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Updated, Monday, May 14, 2012, 3:30 PM (Pacific)
Seattle—
“3in4 Need More”
Update and LTC News and Comment
#############################
The latest stop in the
“3in4 Need More” tour brings Dr. Marion to California, where she
interviews Brenda Bufford, Director of California Partnership for
Long-Term Care, attends a 3in4 "Bring Your Talent" contest, and receives
an award for "Senior Long-Term Care Awareness." Watch the video,
here.
The “3in4 Need More”
campaign and tour are doing important work to help raise awareness for
long-term care planning, and we thank them for all their hard work. Follow
the tour at:
www.3in4needmore.com.
#############################
5/14/2012,
Should You Purchase Long-Term-Care Insurance?, The Wall Street
Journal
Quote: "Long-term-care insurance. It's a subject most people
don't want to think about—but many people know they need to. At first
blush, policies that help pay the costs of extended nursing care make
perfect sense. Bills add up quickly when you can no longer take care of
yourself and your needs exceed what family and friends can provide.
Nursing homes, assisted-living centers and home care all are expensive,
and there is no telling for how long you may need the service. Buying a
long-term-care insurance policy can be a way of making sure your future
physical needs will be met. Policies designed in partnership with state
governments also give individuals and their families a way to protect
savings in the event of burdensome care costs that stretch on for years."
LTC Comment: “The father of LTC Partnerships,” Mark Meiners, dispels
some misconceptions about LTCi.
#############################
5/13/2012,
12 Questions for 1 Successful LTCI Agent: Deborah Peterson, by Marilee
Driscoll, LifeHealthPro
Quote: "Deborah Peterson has been the insurance business for
over 25 years and specializing in long-term care insurance (LTCi) for the
last 15. She also does some annuity sales for her LTCi clients. In
January, Deborah became the first woman inducted into ACSIA's Blue Blazer
club. This club, which currently includes 10 producers, is comprised of
those who have both built a $1 million dollar book of business and been
with ACSIA at least 10 years."
LTC Comment: An interesting Q&A by Center for Long-Term Care Reform
long-time friend and member, Marilee Driscoll.
#############################
5/11/2012,
Why long-term care insurance is important, by Larry Swedroe,
CBS News
Quote: "Even a well-developed investment plan can fail for
reasons that have nothing to do with investments. It could fail because
the family breadwinner dies prematurely and doesn't have enough life
insurance to cover her loved ones. Or it could fail because of an auto
accident that results in a large judgment, and there's insufficient
liability insurance in the form of an umbrella policy. This is why it's
critical to integrate an investment plan into an overall estate, tax, and
risk management (insurance) plan. One area of concern that is
all-too-often overlooked in the need for long-term care insurance (LTCI)."
LTC Comment: Some favorable coverage of LTCi in the mainstream
media.
#############################
5/10/2012,
GAO: Fix the Medicare Advantage Diagnosis Gap, by Allison Bell,
LifeHealthPro
Quote: "The Centers for Medicare & Medicaid Services (CMS)
should do a better job of adjusting for health risk grade inflation at
Medicare Advantage plans, according to officials at the U.S. Government
Accountability Office (GAO)."
#############################
5/10/2012,
SNFs prepare to absorb nearly $800 million in Medicare cuts,
McKnight's Long Term Care News
Quote: "Medicare cuts scheduled to hit in January will cost
skilled nursing facilities close to $800 million in fiscal year 2014, a
new analysis estimates. Under the
Budget Control Act, the mandated 2% across-the-board Medicare cuts
would hit skilled nursing facilities in California, Florida, Texas, New
York, Illinois, New Jersey, Ohio, Pennsylvania, Michigan and Massachusetts
the hardest, according to a analysis from Avalere Health and the Alliance
for Quality Nursing Home Care. The cuts would total $782.3 million."
LTC Comment: As more cuts are made, access to high-quality LTC
services will become even more scarce. Smart planners will save, invest or
insure to cover their long-term care costs.
#############################
5/10/2012/,
Calculating Your Readiness to Retire, Financially and Otherwise, By
John F. Wasik, NYTimes.com
Quote: "IN years past,
retirement was guided by simple arithmetic. You knew exactly how much
Social Security, savings and your defined-benefit pension would pay
you, then cut back any unaffordable expenses when you hit 65. Now that
Social Security and
Medicare are being eyed for cutbacks and
401(k)’s produce ever-varying lump sums, the retirement planning
process requires a more sophisticated strategy.
"Your retirement comfort number, of course, will change depending on
what happens to Medicare and Social Security. Several proposals have been
floated in the last year, ranging from Medicare 'premium support' plans
that will give you money to buy privately issued
insurance policies to means-tested benefit reductions for
higher-income retirees. In nearly every benefit-cut assumption, though,
you’ll most likely dig deeper into your pocket. Just what will happen with
any of these proposals will depend largely on what happens in the November
elections, which will shape the direction Congress will take."
LTC Comment: No matter what happens in
November, people are getting the message that they cannot count on
Medicare and Social Security alone to cover their expenses in retirement.
#############################
5/9/2012,
MassMutual Retirement Services Data Shows Women in 401(k) Plans are Saving
More, Borrowing Less, Insurance Broadcasting
Quote: "MassMutual's Retirement Services Division data for the
first quarter 2012 indicates that two segments of its defined contribution
plan participants are increasing their savings levels at a higher rate
than participants overall. For the quarter ended March 31, 2012, women
increased their deferral rates at twice the level of men (4 basis point
average increase for women vs. 2 basis point average increase for men)."
#############################
5/9/2012,
Cancer Is Leading Cause Of Critical Illness Insurance Claims
Quote: "Cancer accounted for over half of first-time claims by
Americans who own
critical illness insurance protection. Heart attack and stroke
accounted for 29 percent of new claims in 2011. One million Americans now
own critical illness insurance a form of protection that pays a cash
benefit upon diagnosis of covered critical illnesses. Roughly half of new
claims occurred prior to age 55 according to the 2012 Critical Illness
Insurance Buyer & Claimant Study published by the American Association for
Critical Illness Insurance and General Re Life Corporation."
#############################
5/8/2012,
Coming to Your City: The 3in4 Need More Bus Hits the Road With National
Senior Talent Search & Awareness Tour, MarketWatch
Quote: "Non-profit organization 3in4 Association and its
spokesperson, elder care expert & author Dr. Marion, today kicked off a
50-city bus tour to promote awareness for long-term health care planning,
and launch a national senior talent contest to give away a free year-long
stay at an Emeritus Senior Living community, valued at $45,000."
LTC Comment: The 3in4 Need More campaign is still going strong.
Great job!
#############################
5/8/2012,
Long-Term-Care Insurance: Who Needs It?, by Marilyn Geewax, NPR
Quote: "Americans routinely buy all sorts of insurance — for
cars, homes, health and even pets and boats. But when it comes to
long-term-care insurance, relatively few sign up. Out of more than 313
million Americans, only about 8 million have any such protection,
according to the American Association for Long-Term Care Insurance. The
low participation rate largely reflects the high cost of long-term-care
insurance."
LTC Comment: This article is far from perfect;
it describes LTCi as “sketchy” and refers to policy holders as
“fortunate,” rather than sensible or prudent. Nevertheless, it does make
some good points about the product and offers a chart (provided by AALTCI)
that highlights the relationship between an affordable policy, when
purchased early enough, and the approximate increase in value of that
policy as the policy holder ages.
#############################
5/7/2012,
Nationwide: Nearly Half of Pre-retirees Fear Adverse Impact of Healthcare
Costs in Retirement, by Warren S. Hersch, LifeHealthPro
Quote: "Nearly half of soon-to-be-retired,
high-net-worth boomers are concerned about the negative impact of
healthcare costs on their retirement plans, new research reveals.
Nationwide Financial, Columbus, Ohio, published this finding in a summary
of results from an online poll of 625 adults ages 55-plus having $250,000
or more in household assets who plan to retire by 2020; and of 625 retired
adults ages 65-plus having $250,000 or more in household assets. The
survey was conducted for Nationwide by Harris Interactive Jan. 3-19,
2012."
#############################
Quote: "The California Senate Appropriations Committee plans to
hold a hearing May 14 on Senate Bill 1438, a bill that could eventually
lead to the creation of a statewide long-term care insurance (LTCI)
program in California. Members of the Senate Insurance Committee voted 5-3
to approve S.B. 1438 April 25. The bill, introduced by state Sen. Elaine
Alquist, D-Santa Clara, Calif., calls for the California insurance
commissioner to form a task force that would study the idea of creating an
LTCI program."
LTC Comment:
For further information on California’s LTC
financing problems and solutions, please see "Medi-Cal
Long-Term Care: Safety Net or Hammock."
#############################
5/5/2012,
Medicare Covers In-Home Care, Anne Tergesen, WSJ.com
Quote: "Many people assume that Medicare provides little to no
continuing coverage for in-home health care. In fact, the program covers
up to 35 hours a week of nursing and home health care for those who meet
specific requirements."
LTC Comment: At the Center for Long-Term Care Reform, we talk a
lot about the crowd-out effect Medicaid has on long-term care insurance,
but here's an example of how MediCARE crowds out LTCI.
#############################
Updated, Friday, May 11, 2012, 11:15 AM
(Pacific)
Seattle—
LTC BULLET: DOUBLE TROUBLE
LTC Comment: Integrating
Medicaid/Medicare funding and care delivery has been the holy grail of LTC
dreamers, but their latest plan could backfire. More after the
***news.***
*** 3IN4 CAMPAIGN BACK IN FULL SWING:
Check out the first
"Week in Review" video segment plus highlights from the 3in4 Need More
National Bus Tour and Free Rent Give Away Contest. The 3in4 Need More
campaign is dedicated to raising awareness of the importance of planning
for one’s long term care needs. The campaign utilizes multiple marketing
strategies in order to increase awareness nationally. Weekly Media Pick
Ups include:
*
http://northridge.patch.com/articles/grannies
*
http://www.oregonherald.com/oregon/local.cfm?id=1962
*
http://finance.yahoo.com/news/coming-city-3in4-more-bus-154800047.html
***
*** GOVERNMENT SPENDING IS NOW CALLED INVESTING:
Long-time Center supporter, author and LTCI producer
Ross Schriftman recently published this profound squib: “To
understand why our government is in such bad financial shape consider
this. Ben Franklin famously said, ‘A penny saved is a penny earned.’
Last week I was at a presentation where a high ranking Philadelphia
official said, ‘A dollar spent is a dollar invested.’ This is the new
narrative. Count how many times our elected and appointed officials will
call government spending an investment. Sorry guys. You can't invest
money you already spent. It doesn't work that way. No wonder we are in
big trouble.” ***
#############################
LTC BULLET: DOUBLE TROUBLE
LTC Comment: People who qualify for Medicare AND Medicaid
are called “dual eligibles.” Duals are very expensive. For example,
there are only about nine million Medicaid recipients who are also
Medicare beneficiaries, but Medicaid spent $142.9 billion on them in 2009
or $16,056 each. Duals comprise only 15% of Medicaid recipients but they
consume 39% of its spending. Dual eligibles are also heavy users of
long-term care (LTC is 70% of their Medicaid expenditures) and acute care
services not covered by Medicare (5%). Medicaid pays for their Medicare
premiums (9%) and cost-sharing (15%) too.
In a paper the Center published recently, we estimated
that Medicaid could save $30 billion per year by diverting only 21% of
potential dual eligibles from ever becoming duals. For details, see “Briefing
Paper #5: Dual Eligibles and Long-Term Care: How to Save Medicaid
LTC $30 Billion Per Year and Pay for the ‘Doc Fix’.” Our plan achieves
that goal, by targeting Medicaid to the poor and creating incentives for
the middle class and affluent to plan early, save, invest and insure for
LTC so they never become a burden on Medicaid and hence do not become
expensive dual eligibles.
Unfortunately, that is not an approach the federal and
state governments have taken. Instead, they focus entirely on managing
the care of a huge and rapidly growing dual population. The idea is to
combine Medicare and Medicaid funding and place the duals in managed
care. When I was in Washington, DC last summer/fall, the director of the
National Association of State Medicaid Directors told me that
transitioning Medicaid recipients, including duals, into managed care was
the single biggest initiative of the state directors. At best, that
approach can mitigate some of the exploding cost of caring for duals. It
is unlikely, however, to improve the quality of care they receive or
reduce expenditures significantly.
Already, analysts from the political left and right are
waving warning flags. The left worries that private managed care
companies will sacrifice care quality to maximize profits. For example:
The National Senior Citizens Law Center (NSCLC) released a
special report . . . entitled "Assessing the Quality of California Dual
Eligible Demonstration Health Plans" (link)
that raises concern about the eight health plans the state has selected to
handle the care of low income older adults and people with disabilities in
Los Angeles, Orange, San Diego and San Mateo Counties. California has
proposed a three-year demonstration project to enroll individuals dually
eligible for Medicare and Medi-Cal [California’s name for Medicaid] into
managed care plans. (Source:
NSCLC Health Network Alert)
The right worries about care quality too, but also that
this new effort to push duals into managed care is just another Medicare
money grab. For example:
Dr. Scott Gottlieb, a former senior official at the
Centers for Medicare and Medicaid Services in the Bush administration,
warns that under Obamacare disabled seniors who are eligible for both
Medicare and Medicaid will receive inferior care, according to a report by
the New York Post. Gottlieb, an American Enterprise Institute
resident fellow, says these low-income people who are elderly or have
disabilities will be uprooted from the tried-and-true Medicare fold and
"herded" into state-run Medicaid plans as another phase of Obamacare grips
the nation. . . . Some cash-strapped states are jumping at the chance to
capture federal Medicare dollars for their Medicaid programs, according to
Gottlieb. (Source:
Newsmax)
The biggest problem with government-financed health or
long-term care is that well-intentioned interventions have a way of
causing bigger problems than the ones they try to fix. Instead of
preventing people from becoming dual eligibles in the first place, the
latest public financing approach is to cut costs by turning over care of
the sickest and most disabled public dependents to big companies that may
or may not be able to manage their complex care needs adequately. This
could be double trouble for vulnerable elderly people dually dependent on
Medicaid and Medicare. It definitely bears keeping a close eye on
developments.
In the meantime, the only way to be sure you and your
loved ones never have to rely on disintegrating entitlement programs--like
the dying duo of Medicare and Medicaid--is to plan early and save, invest
or insure for your health and long-term care needs.
#############################
Updated, Wednesday, May 9, 2012, 12:30 PM (Pacific)
Seattle—
May Day
Celebration of Success and
LTC News and Comment
#############################
LTC Comment: On
May 1st, the American Association for Long-Term Care Insurance
announced the recipients of the 2012 National Long-Term Care Insurance
Sales Achievement Award. The Center for Long-Term Care Reform thanks all
of our nation’s industrious and talented producers who play a vital role
in protecting against LTC risk and cost. Results and further details
here.
#############################
5/6/2012,
Advisers shortsighted about long-term care, by Darla Mercado,
InvestmentNews
Quote: "Apparently,
the best way to get a client thinking about long-term care is to turn his
or her attention to family members.
"That also requires advisers to reposition long-term-care insurance as
not just a product but as a stream of income that can help fund the
overall financial plan."
LTC Comment: This article highlights the link between sound
financial planning to protect your family and long-term care insurance.
#############################
Quote: "Despite
a strong market rebound over the last two quarters, employees remain
uncertain about their investing decisions and ability to retire. The
survey says this 'appears to be a result of employees continuing to
realize they are not on track to retire comfortably since the recession.'
"Liz Davidson, CEO and Founder of Financial Finesse, says that although
employees are far from where they need to be, they are showing positive
growth by realizing they are behind as they continue to put strong
emphasis on proactive financial issues."
LTC Comment: Although the results from this survey show a bleak
financial outlook for many, they also show a positive trend in awareness
of the necessity to plan financially for the future as well as the
willingness to exercise that financial fortitude.
#############################
5/4/2012,
White House makes $1.9 billion bet: Oregon can fix health care, The
Washington Post
Quote: "On
Thursday, the Obama administration made a $1.9 billion bet that Oregon can
dramatically reduce health costs in an unprecedented way. The Center for
Medicare and Medicaid Services said it will chip in $1.9 billion of
start-up costs to get Oregon’s Medicaid reforms going. In return, Oregon
made a big promise: The state says it will keep its Medicaid costs growing
2 percent slower than in previous years."
#############################
5/3/2012,
Critical Illness Insurance Claims Often Begin Prior To Age 55
"Just under half (47%) of new
critical illness insurance claims in 2011 began prior to age 55
according to the 2012 Buyer & Claimant Study conducted by the American
Association for Critical Illness Insurance (AACII) and General Re Life
Corporation. This marks a significant increase in claims by younger
policyholders compared to the prior year's analysis."
LTC Comment: Already popular in other countries, critical
illness insurance is gaining popularity in the United States, especially
with our younger consumers.
#############################
5/3/2012,
White House refuses to drop $8 billion Medicare private plan demo, by
Charles Fiegl, amednews.com
Quote: "Health
and Human Services Secretary Kathleen Sebelius defended the Medicare
Advantage quality bonus program during an April 27 hearing before the
House Education and the Workforce Committee. Committee members strongly
criticized HHS over findings in a recent Government Accountability Office
report, which called for ending an $8 billion project that will offset
some of the Medicare Advantage cuts mandated by the 2010 health system
reform law."
#############################
5/2/2012,
Will Medicare Costs Outpace Social Security Benefits?, by Kelly
Greene, Total Return - WSJ
Quote: "Here’s
a heads-up if you or someone in your family receives Social Security
retirement benefits:
A new analysis shows that benefits probably won’t keep up with
Medicare premiums – which are typically deducted from Social Security
payments - in the next few years."
LTC Comment: A reality check for anyone who still believes they
will be able to live comfortably on Social Security in retirement, without
further financial planning.
#############################
5/2/2012,
Genworth Chariman, CEO Resigns, by Matt Ackermann, Financial
Planning
Quote: "Genworth
Financial announced Wednesday that Michael D. Fraizer, its chairman and
chief executive officer, has resigned."
#############################
5/1/2012,
Workers Turned Caregivers Lose More Than Wages, hosted by Steve
Inskeep, NPR
Quote: "The
average caregiver is 49 years old. Cheryl Matheis, senior vice president
for policy at AARP, tells Steve Inskeep when a worker has to leave their
job to care for a relative, they lose on average $325,000 in lifetime
income — from lost wages, Social Security and pensions."
LTC Comment: Another reason to plan ahead for
the risk and cost of long-term care, but still no mention of private LTCi
in this article.
#############################
5/1/2012,
Guide Addresses Confusion on Long Term Care Insurance Partnership Program
Quote: "Although
Long Term Care Insurance Partnership Programs can be of tremendous benefit
to buyers in most states, a report released last month by America's Health
Insurance Plans (AHIP) reveals that only 25% of individuals age 50+ know
if partnership type policies are available in their state. The National
LTC Network has published a Guide that makes it easy for anyone to see if
their state does indeed participate. Entitled ‘Tax Breaks and Incentives
for Long Term Care Insurance,’ the Guide includes a comprehensive listing
of whether or not each state participates in Partnership."
LTC Comment: Many LTCi prospects may not know
if their state participates in Partnership, but it appears that many are
realizing the necessity of planning ahead for their long-term care needs.
#############################
Quote: "The
only people more enthusiastic about private long-term care insurance (LTCI)
than LTCI agents, brokers and wholesalers may be the LTCI policyholders
themselves. One of the lessons of the latest round of first-quarter
earnings reports is that, in terms of sheer, dogged loyalty and
determination, LTCI policyholders are the kinds of people you would want
at your side if you were ever planning to take a walk through Hell."
LTC Comment: So true. It may take an AMG
(altruistic, masochistic, genius, as Steve Moses often says) to sell the
product, but once purchased, keeping the coverage is a no-brainer.
#############################
5/1/2012,
Discovering The True Cost Of At-Home Caregiving, by Marilyn Geewax,
NPR
Quote: "Walk
through any nursing home, and your first thought might be: 'I need to take
care of Mom myself.' Few people want to turn over a loved one to
institutional care. No matter how good the nursing home, it may seem cold
and impersonal — and very expensive. But making the choice to provide care
yourself is fraught with financial risks and personal sacrifices. Those
who become full-time caregivers often look back and wish they had taken
the time to better understand the financial position they would be getting
themselves into."
LTC Comment: This article displays some of the many sacrifices
caregivers make for their loved ones and reminds us of the importance to
responsibly prepare for the risk and cost of long-term care, but fails to
mention the option of private LTCi.
#############################
5/1/2012,
Senior Placement & Referral Agency Concierge Care Advisors Expands
Throughout West Coast, MarketWatch
Quote: "Concierge
Care Advisors continued strong growth as it became a West Coast company by
expanding into California's San Francisco Bay Area, Los Angeles and
Ventura Counties, due to demand for its high-quality services. Company
presence also increased in Oregon and Washington. The senior placement and
referral agency helps individuals and families identify the best in senior
living, nursing homes, assisted living, memory care homes, and in-home
care based on each individual's personal circumstance."
#############################
4/30/2012,
CMS Still Figuring Out Assisted Living's Role in Community-Based Care,
by Alyssa Gerace, Senior Housing News
Quote: “The
Centers for Medicare and Medicaid Services (CMS)
released its final rule implementing
the Medicaid Community First Choice (CFC) option, but it’s still figuring
out what assisted living’s role is in the program.”
#############################
4/30/2012,
California Moves on Health Reform in 2012 with a Host of Measures, By
Elizabeth Festa, LifeHealthPRO
Quote: "The
California state legislature is moving forward on a collection of health
insurance reform bills, some specially tailored to conform to sections of
the federal Patient Protection and Affordable Care Act (PPACA).
"AB 999, a bill to modify
the
long-term care
insurance premium rate process to protect consumers from excessive rate
volatility to order to protect the financial stability and well-being of
them and their families, remains stuck in the Senate Insurance Committee."
LTC Comment: For further
information on AB-999 and to read our letter in opposition to the bill,
please refer to this
LTC Bullet. Also of interest is the Center for Long-Term Care
Reform’s major study of LTC financing in California, titled "Medi-Cal
Long-Term Care: Safety Net or Hammock." The
study was conducted in 2010 and published by the Pacific Research
Institute in January, 2011.
#############################
Quote: "Respite
services provide temporary relief in the form of short-term home care
workers, brief stays in residential facilities and adult day care centers.
But these services, which are much less costly for families than skilled
nursing facility stays, have been targeted by cash-strapped states.
Respite care often allows the elderly to delay or prevent being admitted
to a nursing home. The cuts may lead to more seniors being admitted,
although families will likely struggle to cover the costs out-of-pocket."
LTC Comment: This is just one of the many ways that uninsured
consumers will be feeling the bite of Medicaid cutbacks.
#############################
4/30/2012, “Future
looking less bright for private insurance,” by John O'Connor,
McKnight's Long Term Care News
Quote: "Insurance firms like to say they are
in the business of managing risk. In truth, they are in the business of
guessing right. These days, more of them are deciding that these policies
are not worth selling. If that doesn't give you reason for pause, it
probably should."
LTC Comment:
This editorial misses the point entirely. The two main reasons LTC
insurance is challenged are the artificially low interest rates imposed by
the Federal Reserve and the fact that easy access to Medicaid crowds out
demand. Actuarial science still works; guessing has nothing to do with
it.
#############################
4/29/2012,
Shrunken Social Security figures into advisers' plans, by Darla
Mercado, InvestmentNews
Quote: "Anticipating
a cloudy future for Social Security, many financial advisers are taking
steps to de-emphasize the program's place in clients' retirement income
plans.
"Confirming many advisers' fears, the Social Security
Board of Trustees last week said that the federal Old-Age and Survivors
Insurance and Disability Insurance Trust Funds are expected to be
exhausted by 2033, three years earlier than last year's estimate."
LTC Comment:
The abundance of articles like this one exposing Social Security’s
insolvency certainly tarnishes the sheen of how we anticipate our “Golden
Years” to be. Savvy consumers will plan ahead, far ahead, for the risk and
cost of getting old.
#############################
Updated, Friday, May 4, 2012, 12:24 PM
(Eastern)
Tampa Bay, Florida--
LTC BULLET: THE LTC
GRADUATE SEMINAR
LTC Comment: Check
out our newly updated version of the Center for Long-Term Care Reform’s
classic “LTC Graduate Seminar,” after the ***news.***
*** THE ERIE,
PENNSYLVANIA ESTATE PLANNING COUNCIL welcomed Steve Moses on Monday, May
1, 2012 to deliver a speech titled “Why Everything You Think You Know
About Long-Term Care is Wrong.” A warm welcome preceded Steve’s talk and
hearty appreciation followed, including a beautiful framed picture of a
Great Lakes tall ship as a speaker’s gift. We thank Jeff Evans of Evans
Capital Management, Inc. for arranging the program. ***
*** GENWORTH NEWS:
“Michael Fraizer, the chairman and chief executive of Genworth Financial
Inc. (GNW), resigned abruptly on Tuesday, two weeks after the insurance
company postponed a plan to raise funds by selling shares of an Australian
subsidiary. . . . Fraizer had led the company since before it was spun off
by General Electric Co. (GE) in 2004, and had remained at the helm through
the financial crisis, when Genworth's U.S. mortgage-insurance unit began
posting hundreds of millions in operating losses. The company had
struggled to get back on track, causing investors to punish Genworth's
stock and, at times, publicly complain about the pace of the recovery.
Shares had been down by 50% in the past year and 83% in the past five
years. . . . One of the nation's biggest sellers of mortgage and
long-term-care insurance, the Richmond, Va.,-based company was among the
harder hit insurers when the real-estate bubble burst, thanks to its large
exposure to the nation's housing woes through its U.S. mortgage insurer. .
. . ‘Mike Frazier is an extremely capable individual but unfortunately,
all of these businesses’ have proven problematic, said Andrew Kligerman, a
stock analyst at UBS Securities. Kligerman nonetheless said he was ‘kind
of stunned’ by Fraizer's departure.” (Erik Holm, “Update:
Genworth CEO Resigns Abruptly, CFO Takes Over For Now,” Wall Street
Journal, May 1, 2012) ***
*** SPOTLIGHT ON:
Medicaid and Medicare Key Numbers
Need the latest Medicaid and Medicare numbers? Your Center for Long-Term
Care Reform has you covered. We have current data, updated annually, all
the way back to the early 1990s. In this feature you not only have a
historical archive of essential Medicaid and Medicare numbers, you have
access to the current numbers as soon as they are released. The Medicaid
and Medicare Key Numbers feature is located in our
Members-Only Zone website. If you need your user name and password, or
are not yet a member and would like to join, click
here or simply contact Damon (206-283-7036 /
damon@centerltc.com). Zone in today and you’ll find a wealth of useful
resources! ***
#############################
LTC BULLET: THE LTC
GRADUATE SEMINAR
LTC Comment: Remember
the Center for Long-Term Care Reform's
2008
National Long-Term Care Consciousness Tour? Steve Moses criss-crossed
the country in the Silver Bullet of Long-Term Care, a 16-ft. Airstream
trailer towed by a silver FJ Cruiser. Check out some pictures
here and a slide show
here.
One of the highlights
of our LTC Tour was the “Long-Term Care Graduate Seminar” which Steve
Moses presented dozens of times to audiences of aspiring “AMGs.” (That’s
Steve’s term for the “altruistic, masochistic geniuses” who endeavor to
sell long-term care insurance, a product the government still gives away
after the insurable event has occurred.)
In response to popular
demand from audience members, we published a transcript of the two-hour
grad seminar and posted it on the Center’s website in 2009. We’ve now
posted an updated version of the program
here. Check it out. Here’s
what you’ll find:
- "The Elephant, The
Blind Men and Long-Term Care"
- Do you understand
LTC from the perspectives of all key interest groups: government, the
public, Medicaid planners, senior advocacy groups, LTC providers, LTC
financiers and insurance carriers?
- If not, you may
be like the blind men who identified an elephant as a hose, a rope, or
the broadside of a barn, depending on which part of the animal they
touched.
- Our LTC grad
seminar takes apart the puzzling “elephant of long-term care” and puts
it back together in a way that makes much more sense.
- Answers to three
key questions:
1.
Why does the public remain asleep about the risk and cost of
long-term care?
2.
Why are they about to be shocked awake?
3.
How can you help more people protect themselves in the meantime?
·
History of
Long-Term Care and Why it Matters for Financial Advisors and LTCI
Producers
- How did we come
to have a welfare-financed, nursing-home-based LTC system in the
wealthiest country in the world where no one wants to go to a nursing
home but most people remain oblivious to LTC risk and cost?
- Why didn’t a
strong home and community-based services infrastructure develop in the
USA when most people would rather receive care at home?
- Why didn’t
private long-term care insurance penetrate 75% of its potential market
as the actuaries originally predicted in the 1970s?
- What does the
history of long-term care suggest will happen next?
- The “Welfare
Paradigm” and the “Entitlement Paradigm”
- Understand the
difference between these two ways of looking at the long-term care
issue and you’re on your way to helping more people insure for LTC.
- Read this section
of the “LTC Graduate Seminar” for a true “Aha!” experience.
- “Key Money”
- Ever wonder how
“elder lawyers” sell Medicaid to their affluent clients despite the
welfare program’s reputation for third-class, nursing home care?
- They use “key
money” and you’d better know what that is if you’re going to compete
with them.
- Did you know Social
Security is a major funder of long-term care? Do you know how Medicare
props up Medicaid LTC?
- If not, you’d
better read this section of the LTC grad seminar fast, because these
facts represent two of the biggest vulnerabilities your clients face!
- What’s going to
happen next?
- It doesn’t take a
crystal ball to see what’s in store for long-term care financing. But
it does take some savvy, out-of-the-box analysis.
- That’s exactly
what you’ll find in the closing section of the LTC graduate seminar.
- It means the end
of “social insurance” as we’ve known it and the “welfarization” of
Social Security, Medicare and Medicaid.
I hope we’ve inspired
you to take a closer look at the “LTC Graduate Seminar.” Steve Moses also
conducts a full-day version of the grad seminar. If you’d like to have
him deliver either version to your group live and in person, contact Damon
at 206-283-7036 or
damon@centerltc.com to schedule the program.
#############################
Updated, Monday, April 30, 2012, 12:12
PM (Pacific)
Seattle--
MOSES ON LTC-TV
AND LTC NEWS AND COMMENT
LTC Comment: A
couple weeks ago, I was in Santa Fe, NM to meet with
New Mexico Human Services Department Cabinet
Secretary Sidonie Squier and Medicaid Director Julie Weinberg to
discuss Medicaid and long-term care financing.
Executive Director Paul Gessing of the
Rio Grande Foundation facilitated the meeting. Afterwards, I met with
reporter Rob Nikelewski of Capital Report. Here’s an excerpt from
his article titled “New
Mexico’s impending old age crisis: We’ve got the fourth-highest rate of
growth 85+”:
"Steve Moses, the
president of the Center for Long-Term Care Reform in Seattle, says it
means financial disaster unless some changes are made immediately. 'We
can expect those costs for long-term care - care in a nursing home,
assisted living or in the home to skyrocket as the aging population
grows,' Moses told Capitol Report New Mexico in a recent
interview."
Read the full
interview and watch a two-minute video interview
here.
#############################
4/26/2012,
“MetLife
Exits Reverse Mortgage Business,” InsuranceNewNet.com
Quote:
"MetLife, Inc. (NYSE: MET) announced today that it is exiting the reverse
mortgage business. Nationstar Mortgage LLC will purchase MetLife Bank's
reverse mortgage servicing portfolio. The transaction is subject to
certain regulatory approvals and other customary closing conditions.
MetLife Bank will no longer accept new reverse mortgage loan applications
and registrations."
LTC Comment:
By exempting up to $786,000 of home equity from long-term care liability,
the government has effectively crowded out markets for reverse mortgages
and private insurance to fund long-term care leaving Medicaid with the
insupportable burden of providing care to a burgeoning elderly
population. Another example of well-intentioned, but unexamined Medicaid
policy with catastrophic unforeseen consequences.
#############################
4/26/2012,
“Is
it Worth Buying Long-Term Care Insurance?,” by Casey Dowd, Fox
Business
Quote:
"Do boomers really need this kind of insurance, or are there ways for us
to plan accordingly to not only cover any potential medical needs, but
also have enough in our regular retirement savings? I reached out to
Robert Quinlan, an independent insurance agent located in New Windsor,
N.Y., to discuss the pros and cons connected with long-term care
policies."
LTC Comment:
Mass media exposure for the big LTCI question.
#############################
4/25/2012,
“Women without Long-Term Care Plans Face Highest Risk; To Help Prepare,
Newman Long Term Care offers Free ‘Woman's Guide to Long Term Care
Insurance Protection’,” PRWeb (link)
Quote:
"To help women take the first step, Newman Long Term Care is offering a
free guide 'A Woman's Guide to Long Term Care Insurance Protection.' This
free consumer piece contains eight pages of valuable information including
a long-term care checklist, as well as tips for self-employed women and
business owners. The guide can be requested online at: http://www.NewmanLongTermCare.com/womenPR
or by calling Newman Long Term Care at 612-454-4400."
LTC Comment:
Congratulations to Center Premium Member Deb Newman!
#############################
4/24/2012,
“Health
care laws leave hospitals overwhelmed by 'permanent patients',” by
Kate Snow, Janet Klein and Dustin Stephens, Rock Center
Quote:
"They are known as 'permanent patients' and are hidden in plain sight in
hospital rooms across the country. That's because under federal law,
hospitals must treat any patient who needs emergency medical attention
even if they have no way to pay. Nursing and rehab facilities are not
required by law to do so. At the same time, hospitals cannot discharge a
patient without a plan in place for his or her ongoing care. The result
is patients stuck in the hospital in need of long-term care but with
nowhere to go, large medical bills, and no way to pay - a cost that is
usually covered at the hospital's expense."
LTC Comment:
At the same time as affluent elderly people qualify easily for Medicaid
nursing home care without spending down significant assets, poor folks
under age 65 remain in hospitals at enormous private cost which the
hospitals are forced to assume by government rules. Uncle’s right hand
doesn’t know what his left hand is doing, doesn’t care, or maybe just
wants to shift costs from the public to the private sectors.
#############################
4/23/2012,
“The
Social Insecurity Countdown,” by Kelly Greene, Wall Street Journal
Quote:
"This just in: Social Security's trust fund could be exhausted three
years sooner than predicted last year. The combined assets of the Old-Age
and Survivors Insurance and Disability Insurance trust funds will be
exhausted in 2033, according to the Social Security Board of Trustees. At
that point, there should be sufficient non-interest income coming in to
pay about 75% of scheduled benefits."
LTC Comment:
This article lets you vote on how worried you are about the Social
Security problem. Results: Extremely worried, 1358 votes, 63.8%;
Somewhat worried, 474, 22.3%; Not that worried,142, 6.7%; Not worried at
all, 155, 7.3%. Well, at least 86.1% of these WSJ readers are
thinking.
#############################
4/23/2012,
“Hitting
the Long-Term-Care Jackpot,” by Kelly Greene, Wall Street Journal
Quote:
"One in 10 claims started in 2011
began before the policyholder turned 70, mainly due to accidents and
illnesses requiring care for an extended period. Overall, the five most
common reasons for claims are Alzheimer's disease, stroke, arthritis,
circulatory issues and injury, the association says."
LTC Comment:
A winner in the LTC lottery: $1.7 million paid on a single LTCI
claimant. Details
here: "The largest open long-term care insurance claim has reached
$1.7 million in paid benefits, according to a just-released report from
the American Association for Long-Term Care Insurance (www.AALTCI.org).
The claimant, a woman, purchased coverage at age 43, paying an annual
premium of $881. Three years later her long term care insurance claim
began and has continued for almost 15 years. [Note: Payment of policy
premiums ceases when an individual is receiving policy benefits.]
‘Insurers paid some $6.6 billion in benefits to roughly 200,000
individuals last year,' explains Jesse Slome, Executive Director of the
industry trade group that compiled the data from 10 leading long term care
insurers.”
#############################
4/21/2012,
“Readers
Share Their Stories of Loss,” by Tom Lauricella, Wall Street
Journal
Quote:
"The biggest lesson learned: While I have been diligent about saving for
my retirement and my children's college education, I hadn't planned
sufficiently for possible health-care problems and bills involving my
parents."
