. The Tigers were on Channel 3 and the picture was fuzzy, at best. Few games other than Saturday day games were on TV and, since I wasn’t about to stay inside to watch baseball on TV in the summer, radio was my connection to baseball. It’s still my preferred way to take in a ballgame.

Jerry Coon, Enrolled Agent

In the 1970s, Ernie teamed up with Paul Carey. Ernie was still Ernie and Paul had that deep voice that I imagined was what God must sound like. They were even better to listen to than Ernie and George. Too bad the teams, for the most part, were so bad. Paul retired in 1991, but Ernie hung in there until 2002, when the Tigers requested his retirement.

I am one of those who do believe there will be baseball in heaven. I might actually be able to hit a curveball and maybe will get a chance to do some announcing. Who knows, maybe Ernie will be able to hit a curveball, too, and instead of always announcing, he will get to play, too. Imagine that, me announcing a game and Ernie playing. That could only happen in heaven, but how much fun that would be.

Before some of us get to heaven, we are going to go through some bad times down here. Those bad times may include home health care, assisted living, or nursing home care. Those bad times can be very expensive. So expensive, in fact, that many of us will spend every cent we have accumulated and will be forced to go on Medicaid.

An alternative available to cover some of that expense is to buy long-term care insurance. Deb and I were given a quote from three popular carriers, John Hancock, MetLife and Genworth. The basic quote covered $230 per day for three years with a 90- or 100-day elimination period and no inflation option chosen. This is the basic starting policy that I chose.

The annual premium for me ranged from a low of $1,025.20 up to $1,142.94, and for Deb from $846.91 up to $993.60. The price goes up as options or riders are chosen.

One of the important options that most experts say should be added is an inflation adjustment feature. In light of the fact that costs have been increasing at least 5% per year, I agree with the experts, so I chose a 5% simple increasing benefit. That means I am presuming that a nursing home with a cost of $230 today would cost $460 in 20 years. The insurance would increase right along with that increasing cost and would cover the $460. It is an expensive option, however, bringing my annual total premium up to from $1,813.74 to $2,812.73. For Deb, the increase was even more dramatic. Her annual premium jumped up to between $1,521.45 and $2,346.23.

A second option recommended is to eliminate or minimize the 90- or 100-day elimination period. This increases the premium by a low of $124.20 up to $211.79 for me and from $82.80 up to $171.06 for Deb.

Obviously, long-term care insurance is not cheap insurance. My total premium with a 5% simple increasing benefit and a 0- to 30-day elimination period would cost between $1,937.94 to $3,024.52. Deb’s total premium would cost from $1,604.25 up to $2,517.29.

The longer we wait to buy this insurance will result in higher premiums, so there is a cost of waiting. By waiting 10 years, it appears that our premiums would approximately double. That is a pretty stiff penalty for waiting. In addition, if we encounter health problems in the next 10 years, we might not even qualify to buy insurance.

Ultimately, since the odds are high of us eventually having to pay for home health care, assisted living, or nursing home care, perhaps we should analyze the premium costs in light of how long it would take to break even on the premiums paid. How many days would Deb or I have to pay benefits out of our pocket in order to be ahead of the game by buying the insurance? Based on us buying the insurance this year, paying premiums for 25 years, and projecting costs to increase at a 5% annual rate, it would take a stay in the nursing home of about 150-190 days to break even. We could be ahead of the game after 150-190 days. That is a pretty powerful reason to look into acquiring long-term care insurance.

One of Will Rogers’ most famous sayings was he was more concerned with the return of his money than the return on his money. Perhaps we should look at buying long-term care insurance like Will Rogers would. Even if we paid premiums for 25 years, the odds are that we would get all of our money back in about 150-190 days. I have a feeling that may be a much better return than the stock market is going to give us over the next 25 years.

Next week, I will look at a few of the other options available on long-term care policies, such as the guaranteed return of premium. This is Jerry Coon signing off.

Jerry Coon is an Enrolled Agent. He owns Action Tax Service on Northland Drive in Rockford. Contact him at

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