Florida Elder Law Blog - ElderLawAssociates.com

It might sound strange to be told to insure your retirement funds, but after working hard and diligently saving all that money, wouldn't you want to make sure that the funds will be there for you when you need them?

As you move into retirement, you are also moving towards age-related health problems. Events beyond your control, such as stroke, heart disease and cognitive impairment can change one's way of life.

Many people are under the impression that government programs such as Medicare or Medicaid will cover the costs of long term care. Medicare will cover some skilled nursing for a limited period. Medicaid will only cover long term care costs for impoverished individuals. Health insurance does not cover nursing home or other long term care costs except for short-term rehabilitation.

Out of pocket costs for needed long term care resulting from age-related health problems such as home care, nursing home or assisted living will quickly deplete retirement funds and leave the remaining healthy spouse impoverished.

Long term care insurance is the answer to insure your retirement funds and provide protection so that the money stays intact and at the same time insurance provides a way to pay for elder care services.

In his book "The Total Money Makeover," Dave Ramsey says of long term care insurance, "If you are over sixty, buy long term care insurance to cover in-home care or nursing home care. The average nursing home stay costs $40,000 per year, which will crack and scramble a nest egg in a heartbeat. Dad in the nursing home can use up Mom's $250,000 savings in just a few short years."

Long term care Insurance to insure your retirement makes sense. You insure your car against damage, your home against fire, and you purchase life insurance, so why not insure what can be the largest and most devastating risk to you and your family? And unlike the other risks you insure against, long term care is the most likely to happen. Long term care insurance will also help you keep your independence and dignity and allow you to make choices about where you want to spend your final years.

Here are some specific reasons for buying long term care insurance:

• If you are married and you have a need for long term care, your spouse will be able to pay for an outside caregiver and receive needed rest and recuperation.
• If your children promise to take care of you, then when the time comes that you need care, insurance will help them do that by paying for aides to help with tasks such as bathing and incontinence.
• If you are single and a need for long term care arises and you have no family who can help you, insurance can pay for and coordinate that care.
• If you have the desire to leave assets behind when you die, insurance will help preserve those assets from the cost of long term care.

You should also consider buying long term care insurance at a younger age. There is an advantage for doing this. The premium is lower.

For example, a person, currently age 45, buying a typical policy with a spouse, could spend $21,146 in total premiums to age 78.

Suppose this same person chooses to wait to buy the equivalent coverage at age 65.

If that same policy were available in the future, the couple that waits could pay $52,566 in total premiums over their 13 remaining years to age 78. Because they waited, they would pay 2 ½ times more for the same policy.

In addition to the rates going up with age, the health qualifications will be stricter and development of health problems related to aging may even disqualify a person from obtaining a policy.

There are dozens of long term care insurance companies selling a multitude of different policy options. It can become very confusing. For each policy, there are literally thousands of benefit combinations for home care, assisted living, nursing home care, waiting periods, payment amounts, inflation riders, and the list goes on.

You can take the time to do your own research or find a competent long term care insurance agent. Here is a checklist of some of the things you need to know before you purchase a policy.

LONG TERM CARE INSURANCE BUYING CHECKLIST
The more "yes" answers you get the better off you are.

1) Is the insurance company rated by A. M. Best (the rating company) with a rating of at least A, A+ or A++?

2) Is it a large diversified company with deep pockets and selling more than just long term care insurance?

3) Is the insurance representative an expert in long term care insurance? (Because of its complexity, almost all LTCi experts only sell LTCi; they seldom sell anything else.)

4) Does the representative have a degree and/or industry financial designations?

5) Does the representative own a personal long term care insurance policy for himself or herself?

6) Is the policy you like tax qualified, and if not, do you understand the ramifications?

7) Are there at least 6 ADL's (Activities of Daily Living) allowed for in the benefit certification?

8) Does it allow "standby assistance"?

9) Is it a "pool of money" as opposed to a "stated period"?

10) Is it "integrated" as opposed to "2-pool"? (2-pool is not allowed in many states.)

11) Do you understand how the elimination period works? (This is extremely important.)

12) Does it have prohibitive cost containment provisions?

13) Is there any "capping" or other future reduction of automatic benefit increase riders?

14) Do you understand how the waiver of premium works?

15) Does the assisted living facility benefit pay the same as for nursing home?

16) Are you buying adequate home care coverage?


17) Does the company have a history of premium rate stability without periodic increases?


18) Does the policy pay for homemaker services?


19) Does the policy offer an alternative plan of care for services that don't exist today?

