Long Term Care Commentary

LONG TERM CARE COMMENTARY

(1998) Here is something you won't hear about from Money Mag or just about anyplace else. When reviewing a proposal on long term care that someone had sent me- primarily because they were concerned about home health care- I noted that the policy provided coverage for $100.00 per day. But with caps for each person she may have needed. Say what? For example, they would only pay $25 per hour for a RN, LPN, chemotherapy specialist, etc. and anything over that the patient paid. You don't get RN's for $25 an hour out here- or most anywhere else. So if a nurse charged $50.00 an hour for two hours, the patient would still have to pay $50 out of pocket. Hardly great coverage and certainly not what the agent inferred (or even recognized for that matter). The only ethical way this policy could be sold would be to have agents tell prospective clients exactly what costs they would pay themselves since they unquestionably believe that they would actually be getting $100/day coverage. Never happen. It would stop sales if the truth be known. Just another reason why you never buy insurance from (just) an insurance agent. Let's be careful out there.

HOME HEALTH CARE: (1998) The costs for home health care have almost decimated the Medicare and Medicaid budgets. Studies have shown that the "more government spends on services people want instead of nursing home care which they dread, the more people come "out of the woodwork" to seek public assistance." So government spending actually goes up in an effort to help people stay out of nursing homes since the patients don't bother to buy long term care which inevitably arises. "Evaluations of community care programs...tend to show not only that expansion of community care has little effect on nursing home use, but that it raises, rather than lowers, total expenditures." (Caring for the Disabled Elderly: Who Will Pay?, The Brookings Institution) And, quite obviously, more Medicare expenditures causes more fraud (which already consumes 40% of Medicare's home care dollars).

Health Care Trends Report- "Expenditures for the home health benefit, the fastest growing component of Medicare, increased from $2.6 billion in 1989 to $16 billion in 1995, and are expected to increase to $31.3 billion by 2002. This constitutes 3% of total Medicare spending in 1989 and 10% in 1995.... Increased utilization appears to be the driving force behind Medicare home health spending growth. Between 1989 and 1994, the number of home health users per 1,000 beneficiaries increased from 50 to 97, or 94%, and the number of visits per user increased from 27 to 70, or 159%. In contrast, payments per visit increased by only 2%."

National Medical Expenditure Survey Research Findings- "The percentage of nursing home patients receiving Medicaid jumps to 78.6% for full-year residents, and falls to 53.1% and 57.9% for admissions and discharges respectively. In other words, the more expensive, long-term patients tend to be on Medicaid, whereas the cheaper, short-term patients pay privately or have Medicare coverage."

LONG TERM CARE: (American Health Planning Association) (1998) About 75% of LTC is given by family members, and...one-half of the patients so helped are bedbound or incontinent or both."

NURSING HOME MEDICATION: The government pays about $1,000 per year per nursing home patient for drugs. But a recent study says that up to 20% of nursing home patients are receiving inappropriate medications. The problem may not be the homes per se but the fact that pharmacists are having trouble getting a patient's full prescription records so they can determine if there will be a conflict with the various medications. They noted that inappropriate medicines can lead to falls, constipation, delirium, depression and incontinence.

LONG TERM CARE: 1998 Nursing home costs have risen 20% in the last 3 years to about $46,000 average nationally. Assisted living costs range from $20,000 to $48,000 annually (the location is the real reason for the difference.)

40% of adult children whose parents are still living expect to support them financially versus 22% in 1994.

LONG TERM CARE: Women tend to outlive their husbands and have a 13% chance of spending five years or more in a nursing home, compared with 4% for men.

But about half of women now age 65 will spend some time in a nursing home; for men, the likelihood is 33%. Most stays are short; only 24% of today's 65-year-olds who enter a nursing home will remain there for a year or longer. The number of long-term-care policies in effect has risen rapidly to more than 3.5 million.

LONG TERM CARE POLICY COSTS: 1998 To purchase a basic policy- $100/day, compounded annual 5% increase, etc., the projected annual premiums for an individual in excellent health would be as follows: age 40- $550; age 45- $610; age 50- $760; age 55- $860; age 60- $1,130; age 65- $1,570; age 70- $2,020; age 75- $3,300; and age 80- $3,600. The premium for ages 70, 75, and 80 are with simple inflation protection. All premiums reflect a spousal discount. The premiums illustrated may be higher or lower depending on the state of residence.

LONG TERM CARE FACILITIES:(New Lifestyles 1998) CCRCs (Continuing Care Retirement Communities), also known as Continuing/Life Care Centers usually provide a variety of independent living options along with full medical and nursing services. Most CCRCs are self-contained communities that offer all types of recreational activities and dining accommodations and many may include shopping and banking facilities, beautician and barber facilities and transportation services. CCRCs usually charge a partially refundable entrance fee as well as a monthly rate and can be quite expensive.

Retirement Homes are designed for those who are effectively totally independent and want to live in an active community with other seniors. While the conveniences may be similar to CCRC's, they generally do not include any nursing care services. Some, however, may offer "Assisted Living" which is assistance with medications, bathing, or dressing. Retirement communities can be either free standing facilities or affiliated with a complex also offering a range of nursing care services.

Residential Care Facilities (also known informally as personal care facilities or board and care facilities) are residential-type homes licensed to care for a relatively small number of residents who are able to care for themselves in a protected environment. These facilities provide their residents with basic needs such as room and board, laundry, cleaning, and perhaps assistance with the taking of medications, bathing, or dressing. Most will accept at least some residents who are non-ambulatory. Residential Care facilities are usually licensed by each state's Department of Human Services (Some retirement communities are also licensed as Residential Care facilities).

Intermediate Care Facilities (ICF) are for those who are not bed bound, and can move about the facility under their own initiative, even with a wheelchair. They may be incontinent and require intermittent nursing services.

Skilled Nursing Facilities or Nursing Centers are for patients who need 24-hour nursing supervision, many of whom are confined to bed for some portion of the day or who are incontinent. These facilities offer medical treatment under the supervision of licensed nurses, and at least one registered nurse must be on duty during the day. Nursing centers are licensed by the each state's Department of Health. Complete information regarding amenities, services, charges, and care options can be obtained by calling the admission coordinator at any listed facility.

GROUP LONG TERM CARE POLICIES: (New Lifestyles) About 1,000 companies are offering employees (and usually their spouses, parents and in-laws) group long-term-care policies as part of their cafeteria plan.

Premiums are almost always paid solely by employees, with no employer contribution. Coverage for active employees, and possibly spouses, may be guaranteed, but under some plans insurers apply underwriting standards to each employee and coverage is not a sure thing. If you have controlled hypertension, for example, you may be automatically rejected, even though you would qualify for an individual policy.

Actually, individual policies might be more obtainable, cheaper and have greater coverage. For example, an individual policy probably would cover for assisted care- not normally offered in a group policy.

NURSING HOME COSTS: (1998) In New York State, skilled nursing facilities currently charge over $188 per day on average or $69,000 per year or more. In the New York City Metropolitan Area, which includes the 5 boroughs of New York City, Long Island and Westchester County, the average skilled nursing facility charge is about $222 per day or about $81,000 per year. It is estimated that persons in nursing homes stay for 2-1/2 years on average.

Home health care is also expensive. In New York, three home health care visits per week by a registered nurse can cost over $12,950 per year. Even custodial home care at three visits a week can cost over $8,960 per year.

Medicare can cover for SKILLED home health care through services furnished by a home health agency under the following four conditions: (You do not need a prior hospital stay to qualify for home health care.)

The care includes intermittent skilled nursing care, physical therapy, or speech language pathology.

You are confined to your home.

You are under the care of a physician who determines you need home health care and sets up a plan for you to receive care at home.

The home health agency providing services participates in Medicare.

Once all four of these conditions are met, Medicare will pay for covered services as long as they are medically reasonable and necessary. Coverage is provided for the services of skilled nurses, home health aides, medical social workers and different kinds of therapists. The services may be provided either on a part-time or intermittent basis, not full-time.

Medicare pays the full cost of medically necessary home health visits by a Medicare-approved home health agency. The Medicare home health benefit also covers the full cost of some medical supplies, however, if you need durable medical equipment, you are responsible for a 20% coinsurance payment for the equipment.

Medicare will NOT pay for full-time nursing care at home, drugs, meals delivered to your home, and homemaker services that are primarily to assist you in meeting personal care or housekeeping needs.

This looks great- till you recognize that a tremendous amount of fraud has been noted here as home health companies have charged $$$$$ for minimal care.

LONG TERM CARE: (1998) Before you attempt to reduce your assets so you can get Medicaid long term care, consider these issues:

(1) You will probably lose your price, dignity and have an increased dependence on others

(2) An inability to purchase services not available under

Medicare or Medicaid;

(3) There is unquestionably a reluctance by nursing homes to admit Medicaid as opposed to the more lucrative "private pay" patients;

(4) Once the assets are transferred, they ARE the ownership of the donee and it may be difficult or impossible to get the money back when needed.

