Medicaid
Do You Know Someone Who May Soon Need Help Managing On Their Own?
We all dread the time when we may need some assistance due to not being able to manage on our own anymore. It happens to others, but surely, not us. We are never prepared when a loved one needs help, and then we find out how expensive such care is. There seems to be no one place with all the information we need to formulate a plan.
Many family meetings occur in my office, trying to figure out how the family will care for Mom or Dad. The usual questions include: will the VA provide any assistance? Yes, perhaps, through a program called Aid and Attendance. It is a needs based program (meaning your assets must be somewhat limited) that can be available to veterans and even their spouses to help pay for care.
Medicaid is another possible assistance program. It, however, requires strict impoverishment, spending down to very low asset and income levels and is a last resort. There are things a family can do to protect some assets from this spend-down requirement, and this is often a topic of much interest.
If some funds are available from savings or home equity, there are some little known strategies to produce an income for life that requires far less of these assets than a typical life annuity. When life expectancy is less than “average” for someone’s chronological age, this can seem like a miracle. Being able to pay for the needed care and never running out of money is a very good thing indeed.
If you or someone you care about is going to need some help with day to day activities, and you have no idea where to start looking for help, call us at The Long Term Care Guy. We are Wisconsin specialists based in Green Bay, but can help with questions no matter where you are.
Give us a call at (920) 884-3030 or (800) 219-9203 or send us an email at [email protected]
Help Wanted – Home Health Aides
Another article appeared in the Wall Street Journal recently about home health care workers. If you want job security, long hours and low pay, this is the career for you.
I have mentioned in prior posts about the shortage of workers caring for our elderly in the US. The turnover rate for home health care workers is 40% to 65% every year. The US Labor Department predicts this profession will grow by nearly 50%, or the equivalent of nearly a million new jobs by 2022. That is nearly five times the average of all occupations.
This also confirms the New York Times study that caregiving will overtake retail as the number on occupation in America by 2020, only 5 1/2 years from now. Where will all these workers come from? Who will want these jobs at a median wage of $20,000 a year? ResCare, one of the nations largest home care providers hires 2000 workers a month, just to replace workers who have left.
When your health changes and you can no longer manage on your own, who will care for you? Will it be your children? How many do you have, where do they live, and can they leave their careers and families to care for you?
Do you think the government will provide your care? Spend your money and let Uncle Sam take over? He can’t print it fast enough now and the baby boomers continue to turn 65 at a rate of 10,000 a DAY!
A nice assisted living facility that costs $3600 a month now (assuming your need for care is not significant) will be close to $15,000 a month when today’s 50 year olds are 80. Many 80 year olds think this is something they might not need for 10-15 years yet, when it will cost $30,000 a month.
I have Long Term Care insurance that will help pay these bills. Every year its benefits increase automatically at 5% compounded. Many insurance companies and agents are promoting LTC insurance policies that do not increase at all or do so at only 3% inflation. That will not pay the bills in the future! The only good those policies will do is to earn them a commission and leave the (woefully inadequately) insured clients to spend down to Medicaid impoverishment.
Congress wants to raise the minimum wage by a third. Caregiving providers cannot hire or retain workers at current pay grades. Wages will go up, and those with money will be able to get the care they want. I will. Will you? Long Term Care insurance is still available at reasonable rates, if it is chosen appropriately. That’s where I can help.
More information is available at www.TheLongTermCareGuy.com or call me, let’s talk. (920) 884-3030 or at (800) 213-9203 if are from out of town
Providers Sue Kids For Parents LTC Costs
From Financial Advisor magazine comes the following information: more than half the states have filial responsibility laws making adult children legally responsible for indigent parents’ bills.
I’ve known about this for years, but never thought they would be enforced. However, now nursing homes, assisted living facilities, or even a publicly funded long term care agency can go after family members to repay outstanding LTC bills. 28 states have these laws on the books and are now starting to use them.
Buried in the Omnibus Budget Reconciliation Act of 1993 are rules that “compel state agencies to collect back funds they’ve expended on Medicaid services from families if they discover the families have assets available”.
