April 10, 2020

Protect Yourself and Your Family From Long Term Care Costs

There’s no denying it: Most of us are going to need some form of long-term health care during our golden years. And costs of such care are rising.
Genworth Financial recently released its long-term care Cost of Care Survey for 2013, and the results are sobering. The costs of home care providers, adult day health care facilities, assisted living facilities and nursing homes have been steadily rising over the past 5 years.
That being said, the cost increase varies depending on what type of service is necessary. For instance, in 2008 the median annual rate for a private nursing home room was $67,525; in 2013, it’s $83,950 (though prices vary widely across the country). This increase reflects a 4.45 percent compound annual growth rate, more than twice the annual rate of inflation during the same time period.
However, the news is a little better if you don’t need a facility. The national hourly median rate for a licensed home health aide rose by just 1 percent annually over the past 5 years to $19. This slower rate of inflation is attributed to increased competition among agencies and the wider availability of unskilled workers during the recession.
Those are the numbers, but how likely is it that you will need care? According to the U.S. Department of Health and Human Services, about 70 percent of people over age 65 will require some type of long-term care services during their lifetime, and more than 40 percent will need care in a nursing home. Of course, your personal health history may increase or decrease your chances of needing long-term care. (One surprising fact: If you live alone, you’re more likely to need paid care than if you’re married or single and living with a partner. Maybe Match.com should incorporate this detail into their sales and marketing materials!)
One of the big misconceptions about LTC is that services are covered by Medicare. But in reality, Medicare only addresses short-term skilled services or rehabilitative care; it does not cover “custodial care,” or assistance with activities of daily living. The only government-provided insurance that does provide LTC coverage for this is Medicaid, but qualifying for it is a doozy.
If your total net worth is below a certain level (probably around $300,000), it makes sense to rely on Medicaid for future LTC costs. However, Medicaid is a state-specific benefit, so you should visit http://longtermcare.gov/medicare-medicaid-more/medicaid/ for more information. On the other end of the spectrum, if you have more than $1.5 million, you can choose to “self-insure,” where you tap into your assets to pay for care.
The folks that fall in between Medicaid coverage and self-insurance are the ones that should be considering how to protect against a long-term illness that eats away at their financial health as well. These “LTC tweeners” should consider purchasing long-term care insurance.
The biggest problem with long-term care insurance is that it is expensive. It’s hard to justify spending thousands of dollars a year on insurance that you may never need. But then again, do you kick yourself for buying auto insurance and not totaling your car?
Another hurdle is that it’s been hard to find a highly rated insurance company in the LTC business these days. Prudential Financial, MetLife and Unum have all decided to exit the individual long-term care insurance business. While these companies have said that they will honor all existing contracts, which will be guaranteed renewable, they will no longer write new LTC policies.
Why are these companies leaving what would seem to be a highly profitable business? The answer is clear: Insurance companies are very good at pooling and insuring certain types of risks, like homeowners and drivers, but they are less confident about projecting how many people will need long-term care and how much that care will cost.

Getting old is hard enough as it is, but protecting yourself and your family from rising LTC costs can make all the difference in the world.

Shopping for Long-Term Care Insurance

Most of us don’t like thinking about all of those end-of-life documents and preparations. However, you and family members will be glad later if you take some time now to gather information and make some decisions.

Long-term care insurance (LTCI) is a product that might be needed before one reaches “old age.” So, looking at it in mid-life can have its advantages. A good place to start your search for LTCI information is at the NC Department of Insurance/SHIIP website at: ncdoi.com/SHIIP/SHIIP_Long_Term_Care.aspx.

At that website, there are several short publications to download or you may call the National Association of Insurance Commissioners at (816) 783-8300 (Option 2) to request a copy of the Long Term Care Guide.

Long-term care insurance protects the individuals/family from the high cost of long-term care and protects assets for heirs. Long-term care insurance is designed to pay some or all the costs of nursing home, community or home health care when you cannot meet the needs of everyday living on your own. While such insurance is costly and might not cover all of your expenses, it can help to safeguard your assets and protect your financial stability. It is not for everyone. If your only income is Social Security, it is unwise to buy a long-term care policy.