(5) Once you have limited assets, you will be denied entry to facilities that do not accept Medicaid patients.

LONG TERM CARE: 1998 This should be fairly representative of the costs of buying a long term care policy when you are younger. Assume care is not needed till age 80.

Age Daily Amount Annual Premium Total Premiums Paid to Age 80

50 $100 $1,032 $30,960

60 $160 $2,273 $41,460

70 $250 $7,560 $75,600

ELDER CARE ASSURANCE: (1998) Home Health Care and other community based services is unquestionably one area of long term care that the elderly are concerned about. Those saying they are extremely, very, or somewhat likely to use elder care assurance.

Home health care - 92%

Assisted living - 80%

General upkeep and care of home - 53%

Household finances - 14%

Peace of mind is the most important reason.

It is also obvious in the increased product offerings of long term care products. Studies have shown that:

In using professionals for assistance-

99% said the person must be reliable

98% indicated the person have integrity

97% requested they be compassionate

96% that the individual deliver a high quality service

82% that the person must be accredited.

SKILLED NURSING HOME CARE: (1998) "Medicare covers intravenous and tube feedings, injections of insulin, insertion of catheters, tracheostomy aspiration, training in self-injections and diet for diabetics, and rehabilitation services like speech, occupational, and physical therapy. Rehabilitation therapies are covered if they're required at least five days a week, if they're restorative, and not simply to maintain functioning, and if improvement continues.

Payment stops if there's no further improvement.

Many nursing homes have begun to turn themselves into facilities focusing almost exclusively on Medicare-covered services. Other nursing homes are marketing units for "subacute" care: special wings or floors that provide hospital-level care. Even hospitals are setting aside skilled-nursing wings as a way to continue receiving Medicare money once patients move out of acute-care beds. It's unclear if subacute units are marketing-inspired locations with care not much different from that in other parts of a nursing home.

Regardless, eventually, Medicare stops paying. Either qualifications for benefits are no longer met, or the 100 days run out. For many families, coverage ends sooner than they expect. On average, beneficiaries use about 57 days of skilled-nursing care in any calendar year. When benefits end, residents may have to move. If you can't swing the private pay rate the facility charges, or if the facility is not certified for Medicaid, the fallback government program, you'll have to uproot your loved one.

Before you place your relative, make sure you know the facility's certification status. About 11,000 facilities are certified for both Medicare and Medicaid, but some 1,100 homes are certified only for Medicare. If your relative needs continued nursing care, and Medicaid will at some point have to pay the bills, choose a facility that's certified for both."

LONG TERM CARE: (1998) Nursing home costs have risen 20% in the last three years to a national average of $46,000 (in New York City, it is $81,000!). In 1994, only 22% of adult children expected to have to support living parents. Now it is 40%. According to many industry experts, "long term care policies are drastically under priced and will require substantial rate increases in the future. If so, they could suffer the same fate as many disability income policies." What they are referring to is the fact that thousands of disability policies written on the "best" categories (doctors, attorneys, etc.) came under a crescendo of claims requiring the complete rewriting of the contracts and substantial cost increases coupled with severe restrictions in benefits. I have read nothing to indicate that the underwriting on the elderly is misplaced. Admittedly, due to better health, MORE people will need long term care (yes, you read right). But they will not need it until a later age. How that is being factored in, I don't know.

COSTS OF CARE

AVERAGE STATE DAILY NURSING HOME COSTS 1998 (Met Life)

AL 103 CT 202 ID 136 LA 90 MS 100 NJ 192 OR 142 TX 130 WI 166

AK 413 DE 129 IL 133 ME 175 MO 105 MN 144 PA 149 UT 115 WY 100

AZ 137 DC 184 IN 141 MD 151 MT 100 NY 178 RI 155 VT 100 AVG 140

AR 118 FL 120 IA 101 MA 201 NE 142 ND 100 SC 118 VA 115

CA 156 GA 102 KS 110 MI 127 NV 130 OH 151 SD 100 WA 177

CO 117 HI 127 KY 127 MN 133 NH 199 OK 92 TN 126 WV 125

Over a 2 1/2 year average stay, the cost would be $127,750.

LONG TERM CARE: (1999) (Health Care Financing Administration) Total expenditures for nursing home care are projected by the Health Care Financing Administration (HCFA) to grow 70% from 1998 to 2007 ($87 billion to $148 billion). However, Out-of-Pocket payments are projected to grow 87% ($25 billion to $47 billion). While Medicaid payments for nursing home care are projected to grow 55% during this period ($41 billion to $63 billion), payments from private health insurance are projected to grow the most: from $5 billion to $11 billion (127%).

Home health care will grow more in expenditures: 100% between 1998 and 2007 ($33 billion to $66 billion). Out-of-pocket payments for home health care will soar to 150% ($7 billion to $17 billion), while Medicare's costs, now the major payer, will grow only 70% ($14 billion to $23 billion). Payments from private health insurance are projected to grow 140% ($4 billion to $9 billion). Medicaid's costs for home care are projected to grow 140% also, from $5 billion to $12 billion.

Total national health care expenditures are projected to grow 86% ($1,146.8 billion to $2,133.3 billion) between 1998 and 2007.

LONG TERM CARE POLICIES: (1999) Health Insurance Association of America Average stated that "premiums for private long-term care insurance dropped approximately 5% between 1995 and 1996. The number of long-term care policies sold between 1995 and 1996 rose by more than 600,000 - the largest number of policies ever sold in one year. Additionally, in 1996, 10 of the 12 leading sellers of private long-term care insurance waived pre-existing condition limitations, so long as pertinent medical conditions were disclosed when a consumer applied for coverage."

Almost "5 million private long-term care insurance policies were sold as of December 31, 1996. While most sales were in the individual market, employer-sponsored long-term care insurance accounted for nearly 20 percent of all sales in 1996. The average annual premium for individual policies containing a $100 a day nursing home benefit/$50 a day home health care benefit, four years of coverage, and a 20-day elimination period (deductible) was $247 at age 40. At age 50, the premium for the same policy was $364; at age 65, $980; and at age 79, $3,907. The same policy with a 5% compounded inflation feature had an average annual premium of $589 at age 40, $802 at age 50, $1,829 at age 65, and $5,592 at age 79.

Meanwhile, the average annual cost of a nursing home stay is more than $40,000.

The cumulative number of policies sold in the employer-sponsored market has grown to 650,000 - an average annual growth rate of 47% since 1987. The number of employer-sponsored plans grew to 1,532 in 1996 from 1,260 in 1995. Nearly 52 % of all employers offering coverage were small businesses with 100 or fewer employees.

The top 10 states with the largest number of sales, in descending order, are Florida, California, Pennsylvania, Illinois, Texas, Ohio, Washington, Iowa, Missouri, and Michigan.

The states with the greatest percentage of market penetration (15% of the population or more, based upon the number of policies sold and the number of state residents aged 65 and older) are Iowa, Montana, Nebraska, North Dakota, South Dakota, and Washington."

MEDICAID, MEDICARE AND LONG-TERM NURSING-HOME CARE: (1999) An "estate planning" article talks about Medicaid planning and the ability to remove assets through a "business interest" so that a person can "effectively" utilize state funding for long-term care. What is noticeable to me is that the commentary is similar to what I read with the various tax shelters in the 1980s. They used to spend a LOT of print and attorney rationale justifying why their offering was- or should be- exempt from securities law. You could almost smell that this "estate planning" was essentially a convoluted rationale that was probably not going to pass muster later on either (though only time will tell). Anyway, there was extended commentary about transferring assets as an exchange for a business interest (not a transfer of assets) and the fact that "you can 'go into business with this promoted business venture without any substantial effort (doesn't that sound a little too convenient) on your part". As such, the firm "never recommends that you give assets away, they recommend an EXCHANGE of assets for a business interest. This exchange does NOT create an "ineligibility period" and their "non-transferable business interest" is NOT subject to a Medicaid spend-down." Therefore, Medicaid supposedly does not have the right to attach these assets for payment of long-term care. It has, apparently, also been supported by court cases-though I have not checked them out. Will it work? I don't know. Would I use or recommend it? Not a chance.