LTC Comment:
Hello! A welcome wake-up call in the WSJ.
#############################
4/20/2012,
“Consumer-Directed
U.S. Health Insurance Surges,” by Mark Miller, Reuters
Quote:
"There may not be a consensus in the nation's capital on how to control
the cost of health care, but businesses and their employees are not
sitting around waiting for clarity. They are voting with their wallets
for one approach that's already available: Account-based health insurance
plans, which offer lower premiums in exchange for high deductibles."
LTC Comment:
I believe this development is important to LTC insurance because it means
people are accumulating cash reserves in their HSAs and HRAs, etc., which
reserves can someday be used to cover LTCI premiums they'll want to pay in
order to protect those very reserves plus their other assets including
home equity.
#############################
4/20/2012,
“Majority of assisted living residents pay for their care out of their own
incomes, survey finds,” McKnight’s LTC News (link)
Quote:
"The survey, conducted by the Center for Retirement Research at Boston
College, found that assisted living residents earn most of their income
through annuitized forms, including Social Security, pensions, private
annuities and investment income. The majority of residents, according to
the survey, don't need help from family members to pay for their care.
Many residents report actively spending down their assets for their
care."
LTC Comment:
This is the hard reality about "spend down." People are willing to pay
their own money to live in assisted living facilities even though Medicaid
nursing home care is easily available without significant asset spend
down. Savvy boomers are learning from their parents’ experience in
assisted living, that they need LTC insurance to avoid both spending down
and going on Medicaid.
#############################
4/16/2012,
“Too
Many Pills for Aging Patients Personal Health,” by Jane E. Brody,
New York Times
Quote:
"Overmedication of the elderly is an all too common problem, a public
health crisis that compromises the well-being of growing numbers of older
adults. Many take fistfuls of prescription and over-the-counter
medications on a regular basis, risking serious and sometimes fatal side
effects and drug interactions."
LTC Comment:
A major problem of which I’m reminded every time a medical professional
expresses wonderment that I take no prescription medicines, saying most
people “at your age” take a half dozen prescriptions.
#############################
4/16/2012,
“Marketing
to Boomers: 'Where Did My Retirement Go?',” by Maria Wood,
LifeHealthPRO
Quote:
"In a recent survey conducted by LifeHealthPro.com and Senior Market
Advisor, more than 90 percent of the respondents said boomers were a
growing part of their business."
LTC Comment:
For more on boomers see, the MetLife Mature Market Institute’s How
Boomers Turned Conventional Wisdom on Its Head: A Historian's View on How
the Future May Judge a Transitional Generation by W. Andrew Achenbaum.
(link)
#############################
4/1/2012,
“The end of group long-term care insurance? There is a shift in the
industry as insurers pull out of the group LTC market,” by Brian M. Kalish,
Employee Benefit Adviser (link)
Quote:
"There are questions about the future of the group long-term care market,
as two insurers have stopped offering the product in the past 17 months.
November 2010, MetLife announced it would discontinue the sale of new LTC
insurance, and Unum announced it would do the same for group sales in
February. This leaves just two companies - Genworth and Prudential -
offering group LTC insurance."
LTC Comment:
This article quotes several Center for Long-Term Care Reform supporters
including
AALTCI’s Jesse Slome;
Barry J. Fisher of
Paradigm Insurance Marketing; Todd Grove of
LTCFP; and Debra Newman of
Newman Long Term Care.
#############################
Updated, Monday, April 27, 2012, Time
AM (Pacific)
Seattle--
LTC BULLET: HOME
EQUITY, LONG-TERM CARE, AND RETIREMENT INCOME SECURITY
LTC Comment: Tap home
equity first to maximize retirement income security? So argues an
interesting article in the Journal of Financial Planning, after the
***news.***
*** TODAY'S LTC BULLET
is sponsored by Claude Thau, a General Agent whose proprietary sales tools
enable your clients to make informed final decisions about whether to buy
LTCi in 15-20 minutes. He’ll help you build your business in any market
(individual, executive carve-out, work-site, affinity, financial
institution, referrals from other professionals, etc.). Claude is the lead
author of the Milliman Broker World LTCi Survey, was named one of
the 10 "Power People" in the LTCi industry by Senior Market Advisor
in 2007 and was Chairman of the Board of the Center for Long-Term Care
Financing. Test Claude by calling 800-999-3026, x2241 or email him at
claudet@targetins.com to ask questions or get references. ***
*** OLDIE BUT GOODIE .
. . I’m reminded that Claude Thau, today’s Bullet sponsor, wrote a very
interesting article about home equity conversion, long-term care financing
and Medicaid almost ten years ago. We published it as “LTC Bullet: How
to Save Medicaid LTC” on Thursday, October 24, 2002. Read it
here. If the government had followed Claude’s advice back then,
Medicaid might not be in the mess it’s in now and the private LTC
insurance market could be breaking new sales records. ***
***
AALTCI REPORTS . . . "The sale of asset-based long term care
insurance protection continued to grow significantly according to research
by the American Association for Long-Term Care Insurance the national
long term care insurance trade organization. According to data
gathered from leading insurers, premium increased nearly 20 percent and
the number of covered lives increased 13.5 percent. . . . According to the
Association's annual study of new policy sales, more than half (53%) of
male buyers were under age 65. In the prior year's study, only 48 percent
were under age 65. The percentage of women buyers under age 65 also
increased to 50 percent, up from 44 percent in the prior year." Full
press release
here. ***
*** SPOTLIGHT ON:
Take our "virtual tour" of the Center for Long-Term Care Reform's website
here. You'll learn how to navigate the Center’s indispensable
website. Get easy access to critical information--in our public website
and in our popular Members-Only Zone. Whether you are new to the Center
for Long-Term Care Reform or a seasoned Center member, you'll find a
wealth of valuable content on our website by taking this virtual tour.
Take this tour and if you find you need your user name and password, or
are not yet a member and would like to join, contact Damon at 206-283-7036
or
damon@centerltc.com.
***
LTC BULLET: HOME
EQUITY, LONG-TERM CARE, AND RETIREMENT INCOME SECURITY
LTC Comment: These
days everyone is worried, especially boomers, about retirement income
security. The question “Will I outlive my savings?” gives rise to many
worries.
Can I afford to retire
now? How much longer should I work? Will I be able to maintain my
current life style? What may I have to give up? Could unlikely but
predictable catastrophic expenses such as long-term care turn everything
upside down? What if this and what if that?
In more secure
periods, the answers were pretty clear. If you could draw down four
percent of your savings per year and that was enough to live on
adequately, you had a very good chance of making it through the next 30
years. But lately, that formula is being challenged everywhere.
Furthermore, a large and growing percentage of aging Americans cannot
manage for long on the combination of their savings plus Social Security
at any draw down rate no matter how high.
Add to those problems
the increasing vulnerability of the social safety net, likely increased
means-testing of Medicaid, Social Security and Medicare, and doubtful
private investment returns. Where can people turn?
More and more we see
home equity mentioned as a private retirement security safety net.
Certainly home equity is the biggest asset most people possess, especially
older people. This remains true even after the much-touted “collapse” of
home values.
But the home has
always been sacrosanct before. Our WWII generation paid off their
mortgages and held on to their homes tenaciously as sanctuary in old age
and their principal legacy to heirs. Medicaid exempted the home and all
contiguous property from long-term care liability with no limit until 2005
and up to $525,000 (37 states) or $786,000 (13 states and DC) currently.
But home equity is no
longer untouchable. To survive, Medicaid will likely be forced to reduce
its home equity exemption radically. That will put home owners at far
greater risk for long-term care expenses than heretofore. This is a risk
few have anticipated but many will face. Even if they dodge expensive
long-term care, however, many boomers will need to use their home equity
just to make ends meet.
So, a big question
people need to ask is: “What’s the best way to put home equity to use for
retirement security?” That is the question the following article from the
Journal of Financial Planning attempts to answer. Check out the
excerpt provided below, follow the link to the full article, consider its
provocative conclusions and ask some additional questions it does not
address, such as:
What role should home
equity play in financing quality long-term care for aging boomers? Should
Medicaid, a means-tested public welfare program, protect home equity from
long-term care risk? Wouldn’t it make more sense for home equity to help
pay for long-term care through reverse mortgages? Couldn’t supplemental
income from home equity conversion make LTC insurance more affordable for
more people thus protecting all their wealth: savings and home equity?
Much to ponder.
---------------
Excerpt (footnotes
omitted) from Barry H. Sacks, J.D., Ph.D., and Stephen R. Sacks, Ph.D.,
“Reversing the Conventional Wisdom: Using Home Equity to Supplement
Retirement Income,” Journal of Financial Planning, April 2012;
http://www.fpanet.org/journal/ReversingtheConventionalWisdom/.
“Executive Summary
- This paper examines
three strategies for using home equity, in the form of a reverse
mortgage credit line, to increase the safe maximum initial rate of
retirement income withdrawals.
- These strategies
are: (1) the conventional, passive strategy of using the reverse
mortgage as a last resort after exhausting the securities portfolio; and
two active strategies: (2) a coordinated strategy under which the credit
line is drawn upon according to an algorithm designed to maximize
portfolio recovery after negative investment returns, and (3) drawing
upon the reverse mortgage credit line first, until exhausted.
- A three-spreadsheet
stochastic model is described, with one spreadsheet incorporating each
strategy. The three spreadsheets are run simultaneously, with the same
investment performance and withdrawal amounts in each. The cash flow
survival probability over 30 years is determined for each strategy, and
the comparisons are presented graphically for a range of initial
withdrawal rates. We find substantial increases in the cash flow
survival probability when the active strategies are used as compared
with the results when the conventional strategy is used. For example,
the 30-year cash flow survival probability for an initial withdrawal
rate of 6 percent is only 55 percent when the conventional strategy is
used, but is close to 90 percent when the coordinated strategy is used.
“The model also shows
that the retiree's residual net worth (portfolio plus home equity) after
30 years is about twice as likely to be greater when an active strategy is
used than when the conventional strategy is used.
“The overriding
objective for many retirees is to maintain cash flow throughout their
retirement years, to avoid ‘running out of money’ in their later years.
Cash flow survival is the central theme of this article.
“Although more than
half of retirees age 65 and older (64 percent) get at least half of their
retirement income from Social Security, there is a significant portion of
the population of retirees whose primary source of retirement income is a
portfolio of securities, often in a pre-tax account such as a 401(k) plan
or a rollover individual retirement account (IRA). We will refer to any
such account, whether pre-tax or after-tax, as an ‘account.’
“It has long been
accepted that the maximum safe (or ‘safemax’) annual withdrawal from an
account begins with a first year's withdrawal equal to between 4.0 percent
and 4.25 percent of the initial portfolio value. Subsequent years'
withdrawals then continue at the same dollar amount each year, adjusted
only for inflation (thus maintaining constant purchasing power). In this
context, the term ‘safe’ means a 90 percent or greater probability that
the account will have sufficient assets to make such annual payments for
at least 30 years.
“Many retirees find
that the safemax amount of annual withdrawal is uncomfortably limiting and
therefore tend to draw more than that amount. This article considers three
strategies for coping with the economic risk, the risk of exhausting cash
flow, that derives from taking withdrawals in excess of the safemax
amount.
“The three strategies
considered all involve the use of home equity as a supplement to
withdrawals from the account. The conventional wisdom holds that home
equity, drawn upon in the form of a reverse mortgage (discussed below) or
similar product, should be used as a last resort, only if and when the
account is exhausted. This is a rather passive approach. We show that the
probability of cash flow survival is substantially enhanced by reversing
the conventional wisdom. In particular, we show that cash flow drawn from
home equity using either of two more ‘active strategies,’ in conjunction
with withdrawals from the account, yields cash flow survival probability
substantially greater than the more passive approach of using home equity
as the last resort (the ‘conventional strategy’).
“One of the active
strategies is quite simple: a straightforward reversal of the conventional
wisdom. In this strategy, a reverse mortgage credit line is established at
the outset of retirement, and the credit line is drawn upon every year to
provide the retirement income until it is exhausted. Only after the
reverse mortgage credit line is exhausted are withdrawals taken from the
account. This is the ‘reverse-mortgage-first strategy.’
“The other active
strategy is more sophisticated. It also uses a reverse mortgage credit
line, but withdrawals from the credit line are taken in some years and not
others. The withdrawals are taken according to an algorithm described
later in this paper. Because the algorithm consists of coordination
between the account and the line of credit, this strategy is termed the
‘coordinated strategy.’”
#############################
Updated, Monday, April 23, 2012, 11:14
AM (Pacific)
Seattle--
“THE REAL
CHOICE” AND LTC NEWS AND COMMENT
LTC Comment:
Phyllis Shelton, a long-time corporate member of the Center, has a new
plan called “The Real Choice.” She describes it this way: “Americans
think deciding to insure for long-term care is a personal choice,
affecting only them. [But they] are really choosing between paying
long-term care insurance premium which leaves dollars in the state budget
for education or not buying LTC insurance, which diverts state budget
dollars to Medicaid instead of to education and other vital services.”
See her full idea here:
http://www.ltcconsultants.com/articles/2012/real-choice/index.shtml.
Long-time Center
supporter Ross Schriftman has a Mother’s Day gift idea for you. He says:
“With Mother’s Day a few
weeks away, consider my book as a great gift.
My
Million Dollar Mom
is my tribute to the life of my mother and the relationship of a son with
his mom. Here are links to the soft cover, hard cover and nook versions:
http://www.buybooksontheweb.com/product.aspx?ISBN=0-7414-6713-5
http://www.buybooksontheweb.com/product.aspx?ISBN=0-7414-6714-3
http://www.barnesandnoble.com
You can
also purchase books directly from me. When you purchase your copy please
let me know and I will be glad to arrange to autograph it. Ross
Schriftman, Tel. 215-682-7075.”
#############################
4/19/2012,
“'Elderly'
No More,” by Judith Graham, New York Times
Quote:
"But what's the alternative for the rest of us, and for doctors who treat
patients who fit this description, and for academics who study this
demographic? What terms should we use to discuss this age group without
giving offense? I decided to conduct a small, random, unscientific survey
by calling a few mostly past-middle-age experts and asking what they
thought. Here are their responses."
LTC Comment:
A rose may be a rose by any name, but I guess it's pretty important for
people who make their livings talking to aging Americans to stay abreast
of this trend toward cautious euphemisms.
#############################
4/19/2012,
“Should
You Purchase Long-Term Care Insurance?,” Wall Street Journal
Quote:
"We're seeking your opinions about long-term care insurance for an
upcoming special report. Vote in our poll and comment below for potential
inclusion in print."
LTC Comment:
Total votes: 775. Yes: 564, 72.8%. No: 211, 27.2%. Something tells
me a lot of LTCI producers read the WSJ.
#############################
4/19/2012,
“Should I Wipe Out My Family's Assets? (In Order To Get Help With Nursing
Home Expenses?),” Law Offices of Alice Reiter Feld & Associates (link)
Quote:
"As an Elder Law attorney, I get asked this question all the time. Often,
the 'asker' is someone who thinks it's necessary to spend down their
assets. And, often, if they haven't come to me in time, they're forced to
live the rest of their life in poverty. The truth is that it is possible
to get [Medicaid] benefits without spending down...but only if you know
the right way. . . . We know the Medicaid rules. And we're just a phone
call away."
LTC Comment:
If you still harbor the illusion that easy access to Medicaid after the
insurable event occurs does not crowd out a market for private LTC
insurance, read this Medicaid planner’s article and subscribe to her
almost daily explanations of how she can make LTC financial risk go away
by making the government pay.
#############################
4/19/2012,
“Experts tout private and public long-term care funding reforms in Senate
hearing,” McKnight's LTC News (link)
Quote:
"As the trajectory of long-term care costs rises, experts on funding gave
varying approaches on how to achieve savings at a Senate hearing. The
availability of Medicaid presents a deterrent to some for the purchase of
private long-term care insurance, said Douglas Holtz-Eakin, Ph.D.,
president of the American Action Forum at a Senate Special Committee on
Aging titled 'The Future of Long-Term Care: Saving Money by Serving
Seniors.' 'The availability of Medicaid raises the perceived cost of
purchasing private insurance or of saving,' Holtz-Eakin said."
LTC Comment:
Former Congressional Budget Office director Holtz-Eakin gets it. He
testified at the same Congressional hearing I did on April 27, 2005
regarding the Deficit Reduction Act of 2005 and the need to target
Medicaid to the needy.
#############################
4/19/2012,
“Putting
the 'Aged' in Engaged: Financial Tips for Late Marriages,” by Julie
Bawden-Davis, FoxBusiness
Quote:
"Also consider purchasing long-term care insurance for you both, which can
help ease the burden on one partner if the other falls ill."
LTC Comment:
We’re seeing more and more advice like this in mass media outlets like
FoxBusiness.
#############################
4/18/2012,
“Gender differences in care home admission risk: partner's age explains
the higher risk for women,” by Mark McCann, Michael Donnelly, and Dermot
O'Reilly, Age and Ageing (link)
Quote:
"This study goes some way to debunking the myth that older men do not do
caring to the same extent as their female peers; the primary reason why
married women are more likely than married men to be admitted to a care
home is because they tend to have older partners."
LTC Comment:
British results, but interesting.
#############################
4/18/2012,
“Long-Term
Care Needs Demand Your Attention Now,” by Philip Moeller, U.S. News
& World Report
Quote:
"The trend lines for the nation's long-term care needs are becoming
distressingly clear. As a society, we are running out of both the
financial and human resources to provide adequate care to our oldest and
often most frail citizens. From an individual perspective, the bill for
long-term care will become an increasing financial burden."
LTC Comment:
We’ve been saying the same thing for decades. It’s good to know the
national media are finally catching on.
#############################
4/18/2012,
“No
One Is Too Young (Or Too Old) For Genworth's LTC Mobile App,” by Larry
Barrett, Financial Planning
Quote:
"Genworth Financial this week debuted a free, web-based mobile app that
lets investors and advisors calculate their expected long-term care
expenses from their iPhones or iPads and, simultaneously, get down to the
business of adjusting their long-term financial planning goals to meet
these rising costs as they age."
LTC Comment:
Good idea but probably won’t make much difference without an app that
shows why LTCI’s biggest competitor – public LTC financing – is unlikely
to be available to the middle class and affluent in the future as easily
as in the past.
#############################
4/18/2012,
“Retirement may be mission impossible for Gen X: Skeptical about
institutions, they face new rules of how Americans prepare for Golden
Years,” by Jessica Rao, CNBC (link)
Quote:
"As kids, they sat on gas lines in the backs of their parents' cars. As
young adults, they saw the stock market crash, and when it finally came
time to settle down, they bought a house at the peak of the housing bubble
and then were faced with the worst economy since the Great Depression.
It's no shock that Generation X - those born from 1965 to 1981 - may get
short changed in their golden years. Though they've watched parents and
grandparents nestled with pensions, Social Security and strong economic
growth, these are no longer guarantees. On the other hand, longer life
spans with more medical bills and greater need for cash are the reality
for many. Gen X is the first generation to deal with the fact that the
models of American retirement are changing - and its members are
flustered.”
LTC Comment:
What have we done to our kids?
#############################
4/18/2012,
“Where
the Oldest Die Now,” by Paula Span, New York Times
Quote:
"The proportion of those very old people who died as hospital patients
dropped to 29 percent in 2007 from 40 percent in 1989. During the same
time period, the proportion who died at home climbed to 19 percent from 12
percent. . . . [T]he rates of very old people dying in nursing homes and
other long-term care facilities have also increased, reaching 40 percent
of those over age 85. . . . Almost one in five experienced what the
authors called ‘burdensome transitions’ in their final days: transfers in
the last three days of life, multiple hospitalizations, or moves from
nursing home to hospital to a different nursing home."
LTC Comment:
The best way to avoid “burdensome transitions” is to be able to pay
privately for long-term care and remain independent of under-financed
public programs like Medicaid.
#############################
4/17/2012,
“One
Roof, Three Generations, Many Decisions,” by Marilyn Geewax,
National Public Radio
Quote:
"To cope with the hard times that began five years ago, millions of
families pulled together - stacking two, three, even four generations on
top of one another. Between 2007 and 2009, the total number of Americans
living in multigenerational households shot up more than 10 percent, from
46.5 million to 51.4 million. . . . At NPR.org, stories will delve into
the financial issues facing these three families - and millions of others
like them. Among the topics to be examined: the need for financial
planning; the options for elder care; costs of do-it-yourself care for the
elderly; long-term care insurance; college costs; and reverse
mortgages.” (Emphasis added)
LTC Comment:
Hallelujah! Is NPR finally getting it?
#############################
4/17/2012,
“Baby Boomers are ready for retirement, mostly: Generation is generally
wealthy enough, but how Golden Years are paid for is changing,” by Dinah
Wisenberg Brin, CNBC (link)
Quote:
"As of 2009, in the wake of the housing and stock market crises, some 51
percent of U.S. households were at risk of being unable to maintain their
pre-retirement standard of living at age 65, the authors calculated in
their report, ‘The National Retirement Risk Index: After the Crash’. Some
41 percent of early Boomers, 48 percent of late Boomers and 56 percent of
Gen Xers were at risk, they said."
LTC Comment:
Good news is many need and can afford LTCI. Bad news is many others can’t
and will place too much strain on the public safety net making it more
important than ever that those who can, do in fact, get LTCI protection.
#############################
4/17/2012,
“Deep cuts loom as state tries to save Medicaid: Lawmakers, Quinn aides
set to present suggestions this week,” by Monique Garcia and Ray Long,
Chicago Tribune (link)
Quote:
"[Illinois's] plan for drastically slashing Medicaid in order to save it
is expected to come into sharper focus this week as a group of lawmakers
and aides reports back to Gov. Pat Quinn."
LTC Comment:
Expect many more stories like this one, starting with Illinois. Likely
California is next, then dominoes.
#############################
4/16/2012,
“PPACA:
HHS Combines Aging and Disability Arms at ACL,” by Allison Bell,
LifeHealthPRO
Quote:
"The U.S. Department of Health and Human Services (HHS) is using a
statement of ‘organization, functions, and delegations of authority’ to
try to overhaul the way it handles people who need help with the
activities of daily living. HHS is putting several existing agencies,
including the Administration on Aging, the Office on Disability and the
Administration on Developmental Disabilities, in a new Administration for
Community Living (ACL)."
LTC Comment:
No amount of federal reorganization will make up for the shortage of
public funds to sustain the social LTC safety net.
#############################
4/16/2012,
“Caregivers
for Medicaid recipients often live in poverty, study finds,”
McKnight’s LTC News
Quote:
"In 'Hidden in Plain Sight: California's
Paid Medi-Cal Caregivers Are Vulnerable,' UCLA researchers say that about
290,000 paid caregivers in California provide services to adults on Medi-Cal,
the state Medicaid program for adults with long-term illnesses or
disabilities. These caregivers earn an average of less than $11 per hour
and have monthly incomes of about $1,970, which is below 200% of the
federal poverty level."
LTC Comment:
Medicaid pays dismally low rates to all levels of caregivers including
nursing homes, assisted living facilities, and home caregivers.
#############################
4/13/2012,
“Boomers Flock to Niche Retirement Communities: Stargazers, equestrians,
and hippies find like-minded friends and age together,” by Daniel Bortz,
US News & World Report (link)
Quote:
"Specialized retirement communities fit retirees' needs for a variety of
hobbies and cultures. The most popular are university-based retirement
communities, which Carle refers to as UBRCs, which offer retirees the
opportunity to attend campus events, like concerts and arts programs, as
well as sit in on classes."
LTC Comment:
Count on having to pay privately to get into places like these.
#############################
4/11/2012,
“Cost
of aging rising faster than expected: IMF,” by Stella Dawson,
Reuters
Quote:
“People worldwide are living three years longer than expected on average,
pushing up the costs of aging by 50 percent, and governments and pension
funds are ill prepared, the International Monetary Fund said."
LTC Comment:
What more proof do you need that private LTC insurance has a great future?
#############################
March 2012,
“Quantification of the Natural Hedge Characteristics of Combination Life
or Annuity Products Linked to Long-Term Care Insurance Research Projects -
Long-Term Care,” by Linda Chow, FSA, MAAA, Carl Friedrich, FSA, MAAA, Dawn
Helwig, FSA, MAAA, Milliman, Inc., sponsored by The Society of Actuaries
LTCI Section and The ILTCI Conference Association (link)
Quote:
"The Society of Actuaries' Long-Term Care Insurance Section and the ILTCI
Conference Association are pleased to make available a research report
highlighting the characteristics of combination plans that serve to reduce
the risks to insurers issuing these products. Observations are provided
to assist in the understanding of the factors that explain the profit
change sensitivity results and the natural hedging against major risks
that inherently is present within the linked products. The report was
authored by Linda Chow, Carl Friedrich, and Dawn Helwig of Milliman, Inc."
#############################
Updated, Friday, April 20, 2012, 10:07
AM (Pacific)
Seattle--
LTC BULLET: HOW RCFs
AND DUALS IMPACT MEDICAID AND LTCI
LTC Comment: Vital
new information about residential care facilities and Medicaid/Medicare
dual eligibles after the ***news.***
.JPG)
***
GOT AN LTC PLAN? This column on LifeHealthPRO by
Center-premium-member Honey Leveen of Houston strongly endorses the
national “3in4
Need More” campaign. Check it out
here including the picture
of LTCI stalwarts Sally Leimbach,
Gail Steingold and “LTC Queen” Honey Leveen
with 3in4 spokesperson
Dr. Marion Somers. ***
*** THE
PATH OF HOME AND COMMUNITY-BASED CARE. Steve Monroe, editor of the
Senior Care Investor does an excellent weekly 1-minute video called
“Sixty Seconds With . . .” Watch last week’s version
here or read it here: “We all know that most elderly want to stay in
their homes for as long as possible. Who wouldn’t? But sometimes it may
not be the best option. When Medicaid funds were ‘waivered’ for use in
assisted living, the intent was to 1) save on costs as assisted rates were
much lower than skilled nursing rates, and 2) have a more appropriate
setting for many of the elderly. On the cost front, all that happened was
that the pie got bigger, and more people wanted access to care paid for by
someone else. Now, take the case of the current push for home and
community-based care, mostly to keep the elderly out of SNFs. A wonderful
concept, but aren’t we going down the same path, funding more people? For
those elderly residing full time in a skilled nursing facility, staying at
home is usually not cheaper, nor is it safer or healthier, if they
actually need the level of care that is provided in a SNF, but need it
every day. So, just like with assisted living Medicaid waivers, aren’t we
setting ourselves up for creating a larger pool of recipients of state and
federal aid, at a time when more money just isn’t available? Do the math,
it just doesn’t work.” ***
*** SPOTLIGHT ON: The Center for
Long-Term Care Reform’s “Almanac of Long-Term Care” is a compendium of
information on all aspects of long-term care service delivery and
financing organized chronologically by subject for quick and easy access.
The “LTC Almanac” conveniently provides information that will give you a
competitive advantage in your long-term care profession. Members
can access the “LTC Almanac” by clicking
here. If you need your user name and password, or are not yet a
member, contact Damon at 206-283-7036 or
damon@centerltc.com for quick access to The Zone and the LTC Almanac.
***
#############################
LTC BULLET: HOW RCFs
AND DUALS IMPACT MEDICAID AND LTCI
LTC Comment: When the
Medicaid program started paying for most nursing home care in 1966, it had
the effect of distorting the market for long-term care in two ways.
First, because of its
easy eligibility rules Medicaid made nursing home care virtually free.
The result was to crowd out a market for privately financed home and
community-based care and create the “institutional bias” that has plagued
America’s service delivery system ever since.
Second, easy access to
Medicaid financing after expensive long-term care was needed prevented
private financing alternatives like home equity conversion and private LTC
insurance from expanding to their full market potential.
(For a more detailed
history of Medicaid long-term care financing, see our briefing paper
titled “The
History of Long-Term Care Financing or How We Got Into This Mess.”)
By the late 1980s,
deficient Medicaid funding for nursing home care caused serious quality
problems resulting in a major backlash against publicly financed
institutional LTC. Even though people could get Medicaid nursing home
care virtually for free, many chose to pay privately for the much more
attractive alternative of assisted living.
Assisted living
facilities were luxurious in comparison to Medicaid-dependent nursing
homes and they cost about half of what private payers had to pay for
nursing homes. Now middle class people in need of LTC faced contradictory
government-induced incentives:
- Qualify easily for
Medicaid but die in a nursing home on welfare, or
- Pay privately for
highly desirable assisted living.
The outcome was
predictable. Private payers in nursing homes nearly disappeared because
cost shifting forced them to pay half again as much as Medicaid reimburses
nursing homes. If they were going to spend their own money, why not go
into assisted living for half the cost of a nursing home?
Over time, academics
and the government figured out that home and community-based (HCB) care,
including assisted living, costs much less than nursing home care on a
short-term per capita basis. A nationwide push for “rebalancing”
from institutional to HCB care ensued for the dual purpose of reducing
Medicaid costs and providing the kind of care people preferred.
A strong case can be
made, however, that rebalancing doesn’t save Medicaid money, but rather
increases public expenditures. See our briefing paper titled “Rebalancing
Long-Term Care” for that argument. In a nutshell, the more attractive
Medicaid makes its free care, the more likely people are to take advantage
of Medicaid and the less likely they are to plan early and responsibly to
pay privately for LTC. The total cost of long-term care to Medicaid
continues to increase inexorably year after year despite the widely held
view that paying for more home and community-based care “saves money.”
Nevertheless, the
relentless trend for Medicaid to buy more HCB care and less nursing home
care continues. A new report from the National Center for Health
Statistics (NCHS) provides the first reliable data documenting the
utilization of “residential care facilities.” According to “Residents
Living in Residential Care Facilities: United States, 2010,” by
Christine Caffrey, Ph.D., et al.: "Using data from the first
nationally representative survey of RCFs with four or more beds, this
report presents national estimates of these RCF residents by selected
resident characteristics."
Here are the
highlights:
- The majority of
residents living in residential care facilities in 2010 were non-
Hispanic white and female. More than one-half of all residents were aged
85 and over.
- Nearly 2 in 10
residents were Medicaid beneficiaries, and almost 6 in 10 residents
under age 65 had Medicaid.
- Almost 4 in 10
residents received assistance with three or more activities of daily
living, of which bathing and dressing were the most common.
- More than
three-fourths of residents have had at least 2 of the 10 most common
chronic conditions; high blood pressure and Alzheimer's disease and
other dementias were the most prevalent.
Further exacerbating
Medicaid’s financial problems is the growing dilemma of the “dual
eligibles.” Duals are people who qualify both for Medicare and Medicaid.
Nearly all Americans 65 years of age or older qualify for Medicare.
Roughly nine million also qualify for Medicaid. Dual eligibles are by far
the most expensive Medicare beneficiaries and Medicaid recipients. Here’s
news about the duals:
Three new
and updated briefs from the Kaiser Family Foundation’s Commission on
Medicaid and the Uninsured examine spending, utilization and policy
efforts to align payment systems and service delivery for the 9 million
individuals nationally who are dually eligible for both Medicaid and
Medicare. This population has long been of interest to policymakers due to
its relatively high health care needs and correspondingly high cost.
Find a broad
collection of resources on dual-eligible beneficiaries here:
http://www.kff.org/medicare/resources-dual-eligibles.cfm. Read a
shorter version of the latest research published in Health Affairs
here: available free of charge to non-subscriber “guests” for two
weeks from date of publication (April 18, 2012).
Bottom line, dual
eligibles are extremely expensive for both Medicare and Medicaid. They
are growing in number and cost. The trend to finance their care more and
more in the community instead of in nursing homes is likely to increase
costs even more and discourage early planning to pay privately for LTC.
The entire academic and public policy focus on duals is toward managing
their care under Medicare and
Medicaid more efficiently and
cost-effectively.
All to the good, but
much more emphasis by academics and policy makers should also be aimed at
preventing people from becoming dual eligibles in the first place. That
is the focus of our briefing paper titled “Dual Eligibles and Long-Term
Care: How to Save Medicaid LTC $30 Billion Per Year and Pay for
the ‘Doc Fix’ [link]."
The choice is stark:
Bottom line, if
Medicaid doesn’t tighten up eligibility rules, especially by radically
reducing its home equity exemption (currently $525,000 minimum), and if
the program continues to pay more and more for the home and
community-based care people prefer, it will see census and utilization
continue to increase and ultimately collapse financially. Absent reforms
to discourage reliance on Medicaid by the middle class and affluent, the
program will be unable to provide a decent LTC safety net for the truly
needy.
We are now in the end
game of a nearly 50-year history of government interference in the LTC
market which has left the public asleep about long-term care risk and
cost, but the government unable to continue funding care for the vast
majority of Americans. An inevitable crash is coming. The poor will be
hurt the most. The middle class and affluent who’ve failed to insure for
LTC will lose their savings and home equity if they require expensive
long-term care.
Left holding the bag
are future generations who will not only lose inheritances to their
parents’ LTC expenses but will be taxed interminably to pay for the
unfunded liabilities of boomer entitlements that their generations will
not receive, at least not in full measure. What a sad commentary on our
government’s past, present and on-going fiscal irresponsibility!
#############################
Updated, Monday, April 16, 2012, Time
AM (Mountain)
Santa Fe, NM--
LTC E-ALERT
#12-013: LTC NEWS AND COMMENT
LTC Comment: On
Friday, I met with Cabinet Secretary Sidonie Squier and Medicaid Director
Julie Weinberg of the New Mexico Human Services Department. New Mexico
faces a huge demographic challenge, ranking fifth in the nation for growth
through 2030 of the 85-plus generation. The state already strains to
finance long-term care through Medicaid. No wonder. New Mexico’s
Medicaid program provides easy access to government financed LTC, collects
virtually nothing in estate recoveries, and does not participate in the
LTC Partnership program. I encouraged state officials to expand estate
recoveries, participate in the Partnership program, and join me in urging
federal legislation that would allow states to reduce the home equity
exemption and tighten loose eligibility rules.
The previous
Friday, April 6th 2012, I addressed the Bellevue, Washington Breakfast
Rotary Club. The Club published the following article about my
presentation:
Husky Bob Holert
introduced guest speaker Steve Moses, the founder of the Center for
Long-Term Care Reform. Steve's passion is to achieve top quality
long-term care by encouraging private financing as an alternative to
government programs.
Steve readily admitted that long-term care isn't a
particularly exhilarating topic. He defined the scope of care to include
medical or custodial care when people cannot care for themselves, due to
frailty, old age, injury, surgery, etc.
Long-term care is expensive. A nursing home can cost
$75,000 a year, and assisted living is about half of that. The odds are
that 70% of us will need long-term care at some point, and at least 20%
will need five years or more long-term care.
Steve advocates using private insurance to help close the
gap with the long-term risk, but that it is only one of the solutions to
the problem. The issue is an aging population due to the baby-boomer
bubble, with Medicare and Medicaid funding at crisis levels.
He pointed out numerous ironies in how people need to
shift wealth to become eligible for many government benefits. In other
words, if you aren't poor, you need to become poor. He pointed out the
many different ways how that model is dysfunctional, and it must be
supplemented with private insurance.
Another problem is that insurance premiums are rapidly
climbing, largely due to the costs of care, but more importantly due to
the dropping Fed interest rates: the insurance companies charged past
premiums based on the expected financial performance of their large cash
reserves. With low Fed interest rates, the insurance companies cannot
meet the expected payouts without substantial rate increases.
The government side of the equation is also bleak. In
Social Security, there is nothing in the "trust fund." This year, 42% of
the federal budget is deficit - that means that 42 cents of every dollar
spent by the government is borrowed money. The unfunded liabilities of
Medicare and Medicaid dwarf the existing federal debt.
Steve's bottom line is that we need to take the long-term
care reform issue more seriously than ever before. His conclusion is that
it's dangerous to manage long-term care by looking in the rear view
mirror. Instead, if you look through the windshield, you can see that
you're heading for a brick wall at 100 mph. In closing, he asserted that,
"The best way to help the poor is to not become one of them."
More information on Steve Moses and his organization are
available at
www.centerltc.com.