In general, you should purchase as much coverage as you can reasonably afford. Policies vary in their coverage features. Buyers must exam the written details of policies before purchase to avoid surprises later, like no inflation protection and to avoid misleading statements about coverage.

The Facts About Long-Term Care Insurance In North Carolina fact sheet (at above website) lists the NC requirements for LTC Policies and lists companies approved to sell LTCI in NC. It lists general shopping tips and describes features of some policies. A page is included to help determine if LTCI is right for you.

When people make application for LTCI, companies underwrite the policy either before the policy is issued or after a claim is made which is called post claim underwriting. Be sure the underwriting is done before your policy is issued. The insurance company will gather information about your health status to determine your risk and whether they wish to cover you. This will take some time.

Avoid post claim underwriting as the insurance company might decide you are too high a risk and they don’t want to cover your claim. They will refund all of your premiums and cancel the policy, leaving you unable to get any other coverage.

Finding a good policy from a good company takes some investigation and weighing of your needs and available features/costs.

Long Term Care in Illinois State Medicaid Program


State officials say Illinois is moving toward the second phase of a new program for those in the Medicaid system.

The Illinois Department of Healthcare and Family Services made the announcement. Officials say starting Friday there will be new services for more than 40,000 people in the Integrated Care Program. Those services include nursing home care and home and community-based care.

State officials say they hope the program saves government money and offers better care. The first phase of the program focused on standard services like specialist care, lab work, mental health care and substance abuse. The second phase adds long-term care services.

The third phase is expected to launch in 2014 and those suffering from developmental disabilities.

Six Ways to Save Money on Long Term Care Insurance

As we live longer and longer, it becomes more and more likely we’ll become sick or disabled enough to require long-term care, either at home or at a facility such as an assisted living center or nursing home. At the same time, long-term care insurance is becoming more and more expensive, and it can seem daunting to find a policy at the right price.

According to a survey from the American Association for Long-Term Care Insurance, premiums increased by as much as 17% from 2011 to 2012, meaning that a typical individual policy that carried an annual price tag of $1,480 in 2011 now costs $1,720. The association’s executive director Jesse Slome says premiums have gone up by as much as 50% compared to five years ago, pushing the cost beyond many budgets.

The reasons long-term care insurance costs keep increasing are twofold. The cost of long-term care itself has skyrocketed, so a person who would have needed about $100 a day in long-term care insurance coverage 10 years ago needs to double that now, says financial planner Tom Hebrank, founder of Advanced Planning Solutions in Marietta, Ga. On top of that, record-low interest rates have hurt profits for insurance companies, which are heavily invested in bonds. So, insurers have been forced to raise the premiums they charge for coverage.

Despite the challenges, experts say you can buy long-term care insurance that will protect you and won’t completely break the bank. Here are six strategies to save.

Shop Around for a Lower Rate
Consumers should be aware that prices for the insurance policies can vary widely from one carrier to another, says Slome. The survey done by his Westlake Village, Calif.-based trade group found that in some cases, the price difference was as wide as 132%. Slome says the plans are exactly the same but some insurers charge more than others, so shopping around is the first step if you want to spend less on long-term care insurance.

Streamline Your Coverage
With auto insurance, you can pay less by dropping some types of coverage, such as collision. In a similar fashion, you can cut the cost of long-term care insurance by streamlining your policy.
For example, long-term care insurance can offer options to protect against inflation, so that the policy you buy today will keep up with the rising costs of care. If you believe your income and savings will be able to handle the cost increases, Hebrank says eliminating inflation protection from your long-term care policy can cut the premium in half.

Be Willing to Move
Another way to lower your coverage costs: Plan to go to a cheaper area if you need care. Maybe you live in New York, where health care costs are high, but your children reside in Georgia, where care costs less. Hebrank says you can decide that you will travel to Georgia if you need long-term care and buy an insurance policy offering a lower daily benefit. “If you cut your daily benefit in half, then generally you cut the price of the policy in half,” says Hebrank.

Pass on a Lifetime Policy
Reducing the possible length of your long-term insurance benefits also can save you big.
A policy that would pay for up to five years of care will save you as much as 27% annually compared to an unlimited plan, while a policy that pays for three years would save as much as 39%, Slome says. Long-term care is used an average of three years, according to the U.S. Department of Health and Human Services.
Married couples can save through what is known in the industry as a “shared care plan.” For example, if each spouse buys a three-year plan, they can share the six years of coverage. One spouse may need two years of care, leaving four years of coverage for the other. If one dies, the benefits carry over to the surviving spouse, says Slome.

