Long Term Care Insurance Blog

According to the folks at Center for Long Term Care Reform, the answer to that is a resounding NO. Why?

We’ve discussed on this blog many times why private long term care insurance plays a vital role in providing piece of mind for those who want to know that, as they grow older, they won’t have to worry about spending down their wealth or how they’re going to deal with the uncertainty of long term care costs. And although the industry of long-term care insurance has made huge strides in improving products and services, many are still hesitant about purchasing a long term care insurance policy. Why is this and what can be done to help improve the industries reputation?

Before we answer that, let’s get back to our original question and look at what everyone needs to know about long-term care, except this time we’re going to see what the folks at www.centerltc.com think:

LTC Comment: Most people look at the LTC status quo and scratch their heads:
* Seventy percent of people over 65 will require LTC.
* Twenty percent will require five years or more.
* LTC is extremely expensive whether delivered in a home, NH or ALF.
* But the public is in denial about LTC risk and few plan for it.
* So, most with high LTC costs end up in nursing homes on welfare.

These are not earth-shattering facts. They’re just that, facts. So why does the industry continue to struggle with such public hesitation? What can those in the industry do to improve consumers confidence and shed light on the fact that long term care is a very serious (and hugely expensive) issue, one that can no longer be funded solely by the government.

1. The public isn’t in denial about LTC risk and cost out of ignorance or stupidity but because government has always paid for most expensive LTC since 1965.
2. Nine out of 10 dollars for nursing home and home health care come from Medicaid, Medicare, VA, Social Security or other income . . . not assets!
3. Medicaid alone crowds out 2/3 to 90% of the potential market for LTC insurance.
4. Medicaid does not require impoverishment: all you need is income below nursing home cost plus unlimited exempt assets.
5. Social Security and Medicare prop up Medicaid LTC and help crowd out LTCI.
6. Social Security and Medicare have combined infinite-horizon unfunded liabilities of $107 trillion.
7. Medicaid already has problems of access, quality, reimbursement, discrimination, institutional bias, welfare stigma and loss of independence and choice.
8. Medicaid reimburses providers less than the cost of providing the care: $4.6 billion and $14.17 per bed day less for nursing homes.
9. Better look at LTC through the windshield, not the rear-view mirror, because the entitlement safety net is doomed.
10. True now but more in the future: you must pay privately to ensure access to quality LTC at the most appropriate level.

You can read more about these issues at the Center’s website http://www.centerltc.com/

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We wanted to share some insight into something BIG that is hidden in much of the health care reform talk. It’s the CLASS Act – Community Living Assistance Services and Supports (CLASS) Act. In short, the government would provide certain long term care services (once someone pays into the program for a certain number of years.) You’ll hear both sides of the story, but for a quick overview, I’d recommend reading Howard Gleckman’s piece HERE

Every worker would get basic coverage under CLASS, for care either at-home or in a nursing facility. They’d pay premiums for five years, and they’d have to need help with at least two activities of daily living (such as bathing or dressing) before they’d be eligible for benefits. While these would be modest (perhaps $75 a day), they would be available in cash. It is hard to overestimate how significant this could be for those Americans who need assistance and the 40 million family members and friends who care for them.

Tomorrow we’ll share the first of some video interviews with Claude Thau, who comments on the CLASS Act and what it may mean for long term care and to long term care insurance companies.

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Forbes.com published an article on their website today, “Long-Term Care Insurance: You Have Options”. Although the article paints a bright picture of long term care insurance today, it was quickly pointed out by a few readers that some of their assertions were incorrect, specifically those pertaining to “tax qualified plans”.

You can read the full article here, but be sure to read the comments HERE

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We just came across this short piece on how long term care insurance in the U.S. compares with similar programs in other developed countries.

A Washington Post article recently compared the U.S. Medicaid system unfavorably to the long term care systems for the elderly and those with disabilities employed in France and the United Kingdom. Going back 20 years, most of the developed world relied on a system similar to the one the United States uses: Poor enough and sick enough and you received some assistance; middle class and you were on your own (until your resources became so depleted that you no longer qualified as middle class.)

You can read the full article HERE.

If you’ve ever lived outside the U.S. or have dwelt in some way with long term care in another country, we would love to hear from you. Tell us what worked or what didn’t.

