LTC Bullet: LTC Compact Update

Tuesday, June 17, 2008

College Park, Maryland (LTC Tour Mile 13,520; State # 22)--

LTC Comment: An update on the New York Medicaid planners' LTC Compact proposal, after the ***news.***

*** LTC TOUR UPDATE. My meeting yesterday in the Ford House Office Building with majority and minority staff of the Energy and Commerce Oversight and Investigations Sub-Committee went well. The committee plans hearings soon on LTC insurance. I hope and believe I broadened the staff's perspective about the roles of private insurance and Medicaid in financing long-term care in the future. Today, I hitch up the trailer, drive to a nearby FastSigns franchise, and stand by as the logos of several new LTC Tour sponsors are affixed to the Silver Bullet. The LTC Tour's momentum continues to build. Get on board now! Check out the Tour calendar at Read all about the Tour and sponsorship opportunities at the top of Then contact Damon at 206-283-7036 or to make plans. ***

*** LTC GRADUATE SEMINAR. Probably the single most frustrating part of the LTC Tour is that I never have more than two hours, and usually only have an hour, to explain the complicated issue of LTC financing. Why is it the way it is? What can we do about it? And how can advisors help more people protect against the risk and cost of long-term care in the meantime? I wish it were possible for me to offer a full-day course on the subject. And fortunately, it is possible. The Center for Long-Term Care Reform's eight-hour LTC Graduate Seminar is available online in Webinar format. Check out this introduction to the grad seminar at Be patient as it downloads. For only $225, which includes a full year $150 membership in the Center with all the benefits and privileges thereof, you can take the LTC Graduate Seminar and supercharge your professional expertise and success. Questions or comments? Contact the Center for Long-Term Care Reform at or 206-283-7036. ***

*** BONUS WEBSITE. All you have to do to have your very own LTC website designed by LTC Connection is to join the Center for Long-Term Care Reform. That's right, join the Center for $150 per year, get all our publications and access to The Zone, including our incredible "Almanac of Long-Term Care," and on top of that LTC Connection will design your website and waive their usual $149 fee. Or look at it this way, buy your website from LTC Connection through the Center and get a year of membership in the Center for only $1 more. Sure, you'll have to pay LTC Connection's $39 per month website maintenance fee, but you'll get a whole year of LTC Bullets and LTC E-Alerts for no extra charge. So, what do you have to do? Just contact Damon at 206-283-7036 or, join the Center, pay your membership fee, and say "I want my website." We'll connect you with the right person at LTC Connection and you'll be on your way. Great content from the Center and a great website from LTC Connection. How can you beat it? Already a member of the Center but want your free website? No problem. Renew your annual membership early and get the same deal. ***



LTC Comment: The Long-Term Care Compact proposal is a plan promoted by the elder law bar in New York and other states. The Center for Long-Term Care Reform's report, titled "The New York Long-Term Care Compact Proposal: Update, Analysis and Recommendations," describes and analyzes that proposal in detail. Read the report at Here's how I described the Compact there:

"The LTC Compact proposes to offer New Yorkers a new option to pay for long-term care. Under the Compact, a person who is chronically ill and needs long-term care could become a Compact participant by pledging to spend for qualified LTC services an amount equal to half his or her non-housing assets (not counting the first $20,000 for someone with less than $40,000 in total) or the cost of three years in a nursing home (circa $300,000 depending on region of residence), whichever is less. Upon spending the pledged amount for approved LTC services as satisfactorily documented and verified, the Compact participant would become a Compact beneficiary, eligible for a Compact subsidy. The Compact subsidy is an amount of payment for future LTC services equal to the Medicaid rate for the same or a similar service. A Compact beneficiary would be entitled to receive lifetime LTC services funded by the Compact program at the Compact subsidy rate, in accordance with an assessment of need and a plan of care, by paying out of pocket an additional 10% of the Compact subsidy rate plus an annual participation fee not to exceed 25% of personal income." (p. 4)

Since July of 2007, when our report was published, the American Bar Association and Medicaid planners in New York State have continued to push for the LTC Compact's passage in the Empire State AND all across the country. Repeatedly on the National Long-Term Care Consciousness Tour I've encountered public officials in several states who say they were invited and encouraged by the Bar to review, pass and implement the LTC Compact under consideration in New York. In each case, I've given the officials copies of our study and encouraged them to consider the likely consequences of such a public policy.

Soon the LTC Tour will be heading into New York. The Silver Bullet and I will be back in Albany early in August. I'll have another look at the LTC Compact's status then. But for now, here's an update provided by Center for Long-Term Care Reform member and LTC Tour supporter Arthur Rudnick. The following is culled from notes and a letter Arthur shared with us. It represents his opinion, but offers a good starting point for our re-review of the issues involved.


The reintroduced Compact proposal has a few changes from last year's Bill:

1) Changing the Compact's 3-year look-back period to 5-years, in order to conform to the DRA.

2) Changing the 100% home equity exclusion to $500,000/$750,000 to conform to the DRA.

3) Instituting some kind of New York State residency requirement in order to avoid out-of-state residents from moving to New York in order to become Compact participants upon being diagnosed as chronically ill.

4) Raising the minimum asset requirement of Compact participants from $40,000 to a higher number.

It appears the proposal's sponsors are looking for a compromise in order to avoid the major objections and get the Compact passed.

The proposed changes to the Compact (Residency, Home Equity per the DRA, the 5-year look back, etc.) are a giant step in the right direction and a good starting point for a potential compromise.

But, here's my problem: Regardless of the changes contemplated for the Compact, at the end of the day there will still be two issues that will never go away:

1) Why would anyone purchase a long term care policy when they're young and healthy when they can just gamble and if down the road they become chronically ill, they could become Compact participants?

2) Why would anyone who presently owns a policy continue to pay premiums when they can cancel the policy and become Compact participants if care were ever needed?

My original fears of the Compact devastating the long term care insurance industry still exist and I've heard nothing to date to convince me otherwise.

In spite of what others may believe, the Compact will not help sell one more long term care policy. If the Compact offered the potential for additional long term care insurance sales, wouldn't more LTCI carriers support it?

I am also convinced that the Compact will not save the state any money and in fact, will most likely add to its budget.

No matter how you look at it, in reality the Compact is a border-line social program that guarantees long term care services to those that need it. In today's economic climate, the last thing that the state (or country) needs is another government entitlement.

In an ideal world, the answer is for the state to offer as much as an incentive as possible in order to get residents to purchase long term care insurance. Increasing the NYS tax-credit from 20% to 25% would be a great help.

Instead of focusing on the Compact we should be discussing how changes to the New York State Partnership for Long Term Care can be made in order to appease both sides, and also do what's right and fair for New York residents. We don't need the Compact. We just need to adjust an existing Program and try to make it better.