Extend the Waiting Period
In the same way that health insurance premiums can be reduced with a high deductible, long-term care insurance can allow you to enjoy a lower rate by opting for a longer period of paying the bills on your own before your coverage kicks in. While the majority of people get long-term insurance with a 90-day wait (also called an “elimination period”), you’ll pay less each month if you can go longer. The size of your savings will vary from carrier to carrier, says Hebrank.

Get it While You’re Younger
When it comes to long-term care insurance, there’s one glaring catch. You probably won’t need the coverage until you are older, but wait too long to buy it and you will pay a fortune — if you are even eligible at all. The older you are, the greater likelihood that your health will suffer, increasing the chance that an insurer could reject you outright because of pre-existing conditions. That’s why experts say to consider buying coverage beginning in your early 50s.

“It’s much more affordable the younger you are and the healthier you are,” says Sara Polinsky, a Sherman Oaks, Calif., estate planning and elder law attorney. She adds that many children of her elder clients take a look at how expensive long-term insurance is for parents who procrastinated “and then turn right around and buy long-term care insurance so they don’t have to worry about it as they get older.”

Is Long Term Insurance Worth the Cost?

Buying long-term care insurance could do you more retirement planning harm than good, says actuary Anna Rappaport, chair of the Committee on Post-Retirement Needs and Risk for the Society of Actuaries and key author of a new study on retirement security.

Long-term care insurance is expensive, and the likelihood you’ll need it for a significant period of time is relatively low. Rappaport says that in the case of couples who made an average income before retirement — about $60,000 a year — and who retire with less than $100,000 in savings, buying long-term care insurance could reduce their standard of living and leave them vulnerable to minor financial shocks — a leaky roof or a damaged car. And it could increase the likelihood they will outlive their money.
On the other side of the slate are couples whose incomes before retirement were greater than $150,000 a year and who retired with more than $500,000 in savings. These couples can afford to purchase long-term care insurance without seriously reducing their standard of living — but the purchase, Rappaport believes, may not add sufficient financial stability over the long run to be worth the money. In a pinch, they could pay the bill without the help of insurance.

The people most likely to benefit from the purchase of long-term care insurance are those in the middle — $105,000 a year in salary before retirement and about $250,000 in savings. But even in those cases, she recommends that couples consider insuring only the wives. Research suggests that while women live longer than men, those extra years are unlikely to be healthy ones, she says. Buying long-term care insurance for this woman who will probably be widowed and is likely to have health care needs makes good sense in many cases.

“It’s not a perfect solution — there isn’t a perfect solution. You have to make trade-offs. But insuring the wife may be a very good trade-off,” Rappaport says.

How to Know if it's Time for a Nursing Home

Is it Time for a Nursing Home?

When is it time to consider a nursing home?
The National Association of Area Agencies on Aging reports, “of the almost 6 million adults age 65 and over with long-term care needs, only 20% receive care services in a nursing home or other institutional setting, with the remaining 80% receiving assistance at home and in the community.” So how do you know when it’s time to make that move from home care to an nursing facility? One way is using a tool called the activities of daily living (ADL). It’s an assessment of the tasks required for self-care. So in short, a nursing home might be in order when in-home care or an assisted living care facility is no longer enough to meet a senior’s needs.

When a nursing home is the best choice
When evaluating a senior it’s important to look at the ADL list because it will touch on points when nursing home care could be required:

Cannot use telephone
Unable to shop without assistance or even shop at all
Needs meals prepared and served or cannot maintain an adequate diet
Cannot participate in housekeeping activities
Needs laundry done by others
Needs travel assistance or does not travel at all
Isn’t capable of dispensing own medication
Incapable of handling money or making day-to-day purchases

Of course some seniors might be able to do some tasks, but not all of them. If that is the case, then a home health care worker, employed to help with certain tasks, is a much more affordable option. However, if someone is having trouble with a majority, or all, of these tasks, then moving to a nursing home is often considered the safest choice if no one can provide 24/7 care. And make sure that when choosing a nursing home, you choose one that is caring and careful about security. You may want to make sure they have security systems for home security from a reputable provider like ADT to help keep your loved one safe and comfortable.