#############################
4/13/2012,
“Senate
to Put LTCI Under the Microscope,” by Allison Bell, LifeHealthPRO
Quote:
"The Senate Special Committee on Aging wants to look for ways to save
money on long-term care (LTC), and also to talk about the future of
private long-term care insurance (LTCI). The committee has scheduled an
LTC hearing to start at 2 p.m. EDT Wednesday. . . . None of the witnesses
on the initial witness list appears to have significant experience with
designing, pricing, underwriting, selling or administering private LTCI
products."
LTC Comment:
One more Senate hearing to bash LTCI and lament the lack of more
government-financed LTC.
#############################
4/12/2012,
“Reverse
Loans, Pre-Retirement,” by Vickie Elmer, New York Times
Quote:
"REVERSE mortgages, once associated mainly with homeowners in their 70s
and beyond, are now being taken out by people nearing retirement to help
pay off debts and remain financially solvent, a new report shows."
LTC Comment:
This trend parallels the lowering age of purchase trend for LTC
insurance. When Medicaid stops exempting over a half million dollars of
home equity, expect much more use of reverse mortgages to fund home care
and to pay LTCI premiums.
#############################
4/12/2012,
“Cost
of long-term care coverage goes through the roof,” by Dave Lieber,
Quote:
"The long-term care insurance market is struggling, and some companies are
dropping out of selling the insurance to individuals. Others are raising
premiums, but nobody is raising them as high as John Hancock, where some
long-term care premiums in other states are jumping as high 90 percent."
LTC Comment:
This article quotes LTCI producer and Center premium member
Honey Leveen of Houston and nationally syndicated financial columnist
Terry Savage of the Chicago Sun-Times.
#############################
4/12/2012,
“More
Senior Living Communities Needed Says New Report,” Assisted Living
Facilities Association or
ALFA
Quote:
"The report, created by the
non-profit Center for Housing Policy, states that many of the senior
housing challenges we are facing now, will be exacerbated in the coming
years. The report predicts that as the population ages more people will
be living with a disability and will not have access to affordable housing
options. Currently 64 percent of households, in which the oldest member
is 85 or older, contain a person with a disability. Poorer households are
more likely to be affected by a disability and less likely to have the
funds to move into assisted living or retrofit their homes to accommodate
the disability. If this percentage remains stable, a larger number of
seniors will be without adequate support."
LTC Comment:
Translation: more scarce safety net resources will have to go to a
growing population of elderly poor. Conclusion: It’s more important than
ever for those who can, to plan responsibly and pay privately for LTC.
#############################
4/11/2012,
“Report
declares dementia a global public health crisis,” Long-Term Living
Quote:
"A new report from the World Health Organization (WHO) and Alzheimer's
Disease International (ADI) calls for nations to make dementia an
international public health priority, declaring dementia a public health
crisis.”
LTC Comment:
Any focus on Alzheimer’s should include how to finance quality long-term
care.
#############################
4/11/2012,
“Generations
Faring Well in Expanded Households,” by Philip Moeller, U.S. News &
World Report
Quote:
"More than 50 million Americans, including rising numbers of seniors, live
in households with at least two adult generations, and often three.
That's approaching 1 in 6 Americans--a significant percentage. The
increases were driven largely by the Great Recession, with most of the
gains occurring between 2007 and 2009. At the same time, economic and
housing problems have resulted in low rates of migration and new household
formation."
LTC Comment:
The era of the “Club Sandwich Generation” is here.
#############################
4/11/2012,
“Long Term Care Insurance Marketer Wins Coveted 'Social Media Rockstar'
Finalist Award,” California Newswire (link)
Quote:
"Long Term Care Associates (LTCA), a member of the National LTC Network,
was recently announced a finalist in the ‘Social Media Rockstars -
Organizations’ category of SENIORHOMES.COM 2012 BEST OF THE WEB AWARDS.
The contest sought to identify the most valuable resources across the web
for seniors, caregivers and industry professionals in 10 categories, and
was judged by a panel of leading experts in the senior living industry."
LTC Comment:
Congratulations to Steve Forman and the team at
LTCA, corporate members of the Center for Long-Term Care Reform.
#############################
4/10/2012,
“Stroke
means higher risk in affected person's siblings,” Nurse.com
Quote:
"People with a sibling who has had a
stroke may face at least a 60% higher risk of having one themselves,
according to a Swedish study."
LTC Comment:
Useful fact for underwriting and marketing although the one countervails
the other and vice versa.
#############################
4/10/2012,
“Why
do more people die when the economy gets better?,” by Suzy Khimmat,
The Washington Post
Quote:
"In a new paper, researchers argue that economic boom times create a
scarcity of caregivers in nursing homes, raising the mortality rate
through a disproportionately high numbers of deaths among the elderly."
LTC Comment:
What better reason to rely more on private LTCI, which pays adequately for
care in good times and bad, as opposed to Medicaid which pays inadequately
for care even in good times, but falls off dangerously in bad times due to
state and federal budget cutbacks?
#############################
4/10/2012,
“New Medicaid regulations give
states flexibility with home and community based services,” McKnight’s
LTC News (link)
Quote:
"Both rules would give disabled and
elderly individuals more alternatives to nursing home care. Recent
administrations have expedited efforts to move as many residents as
possible out of institutionalized long-term care, which they view as a
costly option."
LTC Comment:
Unfortunately, home and
community-based care is not as cost-effective as public officials and
academics believe and the more Medicaid provides attractive home care, the
less likely people are to plan responsibly to pay privately for LTC.
We've covered this issue in several of our recent reports
here.
#############################
4/10/2012,
“Three
Ways to Buy Long-Term Care Insurance,” by Jay MacDonald, Fox
Business
Quote:
“When shopping for long-term care insurance, three options present
themselves: a stand-alone long-term care, or LTC, policy, a fixed annuity
with LTC benefits and a life insurance policy with an LTC rider. Which
option is right for you? 'Each has its pros and cons,' says Jesse Slome,
executive director of the American Association for Long-Term Care
Insurance, an industry trade group.’”
LTC Comment:
Mass media TV coverage of LTCI.
#############################
4/9/2012,
“Joining a Community By Staying at Home: Some continuing-care campuses
are doing away with the requirement to buy a residence,” by Anne Tergesen,
Wall Street Journal (link)
Quote:
"Thinking about moving to a so-called CCRC, or continuing-care retirement
community? Perhaps you could stay in your home-and have the community
come to you. That is the idea behind a concept called ‘CCRCs without
walls.’ Rather than requiring members to purchase a residence on a
campus, these programs dispatch services-administered by aides, physical
therapists, nurses and care coordinators-to members' homes as needed. By
doing away with the residence requirement, they typically can charge
less."
LTC Comment:
The LTC service delivery system continues to evolve.
#############################
4/9/2012,
“New York Life Reports 2011: Financial Results Surplus and asset
valuation reserve increased by $1 billion, or 6.4%, to a record $17.9
billion,” WSJ MarketWatch (link)
Quote:
"The long-term care insurance operation generated a 17% increase in sales
over the prior year."
"Also, New York Life
was the sixth largest seller of new individual long-term care insurance
premium, according to an industry source. Source: LIMRA International,
Fourth Quarter YTD 2011 Individual Long-Term Care Sales Survey, adjusted
for level premium pay plans plus 10% of limited premium pay plans."
LTC Comment:
Congratulations to Center Silver corporate member New York Life.
#############################
4/9/2012,
“Workers
aren't taking full advantage of benefits options,” by Marli D. Riggs,
Employee Benefit Adviser
Quote:
"When asked how they would pay for out-of-pocket expenses due to an
unexpected illness, 57% of respondents say they would have to tap into
savings, while 30% would use a credit card and 19% would have to withdraw
funds from their 401(k) plans to cover the costs."
LTC Comment:
None of those resources would cover LTC costs very long for most
Americans. Providing LTCI worksite benefit options would help.
#############################
4/8/2012,
“Would
Roosevelt recognize today's Social Security?,” by Robert J. Samuelson,
Washington Post
Quote: "Social Security has evolved into something
[Roosevelt] never intended and actively opposed. It has become what was
then called 'the dole' and is now known as 'welfare.' This forgotten
history clarifies why America's budget problems are so intractable."
LTC Comment: The gradual deterioration of “social
insurance” into welfare is now almost complete.
#############################
Updated, Friday, April 13, 2012, 9:00
AM (Mountain)
Santa Fe, NM--
LTC BULLET: LTC
NUMBERS YOU CAN TRUST
LTC Comment: Who says
70 percent of seniors will need LTC? What exactly does that mean? Whose
numbers can you trust? Observations after the ***news.***
.JPG)
*** HAPPY FRIDAY THE
13th . . . Be careful out there! ***
*** GENWORTH FINANCIAL
has published its 2012 Cost of Care Survey. Check it out
here; cost of care map,
here; key findings
here. Damon has updated our list of all companies’ cost of care
surveys in “The
Zone” including updating links to past year’s surveys. Highlights:
“Looking back at the past five years of survey results, Genworth
recognizes emerging trends across the long term care services landscape.
Overall, the cost of care among facility-based providers has steadily
increased. For example, in 2007 the median annual rate for a private
nursing home room was $65,700, compared with the 2012 median annual rate
of $81,030. . . . In contrast to facility-based care, rates charged by
home care providers for 'non-skilled' services have remained relatively
flat over the past five years. For example, whereas the national hourly
private pay median rate charged by a licensed home health agency for a
home health aide was $18 in 2007, the 2012 hourly rate has only slowly
crept up to $19. The historical compound annual growth rate for this type
of care service has been only 1.09 percent over a five-year period.” ***
*** STEVE MOSES is in
Santa Fe, NM to meet with
New Mexico Human Services Department Cabinet
Secretary Sidonie Squier this morning.
Executive Director Paul Gessing of the
Rio Grande Foundation facilitated the meeting. ***
LTC BULLET: LTC
NUMBERS YOU CAN TRUST
LTC Comment: One of
the biggest benefits of membership in the Center for Long-Term Care Reform
is the ability to ask us questions about LTC financing and expect a quick
reply.
Long-time friend,
supporter and member of the Center, LTCI broker Ed Hutman, CLTC, LTCP of
Group LTC Services and Baygroup Insurance in Baltimore, Maryland
recently posed the following question to us. (Published with Mr. Hutman’s
permission.)
“Steve: I have not
seen these particular statistics (from your newsletter shown below).
All
right. We know 70 percent of seniors will require some long-term care and
20 percent will need five years or more. We know LTC is very expensive
whether it's provided in a nursing home, assisted living facility or in
your own home. We know private long-term care insurance is inexpensive
compared to the cost of care if needed. We know most Americans could
afford LTC insurance, but too few buy it. Why? (From
LTC Bullet: The Completely Understandable LTCI Buyer’s Guide,
Friday, March 30, 2012)
The only specific
study that I have seen that appears to have credibility (though due to its
age perhaps no longer relevant) is the Kemper Murtaugh Study reported in
the New England Journal of Medicine in Feb.
1991. I believe their finding was that of the people reaching age 65 in
1990 43 per cent would spend some time in a nursing home (52% women, 33%
men) and of that number 1 in 11 (9%) would require care for longer than 5
years. If I misread the study and their statement was that 1 in 11 of the
total population would require more than 5 years of care, then the
percentage of those who actually required care for more than 5 years would
be 20%. If there was another study that was conducted, please let me
know. . . Ed
My same-day reply
follows. If you are a member of the Center for Long-Term Care Reform or
if you join (here
or by contacting Damon at 206-283-7036 or
damon@centerltc.com), we’ll do our level best to give you the same
kind of accurate, quick-turnaround answers. “The Almanac of Long-Term
Care,” referenced in my reply to Ed, is a feature in our members-only
website, “The Zone.” Your user name and password as a Center member will
get you into the LTC Almanac and many other resources available only in
The Zone.
Hi Ed,
Excellent question. We
haven't used the old Kemper Murtaugh NEJM article since this one
came out:
Peter Kemper, Harriet
L. Komisar, and Lisa Alecxih, "Long-Term Care Over an Uncertain Future:
What Can Current Retirees Expect?," Inquiry, Vol. 42, Winter
2005/2006, pps. 335-350,
http://www.inquiryjournal.org/.
Below is my entry in
"The Almanac of Long-Term Care" describing and quoting the newer article
including a link to my critique of it in a contemporaneous LTC Bullet.
I've highlighted the sentence that covers the "70%/20%" stats (actually
69%/20%) that you see referenced everywhere these days. By the way, as a
member of the Center you have access to the LTC Almanac in The Zone. It's
a good place to look when you're searching for information like this . .
..
I have a feeling that
other readers may have the same question you raised. They also might
benefit from a reminder about the LTC Almanac resource. May I use your
question and my answer in an upcoming [LTC Bullet]?
Best regards,
Steve
Stephen A. Moses,
President
Center for Long-Term Care
Reform
2212 Queen Anne Avenue
North, #110
Seattle, WA 98109
Office: 206-283-7036
Fax: 206-283-6536
Email: smoses@centerltc.com
Web site:
www.centerltc.com
The Center for
Long-Term Care Reform is a private institute dedicated to ensuring quality
long-term care for all Americans. Sign up for our LTC Bullets online
newsletter and become a member of the Center at www.centerltc.com.
--------------
Excerpt from “The
Almanac of Long-Term Care”
Inquiry
Article 2006
Peter Kemper, Harriet
L. Komisar, and Lisa Alecxih, "Long-Term Care Over an Uncertain Future:
What Can Current Retirees Expect?," Inquiry, Vol. 42, Winter
2005/2006, pps. 335-350, http://www.inquiryjournal.org/. I purchased a
copy of this article from Inquiry. See files.
Steve Moses’s critique
of the Inquiry article, taking issue with many of its assumptions
and conclusions, is here: “LTC Bullet: Microsimulate This!,” Tuesday,
March 28, 2006,
http://www.centerltc.com/bullets/archives2006/622.htm)
Quotations from the
Inquiry article follow. The data points Ed Hutman asked about
specifically are highlighted:
Abstract: "The leading
edge of the baby boom generation is nearing retirement and facing
uncertainty about its need for long-term care (LTC). Using a
microsimulation model, this analysis projected that people currently
turning age 65 will need LTC for three years on average. An important
share of needed care will be covered by public programs and some private
insurance, but much of the care will be an uninsured private
responsibility of individuals and their families-a responsibility that
will be distributed unequally. While over a third of those now turning 65
are projected to never receive family care, three out of 10 will rely on
family care for more than two years. Similarly, half of people turning 65
will have no private out-of-pocket expenditures for LTC, while more than
one in 20 are projected to spend $100,000 or more of their own money (in
present discounted value). Policy debate that focuses only on income
security and acute care-and the corresponding Social Security and Medicare
programs-misses the third, largely private, risk that retirees face: that
of needing LTC." (p. 335)
"Medicaid pays for LTC,
but only for those with limited income and assets. This means individuals
must have low income and savings, or must exhaust their financial
resources, if they are to qualify for Medicaid coverage." (p. 335)
"In general, the model
projections assume that current policy and behavior continue into the
future. For example, Medicaid benefits and income and asset eligibility
requirements are assumed to continue unchanged." (p. 338)
"For Medicaid
eligibility and benefits, the model applies uniform eligibility rules,
reflecting average national criteria, rather than modeling the details of
each state's Medicaid program. This is because the core population on
which the model is based is not representative at the state level." (p.
339)
"To determine
Medicaid's role in nursing home care, the model simulates Medicaid
eligibility, including the process of individuals using their income and
drawing down their assets to pay for LTC, some to the level of Medicaid
eligibility." (p. 340)
"Another important
source of uncertainty surrounds changes in public policy and people's
behavioral responses to them. For example, during the past decade, state
expansions of Medicaid home and community-based services waiver programs
and federal legislation changing Medicare's payment system for home health
services affected the use of LTC services in important ways, but would
have been difficult to foresee. Future policy changes are similarly
difficult to foresee. For the present analysis, however, our purpose is to
focus attention on the policy issues assuming there will be no change in
policy, rather than to analyze the effect of policy that might be
enacted." (p. 341)
"Over the rest of
their lives, the current cohort of 65-year-olds will need, on average, LTC
(facility care, formal home care services, or informal care at home) for a
total of three years, according to the model simulations (see Table 1).
Dramatic differences, although not surprising, exist between women and
men. Women will need LTC for a longer time-for an average of 3.7 years,
compared with 2.2 years for men.
"These averages
mask enormous variation in the need for LTC. While an estimated 31% of
people currently turning 65 will not need any LTC before they die, 20%
will need care for more than five years. Indeed, those in the top 10% with
respect to years of care need will account for 37% of the total years of
care needed by the cohort (not shown)." (p. 341-42, emphasis added.)
"Because only 3% of
people in the cohort are projected to use services paid for by private LTC
insurance, out-of-pocket spending dominates the private expenditure
distribution. Fifty percent of the retiring cohort will have no
out-of-pocket expenditures for LTC, but 6% will incur out-of-pocket
expenditures with a present value of $100,000 or more." (p. 345)
"Out-of-pocket
expenditures will be incurred by those who rely on Medicaid as well as by
those who do not. Among the 30% of people who will receive some LTC
coverage under Medicaid during the rest of their lives, 95% will spend
some money out of pocket for LTC (see Table 5). These expenditures include
both assets that they ''spend down'' before becoming eligible for Medicaid
and income, which Medicaid requires beneficiaries to contribute toward
their care (except for a small personal-needs allowance). The amount spent
out of pocket by those who rely on Medicaid for LTC will range widely.
While 52% will have out-of-pocket expenses of less than $10,000 (including
those with none), about 10% will spend $100,000 or more out of pocket in
some combination of income and assets. Indeed, the average out-of-pocket
expenditures for people who receive some Medicaid LTC will be an estimated
$35,000." (p. 345)
"Public programs and
private insurance will pay for 55% of paid care received either at home or
in facilities. The remaining 45% of LTC expenditures will be paid for out
of pocket." (p. 345)
Results
"Over the rest of
their lives, the current cohort of 65-year-olds will need, on average, LTC
(facility care, formal home care services, or informal care at home) for a
total of three years, according to the model simulations (see Table 1).
Dramatic differences, although not surprising, exist between women and
men. Women will need LTC for a longer time-for an average of 3.7 years,
compared with 2.2 years for men.
"These averages mask
enormous variation in the need for LTC. While an estimated 31% of people
currently turning 65 will not need any LTC before they die, 20% will need
care for more than five years. Indeed, those in the top 10% with respect
to years of care need will account for 37% of the total years of care
needed by the cohort (not shown). [Emphasis added]
"Women have a higher
risk of ever needing LTC than men-an estimated 79% of women currently
turning 65 will need LTC sometime before they die, compared with 58% of
men. Women also face a greater risk of a lengthy period of LTC need-28%
will need care for more than five years versus 11% of men." (pps. 341-42)
"People currently
turning 65 face a substantial risk of relying on their families for
extended periods of caregiving. Sixty-five percent of all people in the
cohort will spend some time at home with LTC need. Among the entire
cohort, 30% will receive more than two years of care at home, and 11% will
receive more than five years of care at home. Twenty-three percent of the
cohort will rely solely on informal care for longer than two years, and 6%
will do so for more than five years.
"Individuals also
differ widely in their projected use of facility care. While 63% of people
in the cohort will not use any nursing home or assisted living care, 8%
will spend more than five years in facilities. The model projects that 35%
of the cohort will use nursing home care, with 5% spending more than five
years in nursing facilities. Fewer people will use assisted living
facilities. The model estimates that 13% of the cohort will use this type
of care, 1% for more than five years." (p. 343)
The model estimates
that average lifetime use among nursing home users is about 2.3 years (not
shown), within the 1.8- to 2.8-year range of previous estimates. Among
nursing home users, the risk of using more than five years of care is
about 14% (not shown), again within the 12% to 21% range of other
estimates. (p. 343)
"Projected
expenditures for LTC services are substantial. The present discounted
value of lifetime LTC expenditures is estimated to average $47,000 in 2005
dollars (see Table 3). This is the average amount per person that would
have to be set aside and invested for people at age 65 to pay for all
their LTC expenditures over the rest of their lives. The amount a specific
person will need varies widely among individuals. Government programs are
projected to pay for 53% of total LTC expenditures of the cohort turning
65. Private LTC insurance is projected to cover only about 2% of the
cohort's LTC expenditures. On average, the cohort faces out-of-pocket
expenditures of $21,100. Thus, 45% of the cohort's total LTC expenditures
are projected to be an uninsured private expense.
"Nursing and assisted
living facility care will account for the lion's share of the cohort's LTC
expenditures-an average of $38,900. Over three-quarters of these
expenditures will be for nursing facility care, based on the modeling
assumptions about growth in assisted living. Public programs, primarily
Medicaid, will pay for 46% of all facility care (not shown). The rest will
be paid for privately, nearly all out of pocket. However, the mix of
public and private funds will differ strikingly for nursing home and
assisted living care-public sources will pay 57% of average lifetime
nursing facility expenditures, while private sources (out-of-pocket
spending and private LTC insurance) will pay 92% of the expenditures for
care in assisted living facilities." (p. 343)
"Fifty percent of the
retiring cohort will have no out-of-pocket expenditures for LTC, but 6%
will incur out-of-pocket expenditures with a present value of $100,000 or
more." (p. 345)
"These expenditures
include both assets that they ''spend down'' before becoming eligible for
Medicaid and income, which Medicaid requires beneficiaries to contribute
toward their care (except for a small personal-needs allowance). The
amount spent out of pocket by those who rely on Medicaid for LTC will
range widely. While 52% will have out-of-pocket expenses of less than
$10,000 (including those with none), about 10% will spend $100,000 or more
out of pocket in some combination of income and assets. Indeed, the
average out-of-pocket expenditures for people who receive some Medicaid
LTC will be an estimated $35,000." (p. 345)
Discussion
"It is this wide
variation in the projected need for LTC that poses a challenge for both
individuals and policymakers. The challenge can be thought of usefully as
an insurance problem. Indeed, given its wide variation and uncertainty,
LTC need appears to be the archetypal insurable risk that could be spread
by insurance, public or private. A private insurance market exists to do
so, and government programs provide public insurance for some LTC. The
simulations clearly show, however, that existing private and public
insurance leaves substantial gaps in coverage of LTC risks-both risks of
incurring out-of-pocket costs and risks to families of providing in-kind
care." (p. 346)
"The role that private
LTC insurance can play in spreading risk is relatively small for a number
of reasons. First, not everyone can purchase insurance because insurers
underwrite to protect against adverse selection (Murtaugh, Kemper, and
Spillman 1995). Second, demand for private LTC insurance is limited.
Premiums are high relative to the financial resources of many retirees.
Many people consider the product expensive, in part because administrative
costs such as marketing and underwriting expenses account for a
substantial share of premiums (Lewis, Wilkin, and Merlis 2003; Brown and
Finkelstein 2004a).8 People are also uncertain about whether the insurance
benefits will cover enough care, and the right type of care, if they need
it. In addition, Medicaid's safety-net coverage of LTC for people who
exhaust their resources may provide a disincentive for some people to
purchase private long-term care insurance.9 Finally, some argue that if
private LTC insurance is to play an increased role in spreading risk,
products need to be more heavily regulated to improve consumer protection.
While regulatory changes and subsidies could increase the role of private
insurance somewhat, underwriting and limited demand constrain its ability
to spread remaining uninsured out-of-pocket expenses.
"Public insurance
could be enacted to spread the uninsured risk of incurring substantial
out-of-pocket expenditures, and many proposals have been suggested to do
so (Rivlin and Wiener 1988; Scanlon 1992; Wiener et al. 2001). The
principal obstacle to doing so is political. For example, the Social
Security Act could be amended to add a LTC benefit to Medicare, but this
would require a dramatic change in public policy thinking concerning the
role of Medicare, which, as indicated, is intended to insure acute care,
not LTC. Public responsibility for insuring acute care of the elderly is
accepted, but the extent of public responsibility for insuring LTC
continues to be debated.
"Incremental expansion
of Medicaid coverage by raising financial eligibility limits or making
home and community-based services or personal care mandatory benefits also
could be enacted to improve access to LTC services. However, this would
not insure against the risk of incurring out-of-pocket expenditures as
would private or public insurance. Medicaid is designed to be a safety net
for those who run out of money to protect against unmet need for LTC, not
to limit out-of-pocket expenditures.10 Indeed, it is not insurance in the
usual sense of the term: Medicaid insures the combined risk of needing LTC
and being unable to pay for it. For those with moderate financial
resources, it is contingent insurance for LTC-contingent on first spending
nearly all their financial resources, often on LTC. It does not protect
income and assets for other things such as living expenses or bequests,
and it only partially protects financial resources for spouses.11 On the
contrary, it ensures that private financial resources are exhausted before
benefits are provided. We saw that 10% of those who eventually qualify for
Medicaid will have more than $100,000 in out-of-pocket expenditures. While
Medicaid plays an essential role as a LTC safety net for those with
limited financial resources, it is limited as insurance against
out-of-pocket spending." (p. 346)
"Policy debate that
focuses only on income security and acute care-and the corresponding
Social Security and Medicare programs-misses the third risk that retirees
face: that of needing LTC. That risk is substantial; under current
Medicare and Medicaid policy much of it is the uninsured private
responsibility of individuals and families. And the uninsured risk is not
easy to spread." (p. 347)
#############################
Updated, Monday, April 9, 2012, 11:14
AM (Pacific)
Seattle--
LTC E-ALERT
#12-012: LTC NEWS AND COMMENT
LTC Comment: Our
weekly summary of the LTC financing news follows.
Reminder:
subscribers to the Center for Long-Term Care Reform’s discounted “clipping
service” received daily emails covering these and other news items in real
time. You too can stay on top of developing stories, the latest studies,
and all sorts of breaking news to keep you ahead competitively. Get all
the details on our clipping service
here:
http://www.centerltc.com/bullets/archives2012/942.htm. Contact Damon
at 206-283-7036 or
damon@centerltc.com to subscribe.
#############################
4/6/2012,
“3in4 Association & Dr. Marion Rescue Overwhelmed Caregiver With
Top-to-Bottom Home Makeover,” WSJ MarketWatch (link)
Quote:
"Non-profit organization 3in4 Association and its spokesperson, elder care
expert & author Dr. Marion, will today unveil a total home makeover valued
at over $50,000 to rescue one California family from a long-term care
crisis. The entire remodel was captured on film for an upcoming reality TV
pilot, 'Dr. Marion to the Rescue.'"
LTC Comment:
Watch here for news about the
3in4 Need More campaign and its 2012 national bus tour.
#############################
4/6/2012,
“LTC
Sculpture for the People,” by David Port, LifeHealthPRO
Quote:
"To maintain [sales] momentum in
2012, the onus is on suppliers and salespeople to deliver products that
resonate with buyers. And these days, what buyers want most are
affordability and flexibility, according to Tom Riekse Jr., a managing
principal at LTCI Partners, Lake Forest, Ill."
LTC Comment:
Good advice from a long-time supporter and corporate member of the Center
for Long-Term Care Reform.
#############################
4/6/2012,
“Don't
Grow Old Without It,” by Kelly Greene, Wall Street Journal
Quote:
"Long-term-care insurance: It can make the difference between living out
your life the way you want and becoming a burden to your family or a ward
of the state. But it is becoming significantly more expensive, more
complicated and harder to get with each passing year."
LTC Comment:
The WSJ financial columnist’s advice on how to buy LTC insurance.
#############################
4/4/2012,
“Why
Is Critical Illness Insurance So Darn Hot?,” by Debbie Cecil,
LifeHealthPRO
Quote:
"Combining voluntary benefits with high-deductible health plans is an
effective way for employers to provide employees more coverage. Brokers
and employers recognize that critical illness coverage, in particular, is
the perfect complement to high deductible health plans, higher co-pays and
Health Savings Accounts (HSAs)."
LTC Comment:
Critical illness insurance has been hot in Canada and the UK, but it’s
catching fire now in the USA especially as a supplement to HSAs.
#############################
4/4/2012,
“Contrary
to Predictions, Boomers Are Retiring,” Life & Health Advisor
Quote:
"Despite the popular belief that Baby Boomers will continue to work well
past the traditional retirement age of 65, those born in 1946 are retiring
in droves, according to Transitioning into Retirement: The MetLife Study
of Baby Boomers at 65. . . . The study reports that 59% of the first
Boomers to turn 65 are at least partially retired - 45% are completely
retired and 14% are retired, but working part-time. Of those still
working, 37% say they'll retire in the next year and on average plan to do
so by the time they're 68. Half (51%) of those who are retired say they
retired earlier than they had expected. Of those who retired early,
four-in-ten say they did so for health reasons. The majority (85%) of
respondents consider themselves healthy, and almost all (96%) retirees say
they like retirement at least somewhat. Seven-in-ten (70%) like it a
lot."
LTC Comment:
We reviewed this report in Friday’s “LTC
Bullet: Boomer Coma” concluding “A
new study shows baby boomers are already cognitively impaired when it
comes to financial and retirement planning.”
#############################
4/3/2012,
“Genworth
cuts off another limb,” by Michael Schwartz, RichmondBizSense.com
Quote:
"One of Richmond's biggest financial firms closed Monday on a deal to sell
off yet another piece of itself. Genworth Financial sold its tax and
accounting advisers unit, known as Genworth Financial Investment Services,
to a Los Angeles-based firm."
#############################
4/2/2012,
“State
and Local Governments' Fiscal Outlook,” Government Accountability
Office (GAO-12-523SP)
Quote:
"In the long term, the decline in
the sector's operating balance is primarily driven by the rising
health-related costs of state and local expenditures on Medicaid and the
cost of health care compensation for state and local government employees
and retirees. Since most state and local governments are required to
balance their operating budgets, the declining fiscal conditions shown in
our simulations suggest that the sector would need to make substantial
policy changes to avoid growing fiscal imbalances in the future. That is,
absent any intervention or policy changes, state and local governments
would face an increasing gap between receipts and expenditures in the
coming years."
LTC Comment:
Translation: Medicaid is finished as the dominant payer for long-term
care sooner rather than later.
#############################
4/2/2012,
“Baby
Boomers Will Transform Aging in America, Panel Says,” by Laura Rowley,
Huffington Post
Quote:
"If the looming shortfall in
entitlement programs is not addressed, boomers will confront challenges
that rival those faced by their parents and grandparents in the Great
Depression and World War II, argued Torres-Gil, who was the first
assistant secretary for aging under President Bill Clinton."
LTC Comment:
It warms my heart and soothes my mind finally to see warnings like this
one, which we’ve made frequently here, showing up in the national media.
Maybe the public will get the message soon enough after all to avoid the
worst of those “challenges.”
#############################
4/2/2012,
“The
Draw-Down of Retirement Savings,” by James Poterba, Steven Venti, and
David Wise, National Bureau of Economic Research
Quote:
Excerpts from the synopsis of a very interesting report:
"While there are many
potential explanations that need to be explored more fully, the authors
'conclude from these patterns of wealth evolution that if anything, past
studies of the cost of poor health in late life under-estimate the risks
that households face from adverse health shocks.'"
"Second, for the
minority of households who reach retirement with substantial assets,
late-life financial planning is complex and multi-faceted. Households face
three main risks: longevity, uninsured medical expenses, and poor asset
returns."
"Noting the financial
pressures on programs like Social Security and Medicare, the authors
conclude that the need to forecast government policies may be one of the
most difficult challenges facing retirement-age households."
LTC Comment:
Hear, hear! Realizing that government safety-net “entitlement” programs
are unlikely to be as rich and easily available in the future as they have
been in the past may be the single most important and difficult challenge
for consumers and financial advisers.
#############################
4/2/2012,
“Long
Term Care Insurance Industry Ad Appears,” by Jesse Slome,
AALTCI
Quote:
"A new national long term care Insurance consumer awareness advertisement
has been announced by the American Association for Long-Term Care
Insurance (AALTCI), the national trade group. According to AALTCI
executive director Jesse Slome, the full-page ad appears in the May
edition of Kiplinger's Personal Finance magazine."
LTC Comment:
Another coup for
AALTCI.
#############################
4/2/2012,
“What
Older Workers Don't Know About Social Security,” by Emily Brandon, U.S.
News & World Report
Quote:
"Many people on the verge of retirement lack knowledge about how Social
Security works. Most older workers can't identify basic information about
the Social Security calculation, including how many years of earnings are
factored into their payout and how much their payments will increase due
to delayed claiming, according to a recent AARP and Knowledge Networks
online survey of 2,053 people ages 52 to 70 who plan to claim Social
Security within the next 15 years."
LTC Comment:
If they know so little about Social Security, how much less do they know
about long-term care financing? LTCI producers who have and can teach
knowledge about government programs have a critical key into the
appreciation and trust of clients.
#############################
4/2/2012,
“Long-Term
Care and Couples: Who Pays?,” by Kelly Greene, Wall Street Journal
Quote:
"So-called Medicaid planning, which is essentially giving assets to loved
ones so you can qualify for government assistance, is highly
controversial. What do you think? Should it be allowed? Are there
situations when it is, or isn't, appropriate? Or should families that
don't buy long-term-care insurance simply be out of luck?"
LTC Comment:
The proper question is "Why expect people to buy LTC insurance if they can
save their assets for heirs and get the government to pay after the
insurable event occurs?”
#############################
3/31/2012,
“In
New York, Spousal Refusal Lives and Expanded Recovery Dies,”
ElderLawAnswers
Quote:
"New York elder law attorneys achieved two major victories in the state's
recently finalized 2012-2013 budget. They beat back a proposal by New York
Governor Andrew Cuomo to remove the right of spousal refusal for those
seeking Medicaid coverage of care in the community. Not only that, but
they managed to include in the new budget repeal of expanded estate
recovery rules enacted in last year's budget."
LTC Comment:
New York's "spousal refusal" policy transfers scarce Medicaid resources
from the poor to the affluent and undermines responsible LTC planning. But
the state continues this fiscally suicidal policy. For a full critique of
New York’s Medicaid LTC program, see our report titled “Long-Term Care
Financing in New York: The Consequences of Denial”
here.
#############################
3/21/2012,
“How
you can hedge long-term care costs,” by Terry Savage
Quote:
"There are several solutions to hedging the potential cost of long-term
custodial care, which is not covered by Medicare or any supplement. And,
while the solutions are costly, they are far less expensive than the
potential of using up all your assets to pay for care - and then being
placed in a state-funded nursing home, even though you could otherwise
have been cared for in your home."
"Peter Florek of MAGA
LTC (800-533-6242), says these combo policies make sense for people who
have savings, want some LTC benefits, and the death benefit, as well as
liquidity. He advises those who do not have money for the cash deposit
into such policies to at least purchase a small amount of traditional LTC
insurance, despite the potential for rising premiums."
LTC Comment:
Congratulations to syndicated financial columnist Terry Savage for her
frequent coverage of long-term care insurance and to distributor MAGA LTC
for their close work with Savage to explain the product’s value and the
challenges it faces.
#############################
Updated, Friday, April 6, 2012, 9:48 AM
(Pacific)
Seattle--
#############################
LTC BULLET: BOOMER
COMA
LTC Comment: A new
study shows baby boomers are already cognitively impaired when it comes to
financial and retirement planning. Findings and analysis after the
***news.***
***
JOHN GOODMAN of the
National Center for Policy Analysis published “Health
Alert: How We Can Keep from Going Broke, Part I” a couple weeks ago.
It explains eloquently how “Social Security, Medicare, Medicaid and other
social insurance programs are bankrupting America.” So it’s a perfect
background and companion piece for today’s LTC Bullet. In “Health
Alert: How We Can Keep from Going Broke, Part II,” published two days
ago, Goodman prescribes a solution. Both articles are worth your
attention, as is everything this gentleman writes at his “Health
Policy Blog” and elsewhere. ****** NEW FEATURE: The Center for
Long-Term Care Reform’s public and members-only websites are full of
useful information. Yet members often tell us they were unaware of this
or that resource. So we’ve decided to point you periodically to
information we think you can use. Watch for our new “Spotlight On”
feature in LTC Bullets and LTC E-Alerts. Center VP Damon Moses will
author them and you can contact him if you have any questions or
comments:
damon@centerltc.com or 206-283-7036. Here’s number 1 in our
“Spotlight On” series:
SPOTLIGHT ON: “LTC
Bullets” Archives. LTC Bullets is our informative newsletter
covering the latest developments in long-term care services and financing.
