Long-term care premium increases soar: Elder law attorneys become the go-to professional

Long-term care insurer John Hancock has begun the process of seeking sharp premium increases nationwide for certain types of coverage.  Initial reports from shocked policyholders surfaced in two midwestern states that have approved increases that are sometimes nearly double the previous premium.  ElderLawAnswers contacted the insurer and learned that it is going state to state asking for rate hikes it says are averaging 40 percent. 

The Chicago Sun-Times profiled an Illinois couple who just received news in the mail of a 90 percent premium rate increase.  The couple, who live on a fixed income, will see their annual premium shoot up from $3,893.40 to $7,385.52 a year.  Meanwhile, the Minneapolis Star-Tribune reports that premiums are soaring by 20 to 90 percent for thousands of Minnesotans who have Hancock policies.  One man profiled will see his annual premium jump nearly 50 percent.

It appears that the largest increases are on policies where the insurer has its greatest exposure to loss – policies that include compound inflation coverage or lifetime coverage, or both.  The rate increases come on the heels of recent announcementsby several long-term care insurers that they are leaving the marketplace entirely.  John Hancock, which is a subsidiary of giant Canadian insurer Manulife, has apparently chosen the route of steeply raising premiums rather than exiting the market.    

“The long-term care industry is still young, and only now is seeing actual usage data which indicate the need for rate increases,” Hancock’s Vice President Corporate Communications, Roy Anderson, told ElderLawAnswers.  “It is mainly this new experience – not the current economy – that is driving the change in our future claims projections and the subsequent need to increase premiums so we are able to meet all of our claims obligations going forward.”

Anderson suggested that affected policyholders can keep their premiums level by trimming their benefits package, for example by reducing the future inflation rate on their daily benefit.  If they did this, he said, they would be able to keep the benefit level that has already accrued.     

Anderson also noted that “even with the increase the resulting premiums for all policyholders will be less than what customers would pay for a new policy today adjusted for benefit differences.”

In most states, long-term care rates can rise only after the rate increase has been accepted by the state department of insurance, meaning that it will be a long process for John Hancock’s increases to reach every state.  However, nearly every state grants at least some such rate requests, and in many states the increase must be approved if the insurance company can demonstrate that it will lose money otherwise.

All this is not making it any easier for officials to convince consumers to finance their own long-term care protection.  "Government will not be able to keep up as the population ages," Minnesota Commerce Commissioner Michael Rothman told the Star-Tribune, "but it's hard to convince someone to buy insurance now if they worry they might not be able to afford it in the future."

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For an Investment News article speculating that long-term care insurance “may go the way of the dinosaur,” click here.

For an article on how to cope with long-term care insurance rate hikes, click here.

For more on how to reduce long-term care insurance costs, click here.

For more on long-term care insurance, click here.

Evan H. Farr on Google +

Do You Love Your Family? Most Important New Year’s Resolution

This year, instead of settling on a resolution solely aimed at self-improvement, resolve to do something to benefit everyone you love.  Many people avoid discussions about long-term care; the unfortunate news is that long-term care is an inevitable necessity for many Americans.  Proper planning can protect assets from nursing home creditors, allowing Americans from all walks of life to legally and ethically qualify for Medicaid and Veterans Benefits, passing on an inheritance if they so choose, and enjoy the standard of living and quality of life they prefer.  An experienced Elder Law Attorney should be your first point of contact.

The reality is that the majority of Americans make no plans for long-term care. Not only does this lack of planning affect older Americans, but it also often has an adverse effect on the older person's family, with sacrifices made in time, money, and family lifestyles. The stresses of being a caregiver for an older parent often results in a deterioration of the caregiver's own physical and emotional health. Because of changing demographics and improved health care, the current generation -- more than ever -- needs to actively plan for long-term care.

According to most estimates, more than 60% of Americans will need long-term care at some point in their lives.  Consider the following long-term care statistics:

• About 70% of Americans who live to age 65 will need long-term care at some time in their lives, over 40% in a nursing home; and
• The median net worth of the average 65 year-old is $232,000. If you live in Northern Virginian, the average cost of a private nursing home room in 2010 was nearly $100,000.

If planning is engaged in soon enough, assets can be 100% protected from nursing home creditors, lawsuits, and general creditors.  Even if someone is already in a nursing home paying the monthly bill, their remaining assets can be protected.

There are three primary ways to plan in advance for how to pay for long-term care: (1) build up your income and life savings in order to be able to self-fund your future care needs; (2) protect your assets by purchasing long-term care insurance; or (3) protect your assets by using an asset protection trust designed to legally protect your assets and allow you to qualify for Medicaid, the governmental program that pays for about 70% of people living in nursing homes.  For some families, a fourth way to pay for long-term care is a type of Veteran’s pension benefit called “Aid & Attendance.”