As for proper planning, assume you are healthy and want to pass on as much assets to your beneficiaries (most often your children) as possible at death. You could attempt this "business strategy" or some other type of transfer. But beyond the attempt to get assets beyond Medicaid is the fact that you better be absolutely sure you want to die in a Medicaid Ward with a bunch of other screaming Alzheimers patients. And if you do not know the difference between the level of care between Medicaid and Private Pay, you probably should be in a home to begin with. That's because the lack of the limited financial resources allowed for Medicaid patients may commit them to substandard care in substandard homes (though not always. This is NOT a diatribe against Medicaid per se since there are good homes and caregivers.) But look at the problems identified in the WSJ and NBC news. One of the major nursing homes in the South was "caught" turning away and OUT Medicaid patients because they were losing money on them. They stated that Medicaid paid $82 a day for care wherein the actual cost to the home was $95. Private pay patients were paying $125 per day. You should be able to see that the difference in payments between the two ($42/day) would almost undoubtedly make a difference in potential care. This scenario is not an isolated case- 125 nursing homes nationally pulled out of Medicaid in the last two years.

Also, don't expect Medicare to help. In fact, it is not now, nor has been, nor will be, designed to provide any long term care at all unless it is skilled care- which represents only about 0.5% of all patients. Some ill people have attempted to use home health care services as a substitute for long term care. Since the rules were rather ambiguous, a lot of home health care services jumped onto the money bandwagon, providing (at times) unnecessary and/or overly expensive services which subsequently drove both the Medicare and Medicaid home health care budgets through the roof. some of the elderly complain that as the rules are tightened, home services will be reduced and they will be left in the lurch. Partially true. But irrespective of personal feelings, the government cannot afford cradle to the grave coverage. Look at the trouble social security is in and that's due to our glorious politicians who "know how to budget and plan"- though kudos to Moynihan and his efforts for years.

So do your planning early and utilize the various policies that can provide adequate care when you are infirmed- assuming you can afford to do so. Don't buy a policy if you were going to go on Medicaid anyway since your income/finances were limited.

Currently there area about 1,385,000 nursing home patients- 771,668 are paid for by Medicaid.

MORE LONG TERM CARE: (1999) "Long-term care related issues cost employers $29 billion a year in lost time, lost employees, and lost productivity" per HIAA. The U.S. faces a looming crisis because long-term care is the largest unfunded liability facing Americans today and the single major catastrophic expense facing today's elderly and tomorrow's retirees. With annual nursing home costs averaging $41,000 today and increasing to about $100,000 in 1996 dollars by the year 2030, such expenses can indeed cause financial ruin."

So I ask, what are you doing about it- either for yourself or a parent? Don't sit idly by and hope that something won't go wrong, particularly if your genealogy indicates you might live till 80 or so (when most long term care is needed). By the same token, don't go out and buy the cheapest thing available or one from an agent or financial planner who took one course (if that) in the subject. These contracts are NOT easy to figure out. As an example of the problems, one MAJOR company offers a home health care option- I'll say a customer bought a $100/day coverage. So if a nurse came to the home and charged $50/hour for two hours, the patient would pay nothing, right? WRONG! The contract only pays to a maximum of $25/hour and therefore the patient has to come up with $50 out of pocket. Frankly, although the "caveat" is printed in the contract, I don't think 99 44/100% of the purchasers are even aware of it, that 100% had been told of it by the salesperson nor that the salespeople even knew about it. I think it is unethical- but ethics is not a primary focus in today's society. (The national general sales manager for the company did not even know it until I bought it to his attention. True statement.)

MORE LONG TERM CARE. (1999) Some of you might be aware that Congress opted to provide some tax "friendly" policies that allow you to take a deduction for the premiums (but only when they exceed- along with other medical costs- 7.5% of your AGI. Big joke- hardly happen for anyone- maybe 4% max) and the ability to get your LTC payments tax free. But there are some major caveats- primarily that the tax qualified polices require "substantial" human assistance in performing at least two ADL's for a period of 90 consecutive days and that the individual must be certified as "chronically ill" to access the policy. Well these are very stringent requirements that are certainly open to interpretation. In fact, a recent letter by Richard Green on the subject says that insurers may find this a financial boon because up to 40% of the policyholders will be denied coverage versus purchasing the standard taxable policy that does not have these restrictions. He comments that "if we could provide early custodial care for the weak or frail or for the person returning from the hospital, we might be able to prevent injuries that require hospitalization or nursing home stays for periods longer than 90 days."

Admittedly these plans are perhaps 5% to 10% cheaper than the taxable plans, but if you are never able to utilize them properly- or at all under certain conditions- then the cost is prohibitive. Sure, you won't have to pay tax on the $50,000 (or whatever) received for long term care, but if you never get even $5, what's the point??

LONG TERM CARE: (1999) Between 12% and 23% of persons would not be eligible for a long term care policy at age 65 due to underwritings restrictions on prior illness and disease. (USHHR)

NURSING HOMES: (1999) (HCFA)- Of those patients in a nursing home, 45% have Alzheimers, 13% other disorders and 10% have mental retardation. 47% of those over age 85 have Alzheimers; 19% between 75 and 84 and 3% for those age 65 to 74.

LONG TERM CARE: (1999) (Center for Long-Term Care Financing President Stephen Moses) -"less than ten percent of seniors have purchased long-term care insurance and virtually none of the baby boomers have done so. Upwards of 85 percent to 90 percent of all payments to nursing homes in the United States come from Medicaid, Medicare, Social Security income, other private patient income or other private sources--NOT PATIENTS' ASSETS. In other words, people who fail to plan ahead for long-term care expenses routinely end up in nursing homes paid for by Medicaid or in extended home care paid for by Medicare. With every benign intent, government policy has anesthetized the public to the risk of catastrophic long-term care expenses. Consequently, people fail to plan ahead for long-term care when they are young, healthy, and affluent enough to insure for the risk. By the time most people confront the risk of long-term care directly, they are either too old to afford private insurance coverage or too infirm to qualify for such protection. Most of them, including a tragically large proportion of America's beloved World-War-II generation, end up in nursing homes on welfare by default, because that is the only way that remains to protect their estates from private long-term care expenses. Efforts to target Medicaid only to the genuinely needy by closing loopholes, mandating estate recoveries, or criminalizing Medicaid estate planning have not succeeded, because these interventions have always been attempted too late, usually after the need for long-term care has already occurred."

LONG TERM CARE: (1999) According to ASHA, 62% of all publicly financed long term care costs are paid for by Medicaid, and 82% of that amount goes to nursing homes. Such spending cost the U.S. government $39.4 billion in 1997, $14.7 billion more than 12 years ago.

ADL's and IADL's: (1999) Activities of Daily Living (ADL's) include Bathing, eating , dressing, transferring, toileting, continence and feeding, among others. IADL's are the Instrumental ADL's and include managing medications, using the telephone, handling finances, performing housework, doing laundry, arranging for transportation and preparing meals. Per LIfe Insurance Selling, "IADL's measure more complex functions than ADL's, such as one's ability to cope with his environment or perform adaptive tasks. A person's need for assistance with IADL's maybe a predictor of future ADL dependency."

Assisted Living Facilities (1999)

Female 76%

Average Age 83.6

Male 24%

Average Age 81.8

Average number of ADLs 3.1

Cognitively impaired 49%

Hospitalized before moving into an ALF 42%

Average Income $26,138

Reasons for Discharge

Death 26%

Move to Nursing Home 39%

Move to Relative's house 4%

AF had a 95% median occupancy for 1997 and 1998. There has been a 3 year decline in semi private rooms form 13% in 1996 to 9% in 1998. 86% of ALF residents receive no final assistance form another source.

LONG TERM CARE (1999)

Table 1

AND NOW FOR SOMETHING COMPLETELY DIFFERENT: (1999) Here is a unique planning "opportunity" for those age 55 and up that have cash value life insurance and an estate over $625,000 and where no long term care planning had been done by husband/wife NOR their children (who will may bear an ultimate responsibility for later care of their parents.) First, one must remember that the insurance is INCLUDED in the estate and will be taxed at around 40%.

Take a look at a simplistic example. Assume a $1,000,000 policy with $400,000 cash. Upon death, about $135,000+ in estate taxes will have to be paid. Why not take out the $350,000 in cash over time to reduce the estate down to the lifetime exemption ($675,000 now growing to $1,000,000 by 2005.) If they gave $20,000 to their son and daughter in law, they have effectively given $28,000. The additional $8,000 is the 40% savings from a lowered estate. But the new couple does NOT take the $20,000 and spend it. They buy MORE insurance on the parents. Say what? What they buy is one of the unique policies that provide life insurance WITH LONG TERM CARE ACCESS. The face value might be $75,000 with a $125,000 value for long term care. If the parents never need it and die, the kids get the $75,000 and there is no estate tax since it is not in the parent's estate. But if the parents need long term care, then the MEC contract can provide nursing home and home health care for an extended period. This provides the children and parents with the ability to cover a financial burden AT A REDUCED COST. Equally important is it provides an emotional security for the children that is hard to value. Whatever you do- review your estate plan to lower taxes- review your long term care to reduce a financial and emotional burden.

