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(EMAILWIRE.COM, March 27, 2008 ) The underlying intention of State Long Term Care Partnership Plans is to slow the hemorrhaging of Medicaid expenditures. The joint federal-state health insurance program paid $100 billion for long term care in 2007 for low-income people.
The Wall Street Journal article entitled “States Draw Fire for Pitching Citizens on Private Long Term Care Insurance” tackles some clear concerns regarding marketing practices, claims practices and rate stabilization, none of which should be overlooked or defended as they must all be addressed with solution-based ideology. Long term care is “Godzilla”, smashing through every community with devastating effect to the economy.
The long term care issue is much broader and it must be addressed in two parts; first, informal caregiving, which is currently costing the American businesses 33.6 billion a year in productivity losses. Next are professional services. Informal caregiving is the first line of defense and families are losing the battle. There are over 50 million people receiving unpaid informal caregiving. The US is not alone; other countries are facing this life-stage challenge. Even those that have Universal Health Care, like Canada, Britain and Japan, are scratching their heads about what to do and where to find the funding and work force.
Long term care insurance is more of a disability issue. We need to change the direction and language of the conversation. “Long term care” and “insurance” have negative connotations. Families discuss it too late or never believe it will happen to them, but it does and in mass numbers. We all have to step left, so we can see things from a different vantage point, if we are going to uncover real solutions. Teasing out the conversation brings it here; disability insurance works from the idea of lost income, LTC insurance really operates on cash for care. CashLTC removes the complexity for the insurer and the consumers.
Cash for care is a starting point for the countriesÂ’ front line of defense, the unpaid informal caregivers (family and friends). Current CashLTC plans have minimal paperwork and benefits are paid tax-free to the policyholder.
Planning must be realistic and practical; would $2,100 a month for four years, in cash benefits, assist families in taking care of mom or dad? For a large number of us, the answer is yes. Big picture: 95% of all claims never exceed four years. Now the practical question, is the insurance affordable? You be the judge. For a 70 year-old married individual, using standard rates from a major carrier, the monthly premium is $143.00. For a 65 year-old, it is $60.25 a month.
The Wall Street Article rightly pointed out the effects of rate increases. Here again, we must be practical. Claims do happen and should be paid. LTC insurance is no different then automobile, home, disability or accident insurance. The more claims made, the more rates will increase. There is no sin in a company being solvent or profitable. The consumer and the insurance professional each have a role to make sure that they select a solid company, with an actual track record of no less than 10 years in LTC. They both must ask questions such as how many rate increases the company has had and why, what the claims payment ratio is and what is the companyÂ’s financial rating.
Anyone who suggests that any form of LTC insurance or State Partnership Plan is a cure-all should be tar and feathered. Long term care insurance is simply a financial tool to manage consequence when adult children must take care of a failing loved one. Most families would be better equipped to manage consequences with $100,000 or $200,000 in cash for care coverage. There are very few families who have looked far enough ahead to set aside a pool of money to cover the cost of this life-event.
Traditional reimbursement and indemnity long term care insurance policies are appropriate for professional services such as Assisted Living, Home Health Care agencies and Nursing facilities, where there is proper billing. However, this type of coverage is losing some of its luster, from a claims management perspective. Families may conclude that informal caregiving is no longer practical and that they must move to professional services or a facility. CashLTC will pay anyone for anything and traditional insurance can be used in combination with CashLTC and is called “CashBridging”. It is a simple process of combining a cash benefits policy with traditional long term care insurance.
The benefit of CashBridging over a single policy with a cash feature is that it allows you to manage premiums more effectively by varying the elimination periods, benefit durations or inflation options. CashBridging will also work extremely well to meet the qualifications of State Partnership Plans at more affordable rates, with more useable benefits, especially for informal caregiving.
The Wall Street Journal should be acknowledged for its diligence in bringing this conversation out in a bigger context. Godzilla does exist and it will take a village to slay this monster.
CashLTC.org
Gregg Kroman
828.628.0876
gk@cashltc.org 
Source: EmailWire.com
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