Long-Term Care Facts Column: article originally published by the Redlands Daily Facts March 7, 2013:

Some of the leading long-term care insurance companies have recently announced that they will soon offer policies that have different rates for men and women.

Gender-based pricing for insurance is not new. Most insurance policies have premiums that are based upon gender, as well as other factors. Life insurance, auto insurance and disability insurance all have different prices for men and women because the risk factors are different for each gender.

Men pay higher premiums than women for most forms of insurance. One type of insurance for which women have paid higher premiums than men is medical insurance. However, as part of the Affordable Care Act, effective Jan. 1, 2014, all medical insurance policies are required to charge men and women the same rates.

Some reports on the Internet have stated that gender-based pricing for long-term care insurance is a violation of the Affordable Care Act (aka Obamacare). However, the Affordable Care Act does not have any regulations regarding long-term care insurance; it regulates only medical insurance.

As of the publishing of this column, all long-term care insurance policies available for sale still use unisex rates, meaning that men and women pay the same rates. However, this will change in most states sometime in 2013.

If you’re a woman and you’ve been thinking about purchasing long-term care insurance, you may want to buy a policy that has the unisex rates rather than wait for the policies that will have gender-based rates. Some have estimated that the gender-based rates may be as much as 20 percent to 40 percent higher for women than the current unisex rates.

Once you purchase a policy with the unisex rates you will always have the unisex rates; your policy cannot be switched to gender-based rates.

The justification for charging women higher rates than men for long-term care insurance is that women account for roughly two-thirds of long-term-care insurance claims. However, more women own long-term care insurance than men, so the data may not be quite so lopsided.

Women tend to become caregivers themselves for the men in their lives, thus reducing the number of claims made by men. With women typically living longer than men, there may be no one left to provide extended care for them.

According to an industry website, Genworth’s new long-term care insurance product, Privileged Choice Flex 2, will be launched in April in about 35 states with single women paying about 20 percent to 40 percent more than single men. Industry experts predict that all companies offering long-term care insurance will soon follow the gender-based pricing model.

To learn more, send your questions or comments to questions@LTCFacts.org.

Long-Term Care Facts Column: article originally published by the Redlands Daily Facts February 21, 2013:

My last column explained the government’s role in providing long-term care.

As a general guideline, if your household income is less than $50,000 per year and your net worth, not including your residence, is less than $50,000, then relying on Medicaid for your long-term care needs probably makes sense.

It is not always this clear cut. Suppose a couple wants to own long-term care insur­ance but can’t afford a policy for each of them.

Which spouse should get a policy?

Statistically speaking, women are more likely to need care than men, so it might make sense to buy only a policy on the woman. In reality, it’s the spouse who has the most income in his or her name who should own long-term care insur­ance.

For example, John has a pension of $36,000 per year. He also receives $24,000 of Social Security benefits each year. Mary, his wife, has a pension of $20,000 and she receives $15,000 of Social Security benefits each year.

Without long-term care insurance, if John were to need long-term care and apply for Medicaid to pay for his care, all of his income would have to go to the facility caring for him (minus a small allowance and minus the cost of his health insurance.) In other words, if he were to rely on Medicaid, Mary would no longer be able to use any of his income for her own living expenses. She would be able to keep only her annual income of $35,000.

Conversely, if Mary were to need long-term care and apply for Medicaid to pay for her care, all of her income would have to go to the facility caring for her (minus a small allowance and minus the cost of her health insurance.) In other words, if she were to rely on Medicaid, John would no longer be able to use any of her income for his living expenses. But, John would be able to keep all of his income totaling $70,000 per year.

Without having a policy on John, they risk losing about $70,000 per year in income. Without having a policy on Mary they risk losing about $35,000 per year in income. Therefore, if they can insure only one person, I think it’s wiser to insure John rather than Mary. Even without owning significant assets, it would certainly be wise to protect the primary source of income.

But what if there is mod­est income yet fairly signifi­cant assets that need protec­tion? In order for the gov­ernment pay for someone’s long-term care expenses, the person would have to spend down his or her assets to the poverty level — about $3,000 in most states.

