LTC Bullet:  Why Not Medicaid? 

Thursday, October 4, 2007 

Tampa, FL-- 

LTC Comment:  What's the best way to handle the often unverbalized objection:  "I'll let the government take care of me," after the ***news.*** 

*** TODAY'S LTC BULLET is sponsored by LTC Solutions (www.ltc-solutions.com), a niche player in the long-term care industry focused on employer-based sales.  LTC Solutions is looking for talented individual producers to serve as enrollers on an as-needed, contract basis.  Requirements include solid long-term care insurance experience, ability to present complex ideas effectively, and a current LTCi license.  For details, contact Christine McCullugh at 888-281-3234 or cmccullugh@ltc-solutions.com.  We thank Christine and LTC Solutions for sponsoring today's Bullet.  To sponsor a Bullet and receive ad space on the Center's LTC Blog, contact Damon at 206-283-7036 or damon@centerltc.com. *** 

*** LTC GRADUATE SEMINAR.  The first LTC Graduate Seminar by Webinar starts October 11.  Learn about this eight-week, hour-per-week course at http://www.centerltc.com/LTC_Grad_Seminar/online.htm or watch Steve Moses's Webinar describing it:  just click on "View Webinar" at the top of www.centerltc.com.  A few slots are still open for this inaugural offering of the "grad seminar" online, first come, first served.  Contact Damon at 206-283-7036 or damon@centerltc.com. *** 

*** WANNA WORK FOR AARP?  Korn/Ferry International, the executive search firm, asked us to recommend candidates for AARP's new position, Director for Long Term Care Policy Design and Development.  The Director leads, delivers, and manages the work of a strategic issue team of two full time and one part time staff, focusing on long-term care public policy.  Issues include but are not limited to:  overall long-term care costs to individual consumers, Medicare, healthcare costs and financing, health and wellness, Medigap and health quality and safety.  Ten years similar experience required and a Ph.D. preferred.  For details, contact Michael A. Ginsberg at 215-496-6666 or Michael.Ginsberg@KornFerry.com.  [We think anyone who reads and heeds these LTC Bullets could help AARP improve its LTC policy positions considerably.] *** 

 

LTC BULLET:  WHY NOT MEDICAID? 

LTC Comment:  Whether they articulate the objection or not, many LTC insurance prospects may be thinking "Why not Medicaid?" 

Count on one thing for sure.  Boomers and seniors have heard hundreds of times that government pays for long-term care.  They've seen best-selling books on how to avoid "spend down."  They've read such dubious advice in AARP's magazine and Family Circle.  They've been barraged with invitations to Medicaid planning seminars.  Not to mention the "wheel-chair telegraph" that communicates artificial self-impoverishment techniques faster than the internet. 

But guess what?  People planning to abuse the public welfare system aren't very proud of the fact.  Maybe they're already ashamed of putting their parents in nursing homes on Medicaid.  In any case, they may well be concerned enough about LTC financing to invite you in for a consultation about private insurance, but clam up entirely about no-cost alternatives they're considering. 

So what's a responsible LTCi producer to do?  My advice is to ignore the subject unless and until you've done a full presentation, dealt with all the prospect's objections, determined they need and can afford a suitable LTCi policy . . . but they still don't buy.  When you get to that point, something else is going on and you'd better bring it to the surface. 

Delicately but forthrightly, explain how Medicaid pays for most long-term care in the United States.  Acknowledge there are ways to qualify for Medicaid while preserving wealth.  But honestly and frankly, disclose Medicaid's downsides.  Don't use scare tactics, but remember you have a fiduciary and moral responsibility to tell prospects and clients the whole truth. 

So what exactly is the truth about depending on Medicaid for your long-term care?  You've heard the answers here a hundred times.  But for a change of pace, here's similar information from a new source. 

What follows is Margie Barrie's December 2007 "LTCi Insider" column for Senior Market Advisor magazine.  That's right, you're reading it here first, thanks to gracious permission given by SMA's editor Brian Anderson.  Check out Senior Market Advisor at www.seniormarketadvisor.com.  

First, one correction to Margie's text:  Medicaid eligibility does not require that assets be spent down for "care."  Over the years, Medicaid planners have recommended round-the-world cruises and "Ziegfield-follies"-scale parties to self-impoverish without spending money on long-term care.  All that matters is that you get rid of the money while receiving fair market value in return. 