You already know these critical emails--authored by CLTCR President,
Stephen Moses--arrive in your inbox weekly, but did you know every “LTC
Bullet” ever published is archived by date and by subject on our
website? Over 950 informative “LTC Bullets” dating back to 1998 are
easily searchable and available for all to view. Check them
out
here. In the archive, you’ll find the “LTC Bullets” organized into
seven subjects: (1) The LTC Problem and Solutions, (2) Reality Check: The
Facts on LTCI, (3) Medicaid Planning, (4) LTC Services, (5) Politics and
Legislation, (6) Demographics and Other Data, and (7) CLTCR News. We
provide this free service to educate the public, legislators, policy
makers and long-term care professionals in order to encourage rational
long-term care policy reform and responsible LTC planning. Browse to our
“LTC Bullets”
archives and start reading and researching today! ***
#############################
LTC BULLET: BOOMER
COMA
LTC Comment: Baby
boomers are retiring faster and in greater numbers than anyone expected.
What’s more, they’re surprisingly content and confident as they drift
blithely into retirement, much more so than America’s economic reality
justifies.
That’s my take away
from the latest MetLife Mature Market Institute’s study of the baby boomer
cohort. Find the “Executive Summary” and “Key Findings” of “Transitioning
into Retirement: The MetLife Study of Baby Boomers at 65” below. Read
the whole report
here. For example:
“Despite the
conventional wisdom that Boomers are ready to ‘work forever’ and
significantly extend their formal working career, many of the oldest
Boomers are already well into the retirement phase. Almost twice as many
65-year-olds in 2011 stated that they were fully retired as were working
full-time at age 65 (45% versus 24% respectively). The average age at
retirement for these Boomers was 59.7 for men and 57.2 for women.” (p. 2)
Evidently, MetLife’s
respondents didn’t get the memo about these findings from a
May 2011 Bankers Life and Casualty study:
- “More than half of
middle-income Boomers (55%) have saved less than $100,000 for
retirement. One-fifth (19%) have saved less than $10,000.”
- “Two out of three
(68%) middle-income Americans age 47 to 65 have experienced a decline in
the value of their retirement accounts since 2008; one-third (30%) of
those have not seen any rebound in value as of March 2011.”
- “One-third (32%)
of those surveyed who own a home have already paid off their mortgage;
however, close to half (48%) do not expect to have it paid off before
they retire.”
- “Three-quarters
(73%) of middle-income Boomers say the turbulent economy has caused
their retirement timing expectations to change; seventy-nine percent
(79%) of those are delaying their retirement, by five years on average.”
- “Two out of three
(66%) middle-income Americans age 47 to 65 are not receiving
professional guidance of any kind regarding their retirement.”
In actuality, baby
boomers’ annual savings rates as a percentage of their incomes plummeted
from 7.3% in 1988 to .5% in 2007. (Source)
What accounts for
this apparent gap between boomers’ complacency toward early retirement and
the hard facts about the generation’s lack of financial preparedness?
I think the
explanation is the same as for the boomers’ denial and naïveté about
long-term care risk and cost. All their lives, they’ve seen their
grandparents and parents supported by Social Security, Medicare and
Medicaid. Boomers think they can depend on the social safety net too.
They’re wrong.
The federal
government is running massive deficits and borrows over 40% of everything
it spends! How long can that continue?
Social Security warns
of dramatic benefit cuts when its trust fund runs out. But there is
nothing in the Social Security trust fund except IOUs; the program already
spends more than it collects in payroll taxes; and its unfunded liability
is $17 trillion.
Medicare is a far
bigger problem than Social Security. Its infinite-horizon unfunded
liability is $89 trillion and there’s nothing but treasury bonds, more
IOUs, in its “trust fund.” Like Social Security, Medicare already draws
down general funds.
Of course, Medicaid,
the biggest payer for long-term care—boomers’ greatest financial liability
in old age—doesn’t even have a phony trust fund for naïve retirees to
pretend they can rely on. The handwriting’s already on the wall for all
three of these insolvent social programs.
Between the
long-standing and still-growing entitlement mentality these programs
created and the collapsing values of personal responsibility so fully and
depressingly documented in Charles Murray’s new book
Coming Apart, it’s hard to imagine how the country will get
through its imminent encounter with financial reality.
Adam Smith said “There’s a great deal of ruin in a nation.” That’s
why America could muddle through for so long. But a country can’t defy
economic gravity forever, any more than a hot air balloon can remain
permanently aloft. A hard landing is coming, and soon.
Let’s hope enough
boomers awaken from their entitlement-induced financial stupor in time to
prevent a crash. But don’t bet your life on it. Make sure you and yours
are protected with adequate savings and full private insurance protection
before you consider retirement.
#############################
Following is an
excerpt from “Transitioning into Retirement: The MetLife Study of Baby
Boomers at 65,” MetLife Mature Market Institute, Westport, Connecticut,
April 2012, (link).
Executive Summary
In 2007, the MetLife
Mature Market Institute (the Institute) began conducting a series of
studies to better understand the Baby Boomer cohort, those born between
1946 and 1964. The first in this series, Boomers: Ready to Launch, studied
Boomers on the cusp of reaching age 62 in 2008. In 2008, the Institute
conducted Boomer Bookends: Insights Into the Oldest and Youngest Boomers
(released in 2009), a comparative look at Boomers born specifically in
1946 and 1964. For each of these studies, respondents were re-contacted to
compare their attitudes and experiences from the previous waves.
In 2010, the
Institute released Boomers in the Middle: An In-Depth Look at Americans
Born 1952-1958. This study examined the middle cohort of the Baby Boomers,
who in some ways tend to favor attitudes and behaviors of either side of
the Boomer spectrum.
In 2011, the oldest
Boomers reached a new milestone - turning age 65 - an age that
traditionally defined retirement. This study examines the attitudes and
behaviors of this leading-edge Boomer segment as they transition into
their next life stage. Respondents included those who agreed to be
re-contacted from the 2009 study, so in many instances, direct comparisons
of changes in circumstances, plans, and behavior are included in this
report.
The results indicate
that much can change in three years, with major changes in employment and
retirement status specifically. Despite the conventional wisdom that
Boomers are ready to "work forever" and significantly extend their formal
working career, many of the oldest Boomers are already well into the
retirement phase. Almost twice as many 65-year-olds in 2011 stated that
they were fully retired as were working full-time at age 65 (45% versus
24% respectively). The average age at retirement for these Boomers was
59.7 for men and 57.2 for women. A large majority of those who have
transitioned into their retirement also report that they are well
satisfied with this new stage of their lives.
Of those still
working, over one-third anticipated that they will retire within the
coming year, when they turn 66 and are eligible for full Social Security
retirement benefits. Despite this anticipation, a small minority (15%) are
unconvinced of the Social Security program's long-term sustainability, and
slightly more (21%) are fully convinced that it will be around. Almost
two-thirds (63%) are also currently collecting Social Security retirement
benefits. At the same time, of the 65-yearold Boomers who have not
retired, many are considering working until even longer than in the past.
Consistent with prior studies, major concerns are having adequate
finances, staying active and productive, and long-term care costs.
With a large majority
of these oldest Boomers without a living parent (76%) and 83% of those
with children now also having grandchildren, much of their attention has
turned to these younger generations. Of the approximately one in four who
have at least one living parent, the incidence and activity of elder care
has remained steady at 14%.
The respondents also
revealed that concerns about the recession may be waning, although it
still clearly concerns many, with 43% expressing optimism about the future
(next 25 years). In this regard, 25% relate it to their personal finances
and 22% to their health. Of those pessimistic, most attribute this to the
government (49%) or the economy (21%).
Although health
reasons play a major role in the decision to retire earlier than
anticipated, a majority report good health and over two-thirds report no
change in their health status. This may be a factor in why the oldest
Boomers continue to push back the age at which they view themselves as
old, now postponing this declaration until age 79, a full year more than
they indicated in 2007.
Key Findings
• Almost one-half
(45%) of 65-year-old Boomers are now fully retired (up from 19% in 2008),
with another 14% reporting that they are retired but working part-time or
seasonally.
• Of those who have
not yet retired, 61% plan to retire at the same time as they planned one
year ago. On average, Boomers who have not yet retired plan to do so by
age 68.5.
• Almost four in 10
respondents (37%) who retired earlier than they had planned, cite
health-related reasons for doing so, another 16%cited loss of a job or job
opportunities. Those who retired later than they had planned mention
needing a salary to pay for day-to-day expenses (27%) and a desire to stay
active (13%) as the reasons for delaying retirement.
• The majority of
Boomers (63%) have also started receiving Social Security benefits; of
those, half started collecting before they had originally planned. Six in
10 Boomers are at least somewhat confident in the ability of Social
Security to provide adequate benefits for their lifetime.
• Seven in 10
retirees report liking retirement "a lot" while another two in 10 say they
"like it somewhat." The majority of Boomers like the word "retirement" to
describe their life stage and feel it is as they expected it to be.
• Half of Boomers
feel on track or have achieved their retirement savings goals. Just under
half (48%) have consulted a financial advisor in the past 12 months, and
six in 10 have calculated their needed monthly income during retirement.
An equal percentage of retirees and those who are still working full-time
have tried to calculate their monthly income needed in retirement (63% of
retirees and 65% of full-time workers).
• Despite current
difficult times, more than twice as many Boomers (43%) are optimistic
about the future in the long-term than the less than one-fifth who are
pessimistic. They are optimistic about their personal finances and their
health. Those pessimistic about the future are most concerned about the
government and the economy.
• Almost one-quarter
of Boomers received an inheritance from their parents with an average
value before taxes of $110K.
• Boomers still feel
that they are in good health, with 85% reporting excellent, very good, or
good general health ratings. Almost two in 10 report being in worse health
than they were in 2008. Of those, half have suffered a major health
problem in the past three years.
• The Boomers
surveyed say on average that they will be old at age 79, a year later than
reported in 2007. Nearly one-third (31%) of Boomers think that they were
their sharpest mentally in their forties while about one-fifth feel the
sharpest now, in their sixties.
• From 2008 to 2011,
more Boomers have become grandparents - an increase from 77% to 83%.
• During that same
period, the number of respondents who report having neither parent alive
increased significantly from 67% in 2008 to 76% in 2011. However, the
proportion of Boomers providing care to a relative has remained stable at
14%, providing an average of 11 hours of care on a weekly basis.
• Home ownership
increased significantly from 2008, from 85% to 93% of Boomers. The
majority of homeowners (83%) do not plan on moving. The average home value
reported is $255,000, down slightly from $269,000 reported in 2008.
#############################
Updated, Monday, April 2, 2012, 10:34
AM (Pacific)
Seattle--
#############################
LTC E-ALERT #12-011:
LTCI Opinion Survey and LTC NEWS AND COMMENT
LTC Comment: Happy
Anniversary to your Center for LTC Reform. Fourteen years ago yesterday,
attorney David Rosenfeld and Steve Moses founded the Center for Long-Term
Care Financing. David went on to hold critical jobs as a Congressional
staffer, currently Senior Health Counsel to the House Republican
Conference. In 2005, the Center changed its name to the Center for
Long-Term Care Reform, but our work has carried on with no change in the
mission: “To Ensure Quality Care for All Americans.” Thank you for your
long and abiding support.
Following is an
invitation from
LIMRA, a trade association of insurance and financial services
companies, to participate in an opinion survey about private long-term
care insurance. I’ve completed the questionnaire and I encourage you to
do the same.
Long-Term Care
Insurance: Industry Insights and Outlook
We would like to
invite your participation in the Long-Term Care Insurance: Industry
Insights and Outlook Survey. Every three years, LIMRA conducts a survey
collecting opinions on the state of the long-term care insurance (LTCI)
industry as well as predictions for the future. Please take a few minutes
to complete this survey and submit it to LIMRA by April 13, 2012. We are
interested in hearing from numerous individuals in the LTCI industry and
are not looking for one "carrier response." As such, please feel free
to forward this survey along to other LTCI folks in your company and/or
elsewhere.
Individual
participants and their responses will not be identified by name in the
final report. Participants will receive a free copy of the results.
Click here to preview a pdf version of the survey.
As always, feel free
to contact me with any questions regarding this survey.
Click here to begin the survey.
Thank you,
Jennifer Douglas
LTC Product Research
Jdouglas@limra.com
860-285-7742
#############################
3/31/2012,
“Practical
Matters: 10 tips for the 'sandwhich generation,'” by Alice Haine,
The National
Quote:
"3 Discuss the future with your parents: Talk to your parents about
their retirement planning and discuss the possibility of them obtaining
long-term care insurance. Long-term care insurance can help to secure your
parents' choices without putting a burden on you. However, never
categorically promise your parents that you will not put them in a nursing
home because in some cases it could be the only option as they may need
more care than you can humanly provide."
LTC Comment:
Thoughtful counsel.
#############################
3/30/2012,
“Critical
Illness: Insurers Report $227 Million in U.S. Sales,” by Allison Bell,
LifeHealthPRO
Quote:
"[T]he results available suggest that the participating carriers generated
at least $227 million from providing critical illness protection for
734,230 people, according to a summary of the results that Gen Re,
Stamford, Conn., posted on the Gen Re website. The researchers found that
13% of the premiums from new critical illness coverage sales came from
sales to individuals, 14% from sales of true group plans, and 72% from
sales to individual workers through individual worksite sales programs or
through voluntary, employee-paid group coverage programs. The policies
provided a total of $8.7 billion in protection."
LTC Comment:
Most critical illness insurance sales occur in other countries, especially
Canada and the UK, but the U.S. market is growing.
#############################
3/30/2012,
“Medicaid
Gets Harder to Tap,” by Kelly Greene, Wall Street Journal
Quote:
"Here's how to preserve some assets and possibly still qualify for help."
LTC Comment:
My note to the author:
Kelly: Your article
about Medicaid planning relies solely on sources who make their livings
selling Medicaid planning. I'd be glad to provide you a different
perspective. I worked for the federal Medicaid program for a decade and
I've followed its gradual decline--due in part to excessive Medicaid
planning--for three decades. Without more balance in your reporting,
WSJ readers may come away with the idea that planning responsibly to
be able to pay for their own long-term care is unnecessary, or even
foolish. Years ago, your columns also explained the risks and downsides of
Medicaid planning and you covered other planning options if I recall
correctly. Steve
#############################
3/29/2012,
“Long-term
care insurance policy costs rising,” by Christine Dugas, USA TODAY
Quote:
"Just as aging Baby Boomers are realizing they may need long-term care
insurance, the marketplace is shrinking, the cost of premiums is soaring,
and providers are altering the policies they offer."
LTC Comment:
Nothing new in this article, and it fails again to point out the greater
risk and vulnerability of the social safety net, but it is noteworthy for
quoting industry advocate and Center supporter Deb Newman in defense of
LTCI.
#############################
3/29/2012,
“Giving
Stuff To Your Kids Could Leave You Broke, Sick, And On The Street!,”
Law Offices of Alice Reiter Feld &
Associates
Quote:
"I recently met with a couple in which the wife needed long-term care.
They told me they had given financial help to their divorced daughter.
When I told them their gifts were going to cause them severe penalties now
that the wife needed care, they were devastated. . . . The moral? Don't
even think about applying for Medicaid without seeing an Elder Law
attorney who specializes in long-term care benefits and estate planning!"
LTC Comment:
This Medicaid planning ad is typical of information inundating consumers
to the effect that long-term care costs are avoidable, without private
insurance, by consulting a lawyer.
#############################
3/28/2012,
“Long-term
care benefits come most easily if you know your policy,” by Terry
Savage, Chicago Sun-Times
Quote:
"Long-term care insurance has been getting its share of bad press lately,
because of premium increases. But for those who are already receiving
benefits, and their families, there is a very positive side to this
story."
LTC Comment:
LTCI's friend in the national media, syndicated financial columnist Terry
Savage, cites producer Honey Leveen, wholesaler Claude Thau, and trade
association chief Jesse Slome in this column.
#############################
3/28/2012,
“Cumulative
cuts spell bad news for SNFs, report finds,” McKnight’s LTC News
Quote:
"Nursing homes are planning to layoff direct caregivers, reduce employee
benefits and cancel facility expansion plans as a result of cumulative
Medicare and Medicaid cuts, a new survey finds."
LTC Comment:
As predicted here for many years: Access to quality care, at home or in a
SNF or ALF, will depend increasingly on the ability to pay privately and
avoid Medicaid.
#############################
3/28/2012,
“3in4
Association and Dr. Marion Team Up with Emeritus to Shine the Spotlight on
Seniors and Long-term Care Planning,” MarketWatch
Quote:
“Non-profit organization 3in4 Association and its spokesperson, elder care
expert & author Dr. Marion, today announced a partnership with Emeritus
Senior Living, a leading national provider of senior living services, to
raise awareness about the crucial need for Americans to form a plan for
their long term care needs."
LTC Comment:
Go 3in4!
#############################
3/28/2012,
“Low
interest rates put cash in Americans' pockets,” by Dennis Cauchon,
USA TODAY
Quote:
"A historic drop in interest rates is helping U.S. households save more
than $3,000 a year on average, allowing consumers to spend more even as
their earnings fall, a USA TODAY analysis finds."
LTC Comment:
Historically low interest rates forced on the economy by the Federal
Reserve may be driving carriers out of the LTCI market by reducing
investment returns on reserves, but isn't it interesting that consumers
are saving enough on the low interest rates ($3,000 annually) to purchase
private LTCI policies? This might be a way to show prospects where to find
the funds to pay for LTCI coverage.
#############################
3/27/2012,
“LTC
industry generates $259 billion in revenue during 2011,” Long-Term
Living
Quote:
"Overall revenues for the U.S. long-term care industry grew 31 percent
since 2006, reaching $259 billion in 2011, according to a new report from
Kalorama Information. The four market segments included in the report are:
nursing home, assisted living, hospice and home care. . . 'Nursing homes
will face less reimbursement. Assisted living, already non-reimbursed by
government plans, will increasingly become an option for those with
long-term care insurance.’”
LTC Comment:
As Medicaid and Medicare cut back, private LTC insurance will fill the gap
increasingly.
#############################
3/27/2012,
“Genworth
Bets on Long-Term Care as Insurers Flee Market,” by Andrea Ludtke,
Bloomberg
Quote:
"Genworth Financial Inc. (GNW), the biggest U.S. seller of long-term care
coverage, is betting on a rise in interest rates to boost profits as other
insurers flee the business."
LTC Comment:
A better bet than most you could find in Las Vegas!
#############################
3/27/2012,
“Insurers
and the Supremes,” by Holman W. Jenkins, Jr., Wall Street Journal
Quote:
"Why the Affordable Care Act (as the law is widely known) even keeps
insurers around is a bit of a mystery. But keep them it does, collecting a
rake-off for administering a system of national health care masquerading
as insurance regulation."
LTC Comment:
Interesting column. What ever happened to the principle of insurance,
i.e., spreading and pricing risk so that a small and affordable
premium protects against a large but unlikely risk?
#############################
3/27/2012,
“Getting
a doctor's appointment tougher on Medicaid,” by Amy Norton, Reuters
Quote:
"Americans on Medicaid have a harder time getting a prompt doctor's
appointment, which may help explain why some end up going to the ER, a new
study finds."
LTC Comment:
The same holds true for Medicaid recipients’ difficulty accessing quality
long-term care, especially in non-institutional settings.
#############################
3/26/2012,
“Editorial:
Boomers unready for long-term needs,” StarTribune
Quote:
"Greater awareness of long term care costs is needed. So is an ‘all of the
above’ strategy -- tax breaks, more-affordable reverse mortgages, new
types of long term care insurance -- when it comes to policy changes that
would enable more Minnesotans to take responsibility."
LTC Comment:
No truer words were ever spoken and it is heartening to see them said in a
major-newspaper editorial. I’d add this: “Target scarce Medicaid
resources to the truly needy and you can soon have ‘tax breaks,
more-affordable reverse mortgages, new types of long term care
insurance.’”
#############################
3/26/2012,
“Caring
for elderly parents catches many unprepared,” by Christine Dugas,
USA TODAY
Quote:
"More than 42 million Americans provide family caregiving for an adult who
needs help with daily activities, according to a 2009 survey by the AARP.
An additional 61.6 million provided at least some care during the year.
And many are unprepared."
LTC Comment:
As stories like this proliferate in the national media, interest in LTC
insurance and sales will grow rapidly.
#############################
3/25/2012,
“Editorial:
Dementia Behind Bars,” New York Times
Quote:
"Many inmates, obviously, can never be released, and they will continue to
require special care. But the states must pursue other avenues as well.
They can foster partnerships between prisons and nursing homes to improve
the quality of care; consider compassionate release programs for frail
inmates who no longer present a threat to public safety; and, no less
important, revisit the mandatory sentencing policies that did away with
judicial discretion and filled the prisons to bursting in the first
place."
LTC Comment:
Watch for demented prisoners ending up in Medicaid-financed nursing homes
and assisted living facilities.
Helpful Hint:
Center member Sue Howarth of TBG West wrote us: “I just went out to my
DVR to set this up to record and had a difficult time finding the show
locally. I finally did find it when I searched for ‘Independent Lens,’
which is the name of the series of which this is one episode. You might
want to share that tip with your subscribers.” Done, Sue, thanks.
#############################
3/23/2012,
“Tips
for Successfully Selling Long-Term Care Solutions,” by Shawn Britt,
LifeHealthPRO
Quote:
"Careful analysis of a client's financial situation, thorough knowledge of
product opportunities, a compelling story, and forethought to approaching
the LTC discussion will allow you a better opportunity to offer your
client the type of LTC coverage they are more willing to purchase for
protecting their assets, protecting their family from burden and
protecting their own choices for care."
LTC Comment:
Good advice for the “AMGs” (altruistic, masochistic geniuses) who sell
this product that the government insists on giving away.
#############################
Updated, Friday, March 30, 2012, 10:00
AM (Pacific)
Seattle--
#############################
LTC Bullet: The Completely Understandable
LTCI Buyer’s Guide
LTC Comment: Craig McCormick’s new book is a good
read and needed. Check out my unabridged “Foreword” to it after the
***news.***
*** SPOTLIGHT ON: “LTC Embed Reports” are special
on-site reports from wherever the LTC policy battle takes us. Whether
it’s a Congressional hearing in Washington, D.C., an LTCi conference, or
field reports from our latest project, we’ll take you deep into the
trenches of LTC policy reform with our first-hand coverage. If you can’t
be there, count on us. Center for Long-Term Care Reform members receive
our “LTC Embed Reports” immediately upon release and have access to our
Embed Report archive chronicling major LTC policy events back to 2004. If
you’re a Center member, log in and browse the archive
here and read our latest report from the recent ILTCI conference in
Las Vegas. If you are not a member, but are interested in becoming one,
click
here or simply contact Damon (206-283-7036 /
damon@centerltc.com). ***
*** HAVE YOU READ OUR LATEST publications? Check ‘em
out:
“How to Fix Long-Term Care: Six Briefing Papers,”
Center for Long-Term Care Reform, Seattle, Washington, February 3, 2012;
http://www.centerltc.com/BriefingPapers/Overview.htm.
"Near-Term Prospects for Long-Term Care Financing
Reform: Final Report to the Milbank Foundation for Rehabilitation,”
Center for Long-Term Care Reform, Seattle, Washington, January 27, 2012;
http://www.centerltc.com/pubs/NearTermProspectsforLTCFinancingReform.pdf.
***
*** WHY GET OUR CLIPPINGS? How much time do you
spend each week reading articles on the internet about health and
long-term care? Is it all time well spent? Or do you scan a dozen
articles to find one that you really need to read? Why not delegate the
searching to Steve Moses? Prioritize your research time by reading the
best of the best articles, which he’ll send you daily. Details on our
“clipping service” are
here, but in a nutshell Center members can subscribe by becoming
premium members at the $250 or $500 level; non-members get the clippings
for $120 per year. Spend pennies a day to save dollars and precious
professional hours daily. You’ll get an average of three articles per day
with a pithy quote, a link to the source, and when necessary, a sentence
or two of interpretation. ***
LTC BULLET: THE COMPLETELY UNDERSTANDABLE
LTCI BUYER’S GUIDE
LTC Comment: You’ll find my opinion of Craig
McCormick’s “The Completely Understandable LTCI Buyer’s Guide” in
the following “Foreword.” This is the only place you can read the full
“Foreword” as it was condensed slightly to fit into the final version of
the book. Find author McCormick’s professional credentials
here. Buy his book
here. The Center for Long-Term Care Reform thanks Craig McCormick for
his steadfast support of our work and for writing this valuable
contribution to the literature on long-term care financing.
-----------------
Foreword to “The Completely Understandable
LTCI Buyer’s Guide”
by
Stephen A. Moses
Let this Foreword's first and main message be
"Forward!" If you're considering this book, buy it. If you've bought it,
read it. When you've read it, act!
Why this book? I don't have to go any further than
the title to answer.
"The Completely Understandable LTCI Buyer’s
Guide" is completely understandable. For a complicated subject like
long-term care financing, clear, concise and comprehensive exposition and
analysis are critical. You'll find them here.
But odds are you'll still demur. The single biggest
problem we have with long-term care in America is procrastination.
"Denial is not a river in Egypt," they say. Rather, it's the main reason
most people don't plan responsibly for the risk and cost of long-term
care.
But if the risks and costs are so great and if the
private insurance solution is so obvious, as this book makes crystal
clear, then why are less than ten percent of eligible Americans insured
for long-term care?
I think answering that question is the most important
contribution I can make to persuade you to buy this book, and more
importantly, to get the LTC insurance protection you need.
All right. We know 70 percent of seniors will
require some long-term care and 20 percent will need five years or more.
We know LTC is very expensive whether it's provided in a nursing home,
assisted living facility or in your own home. We know private long-term
care insurance is inexpensive compared to the cost of care if needed. We
know most Americans could afford LTC insurance, but too few buy it. Why?
The usual explanations don't pass muster.
- Too expensive? So you'd rather spend
dollar-dollars later than nickel dollars now?
- Won't happen to me? So you're exempt from the
laws of probability?
- I'd shoot myself first? So, you'll do it before
Alzheimer's Disease makes you forget why you bought the gun?
- My kids will take care of me? So you're OK with
your daughter giving up her career to change your diapers someday?
Come on! The excuses people give to avoid or delay
getting long-term care insurance are not the reasons they don't buy. The
real reason is subtler and more pernicious.
The American public has been anesthetized to the risk
and cost of long-term care by well-intentioned but perversely
counterproductive public policy.
The vast majority of all expensive long-term care in
the United States has been paid by government programs since 1965. They
include Medicaid, Medicare, the VA, and Social Security income that people
on Medicaid have to contribute to offset their cost of care. These have
accounted for more than three-fourths of LTC expenditures for more than
four decades.
Consequently, most people look backwards at long-term
care risk, at how their parents or grandparents ended up in nursing homes
on Medicaid or some other government-financed program.
No wonder they don't want to think about it. The
outcome is undesirable (hence denial) and inexpensive (hence easy to
ignore).
The book you're about to buy and read explains why it
is not a good idea to rely on government programs to pay for your
long-term care. It explains how financially vulnerable the entitlement
programs are that pay for long-term care. It warns about the problems of
access and quality you're likely to face. It describes the downsides of
Medicaid estate planning.
So let me just add this: What's actually going to
happen to America's entitlement safety net?
Social Security and Medicare now face unfunded
liabilities of $107 trillion. Their "trust funds" are empty, having
already been spent for other government priorities and replaced with
bonds, that is, IOUs.
David Walker, former Comptroller General of the
United States, says the government will have to double payroll taxes or
cut benefits by half just to save those programs.
That's not even counting Medicaid, the dominant payor
for long-term care, for which we can't even calculate an unfunded
liability because it lacks even the phony trust funds disguising the
financial disaster about to confront Medicare and Social Security.
Query: do you really think politicians will double
taxes or cut benefits by half to deal with this fiscal crisis? Not
likely. What will happen instead?
I predict much stricter Medicaid LTC eligibility
rules. Soon people won't be able to shelter half a million dollars in
home equity and get the government to pay for long-term care. Unlimited
exemptions for businesses, automobiles, prepaid burials and term life
insurance will disappear. Mandatory recovery from recipients' estates of
Medicaid benefits paid will be aggressively enforced.
But it's not just the Medicaid safety net that will
be pulled away from the middle class. Look for traditional "social
insurance" programs like Social Security and Medicare to be converted to
means-tested welfare programs too.
Alas, that process has already begun. Social
Security benefits are taxed above relatively low income levels. You'll
lose one dollar of Social Security income for every two dollars of earned
income between age 62 and your full retirement age. President Obama wants
to charge payroll taxes, that now stop at $110,100 in income, on incomes
above $250,000. Look for more means-testing measures like these to
curtail access to Social Security benefits for affluent, and increasingly,
middle class people.
Will Medicare be affected too? It already is. Part
B premiums skyrocket for higher income earners. The newer Part D
pharmaceutical program premium is also tied to income level.
Bottom line, the social safety net for long-term
care, retirement income security, and acute care financing is being and
will continue to be slowly retracted. More and more, you'll hear our
first priority must be to protect the truly poor. With fewer resources
available to meet that goal, more and more of the cost will come from
cutting access to the social safety net programs for people of means.
So here's the main reason you should take my opening
advice and move forward, buy, read and heed this book.
When it comes to all aspects of retirement planning,
but especially long-term care, you must ignore the rear-view mirror and
look bravely through the windshield. Because what's coming toward you at
100-miles-an-hour is a brick wall of fiscal reality.
You can avoid the collision, protect yourselves and
your families. But only if you act decisively and soon.
You're lucky to have such a fine road map as "The
Completely Understandable LTCI Buyer’s Guide" to point the way.
#############################
Updated, Monday, March 26, 2012, 10:19
AM (Pacific)
Seattle--
#############################
LTC E-ALERT #12-010:
“3IN4 NEED MORE” AND LTC NEWS AND COMMENT
LTC Comment: We lead
today with news about the “3in4
Need More” Campaign. Jonas Roeser, president of the 3in4 Association
reports:
“The 2012 - 3in4 Need
More bus tour will kick off at the end of April. Our PR efforts will
start within the next 10 days. The 3in4 Association asks that you place
the 2012 tour schedule
link in your producer communications to showcase your support of the
campaign and to encourage more LTC professionals to participate.”
Contact
jonas@3in4needmore.com with your ideas for tour stops and political or
media connections to synergize the tour with your local efforts.
***
JACQUELINE MARCELL’s book Elder Rage, or Take My Father... Please!
How to Survive Caring for Aging Parents, a Book-of-the-Month Club
selection, is now available in audio. Download it at Amazon
here or Audible
here. More at the
ElderRage website. ***
*** REVERSE
MORTGAGES. “A comprehensive new study from the
MetLife Mature Market Institute shows the age of those seeking Home
Equity Conversion Mortgages (HECM), popularly known as reverse mortgages,
has plummeted in the four years since the collapse of the housing market
in the U.S. It also reports that these mortgages, special types of home
loans that allow people to draw on home equity without monthly mortgage
repayments, have evolved into a way for many older Baby Boomers to help
manage urgent financial needs. Boomers age 62-64 currently represent
one-in-five prospective borrowers of the product, which was once
associated with a much older age group.” Check it out
here. ***
*** WIND IN OUR
SAILS. We work pretty hard here at your Center for LTC Reform. But,
frankly, sometimes it feels like our efforts fly right from the computers
into a digital black hole. Once in awhile, however, something happens
that makes it all feel worthwhile. As I was standing in the food line at
the big Las Vegas ILTCI conference last week, a woman came up to me,
introduced herself, and asked about supporting the Center. I explained
individual memberships are $150 per year, but she replied she was thinking
of something more like $1,000. I said that would qualify her for a
corporate membership with all the many benefits accruing thereto. [See
our “Membership Levels and Benefits” schedule
here.] She explained she’s semi-retired, not interested in any
benefits per se, and just wanted to support the Center’s efforts which
she’s appreciated so much over the years. “Great,” I said, as she walked
away, and I figured that might well be the end of it. But a little later,
Barbara Huguenin, CSA, LUTCF, LTCP, of Emmett, Idaho, returned, kissed me
on the cheek, and handed me a check made out to the Center for $1,000.
Thanks, Barbara, and thanks to all the rest of you whose support makes our
work here at the Center possible. You are the wind in our sails. ***
#############################
3/25/2012,
“Caregiver's
anguish: 'I need to be 2 people',” by Helena Oliviero, The Atlanta
Journal-Constitution
Quote:
"In some ways, her mom's financial resources eased her mind. Gaines has
long-term care insurance. And with the sale of her mother's house, Beckett
is able to cover the cost of memory care at Sunrise."
LTC Comment:
In the absence of Medicaid's $525,000 to $786,000 home equity exemption,
many more sandwich-generation families would ease the wrenching experience
of caregiving by planning early, purchasing LTCI, and using home equity to
pay for top-quality care.
#############################
3/22/2012,
“Should
Medicare Payments Subsidize Medicaid Residents?,” by Alyssa Gerace,
Senior Housing News
Quote:
"So-called 'excess' Medicare funding
isn't being used to increase providers' margins solely for profit, he
says; it's being taken to help balance Medicaid shortfall and keep
facilities afloat."
LTC Comment:
Without generous Medicare reimbursements, nursing homes could not survive
on deficient Medicaid payments and disappearing private payers. If
successful, efforts by Medicare Payment Advisory Commission (MedPAC)
bureaucrats to cut Medicare payments will further impair the access to and
quality of nursing home care for all skilled nursing facility residents
regardless of their payment source.
#############################
3/21/2012,
“Long
Term Care Insurance Career Center Launched by Trade Group,” PR.com
Quote:
"An online Career Success Center has been established to attract
individuals to a full or part-time career selling long-term care
insurance. Launched today by the American Association for Long-Term Care
Insurance the Center aims to provide valuable information to those looking
for a new career opportunity or those seeking a means of earning
additional income."
LTC Comment:
Jesse Slome and
AALTCI just keep adding benefits for their members and services for
the LTCI industry.
#############################
3/19/2012,
“Minnesota
seniors facing a spike in long-term care cost,” by Warren Wolfe,
Star Tribune
Quote:
"Premiums are soaring by 20 to 90 percent for thousands of Minnesotans who
carry long-term care insurance, and many older people are struggling to
figure out what to do."
LTC Comment:
To blame insurers for higher premiums is commonplace but unfair and
hypocritical when the cause is government, i.e. the Fed's arbitrary low
interest rates. Adding to the irony is that entitlement reserves, i.e. the
"trust funds," have nothing in them and the government is already
borrowing from future generations to pay current expenses with no hope of
paying future entitlement claims. But this is not to say insurers and
state insurance departments don’t bear some of the responsibility
especially for the most egregious premium increases as Center member Ed
Hutman pointed out to me in an email commenting on the foregoing item when
it was forwarded to our clipping service recipients. [Learn more about
the clipping service
here; subscribe by contacting Damon at 206-283-7036 or damon@centerltc.com.]
#############################
3/18/2012,
“Long-term-care
insurance may go way of the dinosaur,” InvestmentNews.com
Quote:
"As more life insurers abandon long-term-care insurance, actuaries and
financial advisers are questioning the viability of the product and
arguing that if it remains unchanged, it eventually will serve just a tiny
niche market."
LTC Comment:
How ironic that this kind of bunk is becoming conventional wisdom even as
LTCI's biggest competitor (Medicaid) is on its last legs and LTCI will
thrive increasingly as the best choice for savvy consumers.
#############################
3/18/2012,
“The
New Retirement Resorts,” by Kelly Greene, Wall Street Journal
Quote:
"A growing number of intrepid retirees, wary of spending years in an
assisted-living facility or staying at home, are opting for arrangements
that provide them with a full range of services and a greater sense of
adventure-fully staffed homes in Costa Rica, backyard bungalows on their
children's property, so-called cohousing arrangements, full-time spa
living and even serial cruises."
LTC Comment:
Who says long-term care has to be boring?!
#############################
3/14/2012,
“Fitch:
States Partly to Blame for LTCI Woes,” by Allison Bell,
LifeHealthPRO
Quote:
"Insurers may be leaving the private long-term care insurance (LTCI)
market partly because of states' efforts to regulate LTCI premium
changes."