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If you fall under one of the six types of taxpayers below and pay longterm care insurance premiums, you may be eligible for certain tax deductions.
2010 Long Term Care Insurance Tax Summary

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We all love tax time! Fortunately there is some good news for owners of long term care insurance and in our next few posts we’ll be publishing some very useful 2010 tax info and what, if any, long term care insurance premiums qualify for deductions.

We’ll be looking at the following 6 types of taxpayers and what premium deductions are available:

• Individual taxpayer who does NOT itemize
• Individual taxpayer who itemizes deductions
• MSA & HSA deduct eligible premium
• Employees (non-owners)
• C-corporation owner-employee
• Other business owners

If you have additional questions about long term care insurance premiums and 2009 taxes, click here to email one of our long term care insurance experts.

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Tax season is upon us, which means many of us will be looking for legitimate expenses to write-off. One question that we’re starting to receive more of is “Can I write off longterm care insurance costs?”

We actually did a post on this back in March and will have an update for 2010 shortly. In the meantime, you can read our previous post here.

Here are a few pointers from that last post that will help get you started (remember, this was for 2009):

There is still time to take advantage of tax deductions in 2008 and also benefit from the increased deductible limits next year. The deductible limits under Section 213(d)(10) for eligible long-term care premiums that can be included in the term ‘medical care’ are as follows:

2009 Eligible Long-Term Care Insurance Premiums

Attained Age Before Close of Taxable Year & Max. Limit

* 40 or less: $ 320
* More than 40 but not more than 50 $ 600
* More than 50 but not more than 60 $1,190
* More than 60 but not more than 70 $3,180
* More than 70 $3,980

Source: IRS Revenue Procedure 2008-66 (2009 limits)

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Interesting suggestion brought up by the folks at Center for Long Term Care Reform. Use reverse mortgages to pay for long term care. Good idea or creative way to go into debt? Read the full article here.

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A recent article in the Seattle Times is raising some eyebrows regarding Washington State’s adult family homes. The piece, “How the aged and frail are exploited in Washington’s adult family homes” provides a detailed (and some would argue biased) glimpse into what is considered “…nationally as a leader in community care options for seniors.”

You can read the full article HERE. We would love for you to share your thoughts.

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The crystal ball says…a public long term care insurance program may, or may not, be successfully implemented in the coming years. What are your thoughts?

The folks over at the Center for Long Term Care reform seem to have their own predictions:

• No broad-based health reform will come to pass, much less reform that includes long-term care.
• Another economic “stimulus” will fail as they all do, only shifting wealth, not creating it.
• Huge increases in the federal deficit and debt will require additional borrowing to the point where interest on the public debt will crowd out new–and even much current–social spending. [President Obama announced last night a three-year freeze on discretionary spending.]
• The present economic crisis will worsen precipitating immediately problems with Social Security and Medicare unfunded liabilities ($102 trillion [now $107 trillion, 1/26/10]) that Pollyannas think we won’t confront until 2041 and 2017 respectively.
• Several states will declare bankruptcy, or whatever they choose to call acknowledging their financial insolvency. [Hello, California and New York]
• Medicare will cut reimbursements to skilled nursing facilities dramatically leaving the nursing home industry unable to meet even current standards of care access and quality for publicly financed patients. [Hello, MedPAC]
• Medicaid costs will skyrocket. After a one-time federal matching fund supplement, state and federal Medicaid programs will cut reimbursement, then benefits, and finally eligibility. Expect a new Deficit Reduction Act within five years that will make DRA ‘05 look like child’s play.
• Medicaid will not increase funding for home and community-based services significantly and Medicaid financing of nursing home care will be dramatically reduced. [Medicaid HCBS expansion slows as HCBS payments from LTC insurance expand.]
• No new federal tax deductibility for LTC insurance will pass, not even Section 125.
• Middle class and affluent people will be far more personally responsible for their own long-term care in the future.
• Within five years, reverse mortgages will become a major source of financing for long-term care.
• Within ten years, the market penetration of private long-term care insurance will have doubled at least.
• The “New, New Deal” will prove as infeasible to finance as the old “New Deal,” and the United States will slowly return to the principles that made our country great in the first place: personal responsibility, self-sufficiency, free minds, free markets, competition and risk without moral hazard.

Let’s check back in a few weeks, months and years and see where we are at. You can read more about their opinions here

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