Bullet: 125,000 LTCi
Policies and No Claims Payment Problem
Wednesday, October 10, 2007
LTC Comment: My
article in a Society of Actuaries' newsletter debunks a New York
Times hit piece and defends LTC insurance, after the ***news.***
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*** LTC AWARENESS WEEK.
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Special thanks to the 10 LTCi carriers who supported this
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Don't miss the "free audios," including mine. ***
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LTC BULLET: 125,000
LTCI POLICIES AND NO CLAIMS PAYMENT PROBLEM
LTC Comment: A
week after New York Times muckraker Charles Duhigg bashed LTCi
last March, I explained what's really happening in an LTC E-Alert (one
of our daily "mental vitamins" for Center members.)
The Society of Actuaries re-published my piece in
its "Long-Term Care News" (August 2007, Issue No. 19, pps.
And here it is again for our wider "LTC Bullets"
"125,000 LTCi Policies and No Claims Payment
was in Dallas at the LTCI conference when The New York Times' hit
piece struck last week. A few days later, I was in Des Moines, Iowa and
found what I initially expected to be a "me too" editorial
bashing long-term care insurance in the local daily.
the lead from "Read policy fine print for long-term care; Contact
Insurance Division about problems," in the March 31, 2007 edition
of the Des Moines Register. The full article and readers'
responses, including mine, are at http://www.desmoinesregister.com/apps/pbcs.dll/article?AID=2007703310302.
[Alas, this link has since gone dead.]
insurance can help ensure future nursing-home expenses don't burden
children or grandchildren or force seniors to turn to government health
care programs such as Medicaid. The insurance is designed to protect
assets and give people peace of mind.
that's assuming the insurer actually pays the bills when a policyholder
enters a long-term care facility.
to an investigation by The New York Times, some long-term-care
insurers are denying a substantial number of claims. Some insurers have
'developed procedures that make it difficult-if not impossible-for
policyholders to get paid,' the Times reported."
pretty bleak so far, doesn't it? But read down a few lines and here's
what you find: "So is this happening in Iowa, where more than
125,000 Iowans have purchased long-term care insurance?
checked with the Iowa attorney general's office, the Iowa Insurance
Division and the Iowa Department of Elder Affairs. None identified
denial of long-term care claims as a common problem."
miracle of miracles, no complaints about denied claims in Iowa.
do we know about LTC in Iowa? The state has the lowest percentage of
nursing home residents dependent on Medicaid in the entire United
States. It is also one of only five states in the country with long-term
care insurance market penetration in excess of 15 percent for people
over the age of 50.
New York. That state's LTCI market penetration is among the lowest in
the country (1 to 5 percent). New York's Medicaid nursing home census is
73 percent, the seventh highest in the United States.
York is a long-term care basket case. It has the worst LTC public policy
in the country. The state discourages responsible long-term care
planning with perverse incentives that trap its frail and elderly
citizens on public welfare. It rewards heirs for taking their parents'
wealth and placing them on the public dole.
The New York Times cherry picks problems with long-term care
insurance while totally ignoring the inferior care and impending
insolvency of government LTC programs, it does its readers, the public
and LTCI producers a major disservice.
how I responded to the Des Moines Register's editorial:
of long-term care insurance is good. I'll let people in that business
defend their product. But to be fair, what happens if people don't have
private LTC insurance? Most likely, they end up on Medicaid, which is a
means-tested public assistance program.
it is welfare, Medicaid for LTC is easy to get. Income is rarely an
obstacle and most assets are protected, a home (up to $500,000) plus a
business, car, home furnishings, personal belongings, term life
insurance and prepaid burials of unlimited value.
long-term care? What's not to like? First of all, it isn't free. You'll
have to contribute all but a pittance of your income toward your cost of
consider that Medicaid is tax-payer financed. It's always short of
funds. In Iowa, Medicaid pays nursing homes $10.07 per bed day less than
their cost of providing the care. "So what?
has a dismal reputation for problems of access, quality, reimbursement,
discrimination and institutional bias. Depend on Medicaid and you'll
probably end up in an under-financed nursing home if you can find one at
all that will accept such low reimbursement.
main reason to have private LTC insurance is so you can keep control of
your life and receive red-carpet access to top quality long-term care at
the most appropriate level: home care or assisted living and a top-notch
nursing home, but only if you need it.
Medicaid financed long-term care is problematical now, just wait a
couple decades until baby boomers need LTC. By then Social Security ($15
trillion unfunded liability) and Medicare ($71 trillion unfunded) will
be in big trouble. Those programs prop up Medicaid now by offsetting its
LTC costs (Social Security) and paying nursing homes more generously
(Medicare), but by the time most boomers need LTC, those supports will
be long gone.
consumers should use caution when selecting a private LTC insurance
policy, but they should also apply similar scrutiny toward Medicaid.
Because, without private insurance, that's where they'll likely end
(Note: Reprint permission granted from Stephen A. Moses).