April 10, 2020

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The Obama administration shelved the plan in 2011 but did not want it repealed.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.”

Learn More About Long Term Care Insurance

Don’t count on Medicare to pay for the costs of at-home nursing, an assisted living facility or nursing home care. Medi-Cal helps, but only if you are low-income.

Long-term care insurance covers the cost of care if you develop dementia or can’t physically perform daily activities, such as eating and bathing. The federal government estimates that more than two-thirds of people over age 65 will eventually need long-term care. But be advised that the insurance is very expensive.

For general information, go to www.longtermcare.gov. A fee-only financial planner can be found at www.napfa.org. Local insurance agents can be found at www.independentagent.com.

Help Your Family Stay Out of a Caregiver Crisis

November is Long-Term Care Awareness Month. And it is time for everyone to get real and make a caregiving plan. This week, I caught up with the leadership team at Genworth and asked them about a recent survey they published that talks about the state of planning in America.

I boiled down their insights into 3 basic steps that will help everyone benefit from the power of planning. It is an important and urgent matter.

As a species we are on a quest to live forever. We pursue all manners of diets, medical regimes and spiritual paths to push the boundaries of our lifespan. And while we have been successful in spanning into our 100s, we have yet to catch up on the quality of life that we want to accompany these added years. We are a nation of the chronically ill.

In a recent survey released by Genworth, it showed that Americans over the age of 65 have a 70% chance of needing long-term care. Yet nearly 60% of Americans fail to have a caregiving plan in place. This is an epic fail that has serious financial ramifications.

Usually people enter their caregiving in a crisis mode. This puts fierce pressure on the next generation to juggle between work, children and eldercare commitments. This can trim up to 10 years off a caregiver’s life span due to stress and cost them up to $300,000 in lost wages, out of pocket expenses and savings. To avert going over this elder cliff and to shift gears into care planning, it is necessary to do 3 basic steps.

Every family, regardless of their starting point, can benefit from these 3 steps.

The single biggest challenge to planning is to break the silence around the topic. It is taboo. It makes us face the prospect of disease and the certainty of death. Dr. Barbara Nusbaum, a psychologist who helped analyze the findings of the Genworth survey, says that it is possible to talk about the topic.

Dr. Nusbaum acknowledges that it is a thorny issue that sparks anxiety. She says that talking about the topic during a time of strength is the key to having successful conversations. She highlights that people who are healthy and are earning have more emotional resilience to navigate family dynamics which emerge during the planning process.

My fellow c0-founder of the Caregiver Relief Fund, Ryan Whitmore, says that this journey demands patience and persistence. He encourages families to follow a wash, rinse and repeat as needed approach. For him, talking sooner rather than later is essential to avert dealing with this in a crisis mode.

The second step is to build your care team. Whitmore points out that the best care teams consist of your family, close friends and a group of the highest quality professionals. He emphasizes the need to work with reputable professional providers. He says that quality matters when you consider that financial elder abuse is widespread at $2.3 billion per year, according to a Metlife funded study.

The stronger your team, the easier it will be to thrive during the caregiving journey.

The final step is to take action. It takes time, effort and energy to educate yourself on the different aspects of caregiving.
There are many elements to designing a care plan that works for your circumstance. As such, the time to start planning is now. Act on it.

This is a complex issue that I will help simplify in my upcoming Care Corner series here at Forbes. These articles will help family’s navigate this life chapter. I will interview leading minds in the caregiving field. These insights will help family’s build strong financial and emotional foundations that transform caregiving from a time of crisis to a time of coming together.

Choosing a Long Term Care Policy for Retirement

Over the past few years, long-term-care insurance policies have become more restrictive and premiums have spiked. Generous benefits, such as lifetime payouts, are extraordinarily expensive or have disappeared from policy menus.

With the cost of long-term-care insurance soaring, many people are taking a new approach to covering the risk, by covering a portion of the anticipated expense and calculating how much they can pay from savings. Insurers are also offering more-affordable policies. For example, some are selling policies with benefits that rise with the consumer price index or provide 3-percent compound inflation protection, rather than 5-percent compound inflation protection, and such policies can cost thousands of dollars less per year.

Be sure to check the insurer’s home-care requirements. It’s better to buy a policy that doesn’t require you to use only licensed caregivers from an agency, who tend to cost more than informal caregivers. “If you’re in a nursing home, it doesn’t matter very much what company you use. But home care is where the rubber meets the road,” says Mike Ashley, of Senior Benefits Consultants, in Prairie Village, Kan.

Also, look at how the policy counts days of care toward the waiting period, which is often 60 or 90 days. Some policies start the clock as soon as your doctor certifies that you need help with two out of six activities of daily living (such as bathing and dressing) or have cognitive impairment. Others count only the days that you receive care. Note that if you use less than your maximum daily benefit, you can extend the benefit period.

Some insurers are a lot stricter than others about which medical conditions disqualify you for a policy. John Ryan, of Ryan Insurance Strategy Consultants, in Greenwood Village, Colo., recommends that agents review your medical history and then find companies likely to provide the best deal for someone with your health conditions. For his clients, Ryan tends to work with Genworth, United of Omaha and MassMutual. John Hancock, New York Life and Northwestern Mutual are also big players in the long-term-care insurance business.