Labels: long term care, Medicaid Planning, Medicare

If you work with individuals over the age of 65 (as all Florida elder law attorneys do), you may be getting phone calls requesting help with Medicare questions. It’s that time, once again, to make changes to Medicare options. According to CMS, which is the government entity that oversees Medicare, the six weeks from November 15, 2008 through December 31, 2008 is a hectic time of the year otherwise known as the Annual Election Period (AEP.) Once a year, Medicare allows enrollees to opt in or out of Medicare Part D and Medicare Part C -- otherwise know as Medicare Advantage Plans. Before we get into what that means, some background is in order.

Medicare consists of four parts -- Part A, Part B, Part C and part D. The majority of Medicare enrollees have Part A and Part B. In addition they may have an employer-sponsored supplement or a Medigap policy to go along with Part A and Part B. The fourth part of Medicare is Part D or prescription drug coverage. Most people think that the "D" in Part D is because of the word "drugs." Actually it’s because there is a Part C. Part C is the Medicare Advantage program. It was started in 2003 as part of the Medicare Modernization Act -- the same Act that created the Medicare Part D prescription drug coverage. Medicare Advantage Plans have been around for some time. Before 2003 they were known as Medicare + Choice Plans. With Medicare Advantage, Medicare pays a private insurance company to take over and administer someone’s Medicare benefits. That person is still a part of the Medicare system. He or she doesn't leave the system. A person is simply now receiving his or her benefits from a Private company not the Government.

Back to the massive stack of mail from Medicare that is coming and will be coming over the next few months. Hopefully your people are sitting down. This gets confusing. From November 15, 2008 through December 31, 2008, those eligible for Medicare have the option to change existing Medicare Advantage Plans and/or Medicare Part D. This period is called the Annual Election Period or AEP.

There is also another period of time from January 1, 2009 through March 31, 2009 that is called the Open Enrollment Period or OEP. During OEP, a person can enroll in Advantage but cannot change Part D status, meaning if there is just a Part D, a change or cancellation to the drug Plan cannot occur at this time. If there is a Medicare Advantage Plan which includes Prescription Drug Coverage (MAPD), a change can be made by purchasing another MAPD. Or, if there is just prescription coverage, an MAPD can be purchased. Going the other direction from an MAPD to prescription coverage only, is not allowed.

On April 1, 2009 and thereafter, Medicare institutes a lock-in period. During this time, no changes to drug coverage or an MAPD are allowed. As with most government programs there are a few exceptions to the rule. If a person has moved out of the area the plan operates in, or if a person becomes a resident in any long term care facility, or if a person involuntarily loses coverage, that person can enroll for new coverage under a Special Election Period or SEP. Finally, most people who are eligible for or who are on Medicaid can change coverage whenever they choose.

So why the big deal? Why does someone need to be aware each year of what is going on? The reason is the insurance companies that sponsor the Medicare Advantage and the Part D Plans have the option to change what they offer each year. Changes may come as a result of directives from Medicare, from previous years' claims experience, or from a multitude of other issues. Asking 10 people if there are pending changes to the plans they are in will result in 9 of them replying they have received notice of adjustments or premium changes. However, not all changes are for the worse. There are some instances where the plans have gotten better. Nevertheless, from year to year most plans will have changes. Sometimes a plan may pull out of an area thus forcing an individual to make an unwanted change.

Medicare allows the Advantage companies to start marketing their plans to the public on October 1 and the companies can release information on intended changes to existing plans. For any pending changes, a beneficiary should receive an Annual Notice of Change (ANOC.) Most people will receive this document in November. People need to take the time to review changes. They need to be aware of the plan they are in and the benefits it provides when they might need to use the coverage.

Medicare Advantage Plans can be a great fit for many Medicare enrollees. As with anything, one size does not fit all. During the six-week period when changes can be made, people owe it to themselves to evaluate their options. In the past, many Advantage Plan companies made a big push during this change period to move people out of existing plans and into new ones. Medicare has changed the rules on how companies can induce people to change. In the past, seniors were invited to attend presentations where they received free meals as an inducement to attend. Starting in 2009, only snacks can be provided. Preliminary indications are that pie and coffee are on the menu. Personally we like Pecan pie and free pie is good pie.

On the National Care Planning Council website, at www.longtermcarelink.net, is a link to all medicare approved advantage plans in every state. All the plans listed in an area can be found there. Finally, those people who need help or who are facing changes should contact a trusted insurance agent. Medicare Advantage plans are only available from someone who is licensed to sell health insurance.

Labels: florida elder law, Medicare