Bullet: Virtual Visit to LTCi
Thursday, March 23, 2006
LTC Comment: Did
you miss the big LTC insurance conclave in Anaheim last month?
Here's your chance to check it out ex post facto.
After the ***news.***
*** HEC OF AN IDEA. Our
last LTC Bullet, "On Using Home Equity for LTC," stirred up a lot of
interest and comment. Here's a
*** A REVERSE MORTGAGE LENDER observed that the media
misrepresent home equity conversion too often.
He took issue with our comment that private sector reverse mortgages
would be a better way to help people utilize their home equity than Medicaid's
practice of exempting the home and then recovering from the estate.
He pointed out, correctly, that currently available reverse mortgages
can't do everything that Medicaid does, such as continuing to pay for care as
long as a disabled or minor child remains in the home.
All right, so redesign commercial reverse mortgages so they can do that.
As long as there is equity to serve as collateral, there should be a way
to prevent Medicaid dependency with all of its access and quality problems.
Last year, we proposed a new kind of product we called the "Durable
Reverse Mortgage" to meet that need. Read
about it at http://www.centerltc.com/bullets/archives2005/560.htm.
*** ANOTHER READER wondered how in the world this statement
from Atare Agbamu's article could be true:
reverse mortgages come with an 'eye-popping' entry fee. There are proprietary
reverse mortgages with little to zero set up fee." Here's Atare's reply:
[low-cost] proprietary programs I hinted at are the Cash Account(TM) and, to a
lesser degree, the HomeKeeper. A
proprietary program of Irvine, California-based Financial Freedom Senior Funding
Corporation (a subsidiary of IndyMac Bank F.S.B.), the Cash Account has Zero
Point(TM) and Simply Zero(TM) options. Zero
point means the borrower is not charged an origination fee, and actual
third-party closing costs (excluding local and state taxes where applicable) are
limited to $3,500). However, the
borrower must draw 75% of available cash at closing.
Simply zero means no origination fee and no closing costs, but the
borrower must draw 100% of available cash at closing.
The Cash Account is better suited to jumbo properties (homes worth
$450,000 and over). For more
information, go to www.financialfreedom.com.
The HomeKeeper is a proprietary program of Fannie Mae, the secondary
market colossus. Its closing costs
are lower than FHA's HECM because, unlike HECM, it has no 2% upfront insurance
fee; but it is not as generous as HECM either. For more information, go to www.efanniemae.com/sf/mortgageproducts/reverse/homekeeper.jsp."
FINALLY, Center supporter Jack Stayer of Northern States Brokerage in Wisconsin
made these suggestions: "Here's
another idea for the proceeds from a reverse mortgage.
If health is good, buy a Single Premium Immediate Annuity (SPIA) to fund
a LTCi policy. The LTCi policy will give you a lot more money to work with
in the event you need long-term care. The
nice thing about having the SPIA is that if you do have to leave your home, the
SPIA continues to pay. If the
waiver of premium is activated in the LTCi policy, the SPIA continues to pay so
that you would now have excess money coming in that would have normally been
used to pay for the LTCi policy. If
the policy was a joint plan or had a joint waiver of premium, then no premium
would be due on the spouse's policy either, meaning more excess money to use for
expenses not covered by LTCi. If
the policy has a paid up survivor benefit and they purchased a joint SPIA, the
survivor would continue to receive a benefit from the SPIA and have a paid up
LTCi policy to boot. The reverse
mortgage proceeds, depending on how young the people are, may not be close to
the full value of the house. If the
house appreciates at a rate more than the accumulated interest and payout
received for the reverse mortgage, when the house is sold there could still be
money coming back to the original homeowners or heirs." ***
LTC BULLET: VIRTUAL
VISIT TO LTCI CONFERENCE
LTC Comment: What
follows is a "virtual visit" to the Sixth Annual Inter-Company LTC
Insurance Conference held in Anaheim, CA on February 26 to March 1, 2006
Approximately 8,000 insurance agents specialize in the
marketing of private long-term care insurance.
Only a small percentage of them are able to attend major national
professional conferences. For
several years, the Center for Long-Term Care Reform has published periodic
"virtual visits" to the biggest and best conferences dealing with the
long-term care insurance market. Our
goal is to give anyone who's interested a little flavor of what these
conferences involve and achieve. Today's
Virtual Visit is to the Sixth Annual Inter-Company LTC Insurance Conference held
in Anaheim, CA on February 26 to March 1, 2006.
Like its five predecessors, this conference in the series
was excellent (in content and venue), well-attended (795 registrants, up from
755 last year), and notable for the caliber of its attendees (great networking.)
Fifty exhibitors filled the exhibit hall for the fourth year in a row.
All 51 educational sessions were well attended.
We'll summarize some of the sessions we attended below, but
you can get much more information at www.iltciconf.org.
