Misinformation About LTC Archives - Long Term Care Insurance Expert | Honey Leveen

Keep Your Long Term Care Insurance After You Move to a CCRC

August 6, 2019 by Honey Leveen Leave a Comment

As a resident at Shell Point Retirement Community (SPRC), I have had a number of interesting, eye-opening conversations with my neighbors. Many of them believe that living in a Continuing Care Retirement Community (CCRC) is an opportunity to safely let go of their long term care insurance (LTCi). I do not recommend this!

Before you make this potentially dangerous decision for yourself or your parents, please read through these 3 experiences. Hopefully, they will serve as a cautionary tale and help you from repeating their mistakes.

1. Living in a CCRC Doesn’t Always Include Payment for Home Care

Sally’s mother lived in SPRC for 26 years. Although she needed care, her mother did not own long term care insurance (LTCi), since she believed the CCRC would cover the costs of her needs. Over the years, Sally’s mother was unwilling to accept the fact that her health was deteriorating and that she needed additional care. Ideally, she would have moved to the on-site assisted living facility or elected for home care.

The majority of CCRC’s pay for assisted living or nursing home care, but they don’t pay for home care.

As you’ll hear in Sally’s video testimony below, her mother was unwilling to pay for home care, preferring to preserve her estate for the benefit of her children. Her situation got so dangerous that Sally had to enlist intervention by a professional to “force” her mother into better care. Sally realizes now that the entire situation could have been avoided if her mother had been covered by a LTCi policy.

2. Nursing Care Paid Out-of-Pocket

When Hugh and his wife moved here to SPRC, they assumed that they no longer needed their LTCi since the CCRC would pay for their assisted living and nursing care. So they stopped paying their monthly LTCi premiums and let their policies lapse.

In her last months, Hugh’s wife became extremely disabled, needing care above and beyond what the assisted living facility could legally provide. Hugh was advised to move his wife to the on-site nursing home so she could receive the care she needed. While the assisted living center provides a cheery, home-like atmosphere, the nursing home is more sterile and institutional. Hugh just couldn’t bear moving his wife into the nursing home.

By remaining in assisted living, Hugh had to pay for round-the-clock caregivers out of his own pocket. As he shared his story with me, I told him about my work. He recognized how much he regretted giving up their long term care insurance. He knows that if they’d kept their policies active, the cost needed for his wife’s additional care would have been covered.

3. The Unexpected Need for an Off-site Facility

Nancy’s husband was stricken with Lewy Body Dementia. If this sounds familiar, this is the same illness that actor Robin Williams suffered from. This form of dementia can damage thinking and alertness. Symptoms can include physical stiffness, hallucinations and even violence.

As a result of his condition, Nancy’s husband became physically violent and needed more care than SPRC could safely provide. Despite their best efforts, SPRC was unable to keep him onsite. Nancy was forced to find an off-site facility that could properly care for her husband. Those unexpected costs (paid without the benefit of LTCi coverage) nearly demolished her savings.

Learning from Experience

You don’t have to have these experiences in order to learn the same lessons. Moving to a Continuing Care Retirement Community (CCRC) does not mean it’s time to end your long term care insurance policy. In fact, this may be the time you most want that peace of mind.

Click here to receive a free, no-obligation quote for your own LTCi policy.

Affluent Retirees Won’t Spend Their Money!

August 22, 2018 by Honey Leveen Leave a Comment

Affluent people often tell me they don’t need long-term care insurance (LTCi). They’ll self-insure, instead. This is contrary to my experience.

Traditional retirement planning typically calls for a gradual drawing down of savings to produce retirement income. Contrary to this long-held belief, a recent study published by Employee Benefit Research Institute (ERBI) proves otherwise. In fact, affluent retirees do not want to spend their money!

As illogical as it sounds, this is a point I have been writing about for years. Retirees find great comfort in the size of their nest egg and there is too much uncertainty in their future.

ERBI’s new study shows affluent retirees (with over $500,000 in non-housing savings) had only spent down 11.8 percent of their savings within the first twenty years of retirement. This is far less than projected. In fact about one-third of sampled retirees increased their assets over that period.

