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Feds Push Senior Citizens to LTC Insurance But They
Can't Afford It
 Two studies indicate Medicaid changes won't change
much for those in need
March 2, 2006 - The Deficit Reduction Act of 2005
makes it much harder for individuals to qualify for Medicaid nursing
home benefits. Supporters of the legislation contended that it would
prompt many more seniors to purchase long-term care insurance, thus
alleviating reliance on Medicaid and the resulting government cost. The
problem is Long-Term Care Insurance is too expensive for most senior
citizens who need it the most.
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Related Stories |
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Looming Crisis of Long-Term Care Highlighted in New
Study
March 1, 2006 With Americans living longer, the
risks of needing long-term care is increasing. A new study says senior
citizens currently turning 65 face an average of three years of need for
LTC some time before they die, with one in five expected to need five
years of care or more. Much of the care will be provided by family
members. Though half of today's retirees will incur no out-of-pocket
expenses for LTC, 1 percent will need more than $250,000 of their own
money set aside and invested at age 65 to pay for their future care.
Read more...
New Law Pushes Long-Term Care Insurance Coverage
By Daniel C. Vock, Stateline.org Staff Writer
Feb. 20, 2006 - Thanks to a new federal law, states
will be able to reward senior citizens who buy long-term care insurance
by letting them hang on to assets while Medicaid pays for their nursing
home care. Read more...
Why Planning for Long-Term Care is Necessary in
Todays World
By Robert Valentine,
Certified Senior Advisor
Feb. 11, 2006 - James and Irene Norris spent their
lives surviving. The two owned and operated a small business together
for over 60 years, surviving the stock market crash, the Great
Depression, seventeen U.S. Presidencies, and two World-Wars. All while
raising two sons. But there was one thing they didnt plan on: long-term
care. Read
more...
Long-Term Crisis
Only 1 in 4 U.S. Adults Think They
Can Pay for Long-Term Care
41% Confident they do not have
enough money, 33% Unsure
Feb. 1, 2006 - Only a quarter (26%) of U.S. adults
think they have or will have saved enough money to finance their own
potential long-term care needs as they age. Fully 41 percent do not
think they will have enough money to cover their expenses as they age
and 33 percent are not sure. These findings are in a new Wall Street
Journal Online/Harris Interactive Personal Finance Poll.
Read more...
Read the Four-Part Series on Long-Term Care
Facing the Long-Term (Care) Nightmare: Part 1
Dont Rely On
Medicaid For Long-Term Care: Part 2
Bridging the Long-Term Care Gap: Part 3
Understanding Long Term Care Insurance: Part 4
Read more on
Money Matters & Insurance and
Guarding Your Wealth for Seniors |
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Two new studies by the Kaiser Family Foundation
cast serious doubt on the assumption that private insurance will be a
solution.
One report, "Private Long-Term Care Insurance: A
Viable Option for Low and Middle-Income Seniors?" finds that the price
of a long-term care policy is not affordable for most elderly people,
and that even when they can afford it, such insurance is not available
to people who already have long-term care needs.
The annual cost of a typical long-term care policy
in 2002 was $2,862 for those age 65 and $8,991 at age 79. Estimates
indicate that nearly one-third of people age 65 to 69 would not pass an
underwriting test.
In the DRA, the federal government made it harder
for individuals to qualify for Medicaid nursing home benefits by
increasing penalties on individuals who have transferred assets for less
than fair market value during the past five years and by making
individuals with home equity above $500,000 ineligible for nursing home
benefits.
The legislation also lifts the moratorium on the
number of states that may operate Long-Term Care (LTC) Partnership
Programs, which allow individuals who purchase long-term care insurance
to protect more of their assets if they later need nursing home care
under Medicaid.
The report notes that although LTC Partnership
Programs have been operating in four states since the early 1990s,
enrollment in them has been limited. The programs appear to attract
upper middle-class individuals, similar to the private long-term care
insurance market, Kaiser found.
The majority of purchasers in California,
Connecticut and Indiana have assets greater than $350,000 (excluding the
home), and half have annual incomes of $60,000 or more. Thirty percent
of purchasers say they would not have purchased long-term care insurance
in the absence of these programs.
Some of the highlights of this study:
Private long-term care insurance comprises a
small share of nursing home spending,
The price of a long-term care policy is not
affordable for most elderly people,
Private long-term care insurance is not
available to people who already have long-term care needs, and
LTC Partnerships have been operating in 4
states since the early 1990s, but enrollment remains limited. The
programs appear to attract upper middle-class individuals, similar to
the private long-term care insurance market.
In conclusion, the Kaiser authors predict, "Private
long-term care insurance is growing and is likely to play a larger role
in financing long-term care in the future. However, even with expanded
LTC Partnership programs, these options are not available to those who
already have long-term care needs and remain unaffordable to the
majority of low to middle-income seniors.
"As a result, Medicaid, in conjunction with direct
out-of-pocket spending, is likely to remain the primary financing source
for lengthy nursing home stays."
A second report, "Frontline Perspectives on
Long-Term Care Financing Decisions and Medicaid Assets Transfer
Practices," echoes these findings and warns that efforts to tighten
Medicaid transfer rules may impede access to needed long-term care
services for low- and middle-income Americans. Based on a series of
interviews with long-term care benefits counselors in six states, the
report found that private long-term care insurance remains largely
unaffordable to the majority of low- to middle-income individuals.
Counselors also reported that they rarely recommend reverse mortgages.
The report determined that the "vast majority" of people do not transfer
their assets in order to qualify for Medicaid.
"The findings of this study," the report concludes,
"suggest that the role of Medicaid as the primary payer of long-term
care services will continue to grow, despite recent federal and state
efforts to limit asset transfers."
According to a study that will appear in the next
issue of the health care journal
Inquiry, while the vast majority of seniors will incur little or no
long-term care expenses, about one in ten will amass costs between
$100,000 and $250,000 and an additional 5 percent will confront expenses
of more than $250,000.
● To read "Private Long-Term Care Insurance: A
Viable Option for Low and Middle-Income Seniors?"
Click Here
● To read "Frontline Perspectives on Long-Term
Care Financing Decisions and Medicaid Assets Transfer Practices,"
Click Here
● For more on long-term care insurance at
ElderLawAnswers.com, including a discussion of the Partnership Programs,
Click Here.
● Information on the
Kaiser Commission on Medicaid and the Uninsured
● Parts of this report are from a report by
ElderLawAnswers.com
Click Here
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