Before Medicaid benefits kick in, you’re supposed to liquidate the cash value of any life insurance policies and spend the proceeds on health or long term care. If Medicaid discovers you did not, it will essentially fine you to pay back any money it’s spent on your behalf. Even after you die and your family collects a death benefit on that insurance, Medicaid can sue the family in probate court to recover what the state spent on care. It doesn’t matter if the family intentionally deceived Medicaid or it was an accident.
Why is this happening? 10,000 Americans turn 65 every day, we are getting older as a nation. We don’t have stay at home adult children to move in with a la Harriet Nelson (of Ozzie and Harriet). LTC is expensive, and most of us did not prepare for it – ending up on government welfare called Medicaid. Our government does not have enough money for Social Security and Medicare, let alone thousands per month for a LTC facility for all of us.
So now the Medicaid agency will pay (and the providers lose on the low reimbursements) initially and claw back when and where they can. If you think there is no reason to worry, the government will take care of everything, think again. Talk to your children, perhaps they would purchase LTC insurance for you to protect a possible inheritance (if you are still healthy enough to get it). They could end up paying for your care later, whether they want to or not.
I can email the entire article, simply ask for it at [email protected] Check out www.TheLongTermCareGuy.com for more info
Who Will Have The Money?
I paraphrase an article in the Tuesday, July 22nd Wall Street Journal here, on spending and entitlements. The Congressional Budget Office long- term budget outlook released July 15 shows a 40 TRILLION dollar increase in debt over the next 2o years.
The CBO simply stops projecting after 36 years as its models cannot conceive of a functioning economy. What does this have to do with Long Term Care? If you are expecting government Medicaid to pay for your LTC, you had better reconsider.
The CBO’s estimates show a typical middle class family’s income tax burden nearly doubling over the next 25 years. No, this is not a rant on taxes, it is a warning that government spending cannot continue as it is (which is increasing).
Each day, 10,000 baby boomers retire and begin receiving Medicare and often, Social Security benefits as well. While five workers supported the benefits of each retiree in 1960, only two will by 2030. We do not have the resources for 77 million retirees in the Medicare system, and it’s Medicaid, not Medicare that pays for LTC when you become impoverished (it does not take long with an assisted living facility at $4000/month and a nursing home at $8500/month and doubling every 15 years).
Who will pay for your care when you can no longer manage on your own? Can your children afford to retire early and become your caregivers? Your children may be saving less than you, and you probably did not save enough for your retirement.
We are going to be on our own for our LTC. I bought LTC insurance for myself years ago, when the policies were less expensive, and the insurance companies accepted people that today are often declined. They learned that diabetes leads to cognitive impairment, and heart disease can lead to strokes. Both of these afflictions can require years of care.
Some of the LTC insurance companies have had rate increases, due to accepting people they have now learned to avoid. Some still plan to raise rates regularly, and I avoid those companies. As an independent agent, I am able to pick and chose the best deal for each client, and I work long and hard to find the best deals.
Some LTC insurance companies do not offer their products in every state, but residents of those states can come to Wisconsin to purchase them from me and they are good anywhere in the USA. It may well be worth a $250 plane ticket to get a good deal and save $1200 a year on premiums. If your agent has only one choice, ask why. If a car dealer had only one car on his lot, would that be the appropriate one for you?
If you are still healthy enough to qualify for an LTC insurance policy, you best start investigating, now! Get while the getting is still good. They are actually very inexpensive, when one person of a couple can recoup 30 years of premiums paid by two people in less than one year on claim. I will be well taken care of, who will take care of you?
More information is available at www.TheLongTermCareGuy.com
What We Don’t Know About Long Term Care – Is A Lot
Americans over 40 — in other words, us — are dangerously unaware of our likely need for long-term care when we age and woefully ignorant about the costs, according to a new poll of adults in midlife and beyond.