Relaxing About the Future

My strong opinion, based on nearly 30 years of client observation, is this: LTC insurance ownership releases people from an ever-present gray storm cloud of a possible LTC need looming on the horizon. The gray cloud grows ever larger with each passing year. Let’s call it the LTC Storm Cloud. It’s caused by fear of an unexpected, unplanned for, possibly catastrophically expensive “Spending Shock“, caused by a chronic long term care need.

An AHIP study released in 2014 (email me at honey@honeyleveen.com for the actual study) confirms LTC insurance owners get 35% more hours of care, as well as many additional advantages, such as increased independence and dignity, decreased financial stress, higher quality family relationships, and the list goes on.

The reason LTC insurance owners obtain more care is because they’re not paying for it out of their income or savings.

I see people denying their true need for care all the time. Often, it’s because they have the money for it, but just don’t want to spend it. They’re afraid of losing their wealth. Don’t let this happen to you!

When you’re ready to get some peace of mind about your future needs, click here to receive a no-obligation quote for your personal LTCi policy.

Media Continues to Love Trashing LTC Insurance

May 16, 2016 by Honey Leave a Comment

I will never completely understand why inflammatory headlines like this are necessary: “Out-of-Control Premium Hikes for Long-Term Care Insurance”.

I do partially understand why they run inflammatory headlines. “If it bleeds, it leads”. Disparaging headlines sell copies.

Nowadays, the majority of LTCi media coverage is constructive. But readers usually have to get past negative titles and first paragraphs intended to “hook” people into reading the story.

In the case of Long-Term Care Insurance (LTCi), this is very harmful to the public. Disparaging headlines and lead paragraphs further encourage people to make excuses to avoid important, necessary conversations about planning for LTC.

In addition, inflammatory LTCi coverage fuels falsehoods such as out-of-control, wanton rate hikes and claim difficulties.

If people bother to read “Out-of-Control Premium Hikes for Long-Term Care Insurance” they will find excellent reporting on why today’s LTCi policies should experience very stable rates with very minimal odds of rate hikes.

Click here to read several blogs I’ve done that explain the reasons for and likelihood of LTCi rate hikes.

I want to give a “shout out” to my highly esteemed friends and colleagues Scott Olson, Steve Cain, and Jesse Slome who were quoted in this story. This article’s excellent content is largely due to their input.

Long-Term Care Insurance Can Be Costly but Effective

December 26, 2015 by Honey 1 Comment

Why doesn’t this New York Times article report on what its title promises it will, which is the effectiveness of long-term care insurance (LTCi)?

While being factually correct, this article puts the wrong “spin” on things.

It starts by giving the wrong title. LTCi is not necessarily costly. What can easily be far more costly is needing long-term care for anything but a short length of time and not owning LTCi.

The article “hooks” readers in the first paragraph by describing how LTCi preserves wealth. From there, this article gives readers excuses to avoid responsible LTC planning.

The truth is, the most important reason to own LTCi is not to preserve wealth. It is to preserve family integrity by reducing family resentment, stress and discord. The fact that LTCi also preserves wealth, and does it so well, is “icing on the cake.”

Families and governments are in budgetary crisis due to skyrocketing LTC costs.

Reporters and editors need to get the above perspectives corrected. Reporting needs to be done – now – on the hundreds of thousands of families collecting from LTCi and the radical qualitative difference that LTCi creates in their lives.

Here are some examples of the harmful “spin” I’m talking about:

The article hints that Ms. Cheng’s father is collecting enormous amounts from his LTCi policy, but it is not explicit about this. Why not? Why isn’t any space devoted to describing the extraordinary, qualitative difference LTCi has made not only for Ms. Cheng, but for her father?

Does Ms. Cheng own LTCi herself? Her advice about needing correct professional assistance with choosing LTCi, having a holistic outlook about the role of LTCi in estate planning, and asking children for input and help is sage. The reporter (Mr. Wasik) should have asked her to comment about her own LTCi (if she doesn’t own LTCi, I just don’t understand why not, based on her personal experience and how wise she seems to be).

Instead, Mr. Wasik sidetracks readers with some “red herrings.”

There’s an irrelevant sentence describing how Keith Singer recommends clients with more than $500,000 should own LTCi. (I doubt he has any clients with less than a $500,000 net worth; most financial planners don’t.) This sentence is harmful to readers, giving lower net-worth people one more excuse to dissuade themselves from doing responsible LTC planning. Such people are far more prone to catastrophe resulting from unplanned LTC needs. Here’s a story about a solid middle class couple with a 0,000 net worth that was devastated by unplanned LTC costs. This couple probably could have purchased very reasonable LTCi while they were insurable.

