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Posts Tagged ‘adult day care’

On a clear Monday morning, the New York Times ran a good story about Medicare Advantage Plans. Medicare Advantage Plans are a type of home health care plan sold by private insurance companies. The plans are associated with Medicare. It seems that seniors across the country have been duped into signing away their Medicare benefits by enrolling in a Medicare Advantage Plan. There are some cases when the seniors did not understand how the Medicare Advantage Plans worked, and in others, they didn’t even know that the insurance agents had signed them up for the plan. The insurance companies that sell these plans have been accused of several bad practices, including:

Deceptive marketing strategies that don’t make a clear distinction between Medicare and Medicare Advantage  Targeting of uninformed seniors in low-income areas by pushy agents with hard-sell techniques, From outsourcing customer service to overseas call centers, whose employees have substandard knowledge of the complex Medicare system, Insurance agencies with Medicare Advantage Plans undergo a greater amount of scrutiny than they have in the past;and it seems to be helping at least a little. Kerry N. Weems, the acting administrator of the Centers for Medicare and Medicaid Services, says, “There are substantially fewer violations, and those violations are of substantially lower severity than in previous marketing periods.”

Medicare Advantage programs can help some consumers to finance their senior care, but these plans are not for everyone. There are factors to consider before signing up for any type of Medicare Advantage Plan. Here, a few of the most essential issues: Make sure your doctor(s) and local hospital are within the insurance company;s network of providers.  Also remember that Medigap policies become null and void once you are enrolled in a Medicare Advantage Plan. If you already have a Medigap policy, cancel it once coverage begins with a Medicare Advantage Plan to avoid paying twice.

Medicare Advantage plans vary greatly. You are giving up all rights to your existing Medicare policy, so always remember to pick a plan that will meet your future senior care needs as well as your current ones. Always read the fine print. This is an important decision;don;t rush it!  We live in a society where the buyer must beware. Call your parents tonight! Make sure that they know about the issues concerning Medicare Advantage. That phone call could be the one thing that saves them from making;or worse yet, being pushed into;a decision that isn;t right for them. You don;t even want to think about the alternative!

When Should You Consider Buying Long-Term Care Insurance?

The only short answer to this question is the month before you need to make a claim  But since none of us have a crystal ball to tell us when we will be having a stroke or heart attack, or be diagnosed with a debilitating disease such as multiple sclerosis, Parkinson’s or Alzheimer’s, we simply can’t rely on waiting till the last minute to buy long-term care insurance. The truth is that anyone, at any age, can have an unexpected accident or change in their health that they could not possibly have foreseen that will require long-term care. A couple of well-known examples of such a situation are Christopher Reeve and Michael J. Fox.

Unfortunately, many people think of long term care insurance as protection that is mainly for older folks. But that is simply not the case. In fact, almost 40% of those receiving long term care are younger than 65 years of age! This surprising information testifies the undpredictability of such a need arising at almost any age.So, I suggest that the best age to purchase LTCI is at the earliest age that you:

1. Can comfortably afford the premium.

2. Have enough income and/or assets to protect that it justifies the cost of the policy.

Another sound reason for getting long-term care insurance earlier in life is that the premiums are lesser and you will most likely easily qualify for coverage, perhaps even at a preferred rate that will save you considerable amounts of money throughout the life of the policy. Unfortunately, as we age, most people stand a higher risk of developing health conditions that could cause them to become uninsurable at some point, or at least substantially drive up the cost of a good long-term care insurance policy. My recommendation is to avoid these problems by investing in LTCI at a relatively early age if you can. And since the cost of long-term care is not covered by medical health insurance, it only makes sense to protect your assets against one of the most devastating threats to your personal finances. Then, in most cases, the earlier you get coverage for long-term care, the better.

One rule that I always adhere is that I don’t discuss politics and religion unless I am with my close friends and relatives, it’s just too easy to cross the line from thought-provoking to offensive, most especially for someone who is as opinionated and outspoken as I am. After reading a recent article on President Bush’s 2.9 trillion spending plan for 2008, however, I feel I have no choice but to break my rule. President Bush recently went before Congress, controlled by the Democratic Party for the first time in his presidency, and proposed a 2.9 trillion budget that will entirely cut down 70 billion in funding from Medicare and Medicaid over the next 5 years, while increasing military spending and without affecting first-term tax cuts. While the proposed time frame is in line with Democratic goals, there seems to be some dissonance in terms of federal priorities.  If you are a higher-income beneficiary, you could expect to pay much higher long term care insurance premiums and more for drug coverage.