Potential costs and ways to get help
According research condcuted by MetLife, “The average national cost for care in a nursing home is more than $77,745 a year for a private room and more than $68,985 for a semi-private room, although the actual cost can vary depending upon the area in which you live and the level of care required.”
“The average national cost for care in a nursing home is more than $77,745 a year for a private room and more than $68,985 for a semi-private room.” – MetLife

Medicare coverage is extremely limited, however in some instances it will pay for a fixed period of care in a Medicare-certified nursing home. According to its web site, “Medicare uses a period of time called a benefit period to keep track of how many days of SNF (skilled nursing facility) benefits you use, and how many are still available. A benefit period begins on the day you start using hospital or SNF benefits… You can get up to 100 days of SNF coverage in a benefit period. Once you use those 100 days, your current benefit period must end before you can renew your SNF benefits.”

Medicaid will pay for nursing home care, but again, it must be a Medicaid-certified facility. In addition, they only pay after what they consider to be countable property is depleted (such as cash over $2,000, stocks, bonds, IRA’s, etc.). It’s important to note that exempt items (a home, a car, household goods, business property/real estate, term life insurance, or mortuary trust and burial plot (up to $1,500) are allowed to receive Medicaid benefits.

For individuals who plan ahead, the AARP suggests long-term care insurance be purchased in middle age when rates are lower. However, they state, “An individual who’s 65 years old and in good health can expect to pay between $2,000 and $3,000 a year for a policy that covers nursing home care and home care, with premiums adjusted for inflation.” They add as long as a policy purchase doesn’t affect the current standard of living, it’s worth considering. In addition, they warn that there are two basic policies – nursing home care or only home care – so be sure you know what you’re buying.

In the end, two facts are certain – nursing home care is expensive and it’s a decision that must be made carefully. When it comes time, families do have places to turn for help in making the final decision.

20 Signs That Your Aging Parents Need Help at Home

The burden often falls on the family to recognize the signs that an aging parent might need help with daily living tasks.
This doesn’t necessarily mean that your loved one has to go to assisted living or a nursing home, but they may need some extra help in their home. If they’re not willing to admit it, how do you know if your elderly parent needs home care? Here are some warning signs to look for:

1. Spoiled food that doesn’t get thrown away
2. Missing important appointments
3. Unexplained bruising
4. Trouble getting up from a seated position
5. Difficulty with walking, balance and mobility
6. Uncertainty and confusion when performing once-familiar tasks
7. Forgetfulness
8. Unpleasant body odor
9. Infrequent showering and bathing
10. Strong smell of urine in the house
11. Noticeable decline in grooming habits and personal care
12. Dirty house, extreme clutter and dirty laundry piling up
13. Stacks of unopened mail or an overflowing mailbox
14. Late payment notices, bounced checks and calls from bill collectors
15. Poor diet or weight loss
16. Loss of interest in hobbies and activities
17. Changes in mood or extreme mood swings
18. Forgetting to take medications – or taking more than the prescribed dosage
19. Diagnosis of dementia or early onset Alzheimer’s
20. Unexplained dents and scratches on a car

Will Medicaid Make Me Pay Them Back My Parent's Nursing Home Costs

Here’s a typical scenario I’ve seen play out: You’ve met with your elder law attorney, you’ve come up with a plan of action, time has gone by, and your parent has entered the nursing home, with Medicaid paying the full cost. Your family members have managed to preserve virtually all of their assets through careful planning, so you feel that the lawyer’s fee was well worth it!