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SENIOR MARKET ADVISOR - LTCI INSIDER - DECEMBER, 2007, COLUMN 

QUESTION:  The Deficit Reduction Act has made Medicaid a less desirable solution for funding LTC.  I do mention the disadvantages of relying on Medicaid during my client presentation.  Do you have a list that I can use if asked more questions about Medicaid?    

ANSWER:  A discussion of Medicaid is an essential part of the presentation.  However, I believe it is much better to keep the explanation brief and simple.  Here's why:  

- From the agent's perspective, Medicaid rules keep changing and can vary by state.  If we provide specific advice, it could be wrong.  And we are not attorneys; therefore, our E and O [errors and omissions] insurance may not cover that situation.

- From the client's perspective, they do need to hear information from us so they can be convinced that they need LTCi.  If we add to this a lengthy explanation of Medicaid, we risk having them suffer from information overload.  Then it could be even harder for them to make a decision about purchasing a policy.  

            As National Marketing Coordinator for the AHIP Partnership Training Program, I use as part of the curriculum a list of disadvantages that my students find to be very comprehensive and easy to communicate.  Use this list when you need to provide a more in-depth discussion of Medicaid disadvantages.    

1.  To qualify, a person must generally spend almost all her assets and income on care.  An elderly person who has worked hard and been self-supporting her whole life becomes now indigent and must depend on the government for her needs.  Hard-earned assets cannot be left to heirs or used for such purposes as helping grandchildren go to college.  

2.  The types of long-term care available to a Medicaid recipient are often limited.  Benefits for home and community-based services are not offered everywhere, eligibility for them may be restricted, and funding is generally limited.  And only a few state programs pay benefits for care in assisted living residences.  Consequently, some Medicaid recipients who could be cared for at home are forced to enter a nursing home. 

3.  Possible limited choice of nursing home facilities.  Facilities considered the most desirable may not be available to them because in most states facilities receive less dollars to care for Medicaid recipients than from private patients.  Another consideration is that if fewer facilities are open to Medicaid recipients, they may have to go wherever a bed is available, which might be distant from family and friends.  Even for facilities that accept Medicaid residents, they may have a limited number of Medicaid beds.  Generally those beds go first to those who were long-time private pay residents and have run out of money.    

4.  Medicaid not automatic or guaranteed.  If your LTCI benefits run out, and you have to apply for Medicaid, you may or may not be accepted.  You might not meet Medicaid standards for functional eligibility (need for care), and in some states your income might be too high for you to qualify. 

5.  Medicaid subject to change.  In the future it could be more difficult to qualify, and benefits could be more limited.  

6.  Only assets protected, not income.  If you qualify for Medicaid, you will generally have to spend most of your income on care. 

7.  Some, not all assets protected.  Under the DRA [LTC Partnership program], your assets are protected to the amount of LTCI benefits received when you apply for Medicaid (plus the amount you are entitled to under the spousal impoverishment provision).  

8.  No guarantee any assets will be preserved.  If your LTCI benefits don't cover most care costs, you could spend all your assets before you run out of LTCI benefits and apply for Medicaid.  

9.  Home may not be protected if the value is greater than the amount of LTCI benefits received.  If a person's home is deemed a countable asset by Medicaid and subject to spend-down requirements, a partnership policy protects it only if the amount of home equity is less that the amount of protected assets (that is, the amount of insurance benefits the person has received).  Likewise, if a home is subject to estate recovery, partnership coverage protects it only if the equity is less than the LTCI benefits received.  In other words, if you want to use your asset protection to save your home, you can, provided you have enough asset protection to cover the value of the home.  Of course, some people's homes are exempt for various reasons, in which case this wouldn't apply. 

10.  Reciprocity may not apply.  If you move to another state, the new state might not have a partnership program, or it might not have reciprocity with the old state, so you would have no asset protection unless you moved back.  

11.  Partnership programs subject to change.  Federal or state governments could change the programs in the future, possibly affecting asset protection.  

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Margie Barrie is a principal at Hagelman Barrie Training Solutions and also serves as national marketing coordinator for the LTCP designation. After several years specializing in LTCI sales, Barrie compiled both her knowledge and that of other LTCI professionals in her book, "50 Ways to Boost LTCI Production." 

LTC Bullets reviewed Margie's book in "LTC Bullet:  50 Ways to Survive in LTCI--Book Review," August 6, 2003 at http://centerltc.com/current/458.htm.