One more component of the plan, according to the New York Times: ” freezing Medicare payments to home health care agencies and reducing inflation allowance paid to hospitals, nursing homes and other providers. ” Considering Congress, negative response to the president’s proposal from last year, which suggested smaller Medicare reductions, it’s unlikely this plan will be accepted as is. Whether you bat for the left or the right, though, there’s no denying that the fast increase in the retirement-age population puts a lot of pressure on the federal budget. Remember that entitlement for the older Americans come from income taxes on people of working age. It takes five working Americans to support one senior citizen’s entitlements. How would, or should, the government respond if Social Security trustees have projected accurately, and by 2030 there are only three workers for every adult older than 65?

It is entirely possible for Medicare, Medicaid and Social Security to consume federal spending. Are there options that don’t involve spending cuts or tax increases? How and where should we conserve to avoid a fiscal crisis without stripping Americans of the care to which they’re entitled?

In a long-term care insurance (LTCI) policy, the elimination period is often referred to as the policy deductible. In many ways it is similar to the deductible used in major medical insurance policies. One significant difference is this: rather than a certain dollar amount that you will initially pay for your own care expenses, there is a specified number of days for which you will be responsible for your own homecare.

What are My Options?

Nowadays, there are only a few carriers that offer a zero day elimination period. The most common choices are 30, 60, 90, 180 and 365 days, although these periods can vary from one carrier to another. The choice of 180 or 365 days is most often made by those who have significant assets of their own. Selecting a much longer period can help them keep the expenses of LTCI very low. Even if one chooses a 90-day elimination period, the amount of funds put at risk is miniscule when compared to the asset protection afforded by the policy;s total pool of benefits.

What is a Reasonable Choice for an Elimination Period?

There are some popular financial authors who recommend setting it as low as possible, perhaps even at zero. It’s true that the shorter the elimination period, the less likely it is that you will have to pay out when the time comes for you to begin receiving care.   On the other hand, low elimination periods can have a dramatic effect on the premiums that you pay throughout the life of the policy. Usually some form of compromise is necessary for the sake of affordability. In making a decision about the elimination period, many policyholders keep in mind that insurance is often used as a way to avoid suffering catastrophic financial losses rather than insuring against every possible expense. Accepting a small portion of the risk involved can be an economical and reasonable choice for most people.

The Smartest Thing You Can Do

What’s right for most people, however, may not be right for you. In deciding on the best elimination period for your particular situation, it is important to check what the cost would be for the most expensive assisted care that you may have to receive, which is most often facility care. Once you have a good idea of the daily costs for facility care in your area, then you multiply the costs by various elimination period choices and determine the amount that you feel is affordable. When you decide on the elimination period that best fits your situation, earmark those funds for your care, and allow them to grow so that they keeps pace with inflation, at the very least.   Using a little financial common sense goes a long way toward making a wise decision about the LTCI elimination period.

Most individuals are aware of the gaps within the original Medicare plan. For one, there’s no “stop loss” feature. Other long term care insurance policies will pay 100 percent towards certain medical services after you have meet your deductible, for example, you might have to pay $1,500 per year before your benefits will kick in. If you have Original Medicare and need hospital care or must enter a  nursing home, this applies to you. A lot of people buy Medicare Supplemental (Medigap) Insurance policies to fill in the gaps within their existing coverage, which might include co-payments or deductibles. Medicare Advantage Plans usually cover all the same services that original Medicare covers, and potentially some it doesn’t.

These plans are usually offered in some parts of the country through private insurance companies, but are still part of the Medicare program. If you’d like to switch to a Medicare Advantage Plan, now’s the perfect time. Open enrollment for Medicare Advantage extends from January 1st through March 31st. You are eligible for a Medicare Advantage Plan if you currently have Medicare Part A or Part B. You will, however, need to see doctors and use hospitals within the plan, much like you would with an HMO. If you’d like to switch plans, keep in mind that you cannot drop Medicare prescription drug coverage. If your existing plan has prescription drug coverage, then your new one needs to have it as well. For more information on the plans available in your area, visit Medicare’s web site or call 1-800-633-4227.

Your new plan should be effective on the first of the month after  your request is received. Still not sure what all the Medicare plans cover? Gilbert Guide lists all of the major types of insurance as well as what they cover. For a detailed explanation, check out Gilbert Guide’s Medicare Explained or Senior Care Reimbursement Overview, which will show you where each type of insurance pays benefits.

In a survey conducted by the AARP a few days ago, the findings showed that there is confusion between what most individuals think about long-term care costs and the actual cost of care itself. In fact, after surveying 1,456 people over the age of 45, only one in 12 came within 20% of estimating long-term care costs accurately. Most felt that only $500–1000 a month would do the trick nicely. This is something of an unrealistic outlook when I work with old folks and help them out in making a plan for their long term care needs. Quite often, they are shocked when they see the premium cost for a long-term care policy, especially if they happen to be in their sixties or seventies.

