Long Term Care News and Updates

MEDICAID FOR LONG-TERM CARE

There are volumes written and entire legal practices devoted to Medicaid as it pertains to long-term care. So, this article isn't a primer on Medicaid planning. It's a perspective-my opinion if you will-on an issue that elicits strong opinions from advisors, insurance agents, government officials, attorneys and the taxpayers who pay the bill and who happen to be our clients. Medicaid for long-term care is a safety net; the program is funded with tax dollars and was put in place to ensure that those people who cannot otherwise afford it receive custodial and/or skilled care when and if they require it. It is not an entitlement program for the middle class. Unfortunately, there are those in our profession who, referring to themselves as "Medicaid Planners," take an overly simplistic approach to this issue. Their pitch goes something like this: "Hey, Mr. Prospect, you've worked hard and paid taxes all your life. Why on earth would you want to spend thousands of dollars on long-term care insurance, when, in a few easy steps, we can make sure the government pays for your skilled nursing facility bills? Just sell all your securities, cash out your CDs, take the proceeds and put everything into this terrific annuity I've got here, which was specially designed for solid, hardworking citizens like you." As professionals, we are blessed with the ability to create great good-as well as great harm. The question of whether we should allow ignorance to remain a barrier between the two- that's our choice. http://www.insurancenewsnet.com/article.asp?a=top_lh&newsid=CoXxbWe8_nZmWotaXmdG

ELDERLY AMERICANS SEEM TO THRIVE

An analysis published Tuesday in the Proceedings of the National Academy of Sciences shows that the rate of disability among elderly Americans has dropped under 20 percent for the first time. ``The likelihood of the elderly being vigorous is higher now than ever before,'' said Kenneth G. Manton, Duke University researcher. ``The active life expectancy is increasing as well as life expectancy itself.'' Manton said improved medical care, diet, exercise and public health advances in recent decades have all contributed to a more vigorous and healthy old age. The study analyzed data on chronically disabled, elderly people from 1982 to 1999 and found a steady decline from about 26.2 percent to 19.7 percent. Improvements in both IADL and ADL rates are reflected in a declining population in America's nursing homes, said Manton. In 1982, 6.2 percent of the nation's elderly were in nursing homes, while in 1999 the figure had dropped to 3.4 percent. In 1999, the study added a new category - those in assisted living facilities. The study found that about 2.3 percent of older Americans now live in assisted living facilities, with more than half of such residents reporting no disabilities of any type. Chronically disabled older Americas totaled 7.1 million in 1982, the study found. By 1999, that number had declined to 7 million, even though the elderly population in the U.S. went up more than 32 percent.

HERE’S THE REST OF THE STORY:

Just because the population of nursing homes (even if combined with that of assisted living facilities) has decreased, it doesn’t necessarily mean fewer people need long term care services. According to the Department of Labor’s Advisory Council on Employee Welfare and Pension Benefits Plans (November 200), the vast majority of people suffering from disabilities receive informal long term care in their homes by unpaid volunteers made up of family members, relatives and friends. Of the unpaid caregivers, 91% are family members, 41% are adult children, 24% are spouses and 26% are other relatives.

Home health care, home hospice, adult foster care, adult day care, respite care and similar forms of care are all considered non-institutional. About eight million Americans receive home health care each year. An unknown number receive home hospice, adult day care and other types of non-institutional care. Even with missing data, about four times as many Americans receive non-institutional care as opposed to institutional care. Nursing (institutional) care use is growing at a slower rate than the elderly population (who use approximately 90% of such care). At the same time, home health care (non-institutional care) is growing more rapidly than the elderly population, who use about two-thirds of such care.

The elderly tend to enjoy life and stay healthier when they can continue to live in their own homes with the aid of home health care workers. Home health care has grown rapidly for the past 30 years; the rate of growth is faster than that of the general population, the elderly population and even national health expenditures. According to the Health Care Financing Administration, National Health Expenditure Tables, the expenditures on nursing home care have increased 370 percent (from $17.6 billion to $82.8 billion) since 1980, while the expenditures on home health care have increased 1200 percent ($2.4 billion to $32.3 billion). The growth in expenditures for nursing home care closely parallels national health expenditures but, consistent with earlier statistics, the growth in expenditures for home care is much more rapid. Over the past 15 years, nursing home expenditures have remained relatively flat as a percentage of total long-term care expenditures, while home health care expenditures have more than doubled since 1985. (Source: “Long Term Care Trends And Demographics: Implications For Financial Planning” Journal of Financial Services Professionals, September 2000)

Certainly your clients would like to live in the comfortable and familiar surroundings of their own home for as long as possible. To do so, they must be able to pay for any necessary services received in their home (Medicaid and Medi-Cal generally do not pay for long term care services received at home). Long Term Care Insurance pays for care received at home, including home modification (ramps and shower bars), medical alert systems and help with instrumental activities of daily living (i.e. bill paying, laundry, cleaning, meal preparation). If you would like to help your client age gracefully, help them prepare financially for potential long term care risks.