The most important thing you can do is to act now! You may have limited resources in the future or health problems that will prevent you from taking care of the things you can easily take care of  today.

Evan H. Farr on Google +

Is Medicaid Too Complex for Americans?

Medicaid complexity is a real problem. For those not familiar with program specifics, Medicaid - not Medicare - is the program Americans rely on to receive their long-term care. Long-term care is extraordinarily expensive – in fact, it is the single most expensive creditor Americans are likely to face.  Unfortunately, understanding the various Medicaid rules is a monumental task for the average layperson, and to properly qualify for the program and protect one's assets, it often it takes an experienced professional and a complicated asset protection plan.


Why is Medicaid so complex?  One reason may be due to the fact that Medicaid is a joint state and federal program, and planning to receive (either for you or for a client) this public benefit often involves tax planning, too.  Proper Medicaid planning requires an understanding of several complex bodies of law. 
While some of these quotes are humorous, it is no laughing matter that Americans, by and large, do not realize that Medicaid is available to the middle class.   Protecting assets from long-term care expenses can enable a family to pass an inheritance on to their children that otherwise would not have been available; it allows for the recipient to enjoy an enhanced qualify of life while alive; and it gives peace of mind and security to the family members.

Here is a glance at what the courts have had to say about Medicaid complexity over the last thirty-five years. 

1976:

The Second Circuit commented the absurdity of any law or regulation 7 subsections deep.  For example:

“As program after program has evolved, there has developed a degree of complexity . . . regulations which makes them almost unintelligible to the uninitiated . . . [a] draftsman who has gotten himself into a position requiring anything like [§139a(a)(10)(A)(ii)(VIII)(cc)] should make a fresh start.” Friedman v. Berger, 547 F.2d 724 (2^nd Cir. 1976).

1981:

The United States Supreme Court has called the Medicaid laws:

“an aggravated assault on the English language, resistant to attempts to understand it.” Schweiker v. Gray Panthers, 453 U.S. 34, 43 (1981).

1985:

The Second Circuit calls the Medicaid statute one of:

“unparalleled complexity” in DeJesus v. Perales, 770 F.2d 316, 321 (2^nd Cir. 1985).

1991:

In a case arising out of Maine, the District Court called Section 1396a(a)17) of the Medicaid statute:

“a virtually impenetrable thicket of legalese and gobbledygook.” Lamore v. Ives, 1991 WL 193601 (D.Me.)

1994:

The Fourth Circuit called the Medicaid Act:

“one of the most completely impenetrable texts within human experience” and

“dense reading of the most tortuous kind.” Rehab. Association of Virginia v. Kozlowski, 42 F.3d 1444, 1450 (4th Cir. 1994).

Medicaid complexity is a problem for all Americans.  Most Americans will need some form of long-term care, and of those that do, such care may be a nursing home stay.  The average private nursing home room costs nearly six-figures every year, and the average nursing home stay is close to three years.  Medicaid is available to anyone who can qualify; unfortunately, there are many public misperceptions when it comes to Medicaid.  Contrary to public belief, a person does not need to be "poor" to qualify.
At this point in time, the laws are so complex that it is recommended that any person contemplating long-term care speak with an experienced elder law attorney.

Image: Master isolated images / FreeDigitalPhotos.net Evan H. Farr on Google +

3 tips to talk to your parents about long-term care

1 - Explain that Elder Law attorneys are not “regular” lawyers

Elder Law attorneys have deliberately selected a career in a specialized area of law to serve elders.  Moreover,  the client of an Elder Law attorney is the elder.  Not the children.  An inheritance is nice – and usually a much larger inheritance is a by-product of the plan devised by an excellent Elder Law attorney – but the inheritance is not the focus of ethical planning.  The client’s quality and dignity of life should always remain priority #1

2 - Gather information in a zero pressure environment.

An easy way to spend time with your a parent, while at the same time, gathering information, is to look for a free seminar in your area.  Look in local publications for living trust" or "estate planning" seminars.  Alternatively, you may want to look for a Living Trust Plus™ licensed attorney in your area.  Don’t be afraid to research, communicate, and explain important statistics to your parents.

Did you know that if you are over age 65: you have a 7.2% chance of having an auto accident every year; a 6.15% chance of needing to file a homeowner’s insurance claim; and a 70% chance of needing long-term care?  Over half of those who need long-term care will require a nursing home.

3 - Explain matters using real, truthful data
13% of drivers are uninsured;
15% of homeowners are uninsured;
90% of senior citizens are uninsured and unprotected against long term care needs.

Why is it important to plan for long term care?  Primarily because the expenses of long term care are catastrophic and can wipe out a nest-egg in less than a year. 
 
