LTC Bullet: The Evil Genius of LTC Financing
Tuesday, April 19, 2011
LTC Comment: If an evil genius designed long-term care to fail, he couldn't do a better job than California has done. Details after the ***news.***
*** WHAT IS "3IN4 NEED MORE?" Find out by watching this 9-minute video of the LTCI campaign's packed press conference at the LTCI Producers Summit in Las Vegas: http://youtu.be/4QKme2863-k. Read more about the "3in4 Need More" movement in Jonas Roeser's article "Get More Referrals and Build Better Partnerships Using the '3in4 Need More' Campaign." ***
*** MEDICAID BLOCK GRANTS? If you're not quite sure what they are, how they'd work, or who likes and who hates them, check out "Medicaid explained: How would block grants work?," by Christine Vestal. It's one of the more balanced and objective explanations of the Medicaid block grant proposal that I've come across. ***
*** ATLAS SHRUGGED, PART 1. Did you take our advice and check out this new movie based on Ayn Rand's classic novel? It was excellent, although panned by anti-capitalist reviewers. Watch a fine series of video vignettes about Atlas Shrugged produced by Reason Magazine here. You'll get behind-the-scenes insights on the movie and interviews with Rand's protégés and biographers. ***
LTC BULLET: THE EVIL GENIUS OF LTC FINANCING
LTC Comment: When California Healthline asked me "How Should California Handle Eligibility for Long-Term Medi-Cal?," I replied with the following article. They published it April 11 along with the views of four other experts, including the top California public official on the topic, the state's LTC "Ombudsman," the executive director of California Advocates for Nursing Home Reform, and our own friend and supporter, LTCI producer Barbara Hanson.
Check out my essay and Barbara's below. Read California Healthline's set up and the other's articles here.
"Too Easy To Qualify for Medi-Cal"
If an evil genius designed a dysfunctional and ruinously expensive long-term care financing system, he could not do a better job than California has done, with help from the U.S. government.
Aging Californians can ignore the risk and cost of LTC, avoid saving for it or insuring against it, wait to see if they ever need expensive LTC, and if they do, qualify easily and shift the cost to Medi-Cal.
But wait, you say. Medi-Cal is a means-tested public assistance program, welfare. You have to be poor to qualify. You must spend down your life savings for your own care before the government helps.
Think again. If that were true, Californians would be impoverishing themselves for LTC. They'd use reverse mortgages to fund home care services. They'd be standing in line to purchase private LTC insurance.
But that's not what happens. Medi-Cal doesn't require people to spend their savings for LTC. Buy anything you want. Take a world cruise. Purchase a new car. Remodel your house. Just don't give away your wealth for less than fair market value.
Assets rarely interfere with Medi-Cal LTC eligibility. Keep home equity up to $750,000. Retain, with no limit on value: the capital and cash flow from a business, even a rental property; one automobile; unlimited prepaid burial plans for you, your spouse and immediate family members; term life insurance; household goods and personal belongings; even IRAs if you're receiving periodic interest and principal payments.
Income is only rarely an obstacle to Medi-Cal LTC eligibility. As long as your income is below your medical expenses, including the cost of nursing home care, you're eligible.
Are you still too rich to qualify for Medi-Cal? No problem. A cottage industry of Medicaid planners will wave a magic legal wand and hide or divest your wealth so you can get Medi-Cal LTC. Their bag of tricks is full of special trusts, Medi-Cal friendly annuities, life care contracts, planned divestiture, and special reverse half-a-loaf gimmicks, to name a few. Just Google "Medi-Cal planning"!
No wonder Medi-Cal is bankrupt. No wonder people ignore LTC until it's too late for anything but Medi-Cal. No wonder private payers have nearly disappeared.
Doubt my analysis? Want to fix the problem? Read my report for the Pacific Research Institute titled, "Medi-Cal Long-Term Care: Safety Net or Hammock."
"Long-Term Care Insurance is About
Long-term care insurance benefits permit a more dignified approach to care than the Medi-Cal route to a two-to-four-beds-per-room skilled care nursing facility. Most people do not need full-time nursing, just custodial care. Policyholders can have options such as home care, respite time off for their caregiving family, equipment, home modifications and/or be able to afford quality assisted living facilities.
Long-term care insurance can include a care coordinator to help family members figure out what to do, as well as provide the extra money needed to make any choices about where and how claimants will live receiving care.
Many of my long-term care insurance clients have had health issues, sometimes more than once, and their long-term care insurance policies have allowed them to stay at home paying friends and other caregivers to help them recover.
A 1999 JAMA/AMA study found that older caregiving spouses face a 63% higher risk of mortality than non-caregiving spouses. We can save more than money with long term care insurance. As one client wrote me, "Your program made my wife's last days infinitely more comfortable, and for that I am eternally grateful."
We will not be able to afford 75 million baby boomers (half of whom at 85 are predicted to have Alzheimer's) "going on Medicaid" when the ones who can afford it could have made rational plans to protect their dignity and independence with LTC insurance. Three years of care could cost nearly $2 million in 30 years if costs only rise by 5% annually. A three-year, $250 a day LTC plan with 5% inflation bought today will meet that number.
We need to save the under-reimbursed, understaffed and overworked nursing facilities for the truly needy. No one ever intended Medicaid/Medi-Cal to save wealth for heirs via funding by taxpayers.
In my 16-year career, I have often heard, "My mother got the same care as the person in the next bed on Medi-Cal. My lawyer will get me on Medi-Cal, too." It saddens me to think they could have bought insurance enabling them to stay home or in an assisted living facility with a monthly long-term care insurance premium less than the cost of one day in a nursing home.