Frist/Breaux/Jeffords Proposal Would Increase Number Of Uninsured Americans

CONTACT: Richard Coorsh (202) 824-1787 e-mail: rcoorsh@hiaa.org

May 15, 2001

The following statement was released today by Chip Kahn, President of the Health Insurance Association of America (HIAA):

We are disappointed that new "patients' rights" legislation sponsored by Sens. Bill Frist (R-TN), John Breaux (D-LA), and Jim Jeffords (R-VT) includes so many provisions that will increase the cost of health insurance. This inevitably will make it more difficult for many Americans to obtain or keep coverage. For example, the bill would fuel cost increases by allowing expensive lawsuits against health insurers and health plans, enabling health insurance contracts to be overruled, and increasing dual federal and state regulatory burdens on health insurers and health plans.

Coverage costs already are being pushed upward by medical inflation - including prescription drug spending that increased by 19 percent - as well as by demands for higher reimbursements by health care providers. Furthermore, consumers and employers soon will have to absorb cost increases brought about by expensive new government medical privacy and administrative simplification regulations. The Frist/Breaux/Jeffords proposal would add yet additional expense, thereby making it difficult for many Americans to obtain or retain health coverage.

The most important "patients' right" is the right to affordable, high-quality health coverage. Regrettably, the well-intentioned Frist/Breaux/Jeffords proposal would hurt the very people it is intended to help.

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The Health Insurance Association of America (HIAA) is the nation's most prominent trade association representing the private health care system. Its nearly 300 members provide health, long-term care, dental, disability, and supplemental coverage to more than 123 million Americans. It is the nation's premier provider of self-study courses on health insurance and managed care.

TEAMING UP WITH AN LTC SPECIALIST

All agents in the employee benefits market need to decide how to handle long-term care insurance. Your clients are interested in LTC insurance, for themselves and their employees, yet few have it. If you do sell LTC insurance to an existing client, you further solidify your relationship. If you don’t sell it, someone else will, and that agent may take away other policies. But LTC insurance is an extremely complicated product. If you sell LTC insurance on your own, you must invest extensive time in mastering the details of this niche market and staying on top of the changes in policies and premiums. Or, you could team up with an LTC insurance specialist and split commissions. The advantages of establishing an alliance with a good LTC specialist are many. You save the time necessary to become an LTC specialist yourself, and your clients receive the best possible advice from a specialist who agrees not to solicit other business. Moreover, a good specialist should be able to close a higher percentage of cases than a well-meaning generalist. You receive part of the commission but do little or no work, other than making the introduction. In the long run, you may take in more LTC insurance commission income than you would have if you had tried to handle everything yourself. Few except those who have tried to sell LTC insurance know just how much of a challenge that really is. To sell any LTC insurance product, you need to understand the long-term care system in your market inside and out, establish the need for LTC coverage, close the sale, help choose a carrier, answer employees’ questions, and assist with administration. If you are trying to sell LTC coverage to businesses and their executives, you should also master the many state and federal laws, regulations, tax rulings and business practices that affect the sale of LTC products to businesses.

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WORKSITE LTC GOOD VALUE FOR BOOMERS

The baby boomers are aging, and so are their parents. One way insurance agents and brokers can help workers—and their employers—is to set up voluntary, employee-paid long-term care insurance programs at the worksite. Elderly Americans who pay for care with Medicaid have little choice about the type of care provided or the location of the facility. Setting up a comprehensive program can help protect family assets and give employees and their families the flexibility to choose the kind of care they want for their loved ones. A good worksite LTC insurance program can offer a variety of riders to help workers and their families. One of the most important, of course, is a benefit increase rider offering protection against the effects of inflation. Another less publicized rider is a survivorship rider. A survivorship rider can pay up the policy if one spouse dies and both are covered by the plan.