LONG TERM CARE: (1999) According to the National Committee to Preserve Social Security and Medicare, about 88% of U.S. Nursing homes certified for Medicaid are "drastically short" of qualified medical personnel. Additionally, other studies show that residents in homes with more Medicaid patients are 30% more likely to experience health declines.

LONG TERM CARE: (1999) Two thirds of elderly nursing home patients rely on Medicaid at an expense of $24.2 billion in 1995. Long term care for those over age 65- in and out of nursing homes- approximates 20% of Medicaid's entire budget. Medicaid spending is surpassed only by the cost of public schooling. In 1997, there are about 30.3 million Americans between the age of 65- 84 and 4.0 million over the age of 85; by 2030 that will increase to 60.9 million and 6.5 million respectively. By 2050, there will be 60.6 million between 64 and 84 but the over age 85 will balloon to 18.2 million. And it is the oldest of the elderly that need the most care.

And the crisis is even more contentious today since some nursing homes are refusing Medicaid recipients because, since they are "for profit", Medicaid pays at least $27 per day less than private pay.

If you have assets, plan for long term care in your 50's. If you are a child of elderly parents, you may want to do some planning for them since the burden of care will invariably fall on you later on. This is particularly significant if they live a long distance from you.

LONG TERM CARE: (1999) The New England Journal of Medicine said in 1991 that about 43% of those people who turned age 65 in 1990 will enter a nursing home at some time during their life. 24% of the elderly over age 65 will need nursing home care for more than one year.

The same study reported that among all persons who live to age 65, only 1 in 3 will spend three months or more in a nursing home; about 1 in 4 will spend one year or more in a nursing home; and only about 1 in 11 will spend five years or more in a nursing home. In other words, 2 out of 3 people who turned 65 in 1990 will either never spend any time in a nursing home or will spend less than three months in one. The risk of needing nursing home care is greater for women than men; 13% of the women in this study, compared to 4% of the men, are projected to spent five or more years in a nursing home.

However the study does not address significant underlying problems. There are far more people that should get formal care but, due to both financial obstacles and emotional "obligations", many caregivers give care either beyond their own capacity to cope or may simply give inadequate care. About 75% of Alzheimers victims are cared for in the home. A long term care policy need not be prohibitively expensive and can cover care for many more than the 33% who do need care.

LONG TERM CARE: (Center for Long Term Care 1999) Nursing home care already averages $50,000 per year ($136 per day), up from $31,390 per year ($86 per day) in 1990. By 2030, all the boomers will be over age 65, and between four and five percent of them will already reside in nursing homes. Researchers predict that nine percent of people over the age of 65 will spend five years or more in a nursing home. The United States spent $82.8 billion on nursing home care in 1997, up from $30.7 billion in 1985, an increase of 270 percent. HCFA estimates nursing home costs will rise to $148.3 billion by 2007. Of the total spent in 1997, Medicaid paid 47.6 percent, practically unchanged from 47.2 percent in 1985. Medicare, however, paid 12.3 percent, up from 1.5 percent in 1985. Together, these two big public payers contributed 59.9 percent of the total cost of nursing home care in the United States in 1997, up from 48.7 percent in 1985. Out-of-pocket nursing home expenditures have fallen from 44.3 percent of the total in 1985 to 31.1 percent in 1997. Furthermore, a large proportion of these so-called out-of-pocket costs--possibly as much as two-fifths--are really just spend-through of Social Security income that people who are on Medicaid already must contribute toward their cost of care. (This explains why Medicaid pays for two-thirds of all nursing home patient days, but contributes only 48 percent toward the total cost of nursing home care.)

LONG TERM CARE POLICY COSTS: (1999) Here is something you won't makes sense of. $100 per day; 50% home health care, 5% compounded factor, lifetime benefit, 90 day elimination, best risk, one life

Company Age 65 Premium Age 75 Premium

Lincoln Benefit $1,575 3,803

CNA 1,823 4,042

GE Capital 1,678 3,866

John Hancock 1,850 4,190

Fortis 1,680 3,190

Travellers 2,400 5,690

What's my point? Obviously Lincoln Benefit looks the cheapest and the Travellers the most expensive. But while the various companies appear to cover for exactly the same limitations, there can be a vast difference between coverage that a price usually reflects. The costs of the policy are almost irrelevant since you need to figure out what is actually covered. For example, what is ambulating? Walking with a cane, walker or even personal assistance? Huge difference in coverage- yet not even remotely indicated at the surface via the price. These policies require extensive review. Better read these carefully. If you don't know the intricacies, hire someone that does. But it ain't your insurance agent.

HOME HEALTH CARE: (1999) 80 to 90 percent of home health visits are paid for via Medicare, the federal program that provides health insurance for the elderly and disabled. That's because most private insurance policies offer only limited home health benefits, and because very few seniors can afford to pay those expenses out of pocket.

Under the old reimbursement system, home health providers were paid per visit. But spiraling costs--and a number of high-profile fraud cases--prompted the Feds to cap the amount of Medicare money agencies can receive per patient and the balanced budget agreement of 1997 changed all that.

More than one-tenth of the country's 10,000 Medicare-certified home health agencies have closed since the Balanced Budget Act took effect, according to a recent story in Health Week magazine.

In 1994, 7.3 million Americans needed long-term care services. By next year, that number will rise to 9 million, and it will surge to as many as 24 million by 2060.

CONSUMERS MINIMUM STAFFING STANDARD FOR EVERY NURSING FACILITY:(National Citizens Coalition for Nursing Home Reform 1999)

1. A full time RN Director of Nursing

2. A full+ beds)

3. A full time time RN assistant Director of Nursing (in facilities or 100 RN Director of Inservice Education (in facilities or 100+ beds)

4. A RN nursing supervisor on duty at all times (24 hours per day, 7 days per week)

Direct Caregivers (RN, LPN, LVN, CNA)

Day 1:5 residents

Evening 1:10 residents

Night 1:15 residents

Licensed Nurses (RN, LPN, LVN)

Day 1: 15 residents

Evening 1:25 residents

Night 1:35 residents

"These requirements must be in place for all residents, regardless of payment source."

Staffing in a Nursing Home (National Citizens Coalition for Nursing Home Reform, 1995)".... on average, nursing home residents received very little direct care time: less than 1 hour per 8 hour shift and only 10 minutes from a Registered Nurse per 8 hour shift. In Medicare "skilled nursing facilities", on average, residents received 30 minutes of RN time per each 8 hour shift and less than 2 hours from LPN's, LVN's and NA's. LPN'S's, LVN's and NA's had little or no direct supervision by RN's. Actually the lack of RN participation in direct care was drastic because these numbers included the Director of Nursing, other administrative nurses and the Inservice or Staff Development Instructor, who are usually not providing direct care. "

"The National Committe to Preserve Social Security and Medicare study compared 1988 staffing data to an expert recommended minimum staffing standard. ONLY 5% OF US MEDICARE AND MEDICAID CERTIFIED NURSING HOMES MET THAT STANDARD. Over $4 billion additional expenditures for basic nursing care were needed in 1988 to meet just that proposed minimum standard."

LONG TERM CARE: (1999) An article in the SF Chronicle noted that "even though his mother was in a better home in Santa Rosa, but there were 12 to 16 residents for each care person. Nobody had the time to site with her and make sure she ate....." She was covered by Medicaid for the poor. Could she have gotten better care if covered by a private policy that her kids had bought in previous years? Quite possible.

But irrespective of that commentary was the issue that many individual should utilize various other options such as residential care facility- but that Medicaid won't pay for.

Per the Health and Human Services Agency's report- "Long term care in California traditionally has been biased toward institutional care using a medical model, largely in response to the public endorsement available for institutional care. This tendency can result in care that is both more restrictive and more expensive than necessary." Many states (35) have already used a Medicaid waiver to allow assisted living and residential care.

Many long term care operators have delayed many of these changes however suggesting that the "lower" level of care will seriously impact a patient. But it just hasn't happened. Oregon was instrumental in using the money for residential and assisted living and has had significant success. Of Oregonians over 65, 27 out of 1,000 are in nursing homes compared to 30 in California.