A number of years go by and your parent has now passed on to a better place, but before you’ve finished grieving you get a letter from the state Medicaid Recovery Unit requesting repayment of every dime they paid out on your parent’s behalf! You’re depressed, angry, confused. You stare at the paper and can’t believe it. “I thought we were all set, that once Mom was on Medicaid we didn’t have to worry about that any more….Can this be correct?” you ask your siblings.
Unfortunately, the answer is “Yes.” What you have just been confronted with is something called Medicaid “estate recovery.” Essentially, it requires repayment of the entire amount of Medicaid benefits that were made during your family member’s stay in the nursing home.
Prior to 1993, such estate recovery was optional—a state could implement it or not. However, in that year a new federal law was passed (known as OBRA ’93) that mandated that every state must seek estate recovery from its Medicaid-receiving residents, following their deaths.
In essence, while you thought you had qualified your family member for a government handout, all you’ve really received is an interest-free loan. And upon your family’s member’s death, the state wants its loan paid back.
Now if you’re sharp, you may be thinking “Wait a minute…if someone qualifies for Medicaid, they have to be essentially broke. So where exactly is this money coming from to repay the state?” That’s a good question, and the good news is that if your family member died owning nothing, then indeed the state is out of luck. It can’t go after the kids’ money. There must be some assets that the nursing home resident had a legal interest in, at the time of death, in order for the state to be repaid.
In many states, the only “legal interest” of a deceased Medicaid recipient that is taken into consideration is the individual’s so-called “probate estate.” That’s an asset that was titled in the sole name of the individual, or as a “tenant in common” if jointly owned. It’s the assets that will pass under a person’s will. For example, something like a joint bank account, stock owned in “TOD” (transfer on death) form, a bank account with a “POD” (pay on death) beneficiary, an annuity interest, and real estate that’s titled as “JTWROS” or “joint tenants with right of survivorship,” are all non-probate assets and therefore protected against the state’s claim for reimbursement.

A number of other states, however, have passed laws that permit recovery against an “expanded definition of estate.” The federal Medicaid laws permit this. Under such an expanded definition “estate” could now include joint property, life estates, living trusts, and any other asset in which the deceased nursing home resident had any legal interest at the time of death. This even goes against hundreds of years of common law, but it is legal, and there have been a number of court cases that have backed this up.
Now if you live in one of the “probate estate only” states, you should feel lucky, but remember that at any time your state can revise its laws and go with the broader definition. And your family member will not be “grandfathered in” if he or she received Medicaid benefits before the change in law in your state; there have been court cases that have ruled on this, stating that it’s the law in effect as of the date of death of the Medicaid recipient that counts.
Well, what should you do to plan for this, assuming you can do anything at all? And are there exceptions to this harsh rule?
Merely qualifying for Medicaid is not enough if upon your death your family will have to pay back the state every dime of benefits it paid out on your behalf during your lifetime. There must be some planning techniques you can implement, right? Some “secrets” to avoid that harsh rule?

Let’s take a look at a few…

First of all, in states where recovery of benefits paid is only made by a claim against your probate estate, all you need be sure of is that the Medicaid recipient has no probate estate at death. Thus, the recipient should only own assets in POD, TOD, joint ownership with right of survivorship, annuity, etc., form. This is similar to those avoid probate techniques, except that you cannot use a living trust: any asset titled in the name of a living trust will be a countable asset for Medicaid purposes, even if it’s ordinarily non-countable were it not in the trust.
For example, you can title an automobile in joint names with a child. So the car would be titled as “Mary Smith and John Smith, JTWROS.” John is Mary’s son, and upon Mary’s death, sole title to the car passes automatically to him outside of probate. “JTWROS” stands for “joint tenants with right of survivorship.” (Be sure to check your state’s motor vehicle titling rules to be sure this will work in your state!) Since one car of any value is exempt during Mary’s lifetime, it’s protected during her life and escapes estate recovery on her death.
The same approach can even be taken for her house. Since a Medicaid recipient’s house is normally exempt during lifetime (for an unmarried person, up to between $500,000 and $750,000 of equity value, depending on the state), it’s only at the recipient’s death that there’s a problem. So to avoid the house being included in the parent’s probate estate, once again you can title the house as JTRWOS. CAUTION: Adding another person’s name to the deed is a gift of an interest in the house, effective upon the date of the deed. Thus, when Mary has her attorney add her son John’s name to the deed, she has just made a gift of 50 percent of the house to him. Although gift tax is rarely an issue, it should be considered. More importantly, though, is that this is a Medicaid-disqualifying transfer, with a large penalty attached. If Mary wants to go this route, she may be unable to apply for Medicaid for five years after she signs the deed.

Also, what if John is sued or divorced? Mary may still think of the entire house as “hers,” but the creditor or divorcing spouse will view that 50 percent interest in the house as an asset of John’s, and it could be subject to attack. Mary may find herself out on the street if the house has to be sold to satisfy the judgment or divorce settlement.