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SENATE PLAN IMPROVES NURSING HOMES

The Senate overwhelmingly passed its top priority of the session Friday by requiring better staffing and oversight of nursing homes and making it harder for lawyers to collect deep-pocket punitive damages from homes that neglect residents. Florida has the largest elderly population in the country, and how to improve its long-term care system is the most intensely fought issue of the session. Nursing home operators have battled trial lawyers all session long, amendment for amendment, in a combative atmosphere featuring most of the trappings of a political campaign. The Senate legislation imposes better staffing ratios at nursing homes, from 1.7 hours of care per patient every day to 2.3 hours by January, with the ratio improving to 2.9 hours over the next five years, as a federal study has recommended.

http://www.miami.com/herald/partners/yahoo/digdocs/052248.htm

HEALTH INFLATION: IT'S BEEN WORSE

Health care spending will increase an average 7.2 percent a year between 1998 and 2010, exceeding the 5.2 percent annual growth of 1993 to 1998 but mercifully less than the record 10.4 percent of 1980 to 1993, according to economists from the Health Care Financing Administration. The acceleration through 2002 will be "driven in part by rising provider costs, insurers' inability to negotiate increasing price discounts as obtained in the 1993-1998 period and greater income growth," predicts the HCFA team. After 2002, they project "a move back toward more restrictive health plans as economic growth slows, private health insurance premiums rise and employers again search for ways to control costs."

http://www.insurancenewsnet.com/article.asp?a=top_lh&newsid=CoUZJqfaRnZeWnZu1ntm

EMPLOYER-SPONSORED LONG TERM CARE INSURANCE ON THE RISE

Almost a million Americans are now covered by long term care (LTC) insurance provided through employer-sponsored plans, says a recent report by LIMRA International, an insurance industry trade association. Although new sales of employer-sponsored LTC policies decreased by 6 percent over the past year, the total number of policies grew by 22 percent, with almost 4,000 employers now offering these plans. The majority of these gains seem to be coming as insurers increase their sales to smaller companies, says Patricia Ash, a senior analyst at LIMRA. The average number of people in a new employer-sponsored LTC plan was 168 in 2000, down from an average of 242 in each existing group. The future continues to look bright for the LTC industry. In 2002, approximately 20 million active and retired federal employees and eligible family members will be able to obtain group LTC benefits under the Federal Long Term Care Security Act of 2000. http://www.insure.com/health/ltc/limra401.html

LIFE INSURANCE POLICIES ADD LONG-TERM CARE

The newest approach adds LTC coverage to cash-value life insurance. The sales pitch: You get something back -- the life insurance -- even if you never need long-term care. Here's how combined life-LTC insurance generally works: You buy cash-value life insurance if you need the coverage anyway. For example, you might own a lot of real estate or a closely held business. Your family will need cash after your death while untangling your illiquid assets. If you need long-term care, you start taking money from the death benefit -- usually on a prearranged schedule. The withdrawals are tax-free. At death, your beneficiaries get whatever remains of the insurance. For example, taking $60,000 from a $100,000 policy leaves $40,000 for heirs. As far as I know, all the combos involve cash-value insurance, not term insurance. The insurers that offer combo products structure them in various ways. New York Life calls its product the Asset Preserver. You put up a single cash premium -- enough to buy at least $24,000 of universal-life insurance. The cost depends on your age, sex and health. A 65-year-old woman, investing $50,000 in the policy, would get $92,150 in death benefits and pay about $252 a year for the LTC protection. At the time of purchase, you decide how many months you want the LTC benefits to run. You can take payments over as little as two years or as many as four years (after four years, New York Life extends you for another 18 months). The payments are guaranteed to last for the promised period.

http://www.washingtonpost.com/wp-dyn/articles/A47233-2001Apr21.html

Mergers and acquistions of companies and/or their long term Care insurance block of business continue:

Examples of the changes are:

· Fortis purchased by John Hancock

· Travelers was purchased by GE Capital

· CNA put its LTCI block of inforce business up for sale and then pulled it off the market when the company was unable to secure an acceptable offer

· Insurer Penn Treaty seen as possible takeover target-BizWeek

o New York, March 15 (Reuters) - Penn Treaty American Corp (NYSE:PTA - news) could be a takeover target of a larger insurer, according to BusinessWeek's Inside Wall Street column published on Thursday. The home health care insurance provider could be snapped up by rivals AFLAC Inc (NYSE:AFL - news) or New York Life Insurance, the report said. Penn Treaty's Chairman Irving Levit owns about 24 percent of the company's stock.

o Shares of Penn Treaty closed down 10 cents at $16.70 on Thursday, off a 52-week high of $21.56, up from a year low of $12.88.

The current national average for one day of Nursing Home Care is $153.