But there are two very important reasons that LTCI costs as much as it does. One is that the costs of care in this industry are rising more than 5% annually on the average, and have done so consistently for so many years now. For the most part, average inflationary costs for the rest of the economy averages around 2–3% a year. However, that is usually not the case with home health care, especially long-term care. To put those figures into perspective, a 5% inflationary measure means costs double every fifteen years or so. So let’s say that if facility costs are $150 a day in your area nowadays, in fifteen years they will most likely be around $300 per day. And in fifteen more years, that figure balloons to $600 a day. The questions that each person must ask themselves about preparing for that kind of expense are whether they have the funds available now to pay for their care, and whether they will have the additional funds in the future to make up for the increases caused by inflation? Will those funds be liquid enough to be accessed quickly and without major financial loss to necessary retirement income?

The second reason that LTCI costs as much as it does is that it is one of the most commonly used forms of assisted care insurance that you can buy. A Metlife Mature Market study was made in 2000 revealed that out of 1,000 people age 65 and older, only five will ever lose their home to a fire. Only 70 will experience an auto accident that requires them to file a claim on their auto insurance. But in the same age group, 600 will require some form of long-term care. It saddens me when I see so many people working so hard to put away money for their retirement years, and yet not understand the single greatest risk to their retirement income that exists. I encourage everyone to take a hard, realistic look at the rising costs of long-term care and start as early as possible to prepare to meet the financial challenges ahead.

Some private insurance companies sell LTCI policies to offset the costs of long term care. LTCI, like all insurance policies, need premiums in order to help recipients avoid paying huge amounts later on in the event of an illness or a catastrophic event. Also take note that the premiums are based on the individual’s age at the time of the purchase and are usually locked in for the life of the policy. LTCI covers the following, depending on the policy you choose:

Care in a skilled nursing facility

Care in an assisted living facility

Home health care

Adult day care

Buying a LTCI policy gives the policy holder to select from the many options, such as the amount of the daily benefit, the number of years the policy will pay benefits, and, after the applicant qualifies for a policy, the number of days or months before the policy will begin paying benefits.  It’s very important to evaluate policies carefully to see which one offers the benefits you require with a premium that fits your budget. Policies differ in their benefits, contract conditions, deductibles and premiums.

It is also important to take into account the rising cost of home care. Be sure the LTCI policy provides inflation protection for benefits to increase as health care costs continue to rise. Policies are generally labeled according to the place in which benefits are paid.    Remember that homecare only policies only pay for care at home and in an adult day care or adult day health care facilities. Make sure the policy includes both types of day care.  Facility-only policies pay for care in a skilled nursing facility and in an assisted living facility.  Comprehensive policies pay for care in a skilled nursing facility, assisted living facility, adult day care or adult day health care facility, and at home.  Since the LTCI claims are always paid within many years after the purchase of the policy, it is imperative to check the following:  Financial strength of the company. The industry’s major rating services are A.M. Best , Duff and Phelps, Moody’s, Standard and Poor’s and Weiss Ratings .   Reputation and claims-paying history of the company.

You can contact the State Insurance Department for more information on specific private insurance companies. Check here for more listings information for each of the state’s insurance information. Applicant must be healthy at the time of application   Each insurance company has individual requirements and/or limitations   Not sure when is the right time to buy an LTCI policy? Or how to assess what you will need from a policy? Visit our Expert Column on Financing Long Term Care to find out more.

Becoming familiar with the foundational features and options of a good long-term care insurance (LTCI) policy requires taking the time to educate yourself before making your final decision. This will help ensure that you get the policy that will best fit your particular needs. The next step is to find the insurance provider that will suit you best. Since there are a number of LTCI carriers to choose from, here are a few suggestions for  selecting a company that is worthy of your trust in the many years and also offers a quality product.

Among numerous companies that offer LTCI, there are a few that have an outstanding reputation. What I mean is that these companies have already distinguished themselves over a long period of time as financially solid, rate-stable carriers with an excellent customer service record. Unfortunately, we see so many stories in the media these days of other LTCI companies whose record in these areas is being seriously challenged. It’s been reported that some have appeared to excessively deny claims for the sole purpose of making a profit. Others have had to request hefty premium increases due to a much higher number of claims than they had projected. While these stories may hold some truth,  what we don’t hear is the good stuff: LTCI companies that really adhere to their claims of the  customer being #1.

In the June 18, 2007 issue of the Newsweek magazine recommended the following four companies as being major carriers that can be worthy of your consideration: Genworth, John Hancock,  MetLife, and Allianz Life. Of course, that does not mean that there aren’t other fine companies represented in the LTCI  field, but the four carriers identified by Newsweek are among the oldest and financially strongest in the industry. They are also the ones with extremely favorable records of customer satisfaction.