Go there for bios of all the speakers and click on "tracks" to
get to each of their PowerPoint presentations.
You can read my verbatim remarks titled "What I Believe About
Long-Term Care" at http://www.centerltc.com/speakers/what_i_believe_about_ltc.htm.
how the conference was marketed at its promotional website:
and prospering in today's tumultuous Long Term Care Insurance marketplace has
become a tremendous challenge. Business
as usual just won't cut it in this very unusual business!
More than ever, it takes innovation, out of the box thinking, and
expertise fueled by experience to develop SOLUTIONS that work.
why the Nation's pre-eminent Long Term Care Insurance Conference over the past 5
years will be even better for 2006--with a focus on INDUSTRY INNOVATION AND
SOLUTIONS in each of our 10 educational tracks.
Reorganized educational sessions (48 IN ALL) designed by a team of the
industry's best and brightest
New Public Policy and Field Marketing tracks, along with Actuarial,
Claims, Compliance, Group, Home Office Marketing, Management, Operations, and
Continuation of the highly successful CEO General Session and
Exceptional networking opportunities with the industry's most visible and
Sixth Annual Intercompany Long-Term Care Insurance Conference delivered all that
and more for a registration fee of $945 (discounted $100 for registrations prior
to December 23, 2005.)
rich for your blood? Maybe not if
you can convert the contacts you make at such a meeting into real business
opportunities. So watch for
announcements of next year's conference.
Already, 115 people have volunteered to work on the next
meeting, scheduled for Dallas, TX on March 25 to 28, 2007.
If you'd like to play a part in organizing the conference and/or
presenting, contact Jim Glickman at firstname.lastname@example.org.
the meantime, have a look at this year's meeting from our perspective.
follow are my impressions and comments on the sessions I attended.
Therefore, they are not intended to give a representative sampling of the
"Marketing LTC Insurance to Non-Traditional
Distributors," February 27, 2006, 9:00 AM.
Skip Liddell of the Corporation for LTC Certification was
the emcee. Presenters were Steve
Cain, Centrelink Insurance & Financial Services; Bruce Heymont, Linsco
Private Ledger (LPL); and Karl Romero, Karl H. Romero & Associates, LLP.
Main thrust of the session: More
and more banks, financial planners, CPAs, attorneys, group benefits brokers,
property and casualty agents and others are becoming involved in the marketing
of LTC insurance. What do such
non-traditional distributors want? First,
do no harm to their current business relationships.
Then, enhance those and new relationships.
Make the LTCi process as much of a transaction as possible.
Fair compensation for their role. Key
point to remember: "If you're
not talking about LTC with your clients, someone else is."
Interesting concept: think
of LTCi as an expense account for care that goes up 5% a year.
"Outside-In View of the LTCi Industry," February
27, 2006, 10:45 AM.
Ty Wooldrige of Genworth was the emcee.
Presenters were Eric Berg, Lehman Bros.;
Neal Freedman, Standard & Poor; Jeremy Pincus, The Forbes Consulting Group,
Inc. Main thrust of the session:
LTCi carriers are not providing the hard evidence necessary to convince
investors that long-term care insurance will be profitable in the future.
"Gee whiz" demographics just don't cut it anymore. Problems: Lack
of GAAP (Generally Accepted Accounting Principles) data. No published balanced sheets.
Growth in the market share is translating into flat results.
Impossible to forecast magnitude or timing of alleged upturn.
All this deepens investor bewilderment and skepticism.
By making the product so complex and by focusing on demographic data, and
by not reporting key financial data, insurers are giving investors every reason
to ignore the business.
Paul Forte, CEO of Long-Term Care Partners asked a
brilliant question: "The
government is getting Medicaid out of the way as a prime LTC payer for the
middle class. Are your investment
advisors taking this into consideration?"
Answer: Investors don't pay
much attention to public policy or pie in the sky bye and bye.
All that matters is profitability in the short term.
It's the companies that should take advantage of this new opportunity and
then show investors the money.
"Medicaid Commission Report," February 27, 2006,
Chies, Past Chair of the American Health Care Association (AHCA, the proprietary
LTC provider trade association) was the moderator.
Presenters were Jim Glickman, LifeCare Assurance; Doug Struyk, AHCA
Representative for The Medicaid Commission; and Robert Blancato, Matz, Blancato
& Associates. Main
thrust of the session: Medicaid
long-term care costs are killing state and federal budgets but the program still
pays providers too little to ensure quality care and financial viability.
The Medicaid Commission established during the 2006 federal budget
process recommended many of the measures adopted it the Deficit Reduction Act.
The Commission is supposed to make recommendations for long-term
solutions to Medicaid's funding crisis this year. According to Dr. Struyk's (he's a non-voting member) account
of testimony before the Commission, the members have heard some very misleading
information about long-term care insurance and home equity conversion.