50% of couples and 70% of singles are impoverished (broke) after one year of entering a nursing home!

Evan H. Farr on Google +

Alzheimer’s Planning: “More Dignity, Better Quality of Life”

5.3 million Patients and 10 million Caregivers fight on the front-lines in the battle against Alzheimer’s each day.   

The heartbreaking illness affects both men and women (though women have a slightly higher risk for developing the disease; more on gender differences later).  Regardless of gender, and despite the challenges, expenses, and worries associated with the disease, there is something families can do to instill a degree of order and confidence amidst the turmoil.  Alzheimer’s is the 7th leading cause of death; to ease the burdens and simplify the unique challenges patients face, some Elder Law Attorneys offer a service called, “Alzheimer’s Planning.”

Alzheimer’s Planning is a sub-specialty of Elder Law. It involves a unique and complex combination of estate planning, long-term care planning, asset protection, Medicaid planning, and nursing home planning, and requires a specialized knowledge of the legal and financial problems and issues that are unique to families dealing with this devastating illness.

One of the primary goals of Alzheimer’s Planning is to ensure the highest possible level of personal dignity and quality care for the remaining lifetime of the Alzheimer’s patient. To achieve this goal, it is often necessary to protect assets as quickly as possible, so that if the Alzheimer’s patient must enter a nursing home, Medicaid can be obtained as soon as possible.  Money that is protected through Alzheimer’s Planning can be used to provide the Alzheimer’s patient with an enhanced level of care and a better quality of life while in the nursing home and receiving Medicaid benefits.

Sixty-five percent of Alzheimer patients are women and researchers estimate that one in six women are at risk for developing the disease during their lifetime.  Why does this disease affect more women than men? Researchers have only recently begun to identify the connection between estrogen and the risk of the disease in women – a theory that might explain the disproportionate number of women with Alzheimer’s.

It is theorized that the hippocampus is one of the first areas of the brain that succumbs to the disease.  When healthy, this vital section of the brain organizes and consolidates both short and long-term memory and can be thought of as our natural compass (i.e., for spatial navigation)

 The hippocampus is one of the main "receptor sites" in the brain for estrogen, and when it is stimulated by receipt of estrogen, positive brain processes are activated. Estrogen levels are also thought to be positively correlated to certain key neurotransmitters associated with positive mood.  When a woman enters menopause and her estrogen levels drop, the hippocampus (and all of its important memory functions) is thereby activated less often.

What role, if any, can hormone replacement play in preventing the onset of Alzheimer’s disease?  Do the risks outweigh the benefits? Luckily, these are questions that neuroscientists are hoping to have answers to within the next 5 years, thanks to the recent explosion of estrogen-related research currently underway.

Where should families turn for Alzheimer’s Planning Services? Persons with Alzheimer’s disease and their families face special legal and financial needs. Controlling the high costs of caring for a loved one with Alzheimer’s, and navigating the emotionally and physically demanding requirements of caregiving, require the assistance of a highly skilled and specialized expert in the field of Alzheimer’s Planning. Scheduling a consultation with a trusted Certified Elder Law Attorney* is an excellent place to start!  

Disclaimer: *Virginia has no procedure for approving certifying organizations

Sources:

ScienceDaily.com, available at http://www.sciencedaily.com/releases/2008/03/080318114824.htm);

CBCNews.ca, available at http://www.cbc.ca/news/health/story/2011/04/06/aging-women-brain-estrogen.html); Alzheimer’s Reading Room, available at http://www.alzheimersreadingroom.com/2010/07/estrogen-dilemma-and-alzheimers-disease.html).

Images: Salvatore Vuono / FreeDigitalPhotos.net

Evan H. Farr on Google +

Long-Term care costs in 2010

 Metlife has conducted a 2010 market survey to determine the long-term care costs across the nation.  Most costs have increased since 2009.  The survey is available here.

Average Base Rate (per month) in Assisted Living: $3293

Average Daily Rate for Private Room in Nursing Home:  $229 

• “National average rates for a private room increased by 4.6%, from $219 daily or $79,935 annually in 2009, to $229 daily or $83,585 annually in 2010.”

• "National average rates for a private room increased by 4.6%, from $219 daily or $79,935 annually in 2009, to $229 daily or $83,585 annually in 2010. National average rates for a semi-private room increased by 3.5%, from $198 daily or $72,270 annually in 2009 to $205 daily or $74,825 annually in 2010."

• "The 2010 national average private-pay hourly rates for home health aides and homemaker/companion services remain unchanged from 2009 at $21 and $19 respectively.

Long-Term Care Cost Calculator: To calculate your estimated long-term care costs

Evan H. Farr on Google +