Long Term Care Tax Legisltation Udpate

o New Long-Term Care Bill Is Vital To American's Retirement Security The American Council of Life Insurers (ACLI) praised Reps. Nancy Johnson (R-CT) and Karen Thurmond (D-FL) for introducing legislation to establish an "above the line" federal tax deduction for long-term care insurance premiums. The measure would also permit the inclusion of long-term care policies in employer-sponsored cafeteria plans and flexible spending accounts. The need for the legislation - H.R. 831- is clear. ACLI research shows that over the next 30 years, the 65-and-over population will double to 70 million. Millions more Americans will need long-term care services, whose costs are projected to increase dramatically. For instance, the average cost of one year of nursing home care, which is about $50,000 today, will escalate to about $190,000 annually by 2030 ($97,000 annually in today's dollars). With private long-term care insurance coverage, people will be able to guarantee they get the assistance they want and need in retirement, while protecting their retirement savings.

LTC Tax Deduction Bill Cheers Industry

o Insurance agents and companies are lining up in support of legislation introduced by Rep. Nancy Johnson, R-Conn., establishing a tax deduction for the purchase of long-term care insurance. "This is a top priority for NAIFA and AHIA," says David Winston, vice president of government affairs for the National Association of Insurance and Financial Advisors. AHIA is the Association of Health Insurance Agents, a NAIFA affiliate. "We are hopeful we can get this done this year," Winston says. Chip Kahn, president of the Health Insurance Association of America, says that long-term care remains the largest unfunded liability facing the baby boom generation. "Rep. Johnson’s legislation offers Americans real protection against the often-catastrophic cost of long-term care," he says.

Assisted Living: More Like Home

o It is an aging baby boomer's nightmare. You visit your mother who lives a thousand miles away, and find her home-usually neat as a pin-is a mess. Everything in the home is covered in a layer of dust, and the sink is piled high with dirty dishes. You recall reading or hearing about something called "assisted living" residences. Aren't they supposed to be good places for the elderly? Indeed, the assisted-living concept is the hot new thing in senior residences, with dozens of new facilities opening every month across the country, each with its own glossy marketing brochures promising to take good care of your loved ones. Before getting too taken in by the brochures, however, here are some basics that will help your family make a wise decision when it comes to choosing a residential facility. Assisted-living facilities go by many names, including residential care facilities, adult congregate living facilities, personal care homes, catered living facilities, retirement homes, homes for adults, or community residences, according to the Assisted Living Federation of America, or ALFA.

Studies Confirm Agents Not Going Away

o A slew of recent news reports and new studies continue to disprove predictions that the internet channels would bring an end to insurance agents and brokers. In a departure from the forecasts of gloom sent out beginning just over a year ago, industry analysts, companies and even internet sites are now regularly embracing the independent agency channel as a preferred choice for companies and consumers. Progressive, recognized by many for its internet and telephone distribution efforts, released a study showing consumers preferred to purchase insurance offline, from independent agents. Earlier this year independent agents and brokers gathered for the annual IBA West Installation of Officers in San Francisco heard a reaffirming message from then SAFECO President and COO Bo Dickey. In the keynote address, "It's Still a People Business," Dickey told agents and brokers not to be too influenced by trends and to ignore distractions that take up time and energy and keep them from doing what they do best.

Long-Term Care Insurance Bill Introduced

o Even taxpayers who do not itemize on their tax returns could claim deductions of up to $3,000 for the cost of long-term care insurance premiums, with a separate deduction of up to $3,000 for the cost of purchasing or providing care, under legislation introduced in the House and Senate Tuesday. Senate Finance Chairman Charles Grassley, R-Iowa, along with Finance Committee Democrat Bob Graham introduced the ''Long-Term Care and Retirement Security Act of 2001,'' in the Senate. House sponsors of the bill include House Ways and Means Subcommittee Chair Nancy Johnson, R-Conn., and Ways and Means Democrats Karen Thurman, Fla., and Earl Pomeroy, D-N.D. The legislation is virtually identical to bills introduced but not passed in the last Congress. ``Rome wasn't built in a day and major legislation often takes more than one Congress to come to fruition,'' said Health Insurance Association President Chip Kahn, representing one of several organizations backing the bill. Others include the AARP and the American Council of Life Insurers. Rep. Pomeroy said Congress needs to move quickly to encourage the purchase of private coverage, lest the long-term care needs of 76 million baby boomers swamp the nation's health care system.

