LTC Bullet: The State of LTCI: Myths, Facts and the Wall Street Journal Article

Friday, April 6, 2018


LTC Comment: Tired of reading misguided and bad information in media coverage of long-term care insurance? MAGA’s Brian Gordon offers a much-needed reality check by rebutting the infamous “Wall Street Journal article” with facts, after the ***news***.

*** Those who attended the closing session (The Coming Revolution in Long Term Caregiving: The Future is Now!) at last month’s ILTCI conference know that technology and robotics will play an increasingly substantial role in caregiving going forward. However, in the meantime, caregiving continues to affect real people in real ways. Here are two recent articles we sent to our Clipping Service subscribers that deal with the current and forthcoming caregiving challenges we face. To inquire about our Clipping Service, contact Damon at 206-283-7036 or Please enjoy these sample clippings:

4/4/2018, “Caring for elderly parents can put a dent in your budget,” by Sarah O’Brien, CNBC

  • Quote: “The biggest monthly expenses for caregivers are medicine and medical supplies ($273), food ($159) and personal-care items ($151).

  • About half of current and past caregivers did not know in advance that they would be stepping into that role.

  • In advance of finding yourself in that situation, whether expected or not, it's worth having a conversation with your parents about how they envision their care if they reach a point where they no longer can care for themselves.”

LTC Comment: Sound advice.


3/26/2018, “As Trump Targets Immigrants, Elderly Brace To Lose Caregivers,” by Melissa Bailey, Kaiser Health News

Quote: “Nationwide, 1 million immigrants work in direct care — as CNAs, personal care attendants or home health aides — according to the Paraprofessional Healthcare Institute, a New York-based organization that studies the workforce. Immigrants make up 1 in 4 workers, said Robert Espinoza, PHI’s vice president of policy. Turnover is high, he said, because the work is difficult and wages are low. The median wage for personal care attendants and home health aides is $10.66 per hour, and $12.78 per hour for CNAs. Workers often receive little training and leave when they find higher-paying jobs at retail counters or fast-food restaurants, he said.

LTC Comment: Politics + demographics = LTC - TLC. ***

ltc Bullet: The State of LTCI: Myths, Facts and the Wall Street Journal Article

LTC Comment: Recently we, at the Center for Long-Term Care Reform, celebrated 20 years in operation. In those 20 years, we’ve published over 1,200 LTC Bullets and have all of them archived on our website by date and by subject. One of those vital subjects we call “Reality Check: The Facts on LTCI.” This is where we store over 120 LTC Bullets, dating back to 1998, that address inaccuracies and faulty data that abound in media coverage of long-term care insurance. Lately, with the abundance of LTCi-related inaccuracies, faulty data and bad advice in the popular press, we’ve added a lot of “Reality Check” LTC Bullets to our archive. Today, we add one more. This latest addition is a guest LTC Bullet by Brian Gordon, president of MAGA Ltd., a CLTCR corporate member. We wish to thank Brian Gordon and MAGA for their role in protecting people from the risk and cost of long-term care. Reprinted with permission is Brian Gordon’s piece: “The State of LTCI: Myths, Facts and the Wall Street Journal Article.”


“The State of LTCI: Myths, Facts and the Wall Street Journal Article.”

by Brian Gordon

By now, you've probably read Leslie Scism's Wall Street Journal article, "Millions Bought Insurance to Cover Retirement Health Costs. Now They Face an Awful Choice." The "awful choice" in question is Ms. Scism's assertion that today, LTCI policyholders must either 1) accept large premium increases or 2) drop their coverage.

We found this gloom-and-doom argument-that there is no other reality and no other options-to be misleading and incomplete. Most disturbingly, it invites consumers to throw up their hands in despair, rather than encourage thoughtful long term care planning.

On the plus side, this opinion piece sparked an important conversation, eliciting a range of responses. Here is our rebuttal to some of the key points in the WSJ editorial.  

WSJ: Today, LTCI insureds have two bitter choices: pay stiff premium increases or forfeit coverage.
Fact: Those facing increases (not everyone is) have multiple solutions available to them. Most LTCI insureds can keep their policies inforce and premiums down simply by modifying their benefits-solutions known as "landing spots." For example, we've recommended to clients that they reduce their inflation rider benefit-say, from 5% to 3%-or shorten their benefit period, resulting in little or no premium change. Most clients are receptive and it's worked very well.    

WSJ: LTCI carriers made a huge pricing mistake and now their insureds will pay for it forever in the form of steep rate increases.
Fact: It's true that when actuaries first priced LTCI 40+ years ago, they made some mistaken assumptions-not uncommon with brand new insurance products. They assumed more insureds would drop their policies than actually did so, and they did not foresee a decade of historically low interest rates. Combined with larger-than-anticipated claims that lasted longer than expected, it resulted in "a perfect storm." As a result, older LTCI policies have seen larger rate increases as more claims are paid on older policies.  

However, in recent years, carriers have corrected their pricing. Consider this: rate assumptions made in 2014 were based on 16 times as much actuarial experience as those made in 2000. Companies are more informed. We do prime clients purchasing traditional LTCI today to expect some modest rate increases, just like their car and health insurance.  

WSJ: When an insured's LTCI premiums increase, they're getting a raw deal.
Fact: Actually, a reason some insureds' LTCI premiums have increased is because they got way too good a deal in the first place. In some cases, they received incredibly valuable protection at what we now know was unsustainable premiums. Many older LTCI policies offered such generous benefits-for example, lifetime coverage-that they cannot be purchased today.  

WSJ: Since hybrid/combo LTCI products are costly, they aren't worth consideration.
Fact: To dismiss the entire spectrum of hybrid/combo LTCI policies wholesale is disingenuous. (In WSJ's 50+ paragraph article, only a single paragraph addressed hybrid policies, which now are nearly as popular as traditional LTCI policies.) Yes, premiums are higher-because hybrid products by their nature include additional benefits, such as life insurance or an annuity. However, they can also offer guaranteed premiums and peace of mind-for some clients they make excellent sense.

WSJ: With such limited choices, why bother with long term care planning at all?
Fact: Americans face a proven likelihood of needing long term care at some point, and Medicaid is a solution intended for only the poorest individuals. To forsake long term care planning altogether may be shortsighted, particularly for families with enough assets to engage a professional financial planner. Between traditional LTCI policies, hybrids and the option of self-funding or partially self-funding one's long term care risk, there are numerous long term care funding solutions available.

If you'd like to explore this topic further, we suggest reading the recent Forbes article, "Why the WSJ Is Wrong about Long- Term Care Planning," by Jamie Hopkins, the Co-Director of the American College's New York Life Center for Retirement Income and an Associate Professor of Taxation at the American College. And if you'd like to discuss this further with us, please don't hesitate to get in touch.

MAGA Ltd is a LTCI pioneer established in 1975.  The award winning MAGA team provides education to consumers, financial advisors and insurance professionals.  Licensed nationally, they represent highly rated carriers for both Asset-Based and Traditional LTCI products.  The Founder Murray Gordon, along with Brian Gordon CLTC and Peter Florek CLTC, have over 90 Years combined experience in the LTC Industry.  MAGA clients have received millions of dollars in LTC insurance benefits thanks to their dedication to service.   

For more info, call 800-533-6242 or email  Visit our website at
We are located at 2610 Lake Cook Road, STE 250, Riverwoods, IL 60015.