LTC Comment:
Price controls of all kinds distort markets. If insurers can’t raise
rates to cover costs and ensure their ability to pay claims, they’d be
irresponsible not to get out of the market. Would that someone held
Medicaid’s feet to the fire in the same way so that private LTC insurance
had a chance.
#############################
3/13/2012,
“This
Threat Could Cost You Your Life Savings,” by Dan Caplinger, The
Motley Fool
Quote:
"Protecting yourself against potentially catastrophic health-care expenses
is smart, but not if it costs you too much to get that protection.
Weighing the benefits and options available under different long-term care
policies can help you balance affordability and financial security. With a
combination of lower policy limits, longer periods before benefits kick
in, and other traits, you may be able to tailor a long-term care policy
that meets most of your needs and gives your nest egg enough protection to
survive an extended period of skilled nursing or home health care."
LTC Comment:
Sound advice from a popular financial adviser team.
#############################
3/13/2012,
“75-Year
Study Finds Dramatic Rise in U.S. Lifespans,” by Steven Reinberg,
HealthDay
Quote:
"For those aged 85 and older, the risk of dying dropped 38 percent."
LTC Comment:
Amazing new stats on lengthening lifespans mean more LTC for more people
and greater need for LTC planning.
#############################
3/12/2012,
“LTCI
Watch: What's Wrong?,” by Allison Bell, LifeHealthPRO
Quote:
"Alan Monheit, the editor of Inquiry, is asking whether the U.S.
private long-term care insurance (LTCI) market is sustainable. . . . And
what if the Medicaid nursing home benefit program proves to be (as well
[we] know it must be) far flimsier than the private LTCI programs, and it
collapses, too. What then?"
LTC Comment:
Point well taken.
#############################
3/12/2012,
“Report: Healthcare law cuts put
Medicare Advantage benefits at risk in some states,” by Julian Pecquet,
The Hill (link)
Quote:
"Seniors in a number of states risk losing their Medicare Advantage
benefits because of cuts in President Obama's healthcare reform law,
according to a new
report from Avalere. The law contains about $200 billion in direct and
indirect cuts to private Medicare plans through 2017. Their effect would
be felt unevenly throughout the country, however, because the additional
benefits and reduced cost-sharing offered by Medicare Advantage plans vary
greatly by state."
LTC Comment:
Everything hinges on the Supreme Court’s review of health reform beginning
this week.
#############################
3/12/2012,
“A
New Look at Pet Insurance,” by Carol Harnett, Human Resource
Executive Online
Quote:
"The employees who buy pet insurance . . . also participate in long-term
care insurance and supplemental life plans at higher rates."
LTC Comment:
An interesting tidbit you might share with prospects who have pets.
#############################
3/12/2012,
“Why
Are We Going Broke?,” by John Goodman, National Center for Policy
Analysis
Quote:
"Both Medicare's health insurance for the elderly and the disabled and
Medicaid's long-term care insurance cost about twice as much as
well-designed private insurance should cost."
LTC Comment:
Excellent column by a prolific advocate of rational health and LTC public
policy.
#############################
3/6/2012,
“Aging
in America: Scammers vs. Seniors,” by David Crary, LifeHealth PRO
Quote:
"A federally funded study conducted for the National Institute of Justice
in 2009 concluded that 5 percent of Americans 60 and older had been the
victim of recent financial exploitation by a family member, while 6.5
percent were the target of a nonfamily member. . . . A report last year by
insurer MetLife Inc. estimated the annual loss by victims of elder
financial abuse at $2.9 billion, compared with $2.6 billion in 2008."
LTC Comment:
Query: Is it financial exploitation of the elderly when adult children of
frail or infirm elders take premature inheritances with the help of a
Medicaid planner? If so, why isn’t that practice of law investigated as
such?
#############################
Updated, Friday, March 23, 2012, 9:51
AM (Pacific)
Seattle--
#############################
LTC BULLET: LTC EMBED
REPORT FROM THE ILTCI CONFERENCE IN LAS VEGAS
LTC Comment: The big
annual Intercompany Long-Term Care Insurance Conference was well attended
and a great value in spite of the industry’s recent travails. Highlights
follow.
LTC BULLET: LTC
EMBED REPORT FROM THE ILTCI CONFERENCE IN LAS VEGAS
LTC Comment: This
year’s Intercompany Long-Term Care Insurance Conference (link)
in Las Vegas (Mar. 18-21) was another hit in a long series (12 already) of
top-notch professional meetings. With registrations over 800 and more
than 700 actual attendees, the program attracted a very respectable
attendance despite concerns that recent turmoil in the industry might
diminish participation. No way. The energy level was high and the tone
optimistic.
I’ll touch on some of
my favorite parts of the program and then give you details of the
heavy-weight intellectual battle that many folks considered the high point
of the whole conference.
DAY ONE
opened with a keynote address by “futurologist” David Smith. His
presentation demonstrated “the powerful impact that glimpses of the future
afford business and government alike as they seek to achieve their
strategic goals.” Smith captivated the audience with humorous historical
references, worrisome predictions and thoughtful analysis. For example,
he pooh-poohed the use of focus groups to learn what consumers want,
citing Steve Jobs: “People don’t know what they want until you show
them.” So much for the research value of asking people why they don’t buy
LTC insurance.
The first break-out
session I attended was “How to Become a Billion Dollar Industry Again,”
produced by
National LTC Network President Terry Truesdell. The highlight
of this presentation was Louis Brownstone’s trenchant critique of
LTC politics and his conclusion that “Government can’t do it, so we’ll
have to.” Also on the panel were
LTCI Partners’ Steve Cain, Hancock’s Marianne Harrington and
Genworth’s Buck Stinson. Note that you can find the presentation
materials for this and all 50 of the conference’s sessions here:
http://iltciconf.org/Powerpoints.php.
Next came lunch in
the exhibit hall, which was packed with booths of companies offering
services spanning the full range of long-term care delivery and financing
options. Incidentally, more than one person told me the food at this
meeting was the best of any so far. Alas, I arrived too late at one
meal time and found the sushi “boat” nearly empty. Many thanks to the
corporate sponsors of the conference whose investment helped make it such
a success. Find a list of them from Diamond to Silver level here:
http://www.iltciconf.org/sponsors.php.
During the lunch
hour, Jonas Roeser provided an update on the “3in4
Need More” campaign. The non-profit’s 21 board members and 15+
supporting companies and organizations had a great start-up year in 2011.
The campaign to raise consciousness about the importance of LTC planning
garnered earned media value of $2.8 million with a cash expenditure of
only $228,000. Some planned activities for 2012 include another
12-week bus tour, a “reality TV pilot,” and a national contest with a
prize of one free year’s rent in an
Emeritus assisted living facility. Go “3in4 Need More”! Margie
Barrie and Sally Leimbach reported on their successful
development of a 50-minute presentation for
NAHU local chapters. The “Bright Idea Award” went to producer Tony
Prince of
ACSIA.
DAY TWO
of the conference began with an excellent overview of the likely impact of
health reform (“ObamaCare” to many) on long-term care. Gary Jacobs,
Senior Vice President of
Universal American and a frequent participant in LTCI conferences over
the years, gave an excellent summary of the issues and likely outcomes.
Check out his 25 slides
here. Following Gary came former-Kansas-Governor Mark Parkinson,
President and CEO of the
American Health Care Association, who hammered home the point that
aging demographics being what they are government cannot meet LTC
financing needs so private LTC insurance is critical. Most depressing was
Jeff Ellis’s presentation. He’s Vice President of
MGM Resorts International, which employees 53,000 people averaging 47
years of age, yet he said no one has even tried to interest him in
offering LTC insurance since his company dropped the coverage in 2008 due
to minimal participation. He explained that LTC insurance isn’t even
on his radar screen because health insurance costs and the threat of
growing expenses due to health reform are already consuming all of his
time and his company’s money.
Moderated by
American Health Care’s Karl Polzer, lobbyists Sam Morgante and
Bob Blancato presented their annual update, titled “Washington
Watch,” on what’s happening in the nation’s capital. Check out their
slides here:
http://iltciconf.org/index_htm_files/27-WashingtonWatch.pdf. After
their presentations, I asked this question: “You fellows have been
working the Hill for decades. Every year you tell us what’s going on and
for that, thank you very much. But it’s always just process, never
results. Can you give us any hope that your efforts will someday produce
something that benefits the LTC insurance industry?” Their answer:
nothing’s going to happen between now and the presidential election.
Nor do they hold out much hope for anything helpful thereafter.
The last session I
attended was a post-mortem on CLASS titled “Meeting the Needs that CLASS
Intended,” moderated by Prudential’s Malcolm Cheung with
presentations by Bob Yee, lately CLASS’s actuary; Yair Babab
from the University of Illinois, Chicago; and Mark Meiners, the
father of the LTC Partnership Program. Their slides are
here. I came away convinced less-than-ever that anything about CLASS
is salvageable and more convinced than ever that LTC financing solutions
must come from reducing government interference in the market, not
increasing it. Stop giving away LTC to people who should, could and would
buy LTCI and the market will work its magic.
CLASH OF TITANS
Now to recount the
most fun that was had at the conference. In the afternoon of DAY ONE,
a great debate ensued titled “Clash of the Titans: Moses vs Gordon on
Medicaid and Other Dark Matter.” Ably produced and moderated by
Federal Long-Term Care Insurance Program CEO Paul Forte, the
program included a dramatic “fight poster” inviting the audience to
attend, slides featuring great debates of the past, e.g.
Lincoln/Douglas, etc., and a dual-podium presidential-style debate
format.
Moses and Gordon each
began with 3-minute opening statements. (Find a transcript of the “fable”
I began with at the end of today’s Bullet.) After a coin flip to
see who would get the first question, Forte pummeled the combatants in
turn with six queries ranging from why the LTCI market languishes to
what they’d advise presidential candidates to say about LTC financing.
Answers were strictly enforced to no more than two minutes, with a
one-minute rebuttal, and a final 30-second “re-direct” by the original
answerer.
The program moved
fast with lots of humor and more than just a little gentlemanly
confrontation. In the second phase of the debate, the participants asked
each other questions, with the same time limits applying. Neither knew
what the other would ask so the questions and responses were totally
spontaneous. Finally, the audience submitted written queries pinning
down the debaters with new and different viewpoints. Bruised,
bloodied, but upright, Moses and Gordon shook hands at the end and
affirmed they remain friends. They look forward to continue pursuing
their different paths toward the common goal to improve long-term care for
all.
Who won?
Just between you, me and the lamppost, here’s how LTCI producer and author
Craig McCormick, a former college debater himself, scored the match
up: 13 to 4, for Moses. Now, I acknowledge that Mr. McCormick may
have a bias in my favor. So I invite any of you faithful readers out
there who may have attended the debate to weigh in with your own scoring
of the event. I’d particularly like to hear from anyone who gave the
win to Harley instead of me. Well, I want to hear from anyone except
you, Harley! I’ll publish any thoughtful comments or analysis of the
debate in a future LTC Bullet. Let us hear from you.
#############################
“The Elephant, the
Blind Men and Long-Term Care: Three-Minute Opening Statement” by
Stephen A. Moses for the Debate with Harley Gordon at The 12th
Annual Intercompany Long-Term Care Insurance Conference in Las Vegas,
Nevada on Monday, March 19, 2012
Once upon a time,
some blind men approached an elephant.
The first blind man
grasped the elephant’s tail and exclaimed: “This is a rope.”
The next blind man
patted the elephant’s flank and said: “This is the side of a barn.”
A third blind man
clutched the elephant’s trunk and stated confidently: “This is a hose.”
The moral of this
fable?
You don’t know any
complex thing until you comprehend its entirety, including all of its
facets and their interrelationships.
Long-term care is
like the elephant in this story and LTC interest groups are like the blind
men.
Government is a blind
man of long-term care. It’s paid for most expensive LTC since 1965, but
can no longer afford the cost. The elephant of LTC gobbles budgets.
The public is a blind
man of LTC. Most people don’t worry about LTC despite the apparent risk
and cost. Somehow the elephant of long-term care provides.
Senior advocates
blindly demand more and better long-term care from the government. To
them the elephant of LTC is a cornucopia of free benefits.
Home care and nursing
home providers obsess over low government reimbursements. They see the
elephant as a stingy, but demanding customer.
What do long-term
care insurers see when they look at the elephant of LTC? A puzzle. Why
don’t consumers buy the product when they obviously need it?
If you want to
understand the elephant of long-term care, you’d better be able to explain
why those five blind men see the elephant so differently.
How can the
government be bankrupt; the public, asleep; senior advocates, naïve; LTC
providers, spoiled; and LTC insurers, befuddled? All at the same time.
No new policy
designs, nor tax incentives, nor education programs will sell more LTC
insurance until we resolve that paradox.
Here’s how I see it:
Government pays for
most expensive LTC which desensitizes consumers to LTC risk resulting in a
lack of demand for LTC insurance. But senior advocates and LTC providers
are hooked on government money and dubious of private LTCI.
Nothing will end this
stalemate short of weaning the elephant of long-term care away from the
trough of public financing.
That’s what’s about
to happen, either on purpose or by default, and that’s why the future of
LTC insurance is bright.
#############################
Updated, Friday, March 16, 2012, 12:46
AM (Central)
Alpine, TX--
#############################
LTC BULLET: PRIVATE
LONG-TERM CARE FINANCING ALTERNATIVES
LTC Comment: Paying
privately for LTC is the best way to ensure access to quality care in the
most appropriate setting, yet private-pay LTC is the exception, not the
rule, in the USA. Why and what should be done, after the ***news.***
*** ILTCI CONFERENCE
COVERAGE: Your Center for Long-Term Care Reform will cover the 12th
Annual Intercompany Long-Term Care Insurance Conference this coming week
in Las Vegas. Damon’s on his way this morning to help set up for the
meeting. He’ll be conducting interviews during the program with carrier,
distributor and producer reps. Look him up and get your two cents worth
into the mix. Steve will debate Harley Gordon on Monday, the 19th,
with Federal LTCI Program CEO Paul Forte as moderator. We’ll report,
objectively of course, on the outcome of this confrontation, billed by the
producers as a “Clash of Titans,” in next week’s LTC Bullet. Until
then, faithful readers, take a breather as we’ll skip the LTC E-Alert
otherwise scheduled for Monday. ***
*** LTCI PRICE INDEX:
According to the 2012 National Long-Term Care Insurance Price Index,
published by the American Association for Long-Term Care Insurance (www.AALTCI.org),
prices for long-term care insurance policies currently being offered are
between six and 17 percent higher than comparable coverage a year ago.
“Insurance prices have increased as a result of the historic low interest
rates and yields on fixed income investments,” explained Jesse Slome,
AALTCI’s executive director. Between 40-and-60 percent of the dollars an
insurer accumulates to pay future claims comes from investment returns.
For more information, visit the American Association for Long-Term Care
Insurance's website at
www.aaltci.org or call (818)
597-3227. ***
*** REVERSE MORGAGES:
"A comprehensive new study from the MetLife Mature Market Institute shows
the age of those seeking Home Equity Conversion Mortgages (HECM),
popularly known as reverse mortgages, has plummeted in the four years
since the collapse of the housing market in the U.S. It also reports that
these mortgages, special types of home loans that allow people to draw on
home equity without monthly mortgage repayments, have evolved into a way
for many older Baby Boomers to help manage urgent financial needs. Boomers
age 62-64 currently represent one-in-five prospective borrowers of the
product, which was once associated with a much older age group." Details
here. ***
-----------------
LTC BULLET: PRIVATE
LONG-TERM CARE FINANCING ALTERNATIVES
LTC Comment: Over the
past several weeks, we’ve published five Briefing Papers on long-term care
financing designed to show you step by step how America’s LTC system
became dysfunctional, why it has been so hard to fix until now, and
exactly what to do to improve it.
Today’s LTC Bullet
presents the sixth and last installment in this series. It explains why
private financing of long-term care remains relatively uncommon despite
the enormous access and quality benefits people receive who purchase
long-term care in the private market with personal cash or insurance
benefits.
The arguments and
conclusions presented in today’s LTC Bullet will be much more persuasive
if you’ve read the preceding five “Briefing Papers.” That’s because we
laid down the historical background and factual documentation in those
earlier papers that support today’s presentation. So here’s a quick recap
with links:
In February, we
published
LTC Bullet: How to Fix Long-Term Care, which provided an overview of
the LTC problem and its solution.
We followed with
LTC Bullet: The History of Long-Term Care Financing or How We Got into
This Mess, which explained how the richest country in the world came
to have a welfare-financed, nursing-home-based long-term care system.
Then
LTC Bullet: Medicaid LTC Eligibility described how easy Medicaid LTC
benefits are to obtain after care is needed without substantial asset
spend down. More importantly, we explained why it matters.
Three weeks ago, in
LTC Bullet: Medicaid Planning for Long-Term Care, we tackled the
controversial topic of how affluent people artificially self-impoverish to
qualify for Medicaid LTC benefits and what the government has attempted
unsuccessfully to discourage the practice.
Next, in
LTC Bullet: Rebalancing Long-Term Care, we addressed the question of
whether or not Medicaid can save money by funding more home care and less
nursing home care. Could Medicaid’s providing more services people want
and less care they would rather avoid . . . attract more recipients,
increase overall costs, further desensitize the public to LTC risk and
crowd out private financing alternatives?
Last week, in
LTC Bullet: Dual Eligibles and Long-Term Care: How to Save Medicaid LTC
$30 Billion Per Year and Pay for the "Doc Fix", we covered the
complicated issue of “dual eligibles,” the most expensive beneficiaries of
Medicaid and Medicare. Is it possible to prevent people becoming dual
eligibles and thereby reduce their enormous cost to public programs?
Now read the
concluding paper in this series which capitalizes on all the rest by
explaining the paradox of private LTC financing, i.e., its rarity
despite its benefits, and what to do about it.
-----------------
Briefing Paper #6:
Private Long-Term Care Financing Alternatives
By
Stephen A. Moses
There are only four
sources of private financing that might offset Medicaid long-term care
expenditures. These are (1) increased personal asset spend-down, (2)
Medicaid estate recovery, (3) home equity conversion, and (4) private
long-term care insurance. How well does the United States take advantage
of these potential resources?
Increased Personal Asset Spend-Down
As explained in
Briefing Papers #2 on
Medicaid Long-Term Care Eligibility and #3 on
Medicaid Planning, asset spend-down for long-term care is very easy to
avoid. Some people do pay privately for LTC for three common reasons. The
poor, who are unaccustomed to consulting financial advisers, often lose
everything to high-cost LTC before they find their way to Medicaid. The
middle class and affluent may voluntarily pay out of pocket for highly
desirable care venues, such as assisted living, which Medicaid does not
usually fund. People with private long-term care insurance or who can
otherwise afford the sentiment may pay privately because of a sense that
turning to public welfare is unethical.
In the end, however,
Medicaid is the dominant LTC payer and out-of-pocket expenditures are
relatively small because of (1) easy access to Medicaid financing after
care is needed, (2) the widely held belief that access to publicly
financed long-term care is a "right," both legally and ethically
appropriate for anyone who follows the lenient income and asset rules and
(3) readily available legal advice on how to qualify for Medicaid without
spending down assets. Medicaid will remain the dominant payer for
expensive LTC unless and until measures are taken to (1) ensure that
personal income is used first to purchase HCBS in the private market at
market rates, (2) Medicaid's home equity exemption is reduced or
eliminated so that real estate wealth is used to fund quality LTC, and (3)
other wide-open, unlimited asset exemptions are limited to levels more
commensurate with Medicaid's being a means-tested LTC safety net for the
poor.
Medicaid Estate Recovery
Medicaid estate
recovery is another source of private financing for long-term care that is
mandatory under federal law and expressly intended to relieve the
financial burden on state and federal resources. The Tax Equity and Fiscal
Responsibility Act of 1982 (TEFRA '82) authorized state Medicaid programs
to recover benefits correctly paid from the estates of deceased recipients
or from the estates of the recipients' last surviving exempt relatives.
The Omnibus Budget Reconciliation Act of 1993 (OBRA '93) made estate
recovery mandatory for every state Medicaid program as a condition of
receiving federal matching funds. Nevertheless, few states enforce estate
recoveries strongly; the federal government has not required states to
recover at a reasonable minimum level; and some states, such as Georgia,
Michigan, and Texas have only recently complied with the estate recovery
mandate at all.
Oregon, the top-ranked
state among comparable estate recovery programs, recovered $14 million or
5.8% of its Medicaid nursing home expenditures in 2004, the latest year
for which we found national data.[1]
The country as a whole recovered only .8% of Medicaid nursing home
expenditures. If all states had recovered at the same rate as Oregon,
total estate recoveries would have been $2.6 billion or $2.2 billion more
than they actually were. Federal law includes many safeguards to protect
Medicaid recipients and their families from excessive estate recoveries.
For example, states may not recover from a recipient's estate if the
recipient has a surviving dependent spouse or exempt child.
Medicaid planning
advice on how to avoid estate recovery is readily available. For example,
according to California Advocates for Nursing Home Reform:
The best
way to avoid an estate claim is to have nothing in the Medicaid
beneficiary's estate at the time of death. The State can only claim for
the amount of Medicaid benefits paid or the value of the estate, whichever
is less. The "estate" is composed of what is in the beneficiary's name at
the time of death. Minimizing the estate at the time of death will
minimize the amount of the claim.
The main
asset in the estate is often the home. Protecting the home from recovery
often entails transfer of title out of the beneficiary's name. However,
there are a number of ways to transfer property and still retain some
control over the property. Any such transfer should be discussed with a
qualified estate planning attorney knowledgeable about Medicaid and the
tax considerations related to real estate transfers.[2]
The gradual dwindling
of assets, especially home equity, before and during Medicaid dependency,
the ready availability of Medicaid planning advice on how to evade the
estate recovery requirement, and the administrative difficulty of
recovering from Medicaid recipients' estates severely limits the potential
of Medicaid estate recoveries as a revenue source to offset public
expenditures. Ensuring that assets are consumed for long-term care in the
private marketplace before Medicaid begins to pay is a much more efficient
way to reduce Medicaid's LTC expenditures.
Home Equity Conversion
Home equity conversion
by means of reverse mortgages could generate a huge source of private
long-term care financing to offset Medicaid LTC expenditures, especially
to fund home- and community-based services. Four out of five elderly
people own their homes and two-thirds of these own their homes free and
clear of mortgage debt. People age 62 and older can access their home
equity easily, and without incurring monthly payments, by means of
"reverse mortgages." Reverse mortgages can be arranged formally through
financial institutions or informally within families, whereby usually
adult children engage to purchase the parents' home over time while the
older generation remains in the home.
But very few people
use reverse mortgages to fund home- and community-based services that
would enable them to remain in their homes longer. Even fewer tap their
home equity to supplement their income sufficiently to afford private LTC
insurance premiums. Why is home equity so rarely used to fund long-term
care? The median sale price of homes in the United States as of July 2011
was $244,000.[3]
Medicaid's home equity exemption is at least $525,000, more than double
the value of the median home. There is little wonder why few people tap
the equity in their home to fund long-term care or to purchase LTC
insurance when Medicaid financing is so easy to obtain and estate recovery
is so simple to avoid.
On top of these
reasons, reverse mortgage interviewees consulted during studies reported
at
www.centerltc.com stated that the product is heavily regulated in many
regards, requires extensive outside counseling prior to closing, and
receives a great deal of negative publicity, much of which is inaccurate
and unfair. So, the interviewees explained, education of consumers,
suitability of marketing, and fair evaluation of products are keys to the
widest and most appropriate use of reverse mortgages for any purpose,
including long-term care financing.
Private Long-Term Care Insurance
Private long-term care
insurance is another potentially large funding source that could relieve
Medicaid. Responsible people mitigate potentially catastrophic financial
risks with private insurance. Most Americans have auto and health
insurance; many own life insurance; but relatively few have long-term care
insurance. Roughly 7.3 million LTC insurance policies were in force as of
2009, up 2.8% from 2008. Premiums earned by LTC insurance carriers were
$137 billion in 2009, up 9.6% from 2008 and claims incurred were $55
billion in 2009, up 12% from 2008. That may sound impressive until you
realize the USA already has nearly 100 million people age 50, the prime
market for long-term care insurance.
Why isn't private
long-term care insurance more commonly purchased? The usual reasons cited
for the low rate of purchase are consumers' irrational denial of the risk
and the product's unaffordability. But the risk and cost of long-term care
are extremely high and well documented. The cost of LTC insurance is high
but the cost of the risk being insured is much higher still. If every
tenth house burned down, fire insurance would not be inexpensive either.
So, the key question is: how can consumers remain in denial about such a
huge risk and cost? What is the real reason most people do not purchase
private long-term care insurance?
Published,
peer-reviewed research confirms that between two-thirds and 90 percent of
the private long-term care insurance market is crowded out by the
availability of Medicaid-financed long-term care.[4]
People don't fail to purchase private long-term care exclusively, or even
mostly, because of denial or cost. Rather, they don't buy it because they
don't think they need it and they don't think they need it because
Medicaid has paid for most expensive long-term care since the program's
inception in the 1960s. In fact, the easy availability of Medicaid
services after the insurable event occurs has enabled the public's denial
of LTC risk and cost.
LTC Partnerships,
The CLASS Act and Tax Deductibility
Over the years, policy
makers have tried many ways to encourage more private LTC insurance. LTC
Partnerships, created in the 1980s and reinvigorated by the Deficit
Reduction Act of 2005, were designed to encourage the purchase of special
LTC insurance policies by forgiving Medicaid spend-down requirements. Buy
a certain amount of private coverage, say $100,000, and if you use it up,
you can qualify for Medicaid while retaining $102,000 instead of the
$2,000 limit otherwise. The Partnerships were less successful than hoped
because, as Briefing Papers #2 and #3 in this series explained, Medicaid
spend down requirements are lenient at best, easy to avoid, and would
occur, if at all, many years after most people consider purchasing LTC
insurance. The prospect of ending up in a Medicaid nursing home after
consuming private insurance benefits in home care or assisted living also
discouraged coordinating benefits between private insurance and public
welfare.
The CLASS Act, passed
in March 2010 as part of health reform, aspired to create a voluntary LTC
funding system aimed primarily at the working disabled. Because of its
lack of medical underwriting, unlimited lifetime benefits, expected
adverse selection whereby good risks would avoid the program, and likely
resultant rapid insolvency, the Obama Administration shelved the program
in October 2011.
Roughly half the
states have tried to encourage the purchase of private LTC insurance by
means of tax incentives. Tax deductions or tax credits do increase the
likelihood that people will purchase LTC insurance. Some analysts have
argued, however, that people who purchase LTC insurance because of tax
incentives are likely to be wealthy enough that they would not qualify for
Medicaid anyway, so that tax incentives are unlikely to reduce Medicaid
expenditures. The fallacy in such an analysis is that Medicaid LTC
eligibility does not exclude higher income people with substantial wealth
from the program because of the generous income and asset eligibility
limits described in Briefing Paper #2 and because of Medicaid planning
opportunities described in Briefing Paper #3.
Conclusion
Easy access to
Medicaid-financed long-term care after the insurable event has occurred
results in Medicaid, an ostensibly means-tested public assistance program,
paying for most expensive LTC in the United States. Consequently, most
Americans do not worry about LTC until they need it because of a chronic
long-term illness such as Alzheimers, Parkinson's or stroke. At that
point, private insurance is unavailable; personal income and assets are at
risk; but Medicaid protects most assets including seniors' biggest
resource, home equity. In this way, perverse incentives in
well-intentioned public policy discourage responsible LTC planning,
overwhelm Medicaid's scarce resources, and severely limit care access and
quality for the poor while subsidizing access and quality for the affluent
who have "key money" to pay privately and gain access to the best LTC
facilities. The whole system is now at risk of collapsing to the detriment
of everyone.
End Notes
[1]
U.S. Department of Health and Human Services, Office of the Assistant
Secretary for Planning and Evaluation, Office of Disability, Aging and
Long-Term Care Policy, "Medicaid Estate Recovery Collections," Policy
Brief No. 6, September 2005,
http://aspe.hhs.gov/daltcp/Reports/estreccol.pdf.
[2] CANHR,
“Your Home and Medi-Cal,” last modified December 30, 2008, retrieved
October 6, 2010;
http://www.canhr.org/factsheets/medi-cal_fs/html/fs_medcal_your_home.htm.
[3]
RealEstateABC.com, last updated October 2, 2011, information extracted
October 25, 2011;
http://www.realestateabc.com/outlook/overall.htm.
[4] For
example: "We examine the interaction of the public Medicaid program with
the private market for long-term care insurance and estimate that Medicaid
can explain the lack of private insurance purchases for at least
two-thirds and as much as 90 percent of the wealth distribution, even if
comprehensive, actuarially fair private policies were available." (Jeffrey
R. Brown and Amy Finkelstein, "The Interaction of Public and Private
Insurance: Medicaid and the Long-Term Care Insurance Market," National
Bureau of Economic Research, December 2004, cited from the paper's
abstract;
http://www.nber.org/~afinkels/papers/Brown_Finkelstein_Medicaid_Dec_04.pdf.)
2212
Queen Anne Avenue North, #110, Seattle, Washington 98109
● Phone (206) 283-7036
● Fax (206) 283-6536
E-mail
info@centerltc.com ● Web Site
www.centerltc.com ● Ask how you
can support the Center today!
#############################
Updated, Monday, March 12, 2012, 11:48
AM (Central)
Alpine, TX--
#############################
“THE
COMPLETELY UNDERSTANDABLE LTCI BUYER’S GUIDE” AND
LTC NEWS AND COMMENT
LTC Comment: Craig McCormick, a long-time corporate
member of the Center for Long-Term Care Reform, has authored a fine new
book titled “The Completely Understandable LTCI Buyer’s Guide.” We
will publish Steve Moses’s “Foreword” to the volume soon in an LTC
Bullet. In the meantime, Mr. McCormick will attend the 12th
Annual Intercompany Long-Term Care Insurance Conference in Las Vegas
(March 18-21, 2012). He’ll introduce his book and be available to
autograph copies. Look him up, buy the book, and follow its
recommendations for a stronger LTCI marketplace.
Visit
http://ltcieducationalservices.com
for further information on the book or contact Mr. McCormick at
ltcieducator@yahoo.com
or 877-685-9844.
#############################
3/9/2012,
“Long-Term
Care: What Now?,” by Kelly Greene, Wall Street Journal
Quote:
“Shopping for long-term-care insurance? You should expect higher costs and
a tougher approval process as a growing number of household-name insurers
quit selling the policies.”
LTC Comment:
I’d like to see Kelly Greene and the WSJ cover government’s
deficient LTC programs and unfunded liabilities as assiduously as they
write about challenges to the LTC insurance industry. The awful irony is
that private companies are behaving responsibly by either making sure they
can pay for their LTCI policy promises or getting out of the business,
whereas government endlessly continues its financial irresponsibility with
no hope of meeting its long-term commitments.
#############################
3/8/2012,
“Insurers
among ‘most admired’ on Fortune's list,” by Carrie Burns,
Employee Benefit Adviser
Quote:
"From a list of companies that ranked in the top 25% in last year's
surveys and those that finished in the top 20% of their industry, 3,855
executives, directors and securities analysts were asked to select the 10
companies they admired most."
LTC Comment:
For the results, see the article.
#############################
3/8/2012,
“LTC Financial Partners Ramps Up Long-Term Care Insurance Offerings as
Prudential Exits Individual LTC Insurance Market,” Send2Press (link)
Quote:
"These moves are in contrast to UNUM Group's announcement on February 6
that it would discontinue group long-term care insurance sales to new
group customers; and the March 7 announcement of Prudential Group
Insurance, a business of Prudential Financial, Inc., that it would
discontinue the sale of individual long-term care products and focus
solely on group long-term care insurance."
LTC Comment:
The best way to deal with marketplace adversity is to keep on keepin’ on.
Perseverance now will pay great dividends in the future.
#############################
3/8/2012,
“Report:
Yearly cost of Alzheimer's tops $200 billion,” CNN Health
Quote:
"The Alzheimer's Association's '2012 Alzheimer's Disease Facts and
Figures' finds that the cost of caring for patients with Alzheimer's and
other dementias will total $200 billion this year and is projected to
increase to $1.1 trillion a year by 2050. 'That is real money, even in
government terms,' says Dr. William Thies, Chief Medical and Scientific
Officer with the Alzheimer's Association. 'It's unsustainable, we can't
pay that, and if we get to that stage [of $1.1 trillion in costs per
year], we just won't be able to take care of people.'"
LTC Comment:
Hello! Note the words “unsustainable,” “can’t pay,” and “we just won't be
able to take care of people." This is the sad but inevitable outcome of
long-standing government LTC policy. Once it actually comes to pass,
expect consumers to pursue LTC insurance in the future as much as they
have shunned it in the past.
#############################
3/8/2012,
“States are actively working to regulate assisted living facilities,
report says,” McKnight's LTC News (link)
Quote:
"The report, which is published every March, provides observations on
assisted living regulations across 21 categories, including life safety,
physical plant requirements, medication management, and move-in/move-out
criteria, training and education."
LTC Comment:
As more and more ALFs accept Medicaid they come under federal and state
regulation.
#############################
3/7/2012,
“Not
Your Grandmother's Assisted Living Facility,” by Howard Gleckman,
Forbes
Quote:
"Assisted living and other residential care facilities are looking more
and more like nursing homes. About one in four provide skilled nursing
services, between half and two-thirds offer case management, and- at least
among larger facilities-two-thirds offer their residents physical or
occupational therapy. More than one-third of residents will make an
emergency visit to the hospital and more than one in four will be admitted
to a hospital during the course of a year. . . . Until recently, these
care homes have been largely financed by individuals paying out of pocket.
But the recent expansion of Medicaid home and community based waiver
programs is changing that mix. The study found that about 20 percent of
residents are receiving Medicaid assistance for their long-term care
services (but not for room and board)."
LTC Comment:
I submitted the following comment in response to this column: "Medicaid
financing of assisted living is very dangerous and risks ALFs
deteriorating like nursing homes as I explained years ago in this article:
"The Sirens' Call, The Primrose Path, and Assisted Living," Assisted
Living magazine, April 2004:
http://www.centerltc.com/pubs/Articles/sirens_call.htm."
#############################
3/7/2012,
“Exercising
an Aging Brain, by Denise Grady, New York Times
Quote:
"Many studies do find that being mentally active is associated with a
lower risk of Alzheimer's disease. But the standard caveat applies:
association does not prove cause and effect, and there is always the
chance that the mentally active people who never got Alzheimer's simply
had healthier brains to begin with."
LTC Comment:
Whether it’s only association or actually cause and effect, aging fit
remains a very good idea indeed.
#############################
3/7/2012,
"Long-Term Care Coverage for Employees Continues to Decline As More
Insurers Leave, Says HighRoads Study,” PRWeb (link)
Quote:
"Key findings show that 51% of survey respondents provide long term care
while 49% do not. About half of those who have dropped LTC say they did so
because the insurance carrier offering the coverage has exited the market.
On a positive note: 96% of companies who are offering LTC coverage say
they will continue to do so.”
LTC Comment:
Lost ground but still a foothold.
#############################
3/7/2012,
“Medicare
Combats Fraud With Billing Statements That Beneficiaries Can Understand,”
by Susan Jaffe, Kaiser Health News (link)
Quote:
"The new, more consumer friendly format, which goes online Saturday on
Medicare's secure website, www.mymedicare.gov, includes larger type and
explanations of medical services in plain English. The revised paper
version, which is mailed to seniors every three months, will be phased in
early next year."
LTC Comment:
What a concept! Invoices consumers can understand. And it only took
Medicare 47 years to come up with the idea.
#############################
3/6/2012,
“How
to Plan for Long-Term Health Care,” by Donna Fuscaldo, Fox Business
Published March 06, 2012 Read more:
Quote:
"It's good news that Americans are living longer, but that doesn't mean we
are doing it in perfect health. More people should be planning for
long-term health care, but how they should financially prepare for
coverage varies."
LTC Comment:
This article quotes Center-member Tom Hebrank at length.
#############################
3/6/2012,
“MetLife Mature Market Institute Offers New Consumer Advice Tools and
Resources on Web Site” (link)
Quote:
“The MetLife Mature Market Institute recently launched a new section on
its web site dedicated to providing free resources to help consumers
navigate through personal finance, retirement, aging and caregiving
decisions. The site,
www.metlife.com/mmi/publications, contains more than 30 publications
for free download.”