The telephone survey of 1,019 boomers over age 40 was conducted by the Associated Press-NORC Center for Public Affairs Research and financed by the non-profit SCAN Foundation, which supports research and other initiatives on aging and health care. It found that many older Americans had barely begun to think about their long-term care needs, nevermind put aside money to cover them. For example, nearly 31 percent of respondents said getting older was something they’d rather not think about.
Following are other highlights from the poll, along with advice available on Next Avenue to help you avoid falling short when the time comes.
Only 16 percent of those surveyed said they had done a great deal of planning for their long-term living assistance needs; two-thirds admitted they’d barely started preparing. Looking deeper, only 8 percent of respondents between age 40 and 54 — and just 30 percent of those over 65 — said they’d begun long-term care planning. In addition, just 47 percent said they had created an advance directive (or living will) to designate someone to make decisions for them in the event that they can’t.
The survey found that even many of us who have been caregivers for our own parents have taken no steps to prepare for the day our children may need to look after us. Fifty-three percent of people responding to the survey said they had provided care for a family member or close friend, yet only 24 percent said they thought it was very likely that they’d ever require ongoing living assistance themselves.
And while 77 percent said they were confident their spouse or partner would help them as they aged, if need be, only 46 percent said they were sure they could count on their children. Maybe that hesitancy reflects the fact that nearly 60 percent of respondents had not talked to loved ones about the possibility. That’s surprising, considering 95 percent who had been family caregivers say the role was fulfilling and 72 percent say it was stressful.
Almost half of respondents – 48 percent – said they thought “just about everyone” will need ongoing living assistance at some point, even if they never become seriously ill. The federal government estimates that 70 percent of American adults will require long-term care at some point after age 65, on average for at least three years.
In the survey, 58 percent of people over 40 guessed that living in a nursing home cost less than $6,000 a month, but nursing homes actually average $6,700 per month nationwide. Respondents’ estimates of assisted-living facility and home health aide costs were more encouraging: Only 31 percent underestimated the average monthly cost of the former ($3,000 to $4,000) and 14 percent underestimated the average monthly cost of the latter ($1,000 to $2,000).
Still, when it comes to long-term care savings, many of us have not faced reality. Only 33 percent of those surveyed said they doubted they’d have the financial resources to cover their care needs as they age, which makes sense when you consider that only about a third of respondents said they’d begun setting money aside. As for the rest of us, it’s time to take financial action.
Our knowledge of what’s covered by Medicare and Medicaid is also fairly remedial. For example, 44 percent thought Medicare, the national health insurance program for seniors, paid for care by home health aides; 37 percent thought the program covered nursing home fees. But Medicare does not cover nursing home costs and it covers home aides only in certain cases. As for Medicaid, the federal program for Americans with low or no income, only 39 percent of respondents thought they might ever need to rely on it to cover long-term living costs. The reality is that Medicaid pays the bulk of the nation’s long-term care costs, usually after people have spent their retirement savings. However, there is zero chance that Medicaid will have the funds to pay for the baby boomer’s LTC needs as they begin requesting assistance. For more information visit www.TheLongTermCareGuy.com
These Are The Good-Old-Days of Long Term Care
I heard this at a panel discussion featuring speakers from Wisconsin’s Health and Human Services department in Madison, the state capital, two weeks ago. We have the facilities, we have the staffing, we have the home care agencies to care for our older Americans – yet.
The baby boomers are turning 65 at a rate of 10,000 a day. Have been for a few years now and will continue to for 18-19 more years. In 12 more years those baby boomers will be hitting 80 in large numbers. Where will the caregivers come from to handle this tidal wave of elderly needing assistance with activities of daily living or cognitive impairments?We will look back on 2014 as being the good-old-days, when providers were available with room and staff to take care of whomever needed it.
Alzheimer’s alone will cause one out of seven to need care by 65 and nearly half of us by 85. In the past month I’ve been approached by several home care agencies asking me to inquire if my clients would be willing to work a few hours a week as they already have more clients seeking their services than they have staff to provide it.