Everything stated, if you can afford private care, do so. You will have more feasibility not only as to the location of the facility but which type

ODDS, STATISTICS AND DISABILITIES: (1999) The chances of using your homeowners insurance are about 1 in 88. The odds of having a fire in your home is 1:1200. The odds of using your auto insurance at about 1 in 47. The chances of using your LTC insurance is about 2 in 5. One out of two women and one out of three men will spend some time in a nursing home. (Journal of the American Society of CLU, 1996) More than 12 million older Americans will require some form of long term care by 2020. (Health Insurance Association of America). 72% of residents in a nursing home are women 90% of nursing home residents are over the age of 65. 22% of the disabled population is under age 65. (Puget Sound Life Underwriters Journal 1996). Functionally disabled people between the ages of 18 and 64 represent 40% of Americans needing long term care services. (Life Insurance Selling 1995)

The likelihood of needing LTC (obviously) increases with age. In 1991, 29.2% if those age 45- 64 had a disability; 44.6% between 65 and 74 had a disability; 63.7% between the ages of 75 to 84. 15.3% and 41.5% respectively had a severe disability. (Employee Benefit Research Institute, 1995) 80% of disabled persons are cared for at home or in adult day care centers. 72% of caregivers are family or friends. (Puget Sound Underwriters Journal). The cost of home care can run from $4.25 to over $200 daily depending on the level of skill needed (SF Chronicle, 1995). Caring for each Alzheimers patient will cost more than $213,000- on top of other medical expenses- over the remaining five years of their lives. (American Journal of Public Health, 1994). Over 99% of nursing home care is either custodial or intermediate care, not skilled care, and is not covered by Medicare or Medicare supplements (Journal of the American Society of CLU's, 1996). The reason you see statistics showing Medicare covering for 5% of costs is that skilled care is so much more expensive.

LONG TERM CARE: (1999) People without Long Term Care policies will pay for custodial care themselves. Agencies charge $15+ per hour for the minimal level of custodial care. Skilled care can run as high as $200 an hour (Business Week, 1996)

HOME HEALTH CARE: (1999) 5.6 million seniors receive home health care - five times as many as are in nursing homes. Home care can cost as much as a private facility. Total costs for full time, live in health care averages about $50,000 annually (Business Week, 1996)

Long Term Care: 1999 (AM Best) I think that my previous comments about the "newness" of the industry and the inherent problems are properly and concisely identified by this statement from Best's review of LTC companies, "Given that very few actuaries have expertise and/or experience with this product and that few companies have long-term experience writing it......" Additionally, companies "were asked to estimate the number of actuaries in the field that they consider to be experts in long-term care. Their estimates ranged from as few as three to as many as 400, with most placing the number at less than 50."

Regardless, the risk of need- particularly for the aging baby boomers- has been clearly identified. A recent study by the U.S. Department of Health indicates that people who have reached age 65 face at least a 40% risk of entering a nursing home. Some of the public have purchased private policies and sales have increased dramatically over the last four years by 20%. Yet Best indicates that only 10% of the targeted market has purchased a policy- other statistics indicate about 6%.

Part of the problem is the fact that the public is woefully uneducated about long term care and, as recent as two years ago, 48% in a survey believed that Medicare would cover for long term care. It offers essentially zero days and zero costs (there is some coverage but it is only for skilled care which addresses only 0.5% of all people in a nursing home). The report noted, "It is safe to say most Americans believe that Medicare will pay for part or all of their long-term-care needs." From my perspective, it provides a view of the sorry state not only of U.S. citizen preparedness for future problems, but of their laziness and unwillingness to do even a modicum of research (and it applies to other areas as well.) One would at the very least go to a library upon approaching retirement and seek out literature to review health care for the next 20+ years of their lifetime. A librarian would also assuredly suggest the local Area Agency on Aging (and there is one in almost every metropolitan county) where they could get innumerable brochures on Medicare, Medicaid, etc., etc. They'd also be able to talk to staff personnel that might set them in the right direction.

Ignorance of a subject means that you don't know, but will do what is necessary in an attempt to find out. Being stupid means that you don't know and don't want to find out. Admittedly a pundit might say that "they think they know, so they are not stupid". Unacceptable. Accepting miscellaneous commentary and numbers about retirement from their neighbor at a cocktail party on which they will rely upon for the next 20+ years is ludicrous. (I know my comments are hard and not a very acceptable phrasing of something that has to do with the elderly. But what if your mother bought something where she subsequently lost $10,000 of premium and ended up in a Medicaid ward? Forcing them in the right direction when healthy is a much better alternative.)

As for those people who think that the government will have to step in and offer coverage for long term care- not a chance. Congress recently eliminated any chance to pay for the prescriptions of the elderly and this exposure for LTC is even greater. Best notes that, "based on the overall economic strain produced by the Medicare program, an entitlement program for long-term care would be difficult—if not impossible—to fund and manage through state and/or federal programs. Most the federal government has no choice but to support private-sector solutions to long-term-care risk. Because of these factors, some companies believe that the government must support private-sector involvement and that insurance companies are best equipped to take on this type of risk." I concur though submit they have to do a better job of informing and involving the public as well as training the agents.

Best notes, "Three-quarters of the companies surveyed said they sponsored multiple seminars, classes and other methods of formal training. In most cases, companies supplement their training with manuals that outline the company’s long-term-care products and offer needs-analysis tools, sales strategies and company procedures. One-quarter of the survey population said the training is supported by CD-ROM and videotape instructions. Other educational outlets included 800 numbers for agent support and Internet availability." As long time readers know, I teach LTC as mandated by California and have, obviously, had the chance to see the training offered by such companies. They DO provide some insight that the public needs, but they do NOT provide the limitations of coverage nor the differences in companies and many other critical and objective analyses. Recognize that while some info is good, the whole intent is to SELL a product (even when needed) and some objectivity has a tendency of being universally lost. Further, a lot of objective material won't be offered since even if they did so, such detractive commentary of other companies would look like sour grapes. (Have you even heard of a company telling potential consumers that they shouldn't buy a cheaper policy? Nope-even though the "what you see is what you get" issue is extensive with LTC). The issue is many times worse in others states that have no mandatory education at all. It is truly "caveat emptor".

Anyway, the suggestions for future government actions included additional tax incentives, increased education and much stronger messages from the government. For example, the public must receive information as to the limits of Medicare as it pertains to long-term care. "Companies, however, do not believe the government is going to advertise the long-term-care limitations set forth in the Medicare program. Therefore, the companies believe it is the responsibility of the insurance industry to educate the public. While the education process is taking place today, it is, for the most part, being completed through one-on-one sales presentations. This may not be enough to educate the public as to the realities of growing old in America." I think that, short of Oprah Winfrey or Rosie O'Donnell presenting such info on their shows, I see little improvement in the future.

The other issue mentioned covers tax incentives. Under current law, only tax qualified policies "escape" taxation of premiums (but not without risk of their own). I submit that a long term care should be taxed similar to a disability policy- no tax deduction on premium payments but also no taxation on receipt of "benefits". The study itself noted as regards "non-qualified plans, 15% of the companies surveyed said they believed the benefits of nonqualified plans would be taxed. One-third did not believe the benefits would have any tax consequences, and the rest believed a decision was at least five years away."

Here is another specific point which I have referenced in the past- use only those companies that have a supported track record in the business. "The first long-term-care products arrived in the market within the past 30 years. In comparison, life insurance carriers have about 200 years of experience by which to produce mortality tables and support rate structures." The point being is this- there are a few companies out of the approximately 120 nationally that have underwritten LTC policies for a least 20+ years. If you would not use a life company that had been in business for only 5 or 10 years, whey would you use a LTC company that has underwritten policies for only 5 or 10 years. From Best- "The experience of underwriters in the study group ranged from just a few years to more than 25 years underwriting long-term-care insurance. The backgrounds of underwriters are just as varied, drawing from the fields of life insurance, individual medical, disability, group medical, nursing and long-term care. Most came from the medical insurance field." Regardless, "little data exists to support pricing assumptions of current products, and few actuaries have proven expertise in the long-term-care market." Since there may be less than 50 proven experienced underwriters (I will assume that these are employed by the big firms that started the initial underwriting years ago- though I have no data directly supporting that.), large companies may have a greater ability at pricing a product that will stand the test of time. Yet Best noted,"There is an insufficient amount of reliable claims-payment data available to indicate what claim exposure may be in 20 to 30 years."

In that regard, here is a definite risk factor from Best- "many of the top-10 writers of long-term care are losing money in this business on a statutory accounting basis. In addition, many of the smaller players have little or no access to additional capital and could experience financial distress if they have not priced their products properly."

I will never guarantee that these larger companies will not default or deny claims, but purchasers would be well advised to review this list since wholesale denials of valid claims would destroy literally all other branches of their business. I still want a larger company that has adequate reserves and underwriting experience to make professional adjustments when necessary. That said, there are some companies on this list that are there only because of size and marketing. They do NOT have many years of experience and I would NOT use them.

And....."Until measurable claims experience can be ascertained on the policies in force, the ultimate profitability of this business will remain uncertain. Many of the carriers with smaller blocks of long-term-care business as well as less successful companies will exit the market." Some companies are entering the market not only because of the perceived revenue, but also due to the fact that many of their basic businesses of insurance have matured and extensive growth in the future is not anticipated. "Many recent entrants into the long-term-care market were prompted to venture into new product lines because of regulatory or competitive changes in the market for their primary products.For some companies—such as those with experience in estate planning or senior health insurance products—entering this market is a natural progression. For others, however, the entry into this less-seasoned and capital-intensive product line could become an expensive learning experience." Hence my repeated commentary about the use of only the major players.

