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LTC Bullet: Money Magazine Recommends Boomers Protect Parents

Friday October 16, 1998


Kelly Smith's article "Wealth Insurance" in the Nov. 1998 issue of Money Magazine profiles Jeff Hooke and Martin Cohen - two boomers who pay their parents' long-term care insurance premiums. According to Smith, "many boomers are realizing that they may ultimately bear the cost of their parents' long-term care, whether in the form of a forgone inheritance or as out-of-pocket outlays."

Others might ask: "Why not rely on Medicaid to pay the bills?" Martin Cohen -- the profiled 51-year-old print shop owner who pays his father's LTC insurance premiums -- hits it on the head: "With the insurance, I'm much more confident that I will be able to keep [my father] out of a nursing home."

LTC insurance preserves choices. Boomers, who demand choice in their own lives, can help their parents secure the best possible and most appropriate care across the spectrum of care settings.

The following letter-to-the-editor authored by Center President Stephen Moses responds to Ms. Smith's welcome article:

October 15, 1998

Money Magazine
Rockefeller Center
New York, NY 10020

Dear Editor,

Congratulations and thank you for publishing Kelly Smith's outstanding article, "Wealth Insurance" (November 1998), regarding the importance of long-term care planning.

Ms. Smith's recommendation that adult children pay or subsidize the long-term care insurance premiums for their aging parents is truly wise advice indeed. I have paid the cost of my parents' long-term care coverage for ten years. Why should they pay to protect my inheritance? I have never before seen this practice recommended in a national publication, however.

Good work! Sadly, too many of America's World War II generation are dying in nursing homes on welfare because they and their baby-boomer heirs were unaware of this devastating health and financial risk.

When you publish excellent advice of this kind, you make an important contribution to the well being of our country's social safety net as well as to your readers' estates.

May I offer one important correction and one addition, however? The advice to buy long-term care insurance only if one has more than $100,000 in assets is unsound, especially when the adult children are willing to pay the premiums. The most important reason to buy private LTC insurance is not asset protection! It is rather to assure access to quality care at the appropriate level in the private marketplace. Someone with low assets and income can easily qualify for
Medicaid, i.e. public assistance, but Medicaid rarely pays for the home care or assisted living alternatives that most seniors prefer. As a general rule, Medicaid means nursing home confinement while private insurance means independence and choices with regard to care alternatives. People who want third party financing for the most desirable kinds of long-term care should consider long-term care insurance even if they have no significant estate at risk. Home equity conversion, e.g. reverse annuity mortgages, and financial support from adult children can often make the premiums reasonable under such circumstances.

Finally, Medicaid truly is a trap you should warn your readers to avoid. Because most people do not worry about long-term care until chronic illness strikes, they often find themselves suddenly in need of expensive care when they can no longer qualify to insure privately. (You cannot buy fire insurance when your house is in flames nor LTC insurance when you already have Alzheimer's Disease.) Unfortunately, a large and growing army of private "Medicaid estate planning attorneys" entices the vulnerable elderly and their heirs with a wide array of esoteric techniques to qualify for publicly financed nursing home benefits by means of artificial impoverishment. These lawyers offer the heirs an early inheritance and taxpayer-subsidized nursing home care for the parents. Once they have lost their assets, however, the parents, often frail, infirm, or cognitively impaired by this time, lack the financial wherewithal to remain at home or pay for an assisted living facility in lieu of nursing home care. They become wards of the state, cared for at public expense, while their estates frequently pass unencumbered to legally savvy heirs at the expense of the taxpayers. This is the single most common and egregious example of financial abuse of the elderly in America today. Unfortunately, it is not only legal, but also encouraged by perverse incentives in Medicaid eligibility rules
that reward irresponsibility with generous contributions from the public fisc.

The Center for Long-Term Care Financing in Seattle, Washington is dedicated to disclosing and correcting these problems. Thanks again for a timely article that contributed significantly to our mission.


Stephen A. Moses