This is a WORLD wide problem as the baby boomers were caused by WORLD war II. Germany’s “Medicaid” type program has a 10 year look-back for people who have divested assets. England limits the “at home” spouse to the equivalent of $38,000 of assets, not the $814,000 house, Mercedes, and $117,240 of cash the US allows – yet.
I suppose we could import third world workers to staff our facilities and provide care at home, but they have the same aging population problems we have. Cities and states are raising minimum wages, which will make LTC services more expensive. The New York Times tells us that professional caregiving will overtake retail as the number one occupation in America in 6 more years. Where will the staff come from to fill the need of facility care and home care providers?
I have a very healthy LTC insurance policy that I purchased 13 years ago. LTC insurance was less expensive then, they accepted health concerns that will cause declines today. They offered richer benefits back then. Now less companies offer shorter duration coverage, with tighter health qualifications to get it, at higher prices as they know they will be paying the bills.
How will you pay your bills when you cannot manage on your own anymore? Will your 401K and IRA accounts continue growing throughout your retirement as your Social Security check also gets larger each year? Is the premium on LTC insurance affordable now, or will it be easier to spend $200,000 per person per year 20 years from now? I didn’t ask if you want to buy a LTC insurance policy, I asked if it was affordable. Car insurance is expensive too, but it’s less expensive than replacing one out of pocket. Statistically, you are 120 times more likely to need LTC than have a car accident. 70% of us will need care per Health and Human Services in Washington DC. I’m covered, thank goodness!
For more information try the free LTC cost calculator at www.RetirementChoices.net/rraabeLTC1.html
Where Will The Workers Come From (and What Will The Price Be?)
Long Term Care is getting more and more expensive every year. LTC insurance is getting more and more expensive each year as well, it’s a direct correlation.
This morning’s Green Bay Press Gazette had a guest commentary about boomers becoming part of the labor solution. The article stated that in less than 30 years, the number of people ages 65 or older will rise from 14% of Wisconsin’s population to 24%. The working age population may remain flat during this same period.
Earlier this year the NYTimes reported that caregiving will overtake retail as the number one occupation in America. Where will the (minimum wage) workers come from to care for our aging population? Congress is attempting to raise the minimum wage by a third, further raising the cost of care.
While volunteering at a recent Alzheimer’s Association event, I was approached by two home care agencies. Both lamented that they have more clients seeking home care than they have staff to provide for. They requested I ask my clients if any of them would consider some part time employment as a caregiver.
The employment dilemma will be mitigated by retired workers returning to part time employment, or delaying retirement. But even with that, we do not have enough workers to provide the LTC services of the baby boomers as they age. We do not have the facilities or other infrastructure. Those with available cash flow to pay for care will always find providers. However, Medicaid, which many will have to rely on, pays so far below market costs of care that providers will have to shun that payment source.
Where will Medicaid eligible people find care? Many will have no choice but to move in with family. Many families already have joined the “sandwich generation” caring for parents and children at the same time.
Two states (New York and Pennsylvania) have already begun enforcing filial responsibility laws, holding adult children responsible for parents’ LTC costs. Ask your financial planner how that will impact your retirement! Or, perhaps ask your financial planner how he/she would suggest you fund an extra, unanticipated bill of $50,000 to $100,000 a year later in your retirement. These costs are in today’s dollars, and will double in 15 years, and quadruple in 30. See if they suggest investigating LTC insurance, or if they say your life savings will handle that easily.
For more information, visit www.TheLongTermCareGuy.com or try this free online LTC calculator at www.RetirementChoices.net/rraabeLTC1.html
Is It Too Late To Get Long Term Care Insurance?
For many it is too late. By 60 years old, approximately 25% of us are not healthy enough to be accepted for this insurance. It gets more expensive the longer you wait as well. For each year you wait in your fifties, you will pay 3% to 4% more, while in your sixties, waiting a year will add 6% or more to the premium.
I am taking some of these statistics from two excellent articles published recently, one from a USA Today insert on Sunday, April 13, 2014 and the other from the Wall Street Journal on Monday, April 14th, 2014. The first one stated that eight out of every 10 couples will have an individual who requires long term care (LTC).