This sentence does not report on the effectiveness of LTCi (as the title purports) and is again potentially harmful to readers : “After a 90-day “elimination” period (often partly covered by Medicare for people whose need for extra care is hastened by a stroke or other medical emergency), the policy covers all assisted living, community and home care.” This perspective is incorrect, and further goads the American public to avoid responsible LTC planning by hinting that Medicare might assist with LTC costs. Medicare-paid LTC is not only paltry and inadequate; most people are not entitled to it.

Shame on Mr. Wasik and the NYT editors, whom I otherwise hold in high esteem. For the sake of the American public, reporting needs to be done now on the extraordinary, qualitative, transformative difference LTCi has and will make for hundreds of thousands of us.

Long-Term Care: How Big a Risk?

January 15, 2015 by Honey Leveen Leave a Comment

Huge thanks to my friend and colleague, Stephen D. Forman of Long-Term Care Associates, for permitting me to re-publish his blog, below.

In a nutshell: a Boston College study was released in November, 2014. Its findings are that the need for long-term care insurance is and has been exaggerated. It finds that if you are in the minority who do need long-term care for an extended length of time, no worries, Medicare and Medicaid will be there as your safety net.

If people stop long enough to think about some of the claims the study makes, they are counterintuitive, and fly in the face of too many actual life experiences. Steve explains why this is so in his post, below.

Please flip through my past blog posts to find links to an abundance of credible sources that refute the new study’s findings.

Why do media seem to enjoy hashing and re-hashing stories derogatory to long-term care insurance (LTCi) while often neglecting the abundance of coverage favorable to LTCi purchase?

Major media reported on this study without making much effort to present balanced opinions on it.

Coverage of the faulty study continues (Steve explains why it is faulty). More than a month after its publication, The Wall Street Journal reported on the study. No apparent effort was made to practice fair journalism and present balanced views. I see the date of the WSJ article was December 23, 2014. Perhaps most WSJ reporters were away for the holidays? Maybe the WSJ was really grasping to find any sort of copy. It looks to me like this article can be used as a classroom example of embarrassing, shoddy, unprofessional reporting.

I actually invested valuable time trying to blog about why this new study is so wrong but chose not publish it because I was unwilling to make the effort to go into the detail necessary to create a blog I’d be proud of. Fortunately, Stephen Forman succeeded where I failed.

Steve’s piece, below, will take about three minutes to read and is well worth it. Thanks for allowing me to share this, Steve!

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No single model received more attention in 2014 than one produced by the Center for Retirement Research (CRR) at Boston College titled “Long-Term Care: How Big a Risk?” (November 2014, Number 14 – 18, Leora Friedberg, et. al.) At the same time, no other model has been more widely misinterpreted, wrongly extrapolated, or gleefully co-opted by LTCI detractors. Since the New Year is considered a time for looking forward, let’s begin by clearing this foggy hangover from 2014, then speak no more of it.

Medicaid 1, LTCI 0

This is the way the CRR model’s conclusions are most often presented: by using monthly instead of yearly data, it was found that average nursing home stays are 30% shorter than previously believed. (On average a man stays less than 12 months, a woman 17.) In fact, 45% of patient stays do not exceed 3 months. Even worse, LTC insurance is duplicative since Medicare will cover these short stays– the study assumes the first three months of “all episodes of care are covered by Medicare.” [emphasis in the original]

Finally, CRR corrects a previous model which understated the probability of ever needing care by 32 – 63%. The conclusion? Since long term care is a relatively high-probability event– but less catastrophic than previously understood— it makes less economic sense to insure against.

The media jumped all over it:

“Maybe You Don’t Need Long-Term Care Insurance After All” (Bloomberg)
“Here’s a New Reason to Think Twice Before Buying Long-Term Care Insurance” (Time/Money)
“‘Spending Down’ for Medicaid is the Most Practical LTC Financing Plan for Most Americans, Researchers Assert” (McKnight’s)
“Is Long-Term Care Insurance for You?” (Wall Street Journal)
“Boston College Finds Rip-Off in Long Term Care Insurance Costs When Compared to Other Options, Opines UltraTrust.com” (Estate Street Partners)

Readers who dove into these articles seeking sound advice were met with takeaways such as this: “Forgoing long-term care insurance and relying on Medicaid is the smartest financial planning decision for the majority of unmarried Americans.” Lacking were any qualifications concerning Medicaid’s notoriously low reimbursement rates, institutional bias, record of poor quality, or inability to access care.