LTC Comment:
Another great resource from the prolific folks at MMMI.
#############################
3/4/2012,
“The
high costs of elder care,” by Jerry Large, Seattle Times
Quote:
"Liz Taylor of Aging Well Consortium, is a writer and aging consultant who
for many years wrote a column on aging issues for The Times. . . . 'Most
care facilities in King County haven't taken Medicaid for decades,' she
said. Few adult family homes, retirement communities or assisted-living
facilities do. Nursing homes do accept it, but they are not the first
choice for many families, and not everyone needs that level of care.
Taylor said, 'Seventy percent of people will need care before they die.'
But people have two thoughts about that, she said: First, it's never going
to happen to them; and second, the government will take care of them."
LTC Comment:
Wise and scary warning by one who knows.
#############################
3/3/2012,
“Predict
Long Term Care Insurance Risk With Life Span Calculators,” by Jesse
Slome,
AALTCI Press Release
Quote:
"To provide greater access to information to consumers, the Association
has added information to it's Consumer Learning Center with links to
leading online life span calculators. 'We urge all adults over the age of
55 to take five minutes to see how long they may live,' Slome urges. 'We
think many will be surprised though they may then realize they are not
prepared.'"
LTC Comment:
Interesting exercise. I used the life span calculator
here. Takes about 20 minutes. My life expectancy at 66 years of age
is 94 years. That’s a lot more LTC Bullets!
#############################
3/1/2012,
“More
Americans Rejecting Marriage in 50s and Beyond,” by Rachel L. Swarns,
New York Times
Quote:
"The elderly, who have traditionally relied on spouses for their care,
will increasingly struggle to fend for themselves. And federal and local
governments will have to shoulder much of the cost of their care.
Unmarried baby boomers are five times more likely to live in poverty than
their married counterparts, statistics show. They are also three times as
likely to receive food stamps, public assistance or disability payments."
LTC Comment:
The problem is that federal and local governments will not be able to
shoulder as much of their care as in the past, much less more care for
more of them in the future. Savvy singles should face the facts of fiscal
reality and plan accordingly.
#############################
3/1/2012,
“The
Parent Trap: Adult Children Care For Elderly Parents,” by Marilyn
Werber Serafini, Kaiser Health News
Quote:
"By 2030, 18 percent of the population will be over age 65, up from 13
percent in 2010, according to the Pew Research Center. The toll on the
sandwich generation can be substantial, draining their time, finances and
emotions, experts say. Many begin to neglect their own needs and sink into
depression."
LTC Comment:
What’s your plan to prospect the sandwich generation?
#############################
2/29/2012,
“Easing
the Burden of Retiring Single,” by Robert Laura, Forbes
Quote:
"Single retirees need to consider the risks of losing their sole income as
well as the prospects of care as they get older. Therefore, investigate
options for disability insurance to protect your lifestyle and ability to
save for retirement while you're working as well as long-term care
insurance to help pay for professional care in the future."
LTC Comment:
What’s your plan to prospect aging singles?
#############################
2/29/2012,
“Generation X Turns 47: Will They Buy LTCI Before They Go to Seed?,” by
Allison Bell, LifeHealthPRO (link)
Quote:
"[O]ne thought for LTCI marketers to keep at the back of their minds is
that the oldest members of the 'baby bust generation,' or 'Generation X,'
have started turning 47."
LTC Comment:
What’s your plan to prospect Gen X?
#############################
2/28/2012,
“'Means
testing' to bolster Social Security? It's already happening,” by Allan
Sloan, Washington Post
Quote:
"The bottom line: Social Security is already seriously means-tested,
without having made a point of it."
LTC Comment:
It is ironic and important to understand that government is gradually
welfarizing social insurance programs (Medicare and Social Security) even
as it turns welfare programs (Medicaid and Supplemental Security Income)
into realistically un-means-tested “entitlements.”
#############################
Updated, Friday, March 9, 2012, 11:40
AM (Central)
Alpine, TX--
#############################
LTC BULLET: DUAL
ELIGIBLES AND LONG-TERM CARE: HOW TO SAVE MEDICAID LTC $30 BILLION PER
YEAR AND PAY FOR THE "DOC FIX"
LTC Comment: After
the ***news,*** we explain how to prevent people from becoming
Medicaid/Medicare’s most expensive “dual eligible” beneficiaries by
diverting them years in advance to preferred private LTC financing
alternatives.
*** TODAY'S LTC BULLET is sponsored by Claude Thau, a
General Agent whose proprietary sales tools enable your clients to make
informed final decisions about whether to buy LTCi in 15-20 minutes. He’ll
help you build your business in any market (individual, executive
carve-out, work-site, affinity, financial institution, referrals from
other professionals, etc.). Claude is the lead author of the Milliman
Broker World LTCi Survey, was named one of the 10 "Power People" in the
LTCi industry by Senior Market Advisor in 2007 and was Chairman of the
Board of the Center for Long-Term Care Financing. Test Claude by calling
800-999-3026, x2241 or email him at
claudet@targetins.com to ask questions or get references. ***
*** PRUDENTIAL
announced March 7 that: “After a thorough analysis of our long-term care
insurance business, we've made the difficult decision to discontinue sales
of our individual long-term care insurance products, including LTC3SM, LTC
EvolutionSM, and our multi-life programs (ESP and Affiliation). We will
continue to market our group long-term care insurance products, Solid
SolutionsSM and LTC123SM. Our decision reflects the challenging economics
of the individual market and our desire to focus our resources and capital
on the group market, where we see the greatest opportunity.” More
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#############################
LTC BULLET:
DUAL ELIGIBLES AND LONG-TERM CARE: HOW TO SAVE MEDICAID LTC $30 MILLION
PER YEAR AND PAY FOR THE "DOC FIX"
LTC Comment: In
February, we published
LTC Bullet: How to Fix Long-Term Care, which provided an overview of
the LTC problem and its solution.
Four weeks ago, we
published LTC Bullet: The History of Long-Term Care Financing or How We
Got into This Mess (link),
which explained how the richest country in the world came to have a
welfare-financed, nursing-home-based long-term care system.
Three weeks ago, in
LTC Bullet: Medicaid LTC Eligibility, we described how easy Medicaid
LTC benefits are to obtain after care is needed without substantial asset
spend down. More importantly, we explained why it matters.
Two weeks ago, in
LTC Bullet: Medicaid Planning for Long-Term Care, we tackled the
controversial topic of how affluent people artificially self-impoverish to
qualify for Medicaid LTC benefits and what the government has attempted
unsuccessfully to discourage the practice.
Last week, in
LTC Bullet: Rebalancing Long-Term Care, we addressed the question of
whether or not Medicaid can save money by funding more home care and less
nursing home care. Could Medicaid’s providing more services people want
and less care they would rather avoid . . . attract more recipients,
increase overall costs, further desensitize the public to LTC risk and
crowd out private financing alternatives?
This week, we cover
the complicated issue of “dual eligibles,” the most expensive
beneficiaries of Medicaid and Medicare. Is it possible to prevent people
becoming dual eligibles and thereby reduce their enormous cost to public
programs?
Next week, stay tuned
for how to unleash the potential of private LTC financing alternatives
such as long-term care insurance and home equity conversion.
In other words, stick
with us through this entire series of six Briefing Papers and we’ll show
you step by step how America’s LTC system came to be so dysfunctional, why
it has been so hard to fix until now, and exactly what to do to improve
it.
#############################
Briefing Paper #5:
Dual Eligibles and Long-Term Care:
How to Save Medicaid LTC $30 Billion Per Year
and Pay for the "Doc Fix"
A Foundation in
Facts
Medicaid expenditures
today are huge ($366.5 billion for 2009)[1]
and growing rapidly (up 7.9% for 2010 and up 11.2% for 2011, estimated).[2]
Medicaid is the biggest item in state budgets (22% on average), exceeding
elementary and secondary education combined.[3]
Long-term care (LTC) accounts for 22.0% to 63.7% of total Medicaid
expenditures in the states, 33.3% on average.[4]
Medicaid-financed nursing home care totaled $45.0 billion and home care,
$24.3 billion in 2009.[5]
LTC and Dual Eligibles
Medicaid LTC
recipients consume a disproportionate share of total program expenditures.
For example, people eligible for Medicaid and Medicare or "dual eligibles"
account for 39% of Medicaid spending ($142.9 billion for 2009), although
they comprise only 15% of Medicaid recipients.[6]
Dual eligibles are heavy users of long-term care (LTC is 70% of their
Medicaid expenditures) and acute care services not covered by Medicare
(5%). Medicaid pays for their Medicare premiums (9%) and cost-sharing
(15%) too.[7]
The aged, blind and
disabled--also heavy users of LTC--are 1/4 of Medicaid recipients (25.3%)
but account for 2/3 of program costs (67.1%), whereas poor women and
children are 3/4 of the recipients (74.7%) but account for only 1/3 of the
cost (32.4%).[8]
Potential Medicaid
Savings
Researchers and policy
makers are trying to find ways to manage dual eligibles more
cost-effectively, but no one has focused on how to prevent people from
becoming dual eligibles in the first place. This briefing paper will
suggest how Medicaid could save $30 billion per year by preparing people
to pay privately for long-term care so they do not end up as dual
eligibles dependent on Medicaid.
The heaviest users of
Medicaid's most expensive benefit (LTC)--dual eligibles and the aged,
blind and disabled (ABD)--consume a disproportionate share of Medicaid's
total resources.[9]
Therefore, every actual or potential dual eligible, ABD or LTC recipient
diverted from Medicaid dependency will result in a disproportionate
savings to the Medicaid program. Conclusion: prevent Medicaid dependency
for even a small number of these heavy LTC users, and the savings will be
extraordinarily high.
Queries
Aren't dual eligibles,
the aged, blind and disabled, and heavy LTC users the poorest of the poor?
Isn't Medicaid their safety net which protects them only after
catastrophic spend down has devastated their life's savings and driven
them into financial destitution? How can you possibly hope to divert such
people from Medicaid dependency without destroying their lives and the
lives of their spouses and dependents?
Are people on Medicaid necessarily
poor?
Only if they need
acute or preventive medical care. Not if they're aged, blind or disabled
and eligible because they need long-term care. Income is rarely an
obstacle to Medicaid eligibility for people who require LTC. If they have
too little income to pay all their medical expenses, including nursing
home care, they're eligible.[10]
In other words, you don't need to have low income to qualify for Medicaid
long-term care benefits. All you need is a cash flow problem after you pay
all your medical and LTC bills.
Medicaid limits
non-exempt assets for LTC recipients to $2,000. But, exempt assets are
practically unlimited. For example, a home and all contiguous property up
to $525,000 plus a business including the capital and cash flow, one
automobile, prepaid burial plans, term life insurance, personal belongings
and other resources are excluded without limit from eligibility asset
caps. Married couples are assured of even higher income and asset
protections, including up to $2,841 of monthly income and up to $113,640
of assets for the community spouse as of 2012.[11]
For more details, see
Briefing Paper #2 in this series: "Medicaid
Long-Term Care Eligibility."
Medicaid Planning
On top of these
already generous income and asset limits, Medicaid planners use both
simple and sophisticated techniques to protect additional hundreds of
thousands of dollars for affluent clients and their heirs. Such techniques
include gifting strategies, annuities, trusts, life care contracts and
dozens of others delineated in hundreds of law journal and popular media
articles and books. Google "Medicaid estate planning" to find thousands of
methods and purveyors of self-impoverishment to qualify for Medicaid.
Similar techniques allow people with substantial income and assets to
avoid Medicaid's estate recovery requirements, which in any case, are
rarely enforced effectively by the states.
For more details, see
Briefing Paper #3 in this series: "Medicaid
Planning"
Bottom Line
Medicaid is not
primarily a long-term care safety net for people who have spent down into
impoverishment. Rather, Medicaid is the principal payor of long-term care
for nearly everyone.
Medicaid pays less
than one-third of the dollars for nursing home care (32.8%),[12]
but covers nearly 2/3 of nursing home residents (64%)[13]
and touches over 80% of all nursing home patient days with its extremely
low, quality-destroying reimbursement rates.[14]
Out-of-pocket
expenditures for nursing home care are down from 49.5% in 1970 to 29.1% in
2009.[15]
Nearly half of these already low out-of-pocket costs actually come from
the Social Security income of people already on Medicaid, not from asset
spend down.[16]
When you back out all
nursing home costs paid by Medicaid, Medicare, private health insurance,
Social Security and other personal income spend-through by Medicaid
recipients, individuals' and families' assets are at risk for less than
one dollar in six of nursing home costs.[17]
Home care is even less
a private burden. Only 8.8% of $68.3 billion home health care costs in
2009 were paid out of pocket. Medicare (43.6%) and Medicaid (35.6%) paid
79.2% of the total and private insurance paid 7.3%.[18]
Building on These
Facts
How can we take
advantage of the fact that Medicaid LTC does not require impoverishment to
improve the program, reduce its cost and generate substantial savings?
First ask: what is the
single biggest asset Medicaid protects from long-term care costs? Answer:
the home. Medicaid exempts the home and all contiguous property up to an
equity value of at least $525,000 and up to $786,000 in some states,
e.g. NY, CA, ID.[19]
What do we know about
senior's home equity? Roughly 81% of seniors own their homes; 65% of these
senior homeowners own their homes free and clear.[20]
Altogether, seniors own nearly two trillion dollars worth of home equity.[21]
This home equity wealth is currently illiquid, largely untapped for
long-term care costs, mostly exempted from Medicaid eligibility limits,
and usually avoids Medicaid estate recovery.
There are ways to
liquefy this wealth and put it to use financing quality long-term care for
frail and chronically ill seniors. For example, reverse mortgages are
private financial products that allow people to convert illiquid home
equity into usable income or assets which they can use in any way they see
fit and still remain in their homes as long as they are able.[22]
According to the
National Council on the Aging (NCOA), 48% of America's 13.2 million
households age 62 and older could get $72,128 on average from reverse
mortgages. "In total, an estimated $953 billion could be available from
reverse mortgages for immediate long-term care needs and to promote aging
in place."[23]
Yet, reverse mortgages
are rarely used to finance long-term care today. Why?
Because Medicaid LTC
financing co-opts the market for reverse mortgages by paying for most
formal long-term care for most Americans, exempting most home equity, and
thus obviating the need to tap home equity for long-term care.
How to Save
Medicaid LTC $30 Billion Per Year
To save Medicaid
billions of dollars every year and improve the program, replace the home
equity exemption with a requirement that people consume their home equity
before they become eligible for Medicaid LTC benefits.
How much could this
save? Medicaid spent $142.9 billion on 8.9 million dual eligibles in 2009
or $16,056 per dually eligible recipient.[24]
To save $30 billion per year, Medicaid would only need to reduce the
number of dual eligibles by 1,868,460 or 21%.[25]
Is that feasible? Yes,
because as NCOA reports, half of households headed by people over 62 could
get over $70,000 each from a reverse mortgage. That much money added to
other income and assets and used for long-term care, especially private
home and community-based services, could delay or prevent Medicaid
eligibility for millions of Americans. The savings to Medicaid would
easily exceed $30,000,000,000 per year in combined state and federal
expenditures, probably much more.
Over time, Medicaid
savings will increase rapidly beyond these initial estimates as more and
more people plan ahead to pay their own LTC expenses by means of home
equity conversion and private long-term care insurance, a product whose
market will expand if and when it becomes needed to protect home equity
from LTC expenses.
Objections and
Answers
If this is such a
great idea, why don't people already use reverse mortgages for
long-term care expenses? Why would they when Medicaid exempts the home
and all contiguous property regardless of value and estate recovery is
easy to avoid? Put home equity at risk and consumers will take long-term
care seriously, plan for it, and save, invest or insure against the risk.
Consequently, many fewer will end up as dual eligibles.
How does requiring
people to use their home equity improve Medicaid?
With fewer people to serve, Medicaid will have more resources to help
those who are genuinely in need. Medicaid will require fewer eligibility
workers and estate recovery staff, thus reducing administrative costs.
Part of the Medicaid savings can be applied to increasing reimbursement
rates and expanding the continuum of services provided, thus improving
access to and quality of care. Finally, the jobs created in the financial
services industry (reverse mortgage lenders) and the insurance industry (LTC
insurance agents) will generate new tax revenues to help states and the
federal government support Medicaid.
Wouldn't reverse
mortgages impoverish spouses of Medicaid recipients and leave them
dependent on public assistance?
No, just the opposite. Reverse mortgages provide extra income
indefinitely. They are fully insured by the federal government so that
families retain the income and the use of the home until they move, sell
or die even if the home equity is entirely consumed.
Doesn't this take
away a sacred right people have to pass their homes to heirs?
No, Congress made it clear over 20 years
ago "that all of the resources available to an institutionalized
individual, including equity in a home, which are not needed for the
support of a spouse or dependent children will be used to defray the cost
of supporting the individual in the institution."[26]
That was the justification for estate recovery, which has not worked well
because it is punitive, after the fact, and politically sensitive. Reverse
mortgages as a pre-condition of eligibility would achieve the same
objective far more efficiently.
Long-term care
providers, including nursing homes, assisted living facilities, and home
care agencies, would lose Medicaid patients, wouldn't they?
Yes, and they'll be thrilled to replace
Medicaid recipients, whose reimbursement is often less than the cost of
providing their care, with private patients who pay a sustainable market
rate for access to the top quality care they demand and receive as paying
customers. Furthermore, the influx of new revenue will improve care access
and quality for all long-term care patients, private pay and Medicaid.
Won't baby boomer
heirs, who are counting on inheritances protected by Medicaid, object
strenuously? Probably, but why
should Medicaid, which was intended as a safety net for the poor, be
inheritance insurance for middle-class boomers anyway? Boomers are exactly
the generation we need to awaken to long-term care risk and to their need
to insure against it. For nearly 50 years, Medicaid has done exactly the
opposite. It has anesthetized boomers to the risk by paying for their
parents' long-term care. We worry about the unfunded liabilities of Social
Security and Medicare, but at least those programs have putative "trust
funds." Medicaid is a dead-weight drag on state and federal general funds.
Medicaid has nowhere to turn as the demographic tsunami hits.
How would you
prevent people from gaming this rule the same way they use Medicaid
planning to circumvent the current system?
Most people who transfer assets to qualify for Medicaid do it after they
have a long-term care crisis or when they (or usually their heirs)
anticipate such a crisis coming soon. By that time, they don't qualify
medically or cannot afford private LTC insurance, so they turn to Medicaid
by hook or by crook. Confront them with a real Medicaid spend down
liability while they are still young, healthy and affluent enough to
insure privately and most people will do so. Unlike transfers of liquid
assets or negotiable securities, real property transfers are publicly
recorded and easily discovered. It would be simple to hold people
accountable who give away large amounts of home equity any time before
applying for Medicaid, even a decade or more. The asset transfer look back
period for real property should be at least ten years, instead of five as
now.
This is a political
non-starter because Medicaid is a "third rail" like Social Security and
Medicare. Nonsense. We are
quickly approaching the time when failure to confront exploding Medicaid
costs will exceed the political risk of confronting them honestly. How
will politicians justify cutting dental benefits for poor children or
slashing higher education or letting roads go unrepaired just so
prosperous seniors can pass their wealth to affluent heirs at the expense
of ever-skyrocketing Medicaid long-term care costs?
Do enough people
currently receiving Medicaid LTC benefits own their homes to achieve such
big savings immediately? No,
probably no more than 15% to 20% of people already receiving Medicaid
still own their homes. Besides, policy makers would probably want to
grandfather in current recipients under the status quo. The major savings
will come over a period of three years as the Medicaid long-term care
population turns over and fewer new recipients qualify until after they
spend down their home equity with a reverse mortgage. The big question
here is: what happens now to the homes owned by 81% of seniors by the time
they qualify for Medicaid and most of them no longer own their homes? Are
the homes being transferred to heirs? Are they being sold and the money
used somehow? How? Evidently not for long-term care as the data explained
above shows. Research is needed to answer these questions.
Summary
Medicaid is supposed
to be America's long-term care safety net for the poor. Instead, it is the
principal LTC payor for nearly everyone. Medicaid's LTC benefit has become
"inheritance insurance" for baby boomers, lulling them into a false sense
of security regarding their own future long-term care needs. Medicaid's
generous LTC eligibility and elastic income and asset limits create
perverse incentives that invite abuse and discourage responsible long-term
care planning.
The conventional
wisdom that most people must spend down their life savings before they
qualify for Medicaid long-term care benefits is a myth, demonstrably
false. If people's biggest asset, their home equity, were at risk to pay
for long-term care, most people would plan early to save, invest and
insure against that risk. Reverse mortgages permit people to withdraw
supplemental income or assets from their otherwise illiquid home equity
without giving up use of the home. This extra cash can purchase services
to help them remain at home and delay or avoid Medicaid dependency
altogether.
The single most
effective step Congress and the President can take to fix Medicaid, reduce
its cost, and improve America's long-term care service delivery and
financing system is to reduce or eliminate Medicaid's home equity. That
simple measure will pump desperately needed financial oxygen into the LTC
service delivery system, relieve the burden of Medicaid on taxpayers,
enable Medicaid to provide better access to higher quality care for the
genuinely needy, and expand the market for LTC insurance and home equity
conversion products, thus generating additional tax revenue for state and
federal coffers.
Afterword on the
"Doc Fix" Problem
The sustainable growth
rate (SGR) formula the government uses to pay physicians is set to slice
nearly 30% off the doctors' Medicare reimbursement rates on January 1,
2012. Almost everyone agrees that can't be allowed to happen. But no one
knows how to pay for avoiding it. The "Doc Fix" is estimated to cost $30
billion per year, $300 billion over ten years, and $500 billion soon if
nothing is done.
In the meantime,
Medicaid long-term care is fraught with virtually boundless waste, fraud
and abuse, as Cato's Michael Cannon has documented.[27]
Recent exposés by video-muckraker James O'Keefe dramatize the problem.[28]
All it would take to save most of the cost of the "Doc Fix" is to think
clearly about Medicaid LTC and reform it. In other words, "Pay for the Doc
Fix by Fixing Medicaid LTC." This Briefing Paper explained how.
End Notes
[1]
Kaiser Family Foundation, StateHealthFacts.org, extracted July 27,
2011;
http://www.statehealthfacts.org/comparecat.jsp?cat=4&rgn=6&rgn=1.
[2] National
Governors Association and the National Association of State Budget
Officers, The Fiscal Survey of States, Spring 2011, p. 51;
http://nasbo.org/LinkClick.aspx?fileticket=yNV8Jv3X7Is%3d&tabid=38.
[3] Ibid.
[4] Kaiser Family
Foundation, StateHealthFacts.org, extracted July 27, 2011;
http://www.statehealthfacts.org/comparecat.jsp?cat=4&rgn=6&rgn=1.
[5] Centers
for Medicare and Medicaid Services, National Health Expenditure Data,
Table 9: Nursing Care Facilities and Continuing Care Retirement
Communities Aggregate, Per Capita Amounts, and Percent Distribution, by
Source of Funds: Selected Calendar Years 1970-2009 and Table 4: National
Health Expenditures, by Source of Funds and Type of Expenditure: Calendar
Years 2003-2009, extracted July 27, 2011;
http://www.cms.gov/NationalHealthExpendData/downloads/tables.pdf.
[6] Kaiser
Family Foundation, "Dual Eligibles: Medicaid's Role for Low-Income
Medicare Beneficiaries," May 2011, p. 2;
http://www.kff.org/medicaid/upload/4091-08.pdf.
[7] Ibid.
[8] Kaiser
Family Foundation, StateHealthFacts.org, extracted July 27, 2011;
http://www.statehealthfacts.org/comparemaptable.jsp?ind=858&cat=4..
[9] "Per
capita spending for dual eligibles in nursing facilities averages $44,600,
or about four times greater than spending for dual eligibles in the
community ($10,900) or for other Medicare beneficiaries ($8,400). Because
Medicare does not cover long-term care, the higher costs for the
institutionalized fall heavily on the Medicaid program and account for
nearly 4 out of 5 dollars that Medicaid spends on dual eligibles." Judy
Kasper, Risa Elias and Barbara Lyons, "Dual Eligibles: Medicaid's Role in
Filling Medicare's Gaps," Kaiser Commission on Medicaid and the Uninsured,
March 2004, p. 10, (link).
[10] This is
true in "medically needy" states. In "income cap" states, a Miller income
diversion trust achieves the same purpose.
[11] These
"spousal impoverishment" protections began at $1,500 per month of income
and $60,000 in assets with passage of the Medicare Catastrophic Coverage
Act in 1988. They increase with inflation annually.
[12] Centers
for Medicare and Medicaid Services, National Health Expenditure Data,
Table 9: Nursing Care Facilities and Continuing Care Retirement
Communities Aggregate, Per Capita Amounts, and Percent Distribution, by
Source of Funds: Selected Calendar Years 1970-2009, extracted July 29,
2011;
http://www.cms.gov/NationalHealthExpendData/downloads/tables.pdf.
[13] Ari
Houser, Wendy Fox-Grage, Mary Jo Gibson, "Across the States: Profiles of
Long-Term Care and Independent Living," eighth edition, 2009, AARP,
Washington, DC,
http://assets.aarp.org/rgcenter/il/d19105_2008_ats.pdf.
[14] S.
Feinleib, P. Cunningham, and P. Short, Use of Nursing and Personal Care
Homes by the Civilian Population, 1987 (AHCPR Pub. No. 94-0096),
National Medical Expenditure Survey Research Findings 23, Agency for
Health Care Policy and Research, Rockville, MD: Public Health Service,
August 1994, p. 4.
[15] Centers
for Medicare and Medicaid Services, National Health Expenditure Data,
Table 9: Nursing Care Facilities and Continuing Care Retirement
Communities Aggregate, Per Capita Amounts, and Percent Distribution, by
Source of Funds: Selected Calendar Years 1970-2009, extracted July 29,
2011;
http://www.cms.gov/NationalHealthExpendData/downloads/tables.pdf.
[16]
Although Social Security is not usually considered to be a financing
source for nursing home care, the fact is that it contributes very
significantly albeit indirectly as “spend-through.” Social security
spend-through refers to income most seniors collect in the form of Social
Security benefits which must be contributed toward their cost of care when
they receive nursing-home services paid for by Medicaid. According to HCFA:
“An estimated 41 percent...of out-of-pocket spending for nursing home care
was received as income by patients or their representatives from monthly
social security benefits.” (Helen C. Lazenby and Suzanne W. Letsch,
“National Health Expenditures, 1989,” Health Care Financing Review,
Vol. 12, No. 2, Winter 1990, p. 8.) Later research confirmed that Social
Security spend-through is almost half of nursing home out-of-pocket costs.
(Nelda McCall, "Long Term Care: Definition, Demand, Cost, and Financing,"
in Nelda McCall, editor, Who Will Pay for Long-Term Care, Health
Administration Press, Chicago, Illinois, 2001, p. 19.)
[17] Centers
for Medicare and Medicaid Services, National Health Expenditure Data,
Table 9: Nursing Care Facilities and Continuing Care Retirement
Communities Aggregate, Per Capita Amounts, and Percent Distribution, by
Source of Funds: Selected Calendar Years 1970-2009, extracted July 29,
2011;
http://www.cms.gov/NationalHealthExpendData/downloads/tables.pdf.
[18] Centers
for Medicare and Medicaid Services, National Health Expenditure Data,
Table 4: National Health Expenditures, by Source of Funds and Type of
Expenditure: Calendar Years 2003-2009, extracted July 29, 2011;
http://www.cms.gov/NationalHealthExpendData/downloads/tables.pdf.
[19]
Medicaid exempted one home without regardless of value until the Deficit
Reduction Act of 2005 set the home equity limit at $500,000 or, at each
state legislature's option, at $750,000.
[20] As of
2010, 81.6% of people 65-69 years of age; 82.4% of those 70-74 and 78.9%
of those 75 and older own their homes. (U.S. Census Bureau, Housing
Vacancies and Home Ownership: Annual Statistics: 2010 (Including
Historical Data by State and MSA), Table 17, "Homeownership Rates by Age
of Householder and Family Status for the United States;"
http://www.census.gov/hhes/www/housing/hvs/annual10/ann10ind.html.)
As of 2009, 65.3% of elderly households are
owned free and clear of mortgage debt. (U.S. Census Bureau, American
Housing Survey National Tables: 2009, Table 3-15 Mortgage
Characteristics--Owner-Occupied Units,
http://www.census.gov/hhes/www/housing/ahs/ahs09/3-15.xls.)
For comparison: "Recent studies show that older
Americans, including those who have serious health problems and need
long-term care, want to live at home rather than in an institution. Most
elders (81% of those age 62 and older) own their homes and 74% of those
own them free and clear. With $1.9 trillion tied up in home equity, this
financial resource has the potential to dramatically increase the ability
of seniors to pay for long-term care at home. Reverse mortgages can free
up needed cash while enabling seniors to continue to own their home."
(Press Release of the National Council on the Aging, "Use Your Home to
Stay at Home(tm) Program Study Shows That Reverse Mortgages Can Help Many
with Long-Term Care Expenses," April 15, 2004.)
[21]
Press Release of the National Council on the Aging, "Use Your Home to Stay
at Home(tm) Program Study Shows That Reverse Mortgages Can Help Many with
Long-Term Care Expenses," April 15, 2004.
[22] A good
source of information on home equity conversion is the National Reverse
Mortgage Lenders Association at
http://www.reversemortgage.org/default.aspx . Also see AARP's website
at
http://www.aarp.org/revmort/ and the National Center for Home Equity
Conversion at
http://www.reverse.org/.
[23]
National Council on the Aging Press Release and Fact Sheet, "Use Your Home
to Stay at Home(tm): Program Study Shows That Reverse Mortgages Can Help
Many with Long-Term Care Expenses," April 15, 2004.
[24] Kaiser
Family Foundation, "Dual Eligibles: Medicaid's Role for Low-Income
Medicare Beneficiaries," May 2011, p. 1;
http://www.kff.org/medicaid/upload/4091-08.pdf.
[25] More
than a third of dual eligibles, 3.4 million, are younger persons with
disabilities, including the MRDD population, Mentally Retarded and
Developmentally Disabled. Very few of these recipients can be diverted
from Medicaid dependency. If we consider only the 5.5 million dual
eligibles over age 65, saving $30 billion per year would require diverting
34% of them from dependency on Medicaid, arguably doable though difficult.
(Dual eligible numbers come from Kaiser Family Foundation, "Dual Eligibles:
Medicaid's Role for Low-Income Medicare Beneficiaries," May 2011, p. 1;
http://www.kff.org/medicaid/upload/4091-08.pdf.)
[26] United
States Code, Congressional and Administrative News, 97th Congress—Second
Session—1982, Legislative History (Public Laws 97-146 to 97-248) Volume 2,
St. Paul, Minnesota, West Publishing Company, p. 814
[27] Michael
Cannon, "Entitlement Bandits," National Review Online, July 5,
2011, (link)and
Michael Cannon, "Medicare/Medicaid Fraud: It's Everywhere; It's Brazen;
It's Other People's Money," Cato Institute video, July 20, 2011, (link).
[28] Watch
O'Keefe's explosive videos showing Medicaid eligibility workers suborning
fraud here:
http://www.theprojectveritas.org/node/51.
#############################
Updated, Monday, March 5, 2012, 11:19
AM (Central)
Alpine, TX--
#############################
LTC BULLET:
REBALANCING LONG-TERM CARE
LTC Comment: Will
rebalancing from nursing homes to home care save Medicaid money or drive
up utilization and costs? How will rebalancing Medicaid affect the
private LTC insurance market? Answers after the ***news.***
.JPG)
***
HOST STEVE MOSES: “By hosting an informative event, a Florida
agent developed 16 B-to-B prospects, with two multi-life sales in the
works. The relationship George Braddock II developed with an expert in
the burgeoning field of Long Term Care insurance created an opportunity
for both of them recently. When Seattle-based LTC think-tank president
Stephen Moses planned to pass through Florida on vacation, he contacted
Braddock who quickly set up a lunch meeting, found a sponsor in his local
Continuing Care Retirement Community (CCRC), and created a great hook to
attract professionals involved in any aspect of financial advising to
attend. Offering a discussion of the CLASS Act provided the base for the
two to reach out to Florida professionals to share valuable information
and build Braddock's client base at the same time.” Details and “how to
do it” appear in an article by Jennifer Samson on the Personal PR Forum
(http://pprforum.ning.com/)
here. ***
*** REGISTRATION IS
OPEN for the 12th Annual Intercompany Long-Term Care Insurance
Conference to be held March 18-21, 2012 at the Paris and Bally’s Hotels in
Las Vegas. Check the hotels for special rates. Click
here or on the banner above for all the details and to register. Some
highlights:
* Apply for a
(non-home-office) agent scholarship at a special $395 rate
here.
* First time attendees may qualify for a new, special $495 registration
($995 otherwise)
* Take Harley Gordon’s CLTC Master Class for only $95 extra,
regular $1,395! (12-15 CE hours, the exam and one re-take included;
use the “edit registration link” to sign up for this class)
* Be sure to register for each breakout session at the "edit registration
link"
* Consider attending: ILTCI Business Technology Group meeting on Sunday,
March 18th, from 2:00-4:00 p.m.
* New this year: Mobile app (for smart phones) available for all
* And don't miss this conference highlight: Steve Moses and
Harley Gordon will debate in a program titled "Clash of the Titans!”
***
*** LTCI PRODUCERS
SUMMIT early discounted registration ends March 15. Register
here. KNIGHT KIPLINGER, editor-in-chief of The Kiplinger Letter
and Kiplinger’s Personal Finance magazine will keynote the 2012
American Association for Long-Term Care Insurance industry Summit to be
held November 10-12 at the Tropicana Hotel in Las Vegas. Details here:
http://www.aaltci.org/2012summit/conference.html. “The Summit takes
place a week after Election Day and Mr. Kiplinger’s outlook for the U.S.
economy and personal financial products couldn’t come at a better time,”
declares Jesse Slome, executive director of the organization. ***
-----------------
LTC BULLET:
REBALANCING LONG-TERM CARE
LTC Comment: A month
ago, we published
LTC Bullet: How to Fix Long-Term Care, which provided an overview of
the LTC problem and its solution.
Three weeks ago, we
published LTC Bullet: The History of Long-Term Care Financing or How We
Got into This Mess (link),
which explained how the richest country in the world came to have a
welfare-financed, nursing-home-based long-term care system.
Two weeks ago, in
LTC Bullet: Medicaid LTC Eligibility, we described how easy Medicaid
LTC benefits are to obtain after care is needed without substantial asset
spend down. More importantly, we explained why it matters.
Last week, in
LTC Bullet: Medicaid Planning for Long-Term Care, we tackled the
controversial topic of how affluent people artificially self-impoverish to
qualify for Medicaid LTC benefits and what the government has attempted
unsuccessfully to discourage the practice.
This week we address
the question of whether or not Medicaid can save money by funding more
home care and less nursing home care. Could Medicaid’s providing more
services people want and less care they would rather avoid . . . attract
more recipients, increase overall costs, further desensitize the public to
LTC risk and crowd out private financing alternatives?
In the weeks ahead,
we will cover the complicated issue of “dual eligibles” and how to unleash
the potential of private LTC financing alternatives such as long-term care
insurance and home equity conversion.
In other words, stick
with us through this entire series of six Briefing Papers and we’ll show
you step by step how America’s LTC system came to be so dysfunctional, why
it has been so hard to fix until now, and exactly what to do to improve
it.
--------------
.JPG)
Dedicated to ensuring quality long-term care for all Americans
Briefing Paper #4:
Rebalancing Long-Term Care
By
Stephen A. Moses
Is Rebalancing a Panacea?
Briefing Paper #1 in
this series on "The History of Long-Term Care Financing" explained how
Medicaid's bias toward funding nursing home care crowded out a privately
financed home and community-based services (HCBS) market. Since the 1980s
Medicaid has gradually moved away from financing nursing home care toward
paying for more HCBS. Will this change save money and improve the program
as advocates of rebalancing insist? Or could it cost more and potentially
harm access and quality? What are the downside risks?