Genworth, John Hancock, MetLife and Allianz Life are all fine choices if you are in excellent health. But if you have health issues which are not serious enough to render you uninsurable, but will most likely disqualify you for ” preferred ” rates, then the company you have selected can have a significant impact on your premium. The reason for this is that each company has its own underwriting procedures that it uses for rating policyholders. These procedures can be different from one company to the next. For instance, one company will not issue a ” preferred ” rating  to anyone who uses even a single blood pressure medication, while others will allow the use of up to four of these  medications and still award the highest rate classification for long term care

Once you have more serious health conditions, the difference in the way individual carriers treat those issues can even be more serious. In other words, some health conditions that one carrier may decide to accept may be cause for rejection  by another provider. Here is where having the assistance of a knowledgeable, experienced agent who can choose  from several top companies in the LTCI field, can be a real asset in finding the company that is not only  trustworthy and reliable, but also best fits your particular needs and home health care history.

If affordability is one of the concerns keeping you from investing in a LTCI policy, consider the tax benefits that go along with LTCI. It would indeed be wonderful if the Congress has allowed all LTCI policyholders to deduct the full premium on their taxes. However, our lawmakers have not yet enacted such legislation. As is often the case, they are waiting until the system is almost broke before they will do anything like that. And with the approaching flood of baby boomers quickly becoming seniors, it doesn’t take much to realize that we have a train heading off the tracks at full speed. However, despite the impending train wreck, there are some tax benefits that have been approved thus far. If you are considering the purchase of long term care insurance you should know about them.

Nowadays, most of the tax deduction benefits go to the employers and the self-employed. If you don’t fall into that category, the Congress will require you to itemize your LTCI policy premiums along with all other health expenses during the year. Anything over 7.5% of your adjusted gross income can be used as a deduction. If you have a health savings account (also known as an HSA medical plan), however, you may be able to deduct even more if you are a retired person or an employee.  If you are a sole proprietor, a partner, or own an S corporation or LLC, even if it is just a small business, you can eliminate that 7.5% threshold and instead deduct premiums up to a certain maximum that increases with age. The schedule for tax that lists this table for qualified deductions is available for download on my Web site. If you would like to learn more about the specific deductions that may be available, you can find it at http://www.duanelipham.com/tax_summary.pdf.

If you own a C corporation, you are fortunate enough to be able to declare the entire premium as tax deductible. The amount of money you will save depends to a large degree on your tax bracket. Many self-employed folks in the 30% tax bracket who use the tax schedule mentioned above may be able to save 20% or more of their long term care insurance premiums in tax benefits. For those who can deduct the entire premium, even greater savings can be realized. Of course, it is wise to consult your accountant or tax attorney to be sure of the tax benefits that may apply to you specifically. The tax benefits that surround LTCI can save you money in the long run, and we all know what the home health care benefits can save: in some cases, your life.

On Monday, the New York Times ran a very good story about Medicare Advantage Plans. Medicare Advantage Plans are a type of health plan sold by private insurance companies. The plans are associated with Medicare.  It seems that seniors across the country have been swindled into signing away their Medicare benefits by enrolling in a Medicare Advantage Plan. There were cases that the seniors did not have an idea how the Medicare Advantage Plans worked, and in others, did not even realize that the insurance agents had signed them up for the plan.

The insurance companies that sell these long term care plans have been accused of several bad practices, including:

Deceptive marketing strategies that does not make any clear difference between Medicare and Medicare Advantage  The targeting of uninformed seniors in the low-income areas by pushy agents with hard-sell techniques  Outsourcing customer service to overseas call centers, whose employees have substandard knowledge of the complex Medicare system.  Insurance agencies with Medicare Advantage Plans undergo a greater amount of scrutiny than they have in the past, and it seems to be effective and helping them a little. Kerry N. Weems, the acting administrator of the Centers for Medicare and Medicaid Services, says, ” There are substantially fewer violations, and those violations are of substantially lower severity than in previous marketing periods. “

Medicare Advantage programs can help some consumers to finance their long term care, but these plans are not for everyone. 1There are factors to consider before signing up for any type of Medicare Advantage Plan. Here are a few of the most essential issues:
Make sure your doctor(s) and local hospital are listed within insurance company’s network of providers.  Medigap policies become null and void once you are enrolled in a Medicare Advantage Plan. If you already have a Medigap policy, you will need to cancel it once the coverage begins with a Medicare Advantage Plan to avoid paying twice.

Remember that Medicare Advantage plans vary greatly. You are giving up all rights to your existing Medicare policy, so remember to pick a plan that will meet your future continuous care needs as well as your current ones.  Read the fine print. This is an important decision, so don’t be in a hurry!  We live in a society where the buyer must beware. If you want, call your parents tonight! Make sure that they know about the issues surrounding Medicare Advantage Plans. That phone call could be the one thing that saves them from making;or worse yet, being pushed into;a decision that isn;t right for them. You don;t even want to think about the alternative!