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WHY LTCi

Why LTCi

Not sure why Long Term Care Insurance (LTCi) is a good idea? The following lists most of the reasons people use for failing to purchase LTCi:

I’ll self-insure

If you really mean this, the only smart way to accomplish this is to have separate long-term care savings. If you don’t do this, and do wind up needing care, your life savings may have to be drawn upon to pay care costs. Self-insuring may cause you to spend money you intend to live on in retirement, or leave a legacy with. It may also result in less freedom/fewer care choices and unnecessary stress for your spouse and family. According to the 018 Genworth Cost of Care Survey, average assisted living rates in TX are $42,540 a year, nursing home private rooms average $68,680 a year.

I’ll self-insure (2)

You will have to save very aggressively to accumulate what LTCi will generate. Use this tool to see how much you’ll have to save to self-insure for LTC or call me and I’ll walk you through the arithmetic to prove this, using all of your own numbers and assumptions.

The government pays for care

The government doesn’t pay for the broad range of care options many people want.

I’ll wait

If you plan on living a long life, waiting to buy LTCi will not save you money. In addition, if your health declines, LTCi may cost a great deal more, or you may not qualify for it at all.

I won’t need care/LTCi is a rip-off

If you believe this, you’re at odds with every nationally recognized financial expert I know of. If you’re middle class, even our federal government and Dear Abby advise purchase of LTCi. The odds are high that you may eventually need care, and care costs can be catastrophic.

My kids will take care of me

You don’t believe this, do you? Do you want to burden them?

I don’t need an insurance agent; I’ll do it myself

Then why haven’t you done this yet? LTCi is has a few too many moving parts for the typical person to tackle alone. There’s so much to it that often people feel overwhelmed by the task, so nothing gets done. Some people do buy LTCi on their own, but never quite develop a full sense of confidence in their decision. If you’re going to spend the money that LTCi costs, you should be absolutely confident about what you’re doing. You should have a plan you understand well, that does exactly what you want it to do, and fits into your budget. In the same amount (or less) time that it would take for you to try to plod through your LTCi decision on your own, you could have a more pleasant and less stressful experience working with me. National media and national experts recommend that you work with an LTCi specialist. My clients agree.

LTCi Is Expensive

It doesn’t have to be. Rates vary depending on your age, marital status, health, and what features you choose. The big picture is that if you need care, it generally takes just a few months or less, to collect the entire premium you paid in.

The information above strictly reflects my personal opinions. Always feel welcome to call me at 713-988-4671, or contact me to talk about any of this.

Reality Setting in: Nursing Homes Start to Shutter

October 31, 2011 by Honey Leave a Comment

In an article titled, “Long-term care patients face move as hospital ends service,”Manuel Coppola of the Nogales International (268 W. View Point Dr. Nogales, AZ 85621) states that “Over the next three months, 26 long-term-care patients at Carondelet Holy Cross Hospital (HCH) will have to find somewhere else to go after a decision was made this week to discontinue the residential service effective Feb. 3, 2012.”

The article tragically reports that $500 million in statewide cuts to Arizona Medicaid make reopening the facility highly unlikely.

According to Dina Sanchez, HCH assistant administrator, “For several years, Carondelet Holy Cross Hospital was already subsidizing residential care at this long-term care facility to the tune of about $1 million per year.”

The article continues, “With $1.6 million in AHCCCS (Arizona Medicaid) cuts to Holy Cross compounding the fiscal stress, something had to give.”

I believe this is the tip of the iceberg and that scenarios like this are going to begin playing out across the country. If you don’t already own long-term care insurance, it’s time to face up to the fact that the government won’t be able to pay for your long-term care.

CLASS Act LTC Dead

October 17, 2011 by Honey Leave a Comment

On October 14, 2011, the Department of Health and Human Services (HHS) Secretary Kathleen Sebelius announced her recommendation to halt implementation of the Community Living Assistance Services and Supports (CLASS) Act.

Those of us who specialize in long-term care insurance (LTCi), including the Society of Actuaries and the head actuary of the US Dept of HHS, recognized from the outset that CLASS Act long-term care (LTC) was unsustainable as proposed. It was to be a voluntary program that was going to accept everyone in the workplace who applied, regardless of their insurability. This would have resulted in the most classic example of adverse selection ever. Had CLASS Act LTCi been enacted, there was budget to publicize the need for responsible planning. For healthy applicants who shopped, CLASS Act LTC would obviously not have been competitive with existing LTCi plans in either price or benefits. These two things would have been, in the short term, financially beneficial to advisors. However, in the long run, CLASS would have turned into one more giant government money-hemorrhaging entitlement program.

RIP, CLASS Act!

Days of Decent, Accessible Govenment-Paid LTC Waning

September 14, 2011 by Honey Leave a Comment

An article in the September 10, 2011 edition of the Oakland Tribune by Sandra J. Cohen and Roger Cormier reports that the state of California plans to transition Medi-Cal enrolled participants in adult day health care (ADHC) to a new model before December 1, 2011, which is the date the state has decided to cancel current ADHC Medi-Cal funding.

Most of the state’s 37,000 ADHC enrollees participate in Medi-Cal.

ADHC is a long standing, comprehensive, efficient program that provides medical and social support services and meals in congregate settings for frail elders with multiple chronic conditions, developmental disabilities, or severe, persistent mental illness.

The anticipated changes have already resulted in fallout. Several ADHC programs have already closed because participants and volunteers backed out.

Professionals in the field anticipate that the changes will result in increased nursing home placements and expenses.

This disruptive shift is no doubt due to California’s severe budget shortfalls. The article states that people who privately pay for care or use long-term care insurance (LTCi) to pay for ADHC will not be affected by the cutbacks.

Hopefully, stories like this will encourage more people to plan for long-term care while they are able to do so. The days of decent government-paid long-term care appear to be drawing to an unpleasant end.

Medcaid Loopholes Easily Exploited by Middle Class

September 11, 2011 by Honey Leave a Comment

Here’s a press release by Dale Krause, an advisor who appears to specialize in Medicaid planning. I have recently written about my qualms with Medicaid planning, which I consider “gaming the system.” By using glaring loopholes in current Medicaid laws to re-position, shield and preserve often extensive wealth, advisors like Mr. Krause are often successful at enabling their clients, people of means, to qualify for Medicaid.

Medicaid is a program that was set up to assist the indigent and handicapped: people with little or no wealth. In addition, Medicaid-paid LTC is typically inferior to non-Medicaid-paid LTC. With our country’s grave financial crisis and an oncoming Silver Tsunami of Baby Boomers who’ll need LTC, I predict Medicaid-paid LTC will get worse, not better. We the tax payers fund Medicaid and ultimately wind up paying for the schemes Mr. Krause & others like him derive their income from.

Here is the comment I emailed the author of the press release:

“Hi Dale

Sounds like you are involved with long-term care on an abstract basis and haven’t really thought through the reality of such things as the dignity and options your clients will want. I hope you will take a few moments to read the linked article I wrote on the undeserved glorification Partnership LTCi often gets. I also think it would be wise for you to create a Plan B for when the government inevitably eventually closes the loopholes your strategies depend upon.”

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