This was our first sign of trouble: CRR assumes all “rational, far-sighted, well-informed” individuals make decisions entirely on the basis of money. We do not. As economists, they’d have been better served with a model in which rational individuals make decisions which maximize our utility. Had they done so, their buyers would’ve valued higher quality care and the ability to remain at home with family, tilting the scales in favor of LTCI.

Meanwhile, the Bloomberg piece acknowledges that the biggest threat to a retiree’s nest egg “isn’t a stock market crash. It’s a long illness requiring round-the-clock care.” Unfortunately, thanks to the new CRR model, not only should most people “just skip [LTC insurance],” but the majority of Americans (all but the richest 20 – 30% of singles) should “[spend] down their assets and then [let] Medicaid pick up the tab.”

Lest we dismiss this study for its preoccupation with singles, we are warned that “forthcoming research will show long-term care insurance makes even less sense for married couples.”

And why did the researchers focus on singles anyway, when 82% of all LTCI policies are purchased by members of couples? They argue that since 75%+ of nursing home residents are over age 65 and single, their limitation to singles is “not significant”. Once again our economists have set out on the wrong foot: they are not modeling nursing home residents, they are modeling buyers. Oh, dear.

The Average Family Has 2.5 Children

I’ve been careful in my choice of words: what the Center for Retirement Research produced was an economic model. Framing it otherwise (a study or research report) suggests a methodology or outcome which we shouldn’t reinforce. Models exist in the abstract, not reality. This one invented hypothetical buyers in a controlled environment.

One particularly unfortunate problem with CRR– overlooked in all the hubbub– is that it sought to answer a question of its own making, and not one that anybody had been asking. Namely, why do only a certain percentage of single individuals (an assumption of their own creation which disagrees with other contemporary sources*) buy LTC insurance, differing from the percentage predicted by the Brown & Finkelstein Model (ie, the famous “Medicaid Crowd Out Effect”)? This model was an attempt to reconcile the two numbers.

Now, models can serve a purpose, but they are inherently limited. In the case of CRR, even its “new” data remain archaic (10-years old) and don’t square with reality: after all, insurance is built primarily around the remote but catastrophic risk – not the occasional shopping cart dinging your car door. This is why buyers and sellers have played a tug-of-war between unlimited benefit periods and short-term care. One is hard to offer profitably, while the other is hard to make desirable.

Worst of all, the model presumes that buyers care only about nursing facilities, when the exact opposite is true. Most of our clients are motivated to purchase LTCI for its ability to do the one thing Medicaid is worst-equipped to do— keep them out of the nursing home.

Then, in a final Hail Mary, they assume Medicare pays for most short stays– which one nursing home worker laughs off, “[I] can count on 2 hands out of the thousands of patients I’ve served, how many have actually received 100 days of Medicare coverage.”

Ultimately, the economists got the results they hoped for (had they not, would this study have seen the light of day?), and were able to achieve agreement between the Brown & Finklestein model and their own:

Singles aged 65+ who “make optimal saving and insurance decisions” (how many real people do you know like that?) are substantially less willing to buy an option to purchase LTC insurance at market premiums, based on a more-accurate transition matrix updated to 2004 based on monthly probabilities instead of annual transition events.

Now go back and read that sentence again.

Not much of a headline-grabber, huh? We should be asking ourselves what all the hoopla was about– particularly since a landmark study was released almost simultaneously as CRR which contained some of the most newsworthy, compelling and positive research about LTC insurance in over a decade. Do you remember the financial media covering this report with the same enthusiasm as the Boston College model? Do you recall seeing any of the above publications covering it at all?

Don’t worry, we’ll be reviewing it in our next LTCA Sales Idea. Until then, Good Selling!

* CRR uses a penetration rate that is between 23 – 54% less than other estimates. Had they used the higher rates, the results of their study would not have been as dramatic.

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