The WSJ listed mistakes people make when buying LTC insurance. The first is waiting too long. The second is buying on price alone. There are a number of moving parts in LTC insurance, how much, for how long, deductible, inflation, etc. It is easy for an agent who is not intimately familiar with all the things one needs to consider to offer an inexpensive policy that does not address inflation. Purchasing a daily or monthly benefit today that does not grow, and may not be needed for 30 or 40 years, will give a low price, but may be completely useless when needed. If you had set aside $0.29 for a gallon of gasoline while in high school back in 1965, and tried to buy that gallon of gasoline with it now, you would be very disappointed.
This is not a product to be purchased without some expert guidance. There are features that may be very important to you and others that may not matter much at all. Each person’s situation may be different making what is unimportant to one, very important to another.
The new hybrid policies were also addressed in the article. These are typically life insurance or annuities with a LTC feature. While it is great to have life insurance to claim if LTC is never needed, some have no inflation on the amount paid for LTC services. Thirty or forty years from now when this problem becomes apparent it will be too late to go back and make corrections. If the cash flow at time of claim is not enough, along with your other available cash flow, then spending down to Medicaid impoverishment may be inevitable. If this happens, one must generally cash in any life insurance to obtain Medicaid, and all is lost.
If you have saved well and are ready for retirement, wonderful. Have you also planned for unforeseen expenses? If 80% of couples will have one person needing LTC, and the number of Wisconsin seniors is expected to double by 2035, there will be a lot of unprepared people hoping the government will still be able to pay for their LTC. Good luck with that! I got my LTC insurance at age 52. When will you consider investigating it for yourself? More information is available at www.TheLongTermCareGuy.com
Caregivers Trials and Tribulations
The New York Times recently reported that caregiving is set to become the number one profession in the USA by the year 2020, overtaking retail.
This tells us there are a tremendous number of people caring for an individual needing long-term-care (LTC) services. Whether they are working as a professional caregiver, or are caring for a family member, the stress is similar. Today I am referring to an April 1 article in the USA Today newspaper concerning the depression that comes from doing this work.
The article mentions that 64% of those caring for disabled veterans have jobs. On average, they miss about a day of work each week. Twenty-eight percent quit work due to their caregiving duties. Sixty percent say they are under constant financial strain. Many of these caregivers are aging themselves and worry what will happen to the loved ones they care for when they can no longer provide that care.
It has also been documented that the morbidity (health) of caregivers is significantly worse for their entire life, even after their caregiving duties are over. This is not something you want to burden your family with if it is avoidable. However, with many states requiring more significant disability to qualify for Medicaid payments for care, many families will be required to step into a caregiving role, whether they have the time, energy, or space to do so or not.
Those who take responsibility for their own care will be able to choose the providers they want, and pay for it. When I first purchased my LTC insurance policy 13 years ago, I thought it was expensive. However, over the years that premium has become a smaller and smaller percentage of my income, just like a mortgage payment does. The benefits though, at a built in 5% compound inflation factor, have kept up with the costs of services I may someday need. Fortunately, I purchased my insurance at age 52, before several medical conditions became evident that would have made such insurance impossible to get, at any cost.
I know that I can obtain and pay for any LTC that I might need. Do you have a plan? Social Security will not be sufficient to pay for care, and with facility care costing between $40,000 and $100,000 a year, most life savings accounts will be emptied very quickly. This is something that needs to be considered while you are still healthy. More information is available at www.TheLongTermCareGuy.com
Is Something Really Better Than Nothing?
Recently, I have had a few conversations with agents about clients who have purchased the life/long term care products. Now, it’s no secret that I am skeptical about the benefit of these products for clients (which I’ll explain later). When I share my concerns with the agents, I invariably get the response, “Well, something is better than nothing.” Is it?
Long term care insurance (LTCI) is a complicated product because many factors need to be taken into account when selecting the appropriate product for the client. The major questions include how much benefit is appropriate, for how long, the nature of the deductible – commonly called the elimination period, and inflation.
