Monday, April 21, 2008

Home Care Site

Published as service in the Malden Observer.


Ross Capobianco is president of Home Instead Senior Care, a provider of home care services to seniors living north of Boston. He can be reached at 781-662-2273 or via e-mail at bostonnorth@homeinstead.com.

Sunday, April 13, 2008

Long Term Care Insurance

Baby boomers beware: The safety net you might be relying on to take care of you when you're old and sick is full of holes, a new study warns.
Many are relying on Medicaid, the government's health-care program for the needy, to pick up the tab for their nursing home and other long-term care expenses one day.
But there's a catch: Medicaid won't cover long-term care until your own resources are exhausted, warns Jeffrey Brown, director of the Center on Business and Public Policy at the University of Illinois College of Business and a co-author of the study.
"Medicaid basically forces you to impoverish yourself before it will pay for long-term care," he said. "Then you come out of care, and you've got nothing left."
What's more, the study contends, the government is encouraging people to rely on Medicaid by loading the program with disincentives to buy private long-term care insurance – which would be a better option because it protects assets and provides broader coverage.
Brown said economists have been puzzled about why so many Americans spurn long-term care insurance when they typically insure themselves against other financially damaging events and they face about a 40 percent chance of needing care in a nursing home one day.
"And if they need it, it can be financially devastating for many families, because a nursing home can cost $60,000 or $70,000 a year," he said.
As it turns out, the study found, Medicaid is choking the demand for private insurance because people prefer bad benefits at no charge to good benefits they'd have to buy.
And even for those who want private insurance, Medicaid makes it "not a good deal" for many, Brown said.
Once the benefits Medicaid picks up for free are factored in, the net benefits of long-term care insurance are just 20 cents to 40 cents on every dollar spent on private coverage premiums, the study found.
Another disincentive: Medicaid is a secondary payer, meaning it pays only after a private policy has paid first. So even when people do invest in private coverage, they might still end up exhausting all their resources.
"It will just take them longer to do so," Brown said.
Why not just rely on Medicaid, then?
Because it's not free. Taxpayers are footing $135 billion worth of long-term care expenses a year through Medicaid, and the burden can only grow as more baby boomers age, the study points out.
If there's a good way out of this conundrum, Brown said he hasn't found one yet.
The country could eliminate Medicaid coverage and let taxpayers spend their money on their own long-term care coverage, but there will always be people who won't have coverage and won't be able to afford nursing home care, Brown said.
"Are we as a society prepared to tell these people, 'You didn't insure, you didn't save enough, you're on your own?' I don't think this country is prepared to do that," he said.
Should Medicare, the government's health program for the elderly, take over long-term care expenses?
Talk about really breaking the federal budget, Brown said.
"We've already got under-funded (Medicare) benefits," he added.
Should the government require people to purchase long-term care insurance?
How could that be enforced? Brown said.
"One of the difficult things about this study is we've identified a very difficult public policy problem for which there is not an obvious solution," he said.
The nation's long-term care insurance industry is a bit more optimistic that more Americans will buy policies.
Some 400,000 long-term care policies were purchased last year, says Jesse Slome, executive director of the American Association for Long Term Care Insurance.
"It's growing slowly and steadily," he contends.
Last year, long-term care insurers paid out $3.5 billion in claims, about $200 million more than 2006, Slome said. As more people have positive experiences with this kind of coverage, he predicts more will want to buy it.
But it's going to take time. Before the baby boomer generation, the elderly lived closer to their children and didn't need to rely so heavily on nursing home care. People didn't live quite so long, either, Slome said.
"Prior generations didn't have to think about long-term care," he added.
Slome thinks the real impediment to buying long-term care insurance is human nature: Many folks just aren't good planners, and they procrastinate.
"The fact of the matter is, first of all, people don't live their lives planning to go on welfare. They live their lives without planning, but nobody who's 65 looks and says, 'Gee, I've worked my whole life. I was independent. I saved. I had a retirement plan. I did everything I was supposed to, and in my last years, I want to go on welfare to see what it's really like,'" he said.
The long-term care industry's challenge is to convince more people to start thinking about the costs of nursing home care before they become so old, or their health deteriorates so much, that insurance is going to be prohibitively expensive, he said.
Nearly 45 percent of people applying for long-term care coverage in their 50s qualify for good health discounts, but only about 19 percent of those who wait to apply in their 70s qualify for these discounts, a 2006 report done by Slome's association found.
Another challenge may be today's economy.
Slome said a single person at age 55 can buy decent long-term care coverage for about $1,000 a year, and a married couple at that age can buy decent coverage for both people at about $1,300 a year.
But with the rising cost of health care, many people are finding it difficult enough to pay for insurance they need right now, let alone pay for coverage they may need in their golden years.
Slome's advice for getting the best deal: Work with a professional who can find you the best long-term care insurance coverage for your needs and lock in the rates. The price of coverage varies widely, and every company has its own premium rate sweet spot depending on the client's age, marital status and health status, he said.
"Medicare and Medicaid are already strapped, and it's only going to get worse," Slome warned. "The government can only tax so much."
Should you buy long-term coverage?
It depends on what you've got to lose, says Paul McNamara, a professor and Extension specialist at the University of Illinois Department of Agricultural and Consumer Economics.
His advice:
— Consider buying coverage if you can afford it and want to have assets to leave your heirs or a surviving spouse.
— Know the premiums are more reasonable before you become elderly and fall into poor health. But keep in mind when you buy coverage younger that you're going to have to keep up the premium payments for a long time.
— Don't neglect the bigger picture: Consider long-term care insurance as part of your overall retirement planning. It wouldn't make sense to pay for a long-term care policy if you can't afford to fund your retirement savings.
— When it's not a good deal: If your income is anywhere near Medicaid eligibility level, you don't have a lot of assets now and likely won't have enough assets at retirement to protect.
Find this article at: http://www.news-gazette.com/news/2008/04/13/seniors_warned_about_longterm_care
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