Some states permit adding another person to the deed by giving them less than 50%, which could reduce the amount of the gift, but that is something only your attorney can determine for you. Sometimes what the rule is for real estate law differs from the rule for Medicaid purposes. So, a word to the wise: be sure that the attorney who is doing the new deed for you is up-to-date on the effect that will have on your Medicaid eligibility!
It’s not enough to qualify for Medicaid unless you also plan for the possibility of “estate recovery.” That’s when the state presents a bill to the estate of the person who had been receiving Medicaid, for all Medicaid payments it made on behalf of the Medicaid recipient, following that person’s death. There are some exceptions, however, that prevent such recovery. Let’s take a look at a few of these.

If you were under age 55 at the time you received Medicaid benefits other than nursing home care, then you will be exempt from estate recovery.

If you are survived by a spouse, a child under age 21, or a blind or totally and permanently disabled dependent, you will also be exempt from estate recovery. Technically, the federal law states that recovery can be made “only after the death of the individual’s surviving spouse.” So if, for example, the surviving spouse dies a month after the Medicaid recipient spouse, a state could file a claim for recovery at that time. Many states, however, have taken a more liberal reading of this, and so long as there is a surviving spouse, no recovery will be made, no matter how long or short the surviving spouse lives. Once again, you’ll need to check your state’s own laws to find out which rule applies to your situation.

Notwithstanding the above, even in a state where recovery may be made after the surviving spouse’s death, there typically is an additional limitation that applies to all claims against an estate: all states have a statute of limitations that bars claims against an estate that are made more than a certain number of months after the death. In many states, that limit is one year. So, in a state with this rule, if the surviving spouse dies more than a year after the Medicaid recipient spouse, it will be too late for the state to file its claim for estate recovery.
If a state can only file a claim when there is no child under 21, can they wait until the child attains age 21 and then file their recovery claim? Once again, this must happen within the statute of limitations period, assuming there’s not a blanket exemption if there’s a surviving child under age 21, period.

There will be no recovery made against the exempt home of the Medicaid recipient (i.e., it will not have to be sold to pay back the state) in either of these two scenarios:
A sibling of the Medicaid recipient was living in the house for at least one year immediately prior to the date the recipient was admitted to the nursing home and who has continuously lived in the house since then
There is a son or daughter (of any age) of the Medicaid recipient who was living in the house for at least two years immediately prior to the date the recipient was admitted to the nursing home, who has continuously lived in the house since then, and who provided care to the Medicaid recipient prior to his or her entering the nursing home which permitted the recipient to delay entering the nursing home.

If all else fails, there’s an exemption against estate recovery if such recovery would work an undue hardship on the surviving family members. One example would be where the exempt asset is a working farm, and a forced sale of that farm would throw surviving family members out of work.