"The average annual premium of the in-force business was between $1,250 and $1,500 for most companies, despite the wide deviation in assumptions used in their forecasting models. This may indicate that companies are pricing to the market and not to the risk. It also is possible that this dollar amount represents a saturation level for today’s consumer."

What is missing is the fact that due to the odds of needing long term care is so high- far greater than a house burning down or being in an auto accident- the premium has to be high in order to provide coverage. Additionally, from a previous study, underwritings statistics for nursing home care might be reasonably defined. But the use of home health care is "iffy" at best and may expose some companies to extensive financial exposure. This is an option that the public will pay for- assuming they have enough income- since people want to stay in their home for as long as possible. And that's fine as long as you know the limitations- that once you are impacted by the ADL's, it may be just a short time till you go into a home absent a strong home assistance by your spouse, relatives and other community involvement (which almost always will focus on a woman caregiver).

As regards acceptance by a company- you also have to know which companies accept which risks. One major player requires you to state "have you EVER had........", while another asks if you have ever had WITHIN THE LAST TEN YEARS". Huge difference. If an agent has you submit the wrong policy (many sell only one company), you are effectively preordained to be DENIED. Then no one else may approve you and you lost big time. Best found that "the average approval rate for the whole study group was 70% and the average decline rate was 20%. The highest approval rate reported was 88%, compared with a low of 20% for another carrier. The decline rate ranged from a low of 3% to a high of 80%." All of these differences signify the various underwriting philosophies used in today’s market.

And even when a policy is accepted, people lapse (terminate) a policy for various reasons (some due to huge premium increases caused by poor underwriting and very low initial premiums in order to buy business). Again from Best-"most of the lapse rates used ranged from 4% to 25% in year one, depending on the age at which the policy was issued and the policy duration."

How about State insurance department knowledge? Of those surveyed-"Nearly three-fourths of the companies said they believed the state insurance department’s knowledge base was well below that of the carriers. Only 15% of the respondents believed the departments had a strong knowledge base, and only Florida was mentioned by name as having long-term-care expertise." Having seen the overall ability in California, I submit that the industry remains "caveat emptor."

"A.M. Best views this growing market cautiously." Obviously, so do I. If you buy LTC, get somebody that has an interest and experience in field. That is not a fee only planner. That is not an attorney. That is not a CPA. They are almost universally not licensed in insurance. As such they rarely get the material from enough (any?) companies to review and have undoubtedly never seen the material from Best. But since most people use advisors they "trust" without requiring true competency, I do not see substantial improvement for the consumer in either short nor long term.

LONG TERM CARE POLICY COSTS: (1999) Here is something you won't makes sense of. $100 per day; 50% home health care, 5% compounded factor, lifetime benefit, 90 day elimination, best risk, one life

Company Age 65 Premium Age 75 Premium

Lincoln Benefit $1,575 3,803

CNA 1,823 4,042

GE Capital 1,678 3,866

John Hancock 1,850 4,190

Fortis 1,680 3,190

Travellers 2,400 5,690

NURSES AIDES: From a 1999 article about a nursing home shutdown. A "nurses aide" who had been working for the home for eight years still was paid only $8 per hour. You simply can't get the best of help at $8 per hour.

More than one-tenth of the country's 10,000 Medicare-certified home health agencies have closed since the Balanced Budget Act took effect, according to a recent story in Health Week magazine.

In 1994, 7.3 million Americans needed long-term care services. By next year, that number will rise to 9 million, and it will surge to as many as 24 million by 2060.

CONSUMERS MINIMUM STAFFING STANDARD FOR EVERY NURSING FACILITY:(National Citizens Coalition for Nursing Home Reform 1999)

1. A full time RN Director of Nursing

2. A full+ beds)

3. A full time time RN assistant Director of Nursing (in facilities or 100 RN Director of Inservice Education (in facilities or 100+ beds)

4. A RN nursing supervisor on duty at all times (24 hours per day, 7 days per week)

Direct Caregivers (RN, LPN, LVN, CNA)

Day 1:5 residents

Evening 1:10 residents

Night 1:15 residents

Licensed Nurses (RN, LPN, LVN)

Day 1: 15 residents

Evening 1:25 residents

Night 1:35 residents

"These requirements must be in place for all residents, regardless of payment source."

But irrespective of that commentary was the issue that many individual should utilize various other options such as residential care facility- but that Medicaid won't pay for.

Everything stated, if you can afford private care, do so. You will have more feasibility not only as to the location of the facility but which type.

LONG TERM CARE: (1999) "What motivates seniors to resolve long-term care problems?

Avoid Dependence...............25%

Protect Assets....................23%

Protect Living Standard........15%

Guarantee Long-Term Care...12%"

This was an ad regarding long term care- but not for insurance. It was called "The Medicaid Annuity Solution." The Executive Vice President of Western World Annuity shows how hundreds of thousands of dollars can be sheltered from Medicaid's spend down rules through the purchase of an annuity. They describe how annuity income, which usually is contributed to the Medicaid recipient's cost of care, can be made "unavailable" if paid to the at-home spouse under certain conditions. The ad went on-"Good planning can help seniors preserve assets--for the at-home spouse or even heirs--and at the same time qualify for Medicaid help for long-term care costs." Western World Annuity's average agent specializing in the Medicaid annuity market writes $2 million a year of annuity premium.

Do I agree with the use of such annuities to get Medicaid? No. If you have money, buy insurance. Remember, Medicaid will NOT provide home assistance at all- or certainly with any regularity. Further, the emotional strife of caring for a sick person is enormous- more so with Alzheimers/senile dementia. Lastly, if you know what happened with Vencor nursing homes, the issue of using Medicaid is so entirely remote as to be ludicrous.

If you have money, don't die in a Medicaid ward with a bunch of other screaming Alzheimers patients. Buy long term care insurance. It not only covers at least some of the financial burden, but a good deal of the guilt and emotional burdens that all caregivers face.

1997 analysis of California LTC companies

Company Actual Earned Premium Actual Incurred Claims Actual Loss Incurred to Premium Earned % Anticipated Loss Incurred to Premium Earned % Number of Lives Covered

AIG 116,537 23,000 19.7 21.2 291

Allianz 42,387,732 6,591,953 15.6 21.9 18,448

Bankers 1,564,474,541 519,288,909 33.2 38.7 161,917

Conseco 1,654,889,082 797,278,743 48.2 46.3 265,857

CNA 1,418,046,068 407,089,149 28.7 29.9 236,554

Fortis 237,598,917 59,744,468 25.1 17.4 62,898

GE 1,882,628,731 420,399,034 22.3 20.1 312,785

John Alden 59,286,214 59,286,215 12.0 19.0 12,591

John Hancock 931,236,717 931,236,717 18.3 22.4 242,703

MEDICO 181,431,654 99,253,256 54.7 48.7 9,259

Penn Treaty 226,294,993 94,007,257 41.5 36.7 33,612

PFL 366,489,172 98,786,046 27.0 22.1 69,118

Pioneer 440,036,357 232,288,950 52.8 52.8 29,597

TransAmerica 73,089,622 17,609,455 24.1 12.7 21,814

Travelers 563,990,539 91,683,516 16.3 23.8 105,047

UNUM 391,220,778 196,324,969 50.2 46.1 29,807

LONG TERM CARE: (2000) "The GAO surveyed government inspection reports from July 1995 to October 1998 for the nation's 17,000 nursing homes that receive federal Medicare and Medicaid money. More than a quarter of nursing homes have health and safety violations that harm residents or place them at risk of death or serious injury. Among the most frequent violations: inadequate attention by staff to prevent residents from developing bedsores and lack of supervision or special equipment such as alarms to prevent accidents."

LONG TERM CARE AND MEDICARE CHANGES: (2000) How have nursing home (and managed health care) facilities been impacted by the recent changes in Medicare payments. (Reuters) "A major heathcare group had a huge loss in fourth quarter of 1998 and was cutting 10,000 jobs, freezing wages, selling assets and trimming debt. The company operated 614 long-term care facilities. It indicated that Medicare had cut payments for an array of services for each patient to $319 a day, from more than $500 a day before the new Medicare payment system was phased in and was cutting payments by 60 percent for occupational, speech and physical therapy. In mid 1999, Vencor, a publicly traded health care firm, filed bankruptcy for the same reasons. (Private companies may/are not as seriously impacted since they are not carrying as much debt.)

Nonetheless, how would you feel if your loved one in a nursing home was being covered by Medicare/Medicaid? Think the quality of care will be the best????? Did you do a financial statement on the nursing home/company???