Since 2005, and the pas­sage of the Deficit Reduc­tion Act, most states are allowing their residents to keep more of their assets if they own a government­approved Long-Term Care Partnership policy.

Long-Term Care Partnership policies are similar to tradi­tional long-term care insur­ance policies, except they must include special con­sumer protection features, especially inflation protec­tion. Each dollar that your long-term care partnership policy pays to you in bene­fits entitles you to keep a dollar of your assets, if you ever need to apply for Med­icaid services after using your policy’s benefits.

In the old days, you’d have to spend your assets down to the state-required minimums. Now, the state will allow you to keep the minimum amounts plus an amount equal to whatever your long-term care partner­ship policy paid in benefits.

Your assets are protected from Medicaid spend-down, and your assets can even be protected from estate recov­ery after you die.

Four states have success­fully run long-term care partnership programs since the 1990s — California, Connecticut, Indiana and New York. Since 2005, about 40 other states have established long-term care partnership programs.

To learn more, send your questions or comments to questions@LTCFacts.org.

Carolyn Olson is founder of LTCFacts.org, a website providing short articles about long-term care insurance to help people make decisions about buying long-term care insurance.

Long-Term Care Facts Column: article originally published by the Redlands Daily Facts February 7, 2013:

Last week I discussed the need for long-term care planning and the role that long-term care insurance can play.  Surprisingly, many people still believe that government programs will provide
for them and their loved ones.  But what exactly is the difference between Medicare and Medicaid, and which pays for long-term care?

Medicare is the federal program that provides hospital and medical insurance to people aged 65 or older and to certain ill or disabled persons.  Benefits for nursing home and home health services are limited to only those days that are medically necessary.

Medicaid is a joint federal/state program that pays for health care services for those with low incomes or very high medical bills relative to income and assets.  Therein lies the key words: relative to income and assets.

Medicaid offers some coverage for long-term care, but individuals must spend-down their income and assets.  The rules vary by state, but one typically can’t keep more than a few thousand dollars in “countable assets”.  And, in many cases, most of the income of the Medicaid recipient has to go towards his/her care.

Qualifying for Medicaid can be difficult for married couples.  Depending on the circumstances, the healthy spouse might have to forfeit the income of the spouse needing care.  The real kicker is the estate recovery portion of Medicaid.  According to the National Clearinghouse for Long Term Care Insurance, “If you receive Medicaid coverage for long-term care services, federal law requires states to recover the amount Medicaid spent on your behalf from your estate after you die.”  Although surviving spouses are protected until after their death, how devastating this would be for children to lose their loved ones, then be required to reimburse the state for the care provided after their death?

So what about the Patient Protection and Affordable Care Act?  Otherwise known as Obamacare, it contained a section addressing long-term care, which was supported by the late Senator Ted Kennedy (D-Mass).  This section of Obamacare was known as the CLASS Act (Community Living Assistance Services and Support), which was supposed to provide voluntary long-term care insurance to workers over the age of 18.  If needed, this provision would have allowed participants to receive on average $50 per day to help them pay for long-term care services they received at home or in a facility, without spending down their assets in order to qualify for Medicaid.

The Administration decided not to implement the program because they concluded it was not financially sustainable.  The premiums would have been far too expensive and most healthy workers would have opted-out of the program, thus making it unsustainable.  As a result, Congress never funded this portion of Obamacare, and in fact repealed it completely with the recent passage of the New Year’s Day budget agreement that avoided the “Fiscal Cliff”.

The only government program available to pay for long term care is Medicaid.  As a general guideline, if your household income is less than $50,000 per year and your net worth (not including your personal home) is less than $50,000, then relying on Medicaid for your long-term care needs probably make sense.  But, if there are significant assets and/or income streams to protect, then it might be time to talk do some serious planning for long-term care.  Although annual premiums for long-term care insurance can be $1,500 and up (depending upon your age, health, and choice of benefits), the benefits in the long run can be substantial.

If you’re married and you can only afford a long-term care policy for one spouse, or your income stream is higher than $50,000 per year yet your assets are far less than $50,000, then you need to know which spouse should get a long-term care policy.  I’ll cover that next time at Long-Term Care Insurance Facts.