Washington Looking for Answers on How to Handle Long Term Care Costs

WASHINGTON — The fiscal cliff legislation passed last week killed off an unworkable long-term care insurance plan that was part of the 2010 Affordable Care Act. In its place, Congress created a study commission to come up with a solution to one of America’s most difficult and expensive health care problems.
While most Americans will need long-term care in a nursing facility or at home, hardly anyone has insurance for it. We rely instead on family members, personal savings and — after going broke — on Medicaid.
Medicare does not pay for it.
That’s a hard set of choices for care that, in the Dallas area, can cost an average of $185 a day.
Jeff Deriger, a long-term care specialist with Prescott Pailet Benefits in Dallas, says you would need to salt away $365,000 if you want to self-insure your risk of needing long-term care in a nursing home.
“Everybody has homeowner insurance, but the chance of your house burning down is like 1 in 12,000,” he said. “One in 2 will need long-term care.”
The federal government estimates 70 percent of those over the age of 65 will need some type of long-term care, while 40 percent will need care in a nursing home. (The Department of Health and Human Services maintains an information clearinghouse on this issue at www.longterm care.gov.)
The late Sen. Edward Kennedy fought to get long-term care coverage into the Affordable Care Act, where it was called the CLASS (Community Living Assistance Services and Supports) Act. It was intended to be a voluntary insurance program administered by employers and paid for by workers through payroll deductions.
Didn’t add up
Insurers were supposed to provide coverage to all who wanted it. But the numbers wouldn’t add up because of the likelihood that only those with known disabilities would apply, making the cost of premiums prohibitive — $250 to $300 a month, by some estimates.
The Obama administration shelved the plan in 2011 but did not want it repealed.
Republicans worried that the CLASS Act would be resurrected as a mandatory insurance program, where everyone was compelled to buy it — just like the Affordable Care Act’s health insurance mandate that was upheld by the Supreme Court.
In the jockeying over taxes in the fiscal cliff law, taxes for the wealthiest Americans went up, while the CLASS Act went down.
In most of the industrialized world, long-term care is an insurance benefit covered through payroll taxes. Britain and the United States are the exceptions.
Lost productivity
But U.S. taxpayers still pick up a significant part of the cost.
“The federal and state governments spend about $120 billion a year through Medicaid to care for these folks,” said Howard Gleckman, a long-term care specialist with the Urban Institute, a Washington think tank.
Relying on family members costs the country in lost productivity. Deloitte Health Care Solutions estimates that family long-term care givers provided uncompensated services worth $492 billion last year, while forgoing what they could be earning at a paying job.
About 7 million Americans had long-term care insurance in 2010, bought through their workplace or on their own, according to a study for the National Association of Insurance Commissioners.
Ed Fensholt of Lockton Benefit Services in Kansas City thinks there’s “zero chance” that Congress will create another social insurance program to cover long-term care. As for getting such insurance at work, the government isn’t doing much to encourage it.
“I don’t see that many employers sponsoring this on a group basis. Some, but not many,” Fensholt said. “Federal authorities allow a lot of these kinds of health programs to be paid for on a pre-tax basis. … But they don’t allow that for long-term care insurance.”
Deriger says employer-provided long-term care insurance could be more successful if employers provided a lean, basic plan that workers could beef up with their own money.
“A group benefit to employees could also extend to family members, including parents and grandparents if you want it,” he said. “It would be 10 to 40 percent lower than the premiums you’d get through shopping as an individual.”
The new federal commission has six months to come up with its recommendations.

Rising Costs of Long Term Care Insurance

No doubt about it—long-term care is expensive. In 2012, the average cost for a nursing home stay was about $88,000 per year, reports the AARP, and the cost of a home health aide averaged $19,000 for three visits a week, according to the Department of Health and Human Services.

Whether it’s personal care services like bathing assistance and household chores, community services such as adult day care and transportation, or nursing home services, the Department of Health and Human Services estimates that 70 percent of us will need long-term care at some point after turning 65. What’s more, most health insurance programs—including Medicare—do not cover these costs, leaving the burden on the consumer.

Some people choose to buy private long-term care insurance to try to fill the gap. But the problem is, those private insurance premiums are rising, too. Prices for new policies have risen between 6 and 17 percent over the past year, according to the 2012 National Long-Term Care Insurance Price Index published by the American Association for Long-Term Care Insurance.

The Reasons Behind Rising LTC Insurance Costs

Why is long-term care insurance more expensive than ever? One major factor in the price jump has been the decline in interest rates in the wake of the economic recession, which caused insurers to increase premiums.

“The cost of long-term care insurance has risen because claim costs are increasing and interest rates are at historic lows,” explains Jesse Slome, executive director of the American Association for Long-Term Care Insurance. “Most affected are policies which contain the five percent inflation growth option; but with inflation so low, there are other options available where costs are surprisingly affordable.”

That last bit, at least, is good news; with many policies paying up to 60 or 70 percent of long-term care costs, the savings could be considerable if you take the time to shop around for more reasonably-priced options.

Does Mom Really Need Long-Term Care Insurance?

Private long-term care insurance may not be the right option for everyone. If your loved one has a fairly low income and savings, and/or a high level of disability, then they might qualify for Medicaid or a state-funded program to pay for LTC services. Conversely, those with a lot of income or savings may be able to afford the actual costs of care. However, if you fall somewhere in the middle, you might want to shop around.

What’s the right approach to shopping for LTC insurance? “Buying some coverage with no inflation growth,” suggests Slome, is a good place to start. “A better plan could look at the same initial benefit with the ability to add to the coverage in future years even if your health changes.”