Long Term Care is NOT a required fundamental for Certified Financial Planners during coursework nor required thereafter. (In California, life agents are required to have 8 hours of continuing education in long term care and I feel that this "minimum" level of study is necessary for competent analysis of needs or a policy.) If you do not have such capability/knowledge, you cannot effectively do risk management, retirement or estate planning since a mandatory area is not covered. And if a planner does not have such competency, then the planner's ability to do all the other "types" of planning is highly suspect.

Long term policy possible rate increases (not verified 2000)

Aid Association of Lutherans

American Heritage Life Insurance Company

American Insurance Company of Texas

American Integrity Insurance Company

American Republic Insurance Company

American Travellers Life Insurance Company

ATL Life Insurance Company

Atlantic American Life Insurance Company

Bankers Fidelity Life Insurance Company

Bankers Life & Casualty Company

Central States Health & Life Company of Omaha

Colonial Insurance Company

Commonwealth Life Insurance Company

Continental Casualty Company (CNA)

Conseco Senior Health Insurance Company

Fortis Insurance Company (LTC Division sold to John Hancock)

Great Fidelity Life Insurance Company

Great Republic Life Insurance Company (California)

Great Republic Life Insurance Company (Washington)

Guarantee Trust Life Insurance Company

J. C. Penney Life

Lamar Life Insurance Company

Life & Health Insurance Company of America

Medico Life Insurance Company

Mutual of Omaha

Mutual Protective Insurance Company

National Financial Insurance Company

National States Insurance Company

Network America Life Insurance Company

New Era Life Insurance Company

Old American Insurance Company

Old Southern Life Insurance Company

Pekin Life Insurance Company

Penn Treaty Life Insurance Company

Pioneer Life Insurance Company

Resource Life Insurance Company

Sentry Insurance Company

Standard Life and Accident Insurance Company

Transport Life Insurance Company

Union Bankers Insurance Company

Union Fidelity Life Insurance Company

United Founders Life (now Glenbrook Life)

Universe Life Insurance Company

USAA Life Insurance Company

Remember, until most recently, all policies allow increases if they change the rates for an entire class within a state. Some policies are now guaranteeing rates but the premiums are higher. You still need to use just the five or so top companies. The others simply don't have enough experience in underwriting. That's why a lot of them have "bought business" by lowballing rates and then having to raise them later.

LONG TERM CARE: (2000) A Federal investigation of California's 1,400 nursing homes found that almost 1/3 were cited for causing death or serious harm as shown by death certificates. An article in the SF Chronicle and one attorney noting, "we'd like to think of all of these places should be heaven on earth, but all (residents) cannot have minute by minute, all the clock care unless the state is going to spend $100,000 per year per patient."

So what do you do if you do not have money to pay for the best of service? Pray. And hope that someone visits you often since that induces better care. That's about it. Outside of that, you are left to the financial constraints of Medicaid. If you have money and do not buy a policy so you can pass the assets to other beneficiaries and then end up dying in a Medicaid home under the above conditions: Don't Complain. You got what you wanted.

Also, "Workers are human. They make mistakes. Studies have shown that the bulk of elder abuse goes on in people's homes, not in nursing facilities".

Part of that abuse is due to the extreme emotional issue of caring for another. Again, if you do not have any money, count yourself lucky if a loved one can and is willing to take care of you properly. The problem is for many who do have money and who do not buy insurance- there is a great tendency to try to provide care beyond both the physical and emotional capabilities. This can easily lead to abuse. Such people that have purchased insurance are inclined to use it- hence better overall care and far less abuse.

LONG TERM CARE: (2000) "Most seniors have difficulty maintaining their policies until they reach age 80, when they most probably will need them. The National Association of Insurance Commissioners reports that 16% of all nursing home insurance buyers drop their coverage each year because they can no longer afford it. Insurance companies know that of those who buy coverage at age sixty, 95% will have canceled the coverage by age 80. The U.S. General Accounting Office confirmed those figures. Of insurance company files that were investigated and excluding those who had died, 60% or more of the original policyholders allowed their policies to lapse within 10 years and one insurance company reported a lapse rate approaching 90%."

But don't unilaterally blame the insurance companies. Many seniors are still healthy at ages of 70 and 75 and "forget" the fact that the potential ill health is still ahead of them. That's neither the agent's nor company's fault that they refuse to recognize the future problem. Certainly the (legitimate) company and agent will try to counsel them about retention, but they may surrender it anyway. That said, many agents may oversell a policy- meaning that the owners really could not afford all the bells and whistles they were sold. So as time goes on and money seems a little tight, it may seem prudent to drop something that may not need. Lastly, some companies did raise rates unconscionably (guaranteed renewable) and they became very unaffordable.

More statistics- According to a Congressional study, "57% of all those who enter a nursing home were not hospitalized before their admittance." 47% of all nursing home residents have chronic illnesses.

MORE LONG TERM CARE: (2000) ( Dr. Robert L. Kane, director of the Center on Aging at the University of Minnesota): "Private pay allows a person to buy more or better care, except in a few states that require services and costs to be identical whether payment is from a public or private source. Furthermore, private reimbursement may allow greater flexibility and choice. Private funds can be used to purchase a wider variety of services under more creative arrangements, while public funds cover only a limited set of authorized services. Much of the innovation in LTC has occurred in the private sector, such as assisted living and continuing care retirement communities. Beyond asset protection, the other reasons for considering private LTC insurance all relate to the quality of the package offered by Medicaid. In effect, the less attractive the Medicaid package, the more enticing private LTC insurance becomes"

TAX QUALIFIED VERSUS NON TAX QUALIFIED LONG TERM CARE POLICIES: (Tom Orr) In a newsletter addressing tax qualified policies, it is indicated that an independent tax advisor would be required to review the difference between the standard and tax qualified policies. He notes, "why in the hell would I refer clients to an individual who is not mandated to take up to eighteen hours of LTC-CTQ/CPR continuing education/certification and which I can "safely" say that 95% of them know Jack Squat about LTC insurance."

And more- when looking at tax qualified versus non tax qualified long term care policies, keep in mind the restriction for the 90 day "exemption" for coverage by the TQ policies. And then note this- "According to "Health Care Financing News,"Summer 1993, 77 percent of all nursing home cases and 83% of Medicare home health care cases last for less than 90 days." Additionally, "If TQ plans existed in 1995, 86 percent of Medicare's patients age 65 and older would have received no benefits from their plans because their recovery care lasted less than 90 days (e.g., 94 percent of 1,242,664 Medicare patients in skilled nursing facilities, plus 83 percent of 3,182,000 Medicare home health care patients ages 65 and over).

Now that's not as explicit as it appears. Short term skilled coverage IS covered by Medicare- but only about 0.5% of all people go into a home for skilled care. The issues of the short term stay is whether you have opted for the 0, 20, 30, 60 or 90+ day elimination periods. The longer the elimination, the less costly the premium. But if nursing home costs are roughly $4,000 a month now, at 5%, it will run over $10,500 in 20 years.

LONG TERM CARE AND MEDICAID: (2000) Among Americans aged sixty-five and over, only 12% are below the official poverty line-and fewer than 7% receive means-tested cash assistance under the SSI program. But over half of seniors get a Medicaid subsidy from the day they enter a nursing home. [Actually, 78 percent of people are already eligible for Medicaid when they enter a nursing home. Source: CLTCF]

LONG TERM CARE: (2000) A journalist asked this question- Q. Very few Boomers have bought into long-term care as a legitimate expenditure in their financial planning. To what extent are they missing the boat, vs. being (perhaps) appropriately leery of an insurance industry that has sold them a lot of unnecessary permanent life insurance and annuities? Also, please elaborate on the point you made on your website concerning the long-term care burden on women for "their" men.

My answer- "In order to put the answer into proper perspective, recognize that California (the only state that I am aware of) requires 8 hours of continuing education in long term care every two years for every agent involved with such policies. And I have taught the course for almost 4 years and have written extensively on the subject. That said, the amount of solid information available to consumers nationally is abysmal. Even when available, the public doesn't bother to read it anyway. For example, as recently as two years ago, 48% of the elderly believed that Medicare would cover for long term care. (A John Hancock survey just a couple years ago had 73% believing that Medicare would cover for LTC.) While it does cover for approximately 6% of long term care costs nationally, it is ONLY for those under skilled care services- and that approximates only about 0.5% of all the elderly needing long term care. In essence therefore, Medicare covers nothing. What about Medicaid? Yes- but once again the elderly either believe both they have a right to it and that it provides adequate care. In the first place, Medicaid is primarily for those who become financially indigent. It is not designed nor has ever been intended for use by people who have assets (roughly $100,000+) nor certainly for the middle income consumer. Secondly, Medicaid has extremely limited resources (both Medicare and Medicaid are going bankrupt sometime in the near future) and provide payments to nursing homes at far less than private pay. You are "at risk" for substandard care irrespective of what laws may be applied. Think of it this way. You could pay privately for help in a facility of your own choosing where the staff gets $13 an hour. Or you can opt for a Medicaid facility where they can only afford $8 an hour. And, invariably, there will be less staff anyway.