Institutional Bias Gives Way
The federal Medicaid
LTC program started in 1965. To win industry support, the new program
originally paid exclusively and generously for nursing home care. But
exploding costs and declining quality led in time to calls for Medicaid to
"deinstitutionalize" or "rebalance" LTC benefits.
The Omnibus Budget
Reconciliation Act of 1981 authorized HCBS waivers which allowed state
Medicaid programs to fund home care with restrictions. For example, states
couldn't spend more for HCBS than they would have spent for nursing home
care.
The Supreme Court's
1999 "Olmstead" decision held that people with disabilities have the right
to live at home or in the community if they are able and do not prefer
nursing home care. Olmstead encouraged states to provide more HCBS within
reasonable budget limitations.
Major initiatives
during the George W. Bush Administration expanded opportunities for state
Medicaid programs to cover HCBS. The Deficit Reduction Act of 2005 and the
Affordable Care Act of 2010 (health reform) added options and funding to
encourage rebalancing to HCBS.
The Argument for Rebalancing
The argument in favor
of HCBS, made strenuously by many academic and policy experts, is that
taking care of frail or chronically ill elders in their homes is much
cheaper than in a nursing home. Therefore, rebalancing from skilled
nursing facility (SNF) services to HCBS should save the state and federal
Medicaid programs money while giving people more of what they want (home
care) and less of what they would rather avoid (nursing home care). But is
that true?
Considerations
Intuitively, it would
seem so. SNF services are expensive and HCBS apparently much less so.
Surely, Medicaid can serve more people in their homes and communities for
less money and with better outcomes than in nursing facilities. But the
reality is more complicated. Decades of empirical studies show HCBS delay
but do not replace institutionalization. For example:
When
compared to an elderly population for whom traditionally available care is
offered, recipients of expanded community-based services do not use
significantly fewer days of nursing home care.[1]
An
increasingly large number of studies, including the results of a national
channeling demonstration program, have shown that non-institutional
services typically do not substitute for nursing home care, but, rather,
represent additional services most often to new populations.[2]
Although
community-based LTC programs proved beneficial to both clients and
informal caregivers in the LTC demonstrations, they did not prove budget
neutral or cost effective.[3]
The
Channeling demonstration . . . found that, while community-care models
were often welcome by recipients and their caregivers, they led to overall
increases in public spending for long-term care.[4]
The
primary argument for the cost savings potential of home care rests on a
comparison of the average per person Medicaid expenditures for people in
the community and in nursing homes. The average annual Medicaid
expenditures for home care for older people and adults with physical
disabilities ($8,355 in 2004) per person are dramatically less than
average annual Medicaid expenditures ($27,650 in 2004) per person for
nursing home care. This comparison, however, is incomplete because it does
not address differences in disability levels, use of acute care services,
and the exclusion of housing and room and board costs from home care
expenditures. Thus, it is not strictly an 'apples to apples' comparison.[5]
The
research evidence that changing the delivery system will produce
substantial Medicaid savings is not strong, but it is a premise strongly
held by many state officials and consumer advocates.[6]
Year after year,
combined costs for SNF care and HCBS continue to rise in spite of, or
perhaps because of, rebalancing. Tough questions arise. Would people who
receive HCBS have otherwise entered SNFs? Do they reduce costs or merely
add recipients? Isn't losing the institutional economy of scale very
expensive? How can providing home care services people want instead of
nursing home care they dread save money?
California Case
Study[7]
In-Home Supportive
Services (IHSS) is California's largest Medi-Cal (Medicaid in California)
HCBS program. IHSS has lenient functional eligibility requirements and
allows Medi-Cal recipients to hire and pay their own caregivers, including
family members. One study found that this policy helps "prevent further
functional decline," "addresses tight labor pools and supports family
caregiving."[8]
The same study claimed that HCBS programs are cost-effective.
Unfortunately, this
policy of easy access to IHSS and paying family members for care drives up
program participation and induces population-wide complacency about LTC
risk. It replaces free private care-valued in 2007 at $48 billion or five
times Medi-Cal LTC spending and 9.1 times Medi-Cal HCBS spending[9]-with
paid services at enormous public cost.
California's
Legislative Analyst concluded in 2010: "After accounting for both costs
and savings to the state and counties, IHSS probably results in net costs.
This is because the savings (in the form of avoided nursing home costs)
are probably more than offset by the costs (to provide IHSS and related
services) for those recipients who would not be institutionalized in the
absence of the program."[10]
Conclusion
Believers that
rebalancing can save money and improve Medicaid-financed LTC cling to hope
while disregarding hard reality. The only study supporting their position
"found that states with well-established HCBS programs had much lower
rates of spending growth compared to those with low HCBS spending" but
only after "a lag of several years before institutional spending appeared
to decline."[11]
States efforts to
reduce Medicaid LTC expenditures by rebalancing from nursing home care to
home and community-based care have clearly failed. But the solution cannot
be a return to the institutional bias that plagued the program in years
past. Not only would covering more people in nursing homes again cost more
money, it isn't possible anyway because low-acuity patients no longer
qualify medically for SNF care in many states.
The Solution
The path to a more
promising outcome lies through a better understanding of why and how most
Americans who need long-term care end up on Medicaid. As explained in
Briefing Papers #1, #2 and #3 on the History of LTC, Medicaid LTC
Eligibility, and Medicaid Planning, respectively, easy access to Medicaid
LTC benefits after care is needed has resulted in excessive dependency on
publicly funded long-term care. Offering more attractive HCBS, without
controlling easy eligibility, increases costs and impairs quality.
For Medicaid to afford
quality HCBS for all recipients it must have fewer recipients. By
tightening eligibility, closing eligibility loopholes, preventing Medicaid
planning, and enforcing estate recovery, the program can do a better job
for fewer genuinely needy eligibles. When middle class and affluent people
understand their savings and home equity are at risk for LTC, they will
avoid Medicaid dependency by paying privately from savings, home equity
conversion and private insurance. These points are developed more fully in
Briefing Paper #5 on Dual Eligibles and Briefing Paper #6 on Private LTC
Financing Alternatives.
End Notes
[1]
General Accounting Office, "The Elderly Should Benefit From Expanded Home
Health Care But Increasing Those Services Will Not Insure Cost Reductions"
(Dec. 7, 1982) p. 43,
http://archive.gao.gov/f0102/120074.pdf.
[2]
John F. Holahan and Joel W. Cohen, Medicaid: The Trade-off between Cost
Containment and Access to Care, (Washington DC: The Urban Institute
Press, 1986), p. 106.
[3]
Kenneth G. Manton, "The Dynamics of Population Aging: Demography and
Policy Analysis," The Milbank Quarterly, vol. 69, no. 2, 1991, p.
322.
[4]
Francis Caro, "Long-Term Care: Informed by Research," AcademyHealth,
Washington, D.C., 2003, p. 2;
http://www.academyhealth.org/files/publications/ltcresearch.pdf.
[5]
Joshua M. Wiener and Wayne L. Anderson, "Follow the Money: Financing Home
and Community-Based Services," Pennsylvania Medicaid Policy Center,
Pittsburgh, Pennsylvania, 2009, p. 10, footnote omitted;
http://www.pamedicaid.pitt.edu/documents/Homecare_rp_09.pdf.
[6]
Ibid, p.22.
[7]
Stephen A. Moses, "Medi-Cal Long-Term Care: Safety Net or Hammock?,"
Pacific Research Institute (San Francisco, CA) and Center for Long-Term
Care Reform (Seattle, WA), January 2011; (link).
[8]
Robert Mollica and
Leslie Hendrickson, “Home and Community-Based Long-Term Care:
Recommendations to Improve Access for Californians,” report prepared for
California Community Choices and California Health and Human Services
Agency under Grant CFDA 93.779 from the U.S. Department of Health and
Human Services, Centers for Medicare and Medicaid Services, November 2009,
p. v; (link).
[9]
Ari Houser and Mary Jo Gibson, "Valuing the Invaluable: The Economic Value
of Family Caregiving, 2008 Update," Insight on Issues 13, AARP
Public Policy Institute, Washington, DC, November 2008, table 2, p. 4, and
table 3, p. 5;
http://assets.aarp.org/rgcenter/il/i13_caregiving.pdf.
[10]
Legislative Analyst's Office, "Considering the State Costs and Benefits:
In-Home Supportive Services Program," Sacramento, California, January 21,
2010, p. 3; (link).
[11]
Robert Mollica and Leslie Hendrickson, "Home and Community-Based Long-Term
Care: Recommendations to Improve Access for Californians," report prepared
for California Community Choices and California Health and Human Services
Agency under Grant CFDA 93.779 from the U.S. Department of Health and
Human Services, Centers for Medicare and Medicaid Services, November 2009,
pps. 1-2; (link)
citing Kaye, LaPlante, and Harrington, (January, 2009), “Do
Noninstitutional Long-Term Care Services Reduce Medicaid Spending?” Health
Affairs, vol. 28, no. 1, pp. 262-272;
http://content.healthaffairs.org/cgi/content/abstract/28/1/262.
2212
Queen Anne Avenue North, #110, Seattle, Washington 98109
● Phone (206) 283-7036
● Fax (206) 283-6536
E-mail
info@centerltc.com ● Web Site
www.centerltc.com ● Ask how you
can support the Center today!
#############################
Updated, Friday, March 2, 2012, 11:33
AM (Central)
Alpine, Texas--
#############################
FRANK TITUS EULOGY BY
PAUL FORTE AND LTC NEWS AND COMMENT
LTC Comment:
Paul Forte is the Chief Executive Officer of
Long Term Care Partners, LLC the company that manages the
Federal Long Term Care Insurance Program. We re-publish his eulogy of
Frank Titus with Mr. Forte’s permission:
“Frank Titus, former
Federal Executive and first FLTCIP Contracting Officer, passed away
yesterday [February 2, 2012] after a serious illness. He was 65.
“In his thirty-year
federal career, Frank held every executive level position associated with
the retirement and insurance programs that OPM administers, except that of
Chief Actuary. In 1985, he instituted a cash management program for major
health carriers that greatly reduced federal outlays. In 1987, he
implemented a new Federal Employee Retirement System (FERS), for which he
received a Presidential Rank Award. In the 1990’s he implemented the
Patient Bill of Rights, Patient Safety, and Mental Health/Substance Abuse
Parity Program in the Federal Employees Health Benefits program (FEHB),
for which he received a second Presidential Rank Award. In 1999 he began
work on the FLTCIP. As his record suggests, his success with it was no
accident. Frank’s knowledge and experience of large-scale benefits
programs prepared him to undertake the difficult work of creating the
nation’s largest long term care insurance program.
“Frank was involved in
drafting the authorizing legislation that created the FLTCIP in September
2000. He conducted research into best practices in long term care
insurance. He led the team that put the original FLTCIP contract out to
bid in 2001 and that evaluated proposals from qualified contractors. After
the contract award in December 2001, he supervised the installation of the
FLTCIP, developed the regulations, and helped to plan the first Open
Season in 2002-2003, working closely with LTCP, John Hancock, and MetLife
on the national marketing campaign. Those of us who were here in
Portsmouth when LTCP opened its doors in the spring of 2002 and in the
early years of operation know how much was owed to Frank’s guidance.
“Frank was personally
proud of Portsmouth and made a number of visits here. He chose the John
Hancock/MetLife consortium at least in part because of its plans to build
a dedicated facility. He believed that such a facility was the best
long-term solution for FLTCIP administration. He also believed that
Portsmouth had the potential to do other important federal work. This was
evident in 2004 when he approached us about doing premium allotments for
FSAfeds, and then in 2005, when he asked us to introduce the new FEDVIP
via a Voluntary Benefits Portal later known as BENEFEDS. Frank drew up the
requirements for implementation of BENEFEDS with LTCP in 2006. As the
original Contracting Officer for the portal, Frank believed that BENEFEDS
could serve not only as the enrollment and premium processing platform for
the FEDVIP, ensuring its success, but as the administrative hub for all
federal benefits programs, including FEHB, the nation’s largest health
plan. He was right on both counts.
“Blessed with an
ability to listen closely and a powerful memory, Frank registered
everything without ever writing it down. He once impressed a group of us
in Washington by repeating almost verbatim the technical statements that
each of us had made over a 10 minute period. None of us had ever seen
anyone do that before. Frank could present a gruff exterior, especially if
you were a vendor, and he could make the room feel warm, if he didn’t care
for what you were telling him. But that masked great sympathy and
kindness. At his retirement party in 2006, Frank was recognized both for
his professional achievements and his generosity as a manager and
colleague. He had many friends in the Federal community and was much loved
by those who knew him well.
“Frank was a bold,
original, and determined person who worked hard to improve the lives of
the Federal Family, and by extension, all Americans. He will be missed.”
Paul Forte, CEO, Long
Term Care Partners
#############################
2/29/2012,
“Married
to the Job,” by Paula Span,
New York Times
Quote:
"Ms. Hadas continued to hire aides for her husband (luckily, they'd bought
long-term care insurance two years before his diagnosis), but eventually
had to place him in a series of facilities, starting in 2008."
LTC Comment:
The New York Times rarely has anything good to say about LTC
insurance, but this is an exception.
#############################
2/29/2012,
“Small
business owners are unprepared for retirement,” Life & Health
Advisor
Quote:
"Just 37 percent of the women and 38 percent of the men think their
retirement planning needs are complex. This suggests a potentially
dangerous tendency to oversimplify an increasingly complicated financial
planning situation that needs to account for inflation, medical expenses,
longevity and asset management as well as the accumulation and
distribution of income, long-term care and tax management."
LTC Comment:
An ironic and usually uncommented effect of the fraying “social safety
net” is that too few people worry about future financial security. That’s
a danger for the complacent but an opportunity for the financial adviser.
#############################
2/28/2012,
“Avoiding Stress in Eldercare: What 7 At-Risk Groups Need to Know,” by
Paula Spencer Scott, Caring.com/New America Media (link)
Quote:
"Editor's Note: The following article is part of a series on family
eldercare and what caregivers should know about minimizing their stress
and maintaining their health."
LTC Comment:
Good advice for caregivers.
#############################
2/27/2012,
“Long-term
care uncertainty is a growing issue,” by Bob Rosenblatt, Los
Angeles Times
Quote:
"The cost of long-term care is the big health insurance uncertainty for
Americans 65 and older. How will they pay for long-term care? The biggest
shock for people entering the Medicare system is learning that it won't
pay for custodial care in a nursing home."
LTC Comment:
After they absorb that shock, however, they learn that Medicaid does pay
for such care and that it is easy to qualify for without much asset spend
down. No wonder the next generation doesn’t worry enough about LTC risk
and cost.
#############################
2/25/2012,
“The
Vanishing Mind: Life, With Dementia,” by Pam Belluck, New York
Times
Quote:
"Dementia in prison is an underreported but fast-growing phenomenon, one
that many prisons are desperately unprepared to handle."
LTC Comment:
Watch for states to deal with this problem of demented prisoners by
transfering them in to Medicaid-financed nursing homes. One more reason
to insure, pay privately, and stay out of such places.
#############################
2/25/2012,
“The
elderly should share the burden,” by Robert J. Samuelson,
Washington Post
Quote:
"What this suggests is that some cuts in Social Security benefits or
increases in Medicare fees, even for those already on the programs, would
not impose undue hardship. In any deficit deal, the elderly should be part
of the bargain. All the adjustment should not be heaped on the working-age
population."
LTC Comment:
Expect many more columns and recommendations like these to reduce and
means test benefits to seniors.
#############################
2/24/2012,
“Alzheimer's
Draft Authors Mention LTCI – Briefly,” by Allison Bell,
LifeHealthPRO
Quote:
"The authors of the new draft
National Plan to Address Alzheimer's Disease mention the role of
private LTCI coverage only in passing. . . . Under the 'helping families
plan' heading, plan drafters suggest that HHS should find out why
middle-aged adults fail to plan for long-term care (LTC) needs. The
drafters suggest that HHS also should expand LTC awareness efforts."
LTC Comment:
The Center for LTC Reform has drafted a study proposal to answer the
question once and for all of why people fail to plan for LTC. Details in a
future LTC Bullet.
#############################
2/23/2012,
“New retirement reality, longer life expectancy cause many to rethink
planning for later years,” by Lisa Gillespie, Employee Benefit Adviser
(link)
Quote:
"According to findings from a new survey from Merrill Lynch, 58% of
affluent Americans have a positive view of the prospect of living to be
100. However, three out of four would approach their money management
differently if they knew today that they were going to live that long. A
few things they'd consider are continuing to work part-time during
retirement (39%), investing in an annuity (32%), contributing more to a
savings vehicle (32%) and retiring closer to 85 rather than 65 (25%)."
LTC Comment:
Did they even ask about LTC insurance?
#############################
2/23/2012,
“A
Shift From Nursing Homes to Managed Care at Home,” by Joseph Berger,
New York Times
Quote:
"Faced with soaring health care costs and shrinking Medicare and Medicaid
financing, nursing home operators are closing some facilities and
embracing an emerging model of care that allows many elderly patients to
remain in their homes and still receive the medical and social services
available in institutions."
LTC Comment:
"Rebalancing" from Medicaid-financed nursing home care to home and
community-based care may not be as easy or cost-effective as this article
suggests as I explain here: Briefing Paper #4: Rebalancing Long-Term Care
www.centerltc.com/BriefingPapers/4.htm -- (PDF
for print)
#############################
2/23/2012,
“Part
II: Selling LTCI: You Must!,” by Honey Leveen, LifeHealthPRO
Quote:
"In last month's column, I described what I believe is the right way,
certainly a more enjoyable and less stressful way, to break into long-term
care insurance (LTCi) sales. I've gotten several calls and comments from
last month's column, so this subject is evidently relevant. This month
I'll expand on how you can earn as you learn how to sell LTCi. . . . I
consider my subscription to www.centerltc.org a 'must'."
LTC Comment:
Thanks to Center Regional Rep Honey Leveen for this valuable article and
for shouting out the Center for LTC Reform.
#############################
2/23/2012,
“Providers
pleased with Supreme Court Medicaid decision,” McKnight’s LTC News
Quote:
"The U.S. Supreme Court has not ruled against the idea of providers suing
the state of California for its efforts to cut Medicaid reimbursements by
10%."
LTC Comment:
Expect many more lawsuits like this one as long-term care providers are
caught between the rock of inadequate Medicaid reimbursement rates and the
hard place of mandatory quality.
#############################
2/21/2012,
“Missing
from the Presidential Debate: Long-Term Care,” by Ken Schwartz,
National Council on the Aging press release
Quote:
"[T]he issue of long-term care has been completely absent from this year's
presidential campaign. No questions have been asked during the debates.
The candidates have not posted any views or positions on their websites,
and only two candidates have responded to a national survey on their views
to address this growing national challenge."
LTC Comment:
The two respondents were President Obama and Newt Gingrich. Read the
survey questions and their responses
here.
#############################
2/2012,
“The
Long-Term Care Imperative,” by
Bryan Langdon, LifeHealthPRO
Quote:
"Our industry has long known the combination of pricing, benefits, risk
selection and anticipation of future claims is a learned science. Today we
are dealing with low interest rates, a lower-than-average applicant age,
better care delivery systems and many more changing dynamics, which has
made it difficult for carriers to chart a consistent path to profitability
… yet we continue to learn and adapt. Our sales are growing, the market
gets bigger and our options to solve have never been greater. For years we
told advisors that the baby boomers were coming and their needs would be
changing. Well, they have not only arrived but they are also learning
firsthand the true cost, financially and emotionally, of a long-term care
event. It is those experiences that are changing the buying decisions of
our clients."
LTC Comment:
You may need to scroll down to get to this article.
#############################
2/19/2012,
“Popular
payroll tax cut will cost Americans later,” by Terry Savage,
Chicago Sun-Times
Quote:
“The [Social Security] system will become ‘means
tested’ - meaning those who also
saved money in retirement accounts will certainly have their Social
Security benefits reduced, or taxed away.”
LTC Comment:
Terry Savage is a nationally syndicated financial columnist who writes
frequently and positively about the importance of long-term care
insurance. Her "Savage Truth" columns are often right on the money.
#############################
2/14/2012,
“The Future. LTCI Product
Design. Discuss. Now that the CLASS Act program has died, what impact will
that have on sales?,” by Ed McCarthy, LifeHealthPRO (link)
Quote:
"So what's on the post-CLASS LTCI horizon? Cheung suspects that some
benefits managers who were waiting to see what the act produced may now
revisit the idea of setting up private employer-sponsored coverage."
LTC Comment:
After CLASS, what? Prudential’s Malcolm Cheung and AALTCI’s Jesse Slome
opine in this article. It would make a good topic for a fuller survey of
industry opinions.
#############################
12/2011,
“Residential Care Facilities: A Key Sector in the Spectrum of
Long-term Care Providers in the United States,” National Center for Health
Statistics (link)
Quote:
"Residential care facilities (RCFs)—such as assisted living facilities and
personal care homes—provide housing and supportive services to persons who
cannot live independently but generally do not require the skilled level
of care provided by nursing homes. RCFs are not federally regulated, and
state approaches to RCF regulation vary widely (1). The ability to provide
a comprehensive picture of the long-term care (LTC) industry has been
hampered by the lack of data on RCFs (2,3). Previous estimates of the size
of the RCF sector varied depending on how RCFs were defined (4,5). Using
data from the first nationally representative survey of RCFs with four or
more beds, this report presents national estimates of RCFs and compares
characteristics and services by facility size."
LTC Comment:
Valuable new data on the LTC venues that are replacing nursing homes for
custodial care.
#############################
Updated, Friday, February 24, 2012,
Time AM (Pacific)
Bristol, Virginia--
#############################
LTC BULLET: MEDICAID
PLANNING FOR LONG-TERM CARE
LTC Comment: What is
Medicaid planning and why does it matter? Find out after the ***news.***
*** REGISTRATION IS OPEN for the 12th Annual
Intercompany Long-Term Care Insurance Conference to be held March 18-21,
2012 at the Paris and Bally’s Hotels in Las Vegas. Check the hotels for
special rates. Click
here or on the banner above for all the details and to register. Some
highlights:
* Apply for a
(non-home-office) agent scholarship at a special $395 rate
here.
* First time attendees may qualify for a new, special $495 registration
($995 otherwise)
* Take Harley Gordon’s CLTC Master Class for only $95 extra,
regular $1,395! (12-15 CE hours, the exam and one re-take included;
use the “edit registration link” to sign up for this class)
* Be sure to register
for each breakout session at the "edit registration link"
* Consider attending:
ILTCI Business Technology Group meeting on Sunday, March 18th, from
2:00-4:00 p.m.
* New this year:
Mobile app (for smart phones) available for all
* And don't miss this
conference highlight: Steve Moses and Harley Gordon will
debate in a program titled "Clash of the Titans!” ***
*** SPOTLIGHT ON:
Medicaid and Medicare Key Numbers
Need the latest Medicaid and Medicare numbers? Your Center for Long-Term
Care Reform has you covered. We have current data, updated annually, all
the way back to the early 1990s. In this feature you not only have a
historical archive of essential Medicaid and Medicare numbers, you have
access to the current numbers as soon as they are released. The Medicaid
and Medicare Key Numbers feature is located in our
Members-Only Zone website. If you need your user name and password, or
are not yet a member and would like to join, click
here or simply contact Damon (206-283-7036 /
damon@centerltc.com). Zone in today and you’ll find a wealth of useful
resources! ***
*** THE GREAT
CONNECTIONS SEMINAR for Students Ages 16-24; July 21-28, 2012, in
Chicago. Ask your favorite students:
- “Are you looking
for more than memorization and tests? Do you want to be
challenged to think for yourself?
- “Can you connect
abstract ideas with life decisions and world events? Can you confidently
argue for - and act on - your point of view?
- “Do you want to
gain powerful knowledge and skills and discuss life’s most challenging
questions...while enjoying music, dancing, architecture, and art to the
fullest?”
If their answer is
"yes," point them to a "total immersion" experience of intensive classes,
interactive sessions, off-campus expeditions, and rewarding camaraderie.
It just might change their lives, as it has for previous students.
Description and application. Offered by the Reason, Individualism,
Freedom Institute:
www.rifinst.org ***
*** KNIGHT KIPLINGER,
editor-in-chief of The Kiplinger Letter and Kiplinger’s Personal
Finance magazine will keynote the 2012 American Association for
Long-Term Care Insurance industry Summit to be held November 10-12 at the
Tropicana Hotel in Las Vegas. Details here:
http://www.aaltci.org/2012summit/conference.html.
“The Summit takes place a week after Election Day and Mr. Kiplinger’s
outlook for the U.S. economy and personal financial products couldn’t come
at a better time,” declares Jesse Slome, executive director of the
organization. ***
#############################
LTC BULLET: MEDICAID
PLANNING FOR LONG-TERM CARE
LTC Comment: Three
weeks ago, we published
LTC Bullet: How to Fix Long-Term Care, which provided an overview of
the LTC problem and its solution.
Two weeks ago, we
published
LTC Bullet: The History of Long-Term Care Financing or How We Got into
This Mess, which explained how the richest country in the world came
to have a welfare-financed, nursing-home-based long-term care system.
Last week, in
LTC Bullet: Medicaid LTC Eligibility, we described how easy Medicaid
LTC benefits are to obtain after care is needed and without substantial
asset spend down. More importantly, we explained why it matters.
This week, in
LTC Bullet: Medicaid Planning for Long-Term Care, we tackle the
controversial topic of how affluent people artificially self-impoverish to
qualify for Medicaid LTC benefits and what the government has attempted
unsuccessfully to discourage the practice.
In the weeks ahead, we
will cover the difficulty of “rebalancing” Medicaid, the complicated issue
of “dual eligibles,” and how to unleash the potential of private LTC
financing alternatives such as long-term care insurance and home equity
conversion.
In other words, stick
with us through this entire series of six Briefing Papers and we’ll show
you step by step how America’s LTC system came to be so dysfunctional, why
it has been so hard to fix until now, and exactly what to do to improve
it.
#############################
Briefing Paper #3:
Medicaid Planning for Long-Term Care
by
Stephen A. Moses
What is Medicaid
Planning?
As explained in Briefing
Paper #2 of this series, on "Medicaid Long-Term Care Eligibility," the
program's income and asset means tests are very generous and elastic.
Nevertheless, people with substantial income and assets sometimes exceed
those limits and are thus disqualified.
Medicaid planning or
Medicaid estate planning is often called "artificial
self-impoverishment." It involves manipulating one's or a client's income
and assets so that an individual who would otherwise not qualify for
Medicaid LTC benefits can slip in below the financial eligibility limits
and qualify after all.
What Are the Principal
Methods of Medicaid Planning?
Over the years, as
explained below, the state and federal governments have tried to
discourage Medicaid planning. For each eligibility loophole they've
closed, however, a very creative Medicaid planning bar seems to open
several new ones. Among the techniques most popular today are:
·
Purchase of exempt assets such as
personal belongings, home furnishings, an automobile, prepaid burial
plans, or a more expensive home.
·
Early planning through asset
transfers in any amount done before the current 5-year transfer of assets
look-back penalty period
·
Irrevocable income-only trusts
into which assets including home equity have been transferred early in
anticipation of future LTC expenses
·
Medicaid friendly annuities
through which assets are transferred, often between spouses, replacing
countable cash with cash flow from an annuity of equal economic value, but
without causing ineligibility because income rarely disqualifies
applicants.
·
Life care contracts, whereby
elders transfer assets to family members or others in exchange for their
promise to take care of the elder until he or she needs heavy LTC.
·
The reverse half-a-loaf strategy,
whereby the ailing elder gives away half his or her assets, purchases a
promissory note with the other half, lives on the proceeds of the note
until the transfer penalty on the gift expires, and thus qualifies for
Medicaid in half the time and at half the cost intended by Congress.
·
Life estates whereby the
elderly Medicaid applicant transfers the remainder interest in a home to
an heir (usually an adult child) while retaining a life estate, i.e.,
the right to live in the home until death, including the right to
mortgage, sell or convey an interest in the property, i.e.,
"special powers." Although this could be considered a transfer of assets,
the Centers for Medicare and Medicaid Services (CMS) have allowed it.
·
Commonplace in New York and
Florida is spousal refusal whereby healthy spouses of institutionalized
Medicaid recipients are encouraged to refuse to make their lawful
contribution toward the ill spouse's care and are rarely held to account.
Who Does Medicaid
Planning?
Books, articles and
websites that advocate Medicaid and explain how to transfer or shelter
income and assets are common. An internet search for "Medicaid planning"
will reveal hundreds of examples. See for example "The Medicaid Planning
Guidebook" advertised here:
http://www.thewpi.org/pdf_files/state.laws.mediciad.planning.pdf.
Ordinary people have easy
access to published materials urging them to plan early in order to
qualify for Medicaid if and when they should experience high LTC
expenses. Simple techniques such as transferring wealth at least five
years before applying for Medicaid or purchasing exempt assets after
expensive care is already needed are well within the ability of many
elderly people and their families.
People who have hundreds
of thousands of dollars in various kinds of financial instruments beyond
the value of their homes may need to employ more sophisticated Medicaid
planning techniques with the help of special "elder law" attorneys.
Although there is no practical limit on how much money such Medicaid
planners can protect on behalf of clients, multi-millionaires may find
that other estate planning considerations, such as gift taxes or capital
gains deferral, may take precedence over getting Medicaid to pay for LTC.
Medicaid Planning Quotes
The following advertising extracted last year from a
Pennsylvania Medicaid planner's website is very typical. For numerous
additional examples, search the internet for "Medicaid planning
techniques" or go to "Medicaid Planning Quotes" here:
http://www.centerltc.com/medicaid_planning_quotes.htm.
"For all practical purposes, in the United States the
only social 'insurance' plan for long-term institutional care is Medicaid.
. . . Medicaid . . . is a form of welfare - or at least that's how it
began. So to be eligible for Medicaid, you must become 'impoverished'
under the program's guidelines."
"Those who are not in immediate need of long-term
care may have the luxury of distributing or protecting their assets in
advance. This way, when they do need long-term care, they will quickly
qualify for Medicaid benefits."
"Levandowski and Darpino specializes in elder law and
elder care planning. Let us help you to:
* Plan in advance to limit the devastating expense of long-term care.
* Protect your home and life savings.
* Preserve the financial security of your spouse and dependents.
* Legally transfer assets to children and grandchildren.
* Minimize private payments of nursing home costs.
* Maximize public benefits from Medicare, Medicaid, and other programs.
* File the complicated Medicaid application. . . .
"If you wait, it may be too late to take some of the
steps available to preserve your assets."[1]
How Common is Medicaid
Planning?
Janice Eulau, a Medicaid
eligibility supervisor in New York state for 36 years, testified under
oath on September 21, 2011 before the U.S. House of Representatives
Oversight and Government Reform and Healthcare Subcommittee, that
approximately 60% of the people who apply for Medicaid LTC in her office
have done some form of Medicaid planning. She further testified that the
average successful applicant for Medicaid LTC has $300,000 in assets, but
that half a million is not unusual and over a million does happen. She
said the amount of money makes little difference.
In Ms. Eulau's office,
eligibility workers told researchers that 75% of nursing home applications
are completed by attorneys or para-legals; half of all applications
include asset transfers; 25% to 30% include trusts; nearly every case with
a community spouse involves "spousal refusal"; 75% have prepaid burial
expenses to reduce countable assets; 35% transferred a home years in
advance of applying.[2]
Similar levels of Medicaid planning have been reported by eligibility
workers in other states. Rhode Island workers said 85% of applications
are filed by someone other than the applicant and that 60% are processed
without face-to-face contact with the applicant. In Rhode Island, 75% to
80% of applicants purchase prepaid burials to reduce assets.[3]
For many more examples of
Medicaid planning techniques and estimates of their frequency of use, see
the numerous state-level and national reports linked at
http://www.centerltc.com/reports.htm.
How Much Does Medicaid
Planning Cost Taxpayers?
No one knows for sure what
the full cost of Medicaid planning is. The few studies conducted have
looked only at "asset transfers." Waidman and Liu concluded "pursuit
of transferred assets would recover only about 1 percent of total Medicaid
spending for long-term care."[4]
Total Medicaid LTC expenditures in 2009 were $114 billion which suggests
the cost of asset transfers alone is at least $1.1 billion.
But asset transfers are only one--and not the most
important one--of the many Medicaid planning techniques used to divest or
shelter financial resources from income and asset eligibility tests. No
government agency or think tank has ever studied the financial impact on
Medicaid of the full range of Medicaid planning techniques including the
most common and expensive ones, e.g., purchase of exempt assets,
trusts, annuities, life estates and promissory notes.
Given that these techniques of Medicaid planning are
commonplace according to state Medicaid eligibility workers, it is likely
that a study aimed at measuring their financial impact would deliver
dramatic results probably in the tens of billions of dollars per year.
Nevertheless, as large as the potential savings from curtailing Medicaid
planning may be, it is important to note that such egregious
self-impoverishment is not the biggest financial problem facing Medicaid.
It is only the tip of the iceberg. The bigger problem, as explained in
Briefing Paper #2 on "Medicaid Long-Term Care Eligibility," is the fact
that most people qualify for Medicaid LTC easily without spending down
significantly and without having to employ lawyers or fancy Medicaid
planning legal techniques. Only the wealthiest need Medicaid planning to
qualify.
What Has the Federal
Government Done to Discourage Medicaid Planning Abuses?
The federal government has
tried for decades to close loopholes and discourage the abuse of Medicaid
LTC benefits by affluent people and their legal advisors.
The first major measure in this direction was the
Tax Equity and Fiscal Responsibility Act of 1982, or TEFRA '82. TEFRA
authorized state Medicaid programs for the first time to (1) penalize
asset transfers done for the purpose of qualifying for Medicaid, (2) place
liens on real property in order to hold that property in a recipient's
possession during their period of Medicaid eligibility, and (3) to recover
the cost of their care from the estates of deceased recipients. The
critical thing to understand about TEFRA '82 is that it was entirely
voluntary.
In 1985, in the Consolidated Omnibus Budget
Reconciliation Act, Congress took the next step by putting a stop to
"Medicaid qualifying trusts." MQTs had become the technique of choice for
elderlaw attorneys to impoverish their affluent senior clients and qualify
them for Medicaid nursing home care.
The Medicare Catastrophic Coverage Act of 1988
(MCCA '88) was mostly about Medicare, but it did have some provisions that
affected Medicaid long-term care eligibility. The most important change
was, for the first time, to require state Medicaid programs to penalize
asset transfers for less than fair market value done for the purpose of
qualifying for Medicaid long-term care benefits. MCCA '88 required state
Medicaid programs to look back 30 months for inappropriate asset
transfers. It established an ineligibility penalty equal to the amount of
assets transferred for less than fair market value for the purpose of
qualifying for Medicaid divided by the average cost of a nursing home in
the state. MCCA '88 also established a limit of 30 months as the maximum
penalty for asset transfers.
In 1993, the Omnibus Budget Reconciliation Act
(OBRA '93) implemented most of the recommendations from the DHHS Inspector
General's 1988 "Medicaid Estate Recoveries" report [http://oig.hhs.gov/oei/reports/oai-09-86-00078.pdf].
OBRA '93 extended the look-back period for asset transfers to a full three
years (36 months) for most improper transfers and to five years for
transfers into or out of a trust. The law also eliminated the time
30-month limit on the eligibility penalty.
In 1996, in the Health Insurance Portability and
Accountability Act (HIPAA '96 or the Kennedy/Kassebaum Act), Congress
made it a crime to transfer assets for less than fair market value for the
purpose of qualifying for Medicaid. To do so, according to HIPAA '96
would be punishable by a fine of up to $10,000 and a jail term of as much
as a year. Senior advocates called this the "throw granny in jail law"
and Congress repealed it a year later.
But Congress replaced the throw granny in jail law
with the Balanced Budget Act of 1997, AKA the "throw granny's
lawyer in jail law," which made it a crime to recommend asset transfers to
a client for a fee. Attorney General Janet Reno refused to enforce the
law on the grounds that an attorney could not be held legally culpable for
recommending a practice that was legal again after the
"throw-granny-in-jail law" was repealed.