My judgment: don't expect much from this toothless Medicaid Commission,
which Governors and key legislators boycotted.
"Home Equity: A
Resource for LTC & LTCi," February 28, 2006, 9:00 AM.
Barbara Stucki of The Kenning Group was the moderator.
Presenters were Claude Thau, Thau Inc.; Peter Bell, National Reverse
Mortgage Lenders Association; and Jim Mahoney, Financial Freedom Senior Funding
Corporation. Main thrust of the
session: Home equity conversion,
primarily through reverse mortgages, has tremendous potential to fund long-term
care, especially home care. The
products are highly developed, carefully regulated, and widely available.
They are private sector solutions to free up otherwise illiquid assets.
HEC makes much more sense than putting people on welfare and then
depending on expensive, inefficient Medicaid estate recovery.
Consumers who use them love reverse mortgages and say "I can
sleep at night."
Keynote Address, March 1, 2006, 7:30 AM by Dr.
Dorcas Hardy, the Policy Chair for the 2005 White House Conference on Aging.
The final report of the White House Conference on Aging
will be published by the middle of June 2006.
The event took place December 11-14, 2005 in Washington, DC with 1200
delegates attending. Dr. Hardy's
staff is working on innovative implementation strategies to make the WHCOA's
work reality. They have thousands
of recommendations from hundreds of events representing tens of thousands of
people all around the country. Most
people still don't know Medicare does not cover LTC. LTC was a recurring theme at the WHCOA. Their goal is to set a comprehensive LTC public policy.
Seven of the top 10 recommendations touched on LTC.
These included: Remove the
bias for institutional care and help people stay at home.
Have a coordinated, comprehensive LTC strategy involving both the private
and public sectors and the paid and unpaid workforce.
That resolution was ranked number 2. Two other resolutions regarding LTC.
Foster innovations in financing to increase options available.
Create incentives for increased savings for retirement and LTC.
Many strategies for these: Tax
code changes. Tax incentives. IRA's
and 401ks to purchase LTC. Cafeteria
plans. Reciprocity across states.
More partnership plans. The
DRA's new Medicaid estate planning rules convey that individuals must take
responsibility for their own LTC. She
wanted to make the WHCOA a bully pulpit. "Don't
get caught off guard" campaign. This
didn't rise as high as a recommendation as she'd hoped.
"Own your future" campaign is underway but not reaching far
enough outside DC. LTCi can be part
of that conversation.
My assessment: The
White House Conference on Aging is a non-event. The President didn't even bother to attend this latest one.
Once a decade, well-intentioned delegates get together to talk about all
the wonderful things they could do for long-term care if they just had the
money. Why the system is failing;
how it came to be the way it is; what has to be done to change it; and where the
money will come from are the critical questions that get short (if any) shrift
at WHCOA. These are feel good
events with no practical significance which policy makers completely ignore.
Dr. Hardy did about as good a job as anyone could have done to make the
most of a doomed effort. OK, maybe
that's just sour grapes because I wasn't invited, in spite of many nominations
from members of the Center for Long-Term Care Reform.
CEO Forum, March 1, 2006, 10:15 AM
Mako, Senior VP, Prudential; Buck Stinson, President of LTC Division of Genworth;
Jodi Anatole, VP for LTC for MetLife; Chris Perna, President and CEO, MedAmerica;
Paul Forte, CEO, LTC Partners; Cameron Waite, Exec. VP, Penn Treaty; Laura
Moore, Senior VP, John Hancock
The CEO Forum is the biggest draw of the whole conference.
Everyone wants to hear what the big shots have to say about the LTCi
industry. But every year, it turns out to be the same thing.
The audience asks difficult, penetrating questions like:
Why are sales going down when objective need for LTC insurance is going
up? The CEOs then give long
complicated answers which, when translated into simple straight-forward language
mean: "The only thing we know
for sure is that it isn't our fault."
It was the same this year unfortunately, with a few notable exceptions,
but nothing of sufficient import to bother reporting.
The Center's Vice President for Administration, Damon
Moses, circulated at the conference interviewing attendees and snapping photos.
His report follows. We'll
post it with the pictures at www.centerltc.com
Interview Question: What
effect do you think the new Deficit Reduction Act will have on the marketability
of private long-term care insurance? Can you put a percentage on that?
Respondents and their responses:
PAUL FORTE, LTC Partners
ďI think the Deficit Reduction Act of 2005 is going to
have a very good effect on the development and growth of the long-term care
insurance market. I think the
changes to Medicaid eligibility are going to make it much harder for people in
the middle class to pass along the cost of long-term care to the federal
government while retaining their personal estates.
I think that change is going to make people aware of the fact that they
need to plan for long-term care and that there are resources and tools such as
private long-term care insurance available to help them and that they need to
start doing it as part of their retirement plan.