Premiums vary wildly, so it’s essential to comparison shop. Recently, a policy for a 55-year-old with a $150 daily benefit, three-year benefit period and 3-percent compound inflation protection had an average premium of $2,110 — but there was a 50-percent difference between low and high premiums, according to the American Association for Long-Term Care Insurance 2012 Price Index. To find agents who can offer quotes from several companies, visit the association’s website (http://www.aaltci.org).

How to Choose a Long Term Care Facility

There are five really important factors to consider when choosing a long term care facility for yourself or a loved one.

5: Your First Impression

Feel free to trust your first impression when you walk into the doors of a long-term care facility. Use all your senses — does the place smell pleasant, or is there an industrial or unpleasant odor in the air? Is it well-lit and pleasingly decorated? Is there a television blaring, serving as a babysitter for residents, or are there spaces for quiet and for conversation?

As you walk through the facility, you should get a sense that this is a home, not an institution. It’s important to see the rooms to determine if the layout, lighting and sense of security are adequate. Privacy is important to many people, so find out if there are single rooms or if sharing will be required. Do residents live in long, anonymous rows of rooms, or are they grouped into small households or living units? Will there be opportunities for residents to make their spaces their own, such as bringing in their own furniture and decoration? What rules regarding noise and visiting are in place?

While people tend to focus on their own rooms, take time to visit common areas as well. You might inquire if there are outside areas where residents congregate, or in which activity rooms residents tend to spend a lot of time. Evaluate these areas for homeyness and cleanliness. You’ll also want to get a sense of the eating facilities.

4: The Food

When you’re touring a nursing home or assisted living facility, you’ll likely be provided with a long list of social activities available to residents — everything from bingo to swim classes. And while a long list of activities is a good way to pick a summer camp, there’s no guarantee that the aging adult in question will want to spend a Tuesday afternoon making lanyards. That’s why it’s more important to focus on the one social engagement on everyone’s calendar: meals.

Even if assisted living residents insist on spending all of their free time parked in front of the television, they’re usually required to show up for meals. Since meals are often the primary activity of the day, take time to visit the dining areas and have a meal there. Consider whether the food is tasty enough to eat every day, and request a week’s worth of menus to see if there’s a variety of options.

Two other things to check are how dietary restrictions and preferences, such as keeping kosher, are handled, and whether a resident can get extra food or a snack throughout the day. These last two considerations will give you a clue as to whether the facility sees its residents as numbered mouths to feed or as distinct individuals with their own needs and desires. If the residents are given special attention when it comes to meals, then that standard of care usually carries over into other spheres as well.

3: Staff-to-patient Ratio

Most long-term care facilities strive to maintain residents’ independence and autonomy as much as possible. However, that doesn’t mean that residents should be deprived of care and help when they need it. For that reason, it’s important to consider the staff-to-patient ratio of any care facility. In particular, you’ll want to investigate the number of personal care aides, as they provide the bulk of resident care; a good ratio would be one aide to every five or six residents during the day and 1-to-15 at night [source: Matthews].

Good patient care is more than just numbers, though. Residents aren’t likely to feel comfortable if they never see the same person twice, and if caregiving is merely a revolving door of who’s available. A resident’s transition into a long-term care facility will likely be made smoother by receiving individualized care from a trusted caregiver. Ideally, as you tour a long-term care facility, you’d observe positive interactions between caregivers and residents, such as staff greeting residents by name and staff quickly and cheerfully responding to residents’ needs and requests.

2: The Other People

While scoping out the environment of the long-term care facility is important, so too ­is observing how people fit into that environment. That means taking a look at the current residents to see if they seem happy and engaged. They should look clean and well-groomed, because this will indicate that someone has taken care of them recently. Are there people moving around, taking part in activities, or are most people staying in their rooms by themselves?

To truly get the vibe of other people, you should visit more than once. Your formal visit, with the facility’s tour guide, will obviously be the residence’s attempt to show you the best of the best. Stop by at least twice more, unannounced, to see how people behave when tours aren’t going on. By checking into common rooms and dining areas at different points in the day, you’ll get a sense of what a full 24-hour period might be like in the home.

1: Report Card

While visiting a residence can give you a sense of all that goes well there, you may have to do some digging to find out what goes poorly there. If a facility receives Medicare or Medicaid funding, it is inspected every 15 months by a state surveyor. The surveyor’s most recent findings are required to be kept onhand and shown to anyone who asks to see them. On this report, you’ll learn what violations have been reported, such as physical abuse or health violations. Some of the violations may be minor, and no facility has a perfect record, but by asking staff members about these shortcomings, you might get a sense of whether they take complaints seriously or whether complaints are routinely blown off.

Another good resource is your state’s long-term care ombudsman (some communities also have local ombudsmen). The ombudsman acts as an advocate for long-term care residents and their families and visits facilities regularly. He or she will have a good idea of the issues and problems at certain facilities, as well as a sense of what residences might particularly suit a certain type of person. The ombudsman’s services are provided for free.



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