The next and latest law to
restrict Medicaid planning was the Deficit Reduction Act of 2005 (DRA
'05) which extended the transfer of assets look back period to five years,
capped the Medicaid home equity exemption for the first time ever at
$500,000 or $750,000 at each state's option, and ended the single most
common Medicaid planning technique at the time, the "half-a-loaf"
strategy, whereby people could give away half their assets, hide the rest,
and qualify for Medicaid in half the time intended by the earlier law.
What Needs to Be Done?
Clearly, nothing 15
Congresses and five Presidents have done over the past 30 years has
succeeded in eliminating the practice of Medicaid planning or the problem
of people with substantial wealth co-opting Medicaid's scarce LTC
resources.
The idea behind OBRA '93
was to retain generous eligibility rules but enforce estate recovery so
that people stricken by long-term chronic illnesses would not be
devastated financially, but neither would they avoid paying the cost of
their care in the end. That strategy didn't work because the generous
eligibility rules remained but estate recovery was never implemented fully
by most states, nor was it enforced strongly by the federal government.
The best approach now is
to eliminate or radically reduce Medicaid's $500,000 to $750,000 home
equity exemption so that people who require LTC consume their own wealth
first, through formal or informal (family) reverse mortgages or through
sale of the home, before they qualify for Medicaid. The potential savings
to Medicaid of $30 billion per year are explained in Briefing Paper #5 of
this series on "Dual Eligibles and Long-Term Care."
End Notes
#############################
[1]
Levandowski & Darpino, LLC, 17 Mifflin Ave., Suite 202, Havertown, PA
19083, information extracted July 26, 2010 from
http://www.levandowskidarpino.com/medicaid.php4.
[2] Stephen A. Moses, "Long-Term Care
Financing in New York: The Consequences of Denial," Center for
Long-Term Care Reform (Seattle, WA) and Empire Center for New York
State Policy (Albany, NY), March 2011, p. 17ff;
http://www.centerltc.com/pubs/NY-Consequences_of_Denial-CLTCRfull.pdf.
[3] Stephen A. Moses, "Doing LTC RIght,"
Center for Long-Term Care Reform (Seattle, WA) and Ocean State Policy
Research Institute (Providence, RI), January 2010, p. 14;
http://www.centerltc.com/pubs/Doing_LTC_RIght.pdf.
[4] Timothy Waidmann and Korbin Liu,
"Asset Transfer and Nursing Home Use: Empirical Evidence and Policy
Significance," Urban Institute, published April 2006 by the Kaiser
Family Foundation, p. 1;
http://www.kff.org/medicaid/upload/7487.pdf.
#############################
Updated, Tuesday, February 21, 2012,
11:26 AM (Pacific)
Seattle--
#############################
ARE ADVISERS WHO FAIL
TO RECOMMEND LTC PLANNING ACCOUNTABLE? AND LTC NEWS AND COMMENT
LTC Comment: First,
some LTCI industry news.
***
CONGRATULATIONS TO LOUIS BROWNSTONE: The
National LTC Network recognized the outstanding service of immediate
past Chairman Louis Brownstone at its Board of Directors meeting on
February 2, 2012. Brownstone was Chairman of the Board for the past four
years. Current Network Board Chair Mike Skiens, President of member firm
MasterCare, spoke gratefully and passionately about Brownstone's
service as Chair. The Center for LTC Reform is proud to have Louis
Brownstone, the National LTC Network, and MasterCare as corporate members.
***
***
CONGRATULATIONS TO DEB NEWMAN: "Newman Long Term Care Announces
Strategic Alliance with AdvisorNet Financial: As 10,000 baby boomers turn
65 every day, two leading financial planning and insurance firms team up
to help solve the nation's growing long-term care needs." The Center for
Long-Term Care Reform is proud to count Deb Newman and her company among
our corporate members. ***
*** ARE ADVISERS WHO
FAIL TO RECOMMEND LTC PLANNING ACCOUNTABLE? There’s an urban legend that
attorneys and financial planners who fail to recommend LTC planning and
insurance are highly vulnerable to professional penalties and lawsuits.
I’ve never been able to find much evidence of this. In fact, it seems the
opposite may be more often the case as in this example supplied by Randall
Sorensen, CPA.
“Ione Sorensen's
Certified Financial Planner recommended that she cancel her long-term care
insurance policy because her financial adviser believed that the
government takes care of everyone. Because Ione trusted her CFP, Ione
won't have $300,000 in insurance benefits to pay for the high cost of her
Alzheimer care. Instead of staying at the ‘best’ Alzheimer care facility,
Ione can only afford a sub-standard care facility.
“During the last year
we have filed complaints with the Certified Financial Planner's Board in
Washington, D.C., the Arizona Attorney General's Office and the Arizona
Department of Insurance. To-date no one wants to help an 80 year-old
grandmother who can no longer speak for herself. Don't let this happen to
your Mom or Dad. Make an appointment ASAP to review your parents long-term
care needs. As a result of a negligent financial planner, Ione will be
forced to sell North Dakota farmland that has been in the family for 100
years. If you know of an attorney or legal organization that might be able
to help Ione Sorensen, my family would appreciate any thoughts or
suggestions. My email is RSorensen@ezdoc.net and my direct phone number is
480-831-1169.”
#############################
2/18/2012,
“New
Resources for Caregivers,” by Kelly Greene, Wall Street Journal
Quote:
"Genworth Financial, a large long-term-care insurer, and AARP, the
membership group for older Americans, on Thursday introduced a new service
for AARP members through which the families of older adults with dementia
and other illnesses can assess their needs and develop a care plan-either
online, over the phone or in person with a registered nurse. (Genworth
already has marketed long-term-care insurance with AARP's logo for nearly
five years.)"
LTC Comment:
Medicaid programs throughout the country are trying to provide a similar
service as a means to save money by discouraging nursing home
institutionalization. It will do neither but Medicaid’s involvement will
reduce the market for the private product.
#############################
2/17/2012,
“Women's Views on financial responsibility to their families Study:
Boomers focus on self-reliance; younger generations on education,” Life
& Health Advisor (link)
Quote:
"While women across generations are willing and eager to provide financial
support to their family members, they are also placing a strong emphasis
on self-reliance, according to the MetLife Mature Market Institute study,
‘Women's Views on Family Financial Obligations: A MetLife Survey of
Intergenerational Findings of Baby Boomers and Generations X and Y.’"
LTC Comment:
Download the full MetLife study
here.
#############################
2/16/2012,
“Tracking
Down Government Aid,” by Paula Span, New York Times
Quote:
"The National Council on Aging and
the National Association of Area Agencies on Aging are kicking off a
campaign to nudzh [i.e., pester or annoy] older people into taking
advantage of programs they could qualify for but don't apply for."
LTC Comment:
Just what we needed: a vast,
well-financed campaign to persuade seniors to apply for welfare whether
they need it or not.
#############################
2/16/2012,
“Transitional Senior Housing &
‘Granny Pods’ as Aging-in-Place Alternatives,”
by Alyssa Gerace, Senior Housing News (link)
Quote:
"MedCottages are small (288-square-feet), modular buildings that can
easily be placed on a homeowner's property and hooked up to the main
house's water and electric utilities. They're designed with seniors in
mind and include technology that incorporates motion detection and
interactive monitoring."
LTC Comment:
We called them "Granny Flats" the last time this idea appeared, during an
earlier recession. Will this be the next thing advocates want government
to fund and LTCI to insure?
#############################
2/16/2012,
“Defendant
pleads not guilty in court,” by Anna Bitong, Thousand Oaks Acorn
Quote:
"From December 2009 to July 2010, Bellucci allegedly used false names,
addresses and income information on long-term-care insurance applications
and submitted them to Genworth Life Insurance Company, according to the
California Department of Insurance. He's also been charged with
impersonating some of the fabricated applicants in follow-up phone
interviews with Genworth employees."
LTC Comment:
A sordid commentary if true.
#############################
2/16/2012,
“As
seniors climb from poverty, young fall in,” by Marisol Bello, USA
TODAY
Quote:
"The ratio of senior-to-child poverty was close in 1980: There were three
counties with more than 20% of children living in poverty for every four
counties with 20% of seniors in poverty. Now the two are reversed, and the
gap has widened considerably. Eight counties have high child poverty for
every one that has high senior poverty."
LTC Comment:
Adding insult to injury we pass the future bill for seniors’ current
prosperity to the very same generation we’ve impoverished to enable it.
#############################
2/16/2012,
“MedAmerica and LTC Financial Partners Announce a Broad Suite of
Long-Term Care Insurance Products for the Workplace,” MarketWatch (link)
Quote:
"On the Heels of UNUM's Decision to Stop Marketing Group LTC Plans to New
Customers, the New Program Fills a Growing Need for Flexible Protection of
American Employees."
LTC Comment:
Good luck to both companies.
#############################
2/16/2012,
“Do
You Face 'Money Death' in Old Age?,” by Philip Moeller, U.S. News &
World Report
Quote:
"They [longevity annuities] make the most sense for healthy people who
expect to live into their late 80s or 90s. Also, they make the most sense
for relatively affluent people who could spend $100,000 or more right now
on a longevity annuity without making a big dent in their retirement nest
egg."
LTC Comment:
This article received a lot of play. It got me thinking that LTC insurance
is kind of "longevity insurance" for middle class people who maybe can't
quite afford the product recommended in the article.
#############################
2/15/2012,
“Sleeplessness Tied to Early
Alzheimer's, Study Says But it's too soon to say one leads to the other,”
by Maureen Salamon, HealthDay (link)
Quote:
"Poor-quality sleep may have worse
effects than simple fatigue: A preliminary new study suggests it's linked
to the buildup of brain plaques seen in people with Alzheimer's disease."
LTC Comment:
News that can keep you awake at night?
#############################
2/15/2012,
“Despite
pleas, Burlingame care center closing,” by Victoria Colliver, San
Francisco Chronicle
Quote:
"Burlingame Long-Term Care is a victim of state and local budget
constraints, including a proposed 23 percent reduction in Medi-Cal
reimbursement rates. The financial squeeze was the biggest reason Tupou
and some 230 other poor and disabled residents, most of whom are on Medi-Cal
and other government programs, will now have to find a new home. Concerns
over the building's aging infrastructure and safety also played a role in
the decision to close Burlingame Long-Term Care."
LTC Comment:
I bring this story to your attention because it was brought to my
attention by a Center member who wrote: "Steve...Thought you would be
interested in this front page story in the San Francisco Chronicle.
230 residents, most of them on Medi-Cal, will be kicked out and will have
to relocate...God knows where. I'm sure no one wants this to happen, but
there's no money. We're starting to see the Government's reduced role in
providing long term care benefits."
I replied: "Very
interesting. Just what I've been predicting. As news like this enters the
media bloodstream and consumers' consciousness, I'm confident it will
translate into increasing LTCI sales. In fact, I think we may be seeing
that trend develop already. That's good for LTCI but it's equally good for
the long-term survival of the Medicaid safety net."
It is sad, but
fascinating to see what we've expected playing out in the real world right
on schedule. I wonder what the hundreds of "Medi-Cal" planners in
California have to say for themselves now.
#############################
2/14/2012,
“Your Uninsurable Long-Term Care Insurance Client When No Means It's
Time To Come Up With More Ideas,” by Stuart Armstrong, LifeHealthPRO
(link)
Quote:
"In summary, if your client is uninsurable the value you can provide to
them doesn't end there it may just begin and by providing a thorough
service, your reward may well be referrals to other prospective LTC
clients."
LTC Comment:
The author offers this as a last resort strategy:
“There are various
estate and legal planning strategies that can help address paying for
long-term care and how to help protect and allocate your client and their
spouse's assets. These might include giving away assets, utilizing pooled
trusts, re-titling other assets in a spouse's name, etc. and becoming more
aware of community resources that might be available to your client.”
Unfortunately, most
people are presented with Medicaid planning as the obvious choice after
they already need long-term care which they did not insure for because
they didn’t worry about it because Medicaid has always paid for most
expensive LTC. At the very least, this author should have disclosed that
Medicaid has a dismal reputation for problems of access, quality,
reimbursement, discrimination, institutional bias, and loss of
independence and choice.
#############################
2/14/2012,
“Why
You Might Need Less Retirement Income Than You Think,” by Janet Novack,
Forbes
Quote:
"Long term care insurance could liberate you. . . . Retirees who had long
term care insurance spent a lot more than those without such insurance. So
what? You have to be reasonably well-off to afford the stiff premiums.
True enough. But even when Banerjee controlled for wealth and income, he
found that those with insurance spent more. That suggests that those who
haven't bought insurance are spending less than they might, because
they're worried about saving for nursing home and other long term care
bills."
LTC Comment:
Don’t end up pinching pennies on long-term care.
#############################
2/14/2012,
“U.S.
seniors missing out on $20 billion of benefits,” by Bernadette Baum,
Reuters
Quote:
"Millions of seniors in the United States are missing out on more than $20
billion in aid that could help pay for food, medicine and heating, simply
because they don't know it's there, according to a report released on
Tuesday by organizations that advocate for seniors."
LTC Comment:
And millions more are receiving aid who shouldn't, couldn't and wouldn't
have needed it if they'd just planned responsibly.
#############################
2/13/2012,
“Unum's
Halt of New LTC Sales a Credit Positive, Says Moody's,” by Elizabeth
D. Festa, LifeHealthPRO
Quote:
"Unum Group's decision announced last week to exit new sales of group
long-term care (LTC) insurance during the first quarter of 2012 is credit
positive for the company, Moody's stated, citing potential growing risks
and losses from this business line. Unum is not alone-just another victim
of industry trends and lower interest rates."
LTC Comment:
I wish we could send only good news.
#############################
2/11/2012,
“Top
10 E-Marketing Mistakes,” by Alan Blume, LifeHealthPRO
Quote:
"When using e-marketing or email communications, it's better to focus on
what is likely to arrive, than on what might look good on your computer
screen."
LTC Comment:
A few good pointers because we're all reaching out with email more and
more. Damon observed that he uses the techniques recommended in this
article constantly to help ensure that your emails from the Center are
clear and readable.
#############################
Updated, Friday, February 17, 2012,
10:43 AM (Pacific)
Seattle--
#############################
LTC BULLET: MEDICAID
LTC ELIGIBILITY
LTC Comment: Despite
the conventional wisdom that people must spend down into impoverishment
before qualifying for Medicaid LTC benefits, the truth is that income and
asset eligibility rules are so generous that most people qualify easily
without spending down significant wealth. Find out how and why after the
***news.***
| *** TODAY'S
LTC BULLET is sponsored by Claude Thau, a General Agent whose
proprietary sales tools enable your clients to make informed final
decisions about whether to buy LTCi in 15-20 minutes. He’ll help you
build your business in any market (individual, executive carve-out,
work-site, affinity, financial institution, referrals from other
professionals, etc.). Claude is the lead author of the Milliman
Broker World LTCi Survey, was named one of the 10 "Power People" in
the LTCi industry by Senior Market Advisor in 2007 and was Chairman
of the Board of the Center for Long-Term Care Financing. Test Claude
by calling 800-999-3026, x2241 or email him at
claudet@targetins.com to ask questions or get references.
*** |
*** PREMIUM MEMBERSHIP
in your Center for LTC Reform makes our new, discounted “clipping service”
available to you for pennies per day. Maybe you qualify to become a
“Regional Representative” of the Center. Get the details on the clipping
service
here. Learn about all our individual and corporate membership
opportunities
here. To join or upgrade, contact Damon at 206-283-7036 or
damon@centerltc.com. ***
*** BOOK STEVE MOSES
to speak at your next event. Details
here. Contact Steve directly at 206-283-7036 or
smoses@centerltc.com to inquire. Says he: “Just as it’s always
darkest before the dawn, the challenges to LTC insurance are about to fall
away as a bright future unfolds.” Pollyanna or prescient? Hear him out.
Then decide. No matter what, you’ll have fresh new ideas and a huge head
of emotional steam to motivate you and your producers. ***
#############################
LTC BULLET: MEDICAID
LTC ELIGIBILITY
LTC Comment: Two
weeks ago, we published
LTC Bullet: How to Fix Long-Term Care, which provided an overview of
the LTC problem and its solution.
Last week, we
published
LTC Bullet: The History of Long-Term Care Financing or How We Got into
This Mess, which explained how the richest country in the world came
to have a welfare-financed, nursing-home-based long-term care system.
This week, in
LTC Bullet: Medicaid LTC Eligibility, we’ll show how easy Medicaid
LTC benefits are to obtain after care is needed and without substantial
asset spend down. More importantly, we explain why it matters.
In the weeks ahead,
we will cover the problem of “Medicaid planning,” the difficulty of
“rebalancing” Medicaid, the complicated issue of “dual eligibles,” and how
to unleash the potential of private LTC financing alternatives such as
long-term care insurance and home equity conversion.
In other words, stick
with us through this entire series of six Briefing Papers and we’ll show
you step by step how America’s LTC system came to be so dysfunctional, why
it has been so hard to fix until now, and exactly what to do to improve
it.
#############################
Briefing Paper #2:
Medicaid Long-Term Care Eligibility
By Stephen A. Moses
Theory Vs. Practice
Medicaid is supposed
to be a long-term care safety net for people in dire financial need.
Instead it has become the dominant payer for most Americans who require
extended care at home or in a nursing home, including the middle class and
even the affluent. How can this be true if Medicaid is a means-tested,
public assistance program? That is the key question this Briefing Paper
addresses.
Income Eligibility
Although everyone says
Medicaid eligibility requires low income, that is untrue for people over
the age of 65 who need long-term care. Federal rules require most states
to deduct medical expenses, including the cost of nursing home care, from
applicants' incomes before determining eligibility. Some states apply
"income caps" but those are easily evaded by means of special "income
diversion trusts." Bottom line, income almost never disqualifies anyone
for Medicaid long-term care eligibility.
Asset Eligibility
Spend Down
But what about assets?
It is true that cash or negotiable securities over $2,000 are
disqualifying in most states, but it does not matter how people spend down
to that level as long as they don't give their money away. Financial
advisors frequently tell clients to purchase exempt assets, take a world
cruise, or throw a big party, all non-disqualifying spend down methods.
Exempt Assets
How many exempt assets
can applicants retain and still qualify for Medicaid LTC benefits? There
really is no meaningful limit. Exempt home equity is capped at $525,000 or
$786,000--13 to 20 times the amount protected in England's socialized
health care system--but the following resources are exempt without any
limit:
·
One business including the capital and cash flow
·
Individual retirement accounts (IRAs)
·
One automobile
·
Prepaid burial plans for the Medicaid recipient and immediate family
members
·
Term life insurance, which allows recipients to evade Medicaid's estate
recovery mandate
·
Household goods and personal belongings
The federal
regulations and policies that require these exemptions are documented in
our report titled "Medi-Cal
Long-Term Care: Safety Net or Hammock?," a copy of which may be found
on the Center for Long-Term Care Reform's website here:
http://www.centerltc.com/articlesspeechesandreports.htm.
Spousal Impoverishment Protections
Married applicants for
Medicaid LTC benefits can retain substantially more income and assets than
single people: up to $2,841 per month of income and half the couple's
joint assets not to exceed $113,640 as of 2012. If the healthy spouse's
personal income and assets are below these levels, the Medicaid spouse's
income and assets are transferred to bring her or him up to the limit.
These "spousal impoverishment" protections increase annually with
inflation.
Most Qualify Easily
Because of these very
generous basic eligibility rules, the vast majority of America's elderly
qualify easily for Medicaid when they need long-term care. The
conventional wisdom that people must spend down into impoverishment before
Medicaid will help is demonstrably untrue. Only the most affluent need to
consult Medicaid planners and use special legal techniques--such as
trusts, transfers, annuities, life estates, life care contracts and
promissory notes--to qualify.
Briefing Paper #3 in this series explains Medicaid planning. The key
point to remember is that egregious Medicaid planning is only the tip of
the iceberg. The bigger problem is that Medicaid's basic eligibility rules
allow most people to qualify after they need long-term care and without
spending down their wealth first.
Friendly Fire in the Class War
Easy access to
Medicaid has the effect of desensitizing the public to LTC risk and cost.
Medicaid's home equity exemption discourages people from using reverse
mortgages to finance home care. With most of their assets protected by
Medicaid, few people plan early to save, invest or insure for long-term
care. Well-intentioned public policy has turned into a perverse incentive
inhibiting responsible LTC planning. Furthermore, consuming scarce public
welfare resources to indemnify affluent baby-boomer heirs of well-to-do
seniors hurts the poor instead of helping. It is like friendly fire in the
class war.
Estate Recovery
The Omnibus Budget
Reconciliation Act of 1993 required all state Medicaid programs to recover
benefits correctly paid from the estates of deceased recipients. The goal
of this mandate was to ensure that resources sheltered from Medicaid LTC
income and asset eligibility limits, such as home equity and the other
exempt assets listed above, would be used in the end to help pay for the
recipient's care and reimburse Medicaid. Unfortunately, few states
implemented estate recoveries effectively and the federal government did
not enforce the estate recovery mandate aggressively. When Medicaid LTC
eligibility is very generous, but estate recovery is not pursued, Medicaid
operates essentially as free inheritance insurance for the heirs of
Medicaid recipients.
Potential Savings
Medicaid could save up
to $30 billion per year if people had to consume their home equity before
qualifying for public benefits as is true in England. The program's most
expensive "dual eligible" recipients could be reduced by 21 percent.
Reverse mortgages to fund long-term care would thrive and generate new
jobs and tax revenue. The private long-term care insurance market would
expand creating even more jobs and revenue. But most importantly,
relieving the financial pressure on Medicaid in this way would enable the
program to survive as a quality safety net for the truly needy.
Briefing Paper #5 "Dual Eligibles and Long-Term Care" explains how
Medicaid can achieve savings of $30 billion per year by encouraging
long-term care financing through reverse mortgages and private insurance.
#############################
Updated, Monday, February 13, 2012,
10:39 AM (Pacific)
Seattle--
#############################
MEDICAID ESTATE
RECOVERIES REVISITED AND LTC NEWS AND COMMENT
*** REGISTRATION IS OPEN for the 12th Annual
Intercompany Long-Term Care Insurance Conference to be held March 18-21,
2012 at the Paris and Bally’s Hotels in Las Vegas. Check the hotels for
special rates. Click
here or on the banner above for all the details and to register. Some
highlights:
* Apply for a
(non-home-office) agent scholarship at a special $395 rate
here.
* First time attendees may qualify for a new, special $495 registration
($995 otherwise)
* Take Harley Gordon’s CLTC Master Class for only $95 extra,
regular $1,395! (12-15 CE hours, the exam and one re-take included;
use the “edit registration link” to sign up for this class)
* Be sure to register for each breakout session at the "edit registration
link"
* Consider attending: ILTCI Business Technology Group meeting on Sunday,
March 18th, from 2:00-4:00 p.m.
* New this year: Mobile app (for smart phones) available for all
* And don't miss this conference highlight: Steve Moses and
Harley Gordon will debate in a program titled "Clash of the Titans"!
***
#############################
LTC Comment: The
following letter from a constituent to Congressman Charles W. Boustany,
Jr., M.D. (R, LA) was brought to my attention by the Congressman’s aide
Mike Thompson. Mr. Thompson asked me:
“Do you have thoughts
on his comment related to liens by states when the person enters a skilled
nursing facility. . . . [T]o what extent do states file liens or go
collect the value of the home now?”
Here’s the letter,
reprinted with permission, followed by my reply.
------------
Mr. Boustany,
I am a closing
attorney who handles the transaction of real estate in this part of our
state. In my practice, I come across situations where the owner of a home
is placed in a nursing home. As you probably are aware, Medicaid will not
pay for anyone until they have exhausted their own assets. However, one
exception to this is that the personal home is allowed to be kept in that
person’s name. It is my understanding that Medicaid has the right to
pursue the home once that person dies to seek reimbursement of the monies
paid, but it is my experience that Medicaid does not have the manpower to
do so.
It does not seem fair
for people who have significant equity in their home, not to have to use
that equity to pay for their care. Why should taxpayers pay if they have
the means to reimburse Medicaid for their care?
I think there could be
a very simple legislative solution. If Medicaid had the right to record a
lien for their reimbursement rights immediately upon the person entering
the nursing home, then the heirs would have to deal with Medicaid in order
to sell or mortgage the home. Medicaid would not have to pursue the
property, the heirs in most cases would come to Medicaid for a payoff.
I think Medicaid is
leaving millions if not billions of dollars on the table that could help
the system work more efficiently.
As a title attorney,
if a lien shows up when I do title I would not close until I get it
cancelled or I collect the amount necessary to get it cancelled.
I would be happy to
talk to you or any of your staff about this if you have any questions.
Randy Olson
------------
Steve Moses’s reply:
Mike:
Smart constituent you
have there.
Medicaid not only has
the right to recover from the estates of deceased recipients, including
the value of real estate, it's been mandatory to do so since OBRA '93
which implemented most of the recommendations in my 1988 Medicaid
Estate Recovery report for the DHHS Inspector General. Read it here:
http://oig.hhs.gov/oei/reports/oai-09-86-00078.pdf,
but excuse the HHS’s sloppy copy job. Most states don't bother with
pursuing estate recoveries diligently and the federal government doesn't
enforce the requirement aggressively.
Billions are left
uncollected annually but that isn't the biggest loss. The fact that
Medicaid pays for most LTC and rarely collects from estates has had the
effect of desensitizing people to LTC risk and cost so they don't plan or
insure and end up on Medicaid by default if they ever need LTC. It’s all
right there in my 1988 report for anybody who wants to understand.
States have been able
to file liens on home property before death since TEFRA '82 but only under
very limited conditions, so most states don't bother. You can read all
the details regarding TEFRA liens in the aforementioned report starting on
p. 18. Basically, the state must be able to demonstrate that the
institutionalized Medicaid recipient will be unable to return to the home
within six months. Of course, there can be no exempt dependent relatives
in the home. Both those requirements should be eliminated. The lien
doesn't hurt anyone; it only guarantees that the Medicaid program will be
able to recover costs if and when the home is sold.
Steve
------------
*** IF YOU
SUBSCRIBED to the Center’s new discounted “clipping service,” you would
have had the following news in your email in-box the same day it was
reported—in time for it to make a difference competitively. See details
here and contact Damon to subscribe at 206-283-7036 or
damon@centerltc.com. ***
#############################
2/11/2012,
“Even
Critics of Safety Net Increasingly Depend on It,”
by Binyamin Appelbaum and Robert Gebeloff, New York Times
Quote:
"Older people get most of the benefits, primarily through Social Security
and Medicare, but aid for the rest of the population has increased about
as quickly through programs for the disabled, the unemployed, veterans and
children. The government safety net was created to keep Americans from
abject poverty, but the poorest households no longer receive a majority of
government benefits. A secondary mission has gradually become primary:
maintaining the middle class from childhood through retirement. The share
of benefits flowing to the least affluent households, the bottom fifth,
has declined from 54 percent in 1979 to 36 percent in 2007, according to a
Congressional Budget Office analysis published last year. "
LTC Comment:
The entitlement mentality continues to creep higher and higher into middle
class economic strata.
#############################
2/10/2012,
“As
nursing home care improves, some problems slow to mend,” by Paul
Monies, USA Today
Quote:
"U.S. nursing homes that consistently received the lowest rating -- one
star -- since the federal government began ratings in late 2008. The list
includes homes receiving a one-star overall rating for each of seven
consecutive ratings periods analyzed from 2009 to 2011. See all homes."
LTC Comment:
Care to guess whether or not these persistently sub-par nursing homes have
higher-than-average Medicaid census?
#############################
2/2012,
“On
the Verge: The Transformation of Long-Term Services and Supports,”
AARP Public Policy Institute
Summary:
Summary of this report by Karl
Polzer of the American Health Care Association: "A report just released by
the AARP Public Policy Institute describes how states are transforming
financing and delivery of their long-term services and supports (LTSS)
systems. The report documents states' rapid movement toward Medicaid
managed care, the continuing trend toward providing Medicaid services in
home and community-based (HCB) settings, and the push to integrate care
for people dually eligible for Medicaid and Medicare." An
"In Brief" version is available
here.
LTC Comment:
In case you aren't familiar with the awkward phrase "Long-Term Services
and Supports" or LTSS, this is the new expression replacing "long-term
care" favored by advocates of government financing because they think
"long-term care" implies nursing home institutionalization.
#############################
2/10/2012,
“Attack
on Alzheimer's,” by Gautam Naik, Wall Street Journal
Quote:
"The disease is a growing problem, especially in aging societies, but no
effective treatment has been found. The drugs used today work just for a
short time and only relieve symptoms, instead of halting the disease.
Over the years, drugs in about a half-dozen late-stage human trials have
failed to make the cut."
LTC Comment:
Hopes raised and dashed—the history of Alzheimer’s research in a nutshell.
#############################
2/9/2012,
“Frank
D. Titus, senior federal executive,” Washington Post
Quote:
"Frank D. Titus, 64, a senior
federal executive who retired from the Office of Personnel Management in
2006 as assistant director of the retirement and insurance division, died
Feb. 2 at Inova Alexandria Hospital. . . . Mr. Titus, who joined OPM in
1972, played a key role in shaping a federal long-term-care insurance
program in the early 2000s."
LTC Comment:
I didn't know Frank well, but I
remember his attending some industry conferences during the period of
development for the federal LTCI program, so perhaps some of you knew him
better.
#############################
2/9/2012,
“Daddy
Issues: Why caring for my aging father has me wishing he would die,”
by Sandra Tsing Loh, The Atlantic
Quote:
"Recently, a colleague at my radio station asked me, in the most cursory
way, as we were waiting for the coffee to finish brewing, how I was. To my
surprise, in a motion as automatic as the reflex of a mussel being poked,
my body bent double and I heard myself screaming: ‘I WAAAAAAAANT MY
FATHERRRRRR TO DIEEEEE!!!’ Startled, and subtly stepping back to put a bit
more distance between us, my co-worker asked what I meant."
LTC Comment:
This is a long read, but I bet any prospect you persuade to read it won't
turn down LTC insurance for self and will become an advocate for parents,
siblings and children insuring. And that despite some brief badmouthing
of LTCI in the piece.
#############################
2/9/2012,
“The 2012 State of the [LTCi] Union: Where have we been? Where are we
now? Where do we go from here?,” by Robert M. Vandy, Life & Health
Advisor (link)
Quote:
"Despite some recent negative press reports, negative sentiment among some
financial professionals and a general societal desire for a 'quick fix,'
LTC insurance will remain the most viable financing alternative for those
who have the ability to 'read the tea leaves' and who are prepared to plan
ahead. The question for the advisor to present to their clients is simple:
if not LTCi, then what? Take heart, fellow financial professionals.
Long-term care insurance isn't going anywhere."
LTC Comment:
Congratulations to Bob Vandy of
New York & National Long-Term Care Brokers for this excellent
article. And thanks for your long-standing support of the Center for
Long-Term Care Reform.
#############################
2/8/2012,
“Social
Security retirees can't ditch Medicare, court rules,” by Nedra Pickler,
Associated Press
Quote:
"Social Security recipients sued to opt out of Medicare, saying the
benefit limits their private insurance coverage. But federal appeals court
rules they can't reject Medicare if they receive Social Security."
LTC Comment:
A free country still?
#############################
2/2012,
“Income-Relating Medicare Part B and Part D Premiums Under Current Law
and Recent Proposals: What are the Implications for Beneficiaries?,”
Kaiser Family Foundation (link)
Quote:
"This issue brief explains provisions of current law that impose
income-related premiums under Medicare Part B and Part D, describes recent
proposals that would modify these current-law requirements, and analyzes
the potential implications of these proposals for the Medicare
population."
LTC Comment:
Medicare used to be "social insurance." Everyone paid the same premiums
and everyone received the same benefits. Not anymore. Part B & D
premiums are tied to income level and the income levels vulnerable to
higher premiums are likely to fall fast. Medicare is a means-tested
welfare program now and is likely to become more and more like Medicaid
over time.
#############################
2/7/2012,
“Medicare Misconceptions Could Land Middle-Income Retirees in
Financial Hardship, New Study Says,” WSJ MarketWatch (link)
Quote:
"An alarming number of our country's middle-income retirees on Medicare
lack understanding or have misconceptions about the program's coverage and
costs resulting in unexpected financial surprises, according to the latest
findings released by the Bankers Life and Casualty Company Center for a
Secure Retirement(SM) (CSR)."
LTC Comment:
It’s not exactly news that many people think mistakenly that Medicare
covers long-term care. What’s really important, however, is that Medicaid
DOES cover LTC, is easy to get after the insurable event occurs, and thus
incentivizes the denial that crowds out LTC insurance.
#############################
2/7/2012,
“Americans'
lifespan shorter than previously thought, study finds,” McKnight’s
LTC News
Quote:
"A person's risk of death in a given year after age 30 doubles every eight
years of age, which is known as the Gompertz Law."
LTC Comment:
Now there’s a happy thought. But I guess I like this “law” better than
the one that says the probability of having Alzheimer’s Disease doubles
every five years after age 65.
#############################
2/6/2012,
“Unum
Retreats From Long-Term Care Coverage, Takes Charge,” by Andrea Ludtke,
Bloomberg
Quote:
"The insurer took a $561.2 million charge in the fourth quarter tied to
its review and decision to scale back, Chattanooga, Tennessee-based Unum
said today in a statement distributed by Business Wire."
LTC Comment:
More from a confidential, personal source: FYI, from Unum's 4th Quarter
financial results announcement today, which can be found at http://unum.newshq.businesswire.com/press-release/financial-news/unum-group-reports-fourth-quarter-2011-results
(paragraphs 4 & 5):
The Company concluded
its strategic review of its long-term care business and announced that it
will discontinue new sales of group long-term care contracts during the
first quarter of 2012 and reclassify the long-term care line of business
from the Unum US segment to the Closed Block segment. The results for the
fourth quarter of 2011 include an after-tax charge of $561.2 million
($1.92 per diluted common share) to reflect an increase to long-term care
policy and claim reserves of $573.6 million before tax and an impairment
of long-term care deferred acquisition costs of $289.8 million before tax.
"The decision to
discontinue new sales of group long term care policies and move this
business to our closed block allows us to further refine our focus on the
markets that provide the greatest long-term opportunity for our Company
and create maximum value for Unum shareholders," added Watjen. "We are
well positioned financially to take this action, and this decision does
not impact the general financial guidance we have provided for 2012."
From speaking with
folks at Unum, we understand this to mean that they will continue to allow
new hires to enroll in existing GLTC plans, but will create no more new
GLTC plans - or at least, for now, that's what they plan to do...
#############################
2/6/2012,
“Federal
Medicaid matching rate to decline in 2014,” McKnight’s LTC News
Quote:
"About 30 states can expect a drop in federal matching rates for Medicaid
in fiscal year 2014, with only a handful seeing an increase, according to
a new report."
LTC Comment:
This could be the straw that breaks Medicaid's back because state budgets
are already hurting, Medicaid already eats up resources intended for
education and other priorities, and "health reform" is about to put 30
million or more new people on the program.
#############################
2/3/2012,
“Industry
Adds 1,100 Jobs in January,” by
Jeff Jeffrey, InsuranceNewsNet.com
Quote:
"Life insurance weekly wages increased 4.8% to $1067.19; health 4.2% to
$1037.19; property/casualty 4.1% to $1085.06; agents/brokers 5.4% to
$839.08; claims adjusting 5.11% to $967.57; and third-party administration
of claims 3.7% to $815.69. Reinsurance again saw the most dramatic
increase in weekly wages, jumping 37.4% to $1315.55."
LTC Comment:
Evidently things are looking up.
#############################
2/1/2012,
“CI
policies gain sales gain ground, become part of employers' overall
strategy,” by Marli D. Riggs, Employee Benefit Adviser
Quote:
"CI programs have been rapidly evolving. As a result, Willis and MetLife
are adding more conditions to the roster of conditions that are covered.
At Willis these include: cancer, heart attack, stroke, benign brain tumor,
permanent paralysis, Alzheimer's and many more. At MetLife, cancer, heart
attack, stroke, major organ transplant, coronary artery bypass, kidney
failure are generally being offered."
LTC Comment:
Critical Illness policies are big in Canada where they’re marketed as a
means to ensure quick access to quality health care in the United States
in case of serious illness. Quite a commentary on public vs. privately
financed health care systems.
#############################
|