Insurance Industry Ads Target Tax Break For Care

o The Health Insurance Association of America (HIAA) announced on Monday that it is launching an advertising campaign to support tax relief for Americans who buy private long-term care insurance. HIAA plans to spend roughly $300,000 on the campaign as part of a broader strategy for capitalizing on bipartisan Congressional support for long-term care tax relief this year. Print and radio ads are slated to run in Washington, DC. Families USA, the consumer advocacy group, however, argues that long-term care insurance is extremely expensive and that most people would be better off spending down their own assets until they qualify for Medicaid. ``I think tax credits for the purchase of long-term care insurance tend to be very regressive, and that's because the cost of long-term care insurance tends to be very expensive and only the wealthy part of the population can afford it,'' said Ronald F. Pollack, vice president and executive director of Families USA. ``For the middle class and those of moderate incomes, private long-term care insurance may not be an advisable thing to purchase,'' he told Reuters Health. One benefit of tax relief: Americans could save more than 20% on insurance costs, making long-term care more affordable, HIAA argues in the ad.

Senate Plans Elder Care Tax Break

o For six years, Bill Kays fed, bathed and nursed his wife, Pearl. Then the Vienna, Va., man had to put her in a nursing home at a cost of $1,700 a month. In a nation where 37 million people care for sick and aging relatives each year, Kays told Congress Tuesday, he's one of the lucky ones. ``We are just barely able to afford her care,'' said Kays, a phone company retiree whose wife was diagnosed with Alzheimer's disease 10 years ago. Kays told the Senate Finance Committee that other people have to ``spend themselves into poverty'' to get government aid. The committee Tuesday introduced a plan to give families tax breaks for buying their own insurance for long-term nursing care. ``It would be a tremendous help,'' Kays said. ``But we are going to have to do a lot more.'' Nursing home care costs an average of $55,000 a year, but 80 percent of the people who need that level of help are in their own homes, being cared for by family members, professional nurses or community groups, health experts told the panel. The Senate tax-credit plan is aimed at getting Americans to rely more on private insurance to pay those bills. The plan would let taxpayers deduct the full cost of long-term-care insurance premiums, which can cost about $1,000 a year for a 65-year-old policyholder and twice as much for an 80-year-old. The bill also gives a $3,000 tax credit to sick individuals or their caregivers.

Long Term Care Insurance Works, With Exceptions

o Older people who buy long-term care insurance policies are generally satisfied with their coverage, but significant gaps in the care of frail elderly people remain, according to a University of California, Berkeley, study. The largest gap in care is a lack of sufficient follow-up and monitoring to assure that policyholders actually receive the full range of services they need, the study found. Researchers tracked 35 elderly policyholders through personal interviews and phone calls for six months during 1998 and 1999. "We found that people generally were quite satisfied with their benefits," said Scharlach. "They were getting home care services paid for, just like they were supposed to. No one's claim was denied inappropriately." But he said that policyholders were dealing with a range of problems the insurance companies knew nothing about, such as theft by providers, helpers who did not show up, unmet needs for transportation, medication and other problems. "Care managers were helpful initially in getting the services that people needed," said Scharlach. "But we found many needs that the care managers apparently were not aware of." Consumers do not ask for, nor do insurance companies typically provide, a level of care management that could avoid many preventable, undesirable outcomes. These limitations in care management are found outside the insurance business as well, said Scharlach. Consumers need a better understanding of what benefits are available to them and a better understanding of the role of care manager. Used appropriately, this service can be a powerful tool in helping to meet the needs of disabled older adults."

Alzheimer's May Overwhelm Medicare

o A wave of baby boomers with Alzheimer's threatens to overwhelm Medicare and other health programs. Alzheimer's already costs the federal government about $50 billion. In the next decade, says the report, government costs to treat Alzheimer's patients are expected to rise to $82.3 billion, the price of increased hospital and doctors' visits for approximately 5.5 million sufferers. ``The only reason that Alzheimer's has not already bankrupted Medicare and Medicaid is that those programs don't pay for much of the care a person with Alzheimer's needs,'' actor David Hyde Pierce said in testimony prepared for Senate lawmakers who oversee health spending. ``It is already bankrupting individual families,'' he said. Medicare, federal insurance for the elderly and disabled, doesn't directly cover two main expenses associated with the disease, prescription medicine and nursing home stays. But the group predicts Medicare will foot a $49.3 billion bill in 2010 for Alzheimer's sufferers who were unable to manage their treatments for other diseases such as diabetes. And the costs will come long before 2050, when the number of victims triples to 14 million, as the baby boom generation reaches the high-risk age groups.