"I personally think that the expansion of the
partnerships will be interesting and will probably also raise awareness of the
benefits of planning ahead. I do
not think that that [partnerships] part of the bill will be quite as dramatic in
changing the opinion of many people about how desirable long-term care insurance
is and how quickly they ought to go out and get it.Ē
LARRY THOMAS, Equitable Life and Casualty
ďLike many of the folks Iíve talked to recently, I
think I am feeling really bullish on Long-Term Care insurance again.
Everybody recognizes weíve been in the throes of a long, flat
production cycle. I think all of us
hope the Deficit Reduction Act will give a shot of adrenalin to LTC sales that a
lot of carriers will be able to capitalize on.
I think more people will recognize there is no Santa Claus when it comes
to long-term care benefits and that they do need to provide for themselves. . .
. 10 percent increase by
CHRIS PERNA, MedAmerica Insurance Company
ďThe hammer approach is the tightening of Medicaid
eligibility; the velvet glove approach is that carriers and producers are going
to make it easier for the consumer by making this partnership product available.
We are going to allow you to retain assets if you buy this product and
transition onto Medicaid. I think
those two things working in concert are going to certainly expand the market. .
. . 12-15 percent."
JODI ANATOLE, MetLife Long-Term Care
ďI think that in the long run itís going to help the
marketability of the long-term care product line significantly.
I think itís going to allow people to look at products and see that
they can actually afford to buy something because they donít need the
unlimited protection, the most catastrophic protection.
I think the Medicaid reform component of the DRA is also significant.
I think thatís going to have the most immediate effect.
I think thatís going to be the key to raising awareness.
Changing the loopholes is probably the strongest part to forcing people
to look for other alternatives. . . . 20
PHYLLIS SHELTON, LTC Consultants
ďI think the passing of the Deficit Reduction Act is the
biggest catalyst for long-term care insurance since tax incentives were passed
in 1997 with HIPAA. If people
believe they can get on Medicaid easily, they donít buy insurance.
So, I am extremely excited that Medicaid reform is finally here.
Itís been long overdue.
ďMy concern is that the producers donít understand what
a big deal it is. If they donít
start doing seminars, writing articles, working to get the word out in their
community, it could just sail over peoplesí heads. Now, if producers do start incorporating this into their
message, sales could go up as much as 25 percent.Ē
RALPH LEISLE, LTCI Decision Systems
ďIf thereís anything thatís critically important in
the Deficit Reduction Act itís putting the public on notice that the
government will not and cannot continue to fund asset transfers so that the
middle asset base can rely on Medicaid as their sole support.Ē
KERN BAKER, Physicians Mutual
"Impoverishing yourself isnít an option anymore for
most people and theyíre going to have to buy long-term care insurance.
. . . 50 percent or more
right off the topĒ
JAMES DOVE, LTC Connection
ďI think the DRA is a first step in the growth in sales.
Itís a good forward step, but weíve got many more to go.
I think itís a combination of both Medicaid reform and Partnership
expansion. If we start limiting
Medicaid more and more, people will take responsibility and accountability for
themselves and their families. That,
in turn, will accelerate the Long-Term Care sales insurance process.Ē
HONEY LEVEEN, Your Long-Term Care Insurance Specialist, LLC
ďThe passage of the Deficit Reduction Act is a very, very
good thing for the Long-Term Care insurance industry. It makes issues more visible to the public; it gives
long-term care insurance more exposure. Hopefully,
it will get more people out of this state of chronic denial.Ē
ROBERT FRIEDLAND, Georgetown University
ďI think the DRA will help agents say more about why
people should consider long-term care insurance, but Iím afraid it wonít
have much of an impact on the actual sales.
I donít think people are fixated on long-term care insurance in the way
that relates to Medicaid; I think theyíre just trying to figure out whatís
best to do.Ē
MARC CATALANO, formerly of Catalano Nurses Registry
ďItís finally a step in the right direction that is
going to send a signal to the citizens of the country that they canít depend
on the federal government to cover their long-term care needs.
Itís closing loopholes that the elder law attorneys have used to
manipulate the system. At the same
time, by creating the partnerships and allowing them to be available throughout
the entire country, it will encourage people to cover themselves with long-term
care insurance whether they use the partnerships or not.
I think the partnerships will be a strong motivating factor. . . .
LTCi sales will spike over the next five years."
JULIE GELBWAKS GEWIRTZ, Gelbwaks Insurance Services
ďI think that it is a huge step forward for our industry. We are going to have a dramatic increase in sales. It will give middle America the opportunity to find the right fit for a long-term care insurance policy, which I donít think has been available in most states. . . . 15-20 percent market increase, which is huge considering weíve only tapped 10 percent of the marketplace.Ē
This report respectfully submitted by Stephen and Damon Moses, Center for Long-Term Care Reform.