The first factor–how much benefit is appropriate–can be determined by considering how much of the cost of care clients can cover with their own resources—how much they can pay “out of pocket”. When care is needed, the lifestyle changes that occur at the same time often mean that other areas of spending go down. For example, they may be able to sell a car that is no longer being driven, will probably travel less, go out for dinner less frequently, and generally be out and about less. Those dollars that were formerly used for these things can now be reallocated to paying part of the cost of care. The interest generated on a life savings can also help pay for care, even while preserving the principal.
Selecting the proper product becomes essential in accomplishing what is intended here. If the combination of the clients’ income sources, along with the proposed LTC insurance benefit is not enough to pay the monthly bills for care when that care is needed, the clients’ assets will be depleted. Eventually, they will become impoverished and need to turn to Medicaid.
Choosing the length of the benefit and the deductible is often a matter of what companies offer and what the clients prefer. Many companies have been shortening the length of time they will provide a benefit. Here too, clients may need to decide how much they can pay for on their own before they would need to turn to the insurance when considering these benefit levels.
One of the most vital items that must be considered when selecting an appropriate LTCI product is the impact of inflation on the benefits, especially when the needed care might not start for 20, 30, or 40 years from the time of purchase . The costs of long term care services (such as assisted living, nursing care, home care, and so on) have been increasing by an average of 5- 6% per year for the past 20 years. Since about 2008, the impact of the recession has resulted in a slightly lower rate of inflation, but costs will likely accelerate in the future. The New York Times recently reported that “Caregiving” will become the largest profession in the United States by 2020, overtaking retail. This is because of some basic demographic changes that are occurring.
My other blog posts have discussed the impact of the aging of the baby boomer population on the demand for long term care services. Suffice it to say that the unprecedented number of people on the cusp of turning 65—or older—will have an impact on long term care service needs, just as it has impacted every other institution over the past 60 years. Especially significant is the fact that the U.S. Department of Health and Human Services says that at some point, 70% of Americans will need some long term care services. There are fewer working-age caregivers, compared to the growing number of seniors who will need care. The market always responds to an imbalance of demand and supply– wages will rise to attract more workers to meet the need. All this is a recipe for rapidly increasing costs of long term care services. A benefit that will pay for long term care today will be as useless as having $1 to fill a gallon gasoline can 20, 30, or 40 years from now. Thus, purchasing long term care insurance without an automatic 5% inflation factor benefit increase is not in the consumer’s best interest.
So…is something better than nothing? Is a flat spare tire better than nothing? You think you are covered in the event of a flat tire, but you have actually lost fuel mileage hauling around that empty flat spare while thinking you had “insurance” against a flat.
Similarly, if you paid LTCI premiums for many years, and then find that the cash flow it provides, along with your other available income sources is not enough to pay for care, you have no choice but to spend assets down to impoverishment and end up on Medicaid. What good did that policy and all those years of premiums do for you? They helped you go broke faster, and you still end up on the welfare program called Medicaid.
Long term care insurance is a complicated product. Decisions made when purchasing it today will affect you many years down the road. If it does not do what it was expected to do, it was a waste of time and money for clients and provides them a false sense of security.
My aforementioned skepticism about the life/long term care products is that when they were introduced, they didn’t include the inflation feature… and you can see that I think this is essential to protect clients. The good news is that many products have now begun to include this. Agents who have clients who can benefit from a life/long term care product have an obligation to seek out the ones that include inflation protection, for the protection of their client.
From time to time, I have even heard some agents say that clients won’t buy the life/long term care policy with inflation because it’s too expensive, so that’s why they sell the ones without inflation. That makes me wonder—is this about making a sale or doing what’s best for clients?
So..is something better than nothing? I think that when it comes to long term care insurance, in some cases, nothing is, in fact, better.
Seeking expert advice from someone knowledgeable is vital. For more information visit: www.TheLongTermCareGuy.com