Thursday July 15, 1999
The following question and answers comes from an ad in the July 5, 1999 issue of National Underwriter (Life & Health/Financial Services Edition, Vol. 103, No. 27, p. 32):
"What motivates seniors to resolve long-term care problems?
You might assume that this is an ad for long-term care insurance. Guess again. The ad, which is crafted to look like a National Underwriter article, is promoting Medicaid. In fact, the "title" of the ad is "The Medicaid Annuity Solution."
In the ad, Jim Wolter, Executive Vice President of Western World Annuity, shows how hundreds of thousands of dollars can be sheltered from Medicaid's spend down rules. After presenting a dramatic example, Wolter asserts, "While every planning situation differs, this illustration shows how effectively a qualified annuity can help preserve a senior's assets. The advantage of an annuity can vary, but results like this happen every day." He even describes how annuity income, which usually is contributed to the Medicaid recipient's cost of care, can be made "unavailable" if paid to the at-home spouse under certain conditions. Wolter writes, "Good planning can help seniors preserve assets--for the at-home spouse or even heirs--and at the same time qualify for Medicaid help for long-term care costs."
Ironically, Medicaid-financed care is the least likely option to achieve any of the goals stated in the above survey question. Yet, pervasive marketing of Medicaid planning services--which of course never mentions the downsides of welfare financed care--leads many Americans to view Medicaid as a perfectly acceptable if not desirable alternative to private long-term care insurance.
The Center for Long-Term Care Financing has argued time and again that the greatest competitive threat to long-term care insurance is easy access to public dollars after the insurable event occurs. Why pay premiums if you can wait, see if you become sick, and get the taxpayers to pick up your long-term care tab?
Even in the face of overwhelming empirical evidence (detailed in the Center's "LTC Choice" and "Myth of Unaffordability" reports; see ordering information below), skeptics question whether public financing really is the competition. The success of Western World Annuity is certainly telling. According to the ad in National Underwriter, Western World Annuity's average agent specializing in the Medicaid annuity market writes $2 million a year of annuity premium.
Copies of "LTC Choice: A Simple, Cost-Free Solution
to the Long-Term Care Financing Puzzle" ($24.95) and "The
Myth of Unaffordability: How Most Americans Should, Could, and
Would Buy Private Long-Term Care Insurance" (available Sept.
1, 1999; pre-order $34.95) can be purchased by contacting the
Center at 206-447-1340 or by clicking