So what does the insurance industry do? In the more professional sense(?), it promotes products that can properly help an individual with that need- assuming the product is sold correctly. In the second issue, other companies provide and promote other products that "help" consumers escape the financial limits of Medicaid so that one can get (the inadequate) state care.

As regards the companies and policies per se, the consumer is thwarted from purchasing the best product for acceptable care because- even irrespective of California's intent- agents are woefully undertrained in the area. It is not simply a review of statistics as to why long term care is needed- education must also identify the companies that can effectively offer the product AS WELL AS a review of the contractual elements. For example, there are about 120+ companies offering products. About 10 control about 80%+ of the market. In one sense- "as well they should." The companies that have underwritten policies for 25 years+ are the odds on favorite for a sale since the experience in this new area is absolutely valid. But agents- sometimes captive- see a bunch of commissions forthcoming and are simply apt to sell anything for whatever reason- be it on price, perceived coverage, etc. The result- stuff like American Travelers. It was recently identified as a company that repeatedly raised rates (guaranteed renewable) in some states to the point that many purchasers had to drop coverage. The reason- the product had been priced "competitively" (far too low) to induce business. Another contractual provision actually limited coverage by the company to about 50% of the home health care aspects that purchasers thought they had purchased. Other companies have standards accepting only the most healthy- others have more flexible standards. Which one do you purchase and when? Add in the new tax qualified policies and the requirements for due care become all the more necessary. Yet, who reviews such policies independently and provides objective advice to consumers- or even to agents. Nobody. Certainly not the brokerage companies that go after agents with inducements of extra commissions, free trips, cars, etc. As a result, consumers end up being sold something that may or may not work. Even when good policies are sold, the wrong coverage may still be utilized. For example, home health care is a sought after rider (though expensive). But unless you happen to have a large support group in the community, you will (probably) end up in a nursing home in a short period since home health care is only provided on an intermittent basis. It is not intended to be a substitute for 24 hour care and unless there are other people to help, it won't work. So consumers really won't get to use effectively what was purchased and paid for for perhaps 20+ years. Is it therefore being sold in many cases to the wrong people. Yes. But is the criteria being mentioned anyplace? Certainly not in education training. In other words, as in life insurance, there is a need.. A definite need. But the bulk of the effort is to induce sales that may only be 50% to 70% correct- and even that might be by luck, not skill.

In the alternative to LTC products is the highly publicized and quite effective use of annuities to bypass the financial restrictions to Medicaid. Thousands of national seminars tout the ability of an annuity to get around Medicaid regulations. But they never tell attendees of the large commissions that are being generated, how the annuity restricts almost all access to money when it is most needed (retirement and poor health) and the fact that care in a Medicaid facility is clearly suspect. Even Elder Care attorneys have heavily promoted the use of special trusts and court filings in order to utilize Medicaid. This is not to say some intervention may not be needed in certain circumstances. But a unilateral focus to transfer assets so that one gets care under Medicaid borders of a breach of a fiduciary obligation to a client. What's the breach? Taking Mom or Dad to a Medicaid facility and tell them this is how and where they are going to die. Once Mom or Dad saw that, they'd almost universally opt for paying for private care.

Per your request is my continued focus on the emotional and physical state of caregivers- universally women. Women simply are the people who provide the care for others- first their children and lastly for their husbands and their own parents. Most do not plan for such later contingencies and may become martyrs. Their own health becomes secondary to their life. Once their husband/parents die, they may be in need of care themselves. In the alternative, a good long term care policy for a spouse, parents and themselves can provide not only physical care when needed, but an emotional well being that is immeasurable.

And I'll add commentary to statistics. You don't take a LTC budget and break it up equally between men and women. That's because women will live in a long term care facility whereas men usually get better or die. Therefore one picks 4 years+ for the woman and "just" a 2.5 year coverage for a man (unless there are other health or longevity issues). I think that one of the reason men die so "quickly" in a facility is that the wife has taken care of the husband far into an illness and will send them to a home only when the problem is almost terminal. (About 75% of all people who need care are cared for at home.) Women, on the other hand, don't have anyone left to care for them and have to enter a facility sooner. But then they "live" in the facility for a long time."

ADL: (2000) By 2030, the number of Americans age 85 or older- NEARLY HALF OF WHOM WILL NEED ASSISTANCE WITH DAILY ACTIVITIES- will be 8.4 million- up from the current 4 million.

Nationwide, caregiving families spend 2 billion dollars of their OWN money PER MONTH to provide care for family members. (Either there are a lot of caregivers or just one family is sending out someone in style.)

How to Pay for Long Term Care (Walter M. Cadette 2000) An excellent article that addresses potential changes in Medicare, Medicaid, use of tax credits, costs, subsidies, long term care insurance and more. One of the best concise articles addressing the dilemma of the elderly. Really a nice job

White Paper by the National Association of Elder Care Attorneys for changes in long term care. (2000) They are suggesting a new Medicare D with higher payroll taxes. I just do not believe another government bureaucracy is the right approach but you can read for yourself.

Experts think that only about 10- 20% of the elderly could afford a long term care policy (others say about 33%). A Gallup poll in 1993 indicated that 73% of respondents thought Medicare covered for long term care. Maybe the insight is better now, but I believe the poll would still show over 50%- perhaps over 60% have not done adequate research about their elderly years. That is borne out by an American Health Care Association of Baby Boomers where 56% did not know that Medicare did not fund for Long Term Care. Medicaid spending for long term care doubled between 1987 and 1997 to $56.1 BILLION

Adult Day Care Cost (2000) "Fees at accredited private facilities can average $40 per day with an extra $3.00 to $5.00 for transportation costs. However, at many non-profit adult day care facilities, transportation and meals may be the only charges–and you can expect to pay no more than $10.00 per day. Often — for example, when a religious group or private foundation funds the adult day care center – there is no charge at all. If there is a charge, be sure to ask if there is a sliding scale fee structure based on financial need."

Long Term Care: (PDF 2000) 'Middle income Baby Boomers will find that to successfully age "in place" - that is, in their homes or in the home-like setting of an assisted living facility - they will have to use their retirement savings to pay for increasingly expensive long-term care services,' says Barbara Stucki, Ph.D., primary author of the ACLI study Can Aging Baby Boomers Avoid the Nursing Home? 'Without private long-term care insurance, many will face potentially catastrophic costs that could lead to impoverishment and the need to use Medicaid-funded nursing home care.'

"While the financial benefits to individual policyholders are obvious, the benefits to government - and future taxpayers - of wider purchase of private long-term care insurance are substantial, the new ACLI study shows. Medicaid's annual nursing home expenditures are projected to skyrocket from today's $29 billion to $134 billion by 2030 - an increase of 360 percent. ACLI's research indicates that by paying policyholders' nursing home costs - and by keeping policyholders out of nursing homes by paying for home- and community- based services, private long-term care insurance could reduce Medicaid's institutional care expenditures by $40 billion a year, or about 30 percent.

"In addition, the ACLI study found that wider purchase of long-term care insurance could increase general tax revenues by $8 billion per year, because of the number of family caregivers who would remain at work. Today, 31 percent of caregivers quit work to care for an older person; nearly two-thirds have to cut back their work schedules; more than a quarter take leaves of absence, and 10 percent turn down promotions because of their caregiving responsibilities. It costs the typical working caregiver about $109 per day in lost wages and health benefits to provide full-time care at home - which is almost as much as the cost of nursing home care."

How to Cope with the Coming Crisis in Long-Term Care (2000) Excellent lengthy article from the Heritage Foundation In 1900, life expectancy for Americans was 47 years of age. By 1935, when President Franklin D. Roosevelt and Congress enacted the Social Security program, establishing eligibility at age 65, life expectancy had risen to age 62. By 1998, life expectancy had risen to 76.6 years, and it is projected to rise to age 81 in 2030, according to recent estimates by the Social Security Administration's Advisory Board.

The average yearly cost in 1998 for staying in a nursing home was $47,000; for the services of a home health aide, $36,000; and for assisted living, $26,000.

From 1990 to 2030, the number of all elderly will increase 105 percent, the number of Americans between the ages of 65 and 74 will grow 89 percent, and those between 75 and 84, 119 percent. But the number of Americans over age 85 will increase 143 percent.

The total number of elderly in nursing homes will climb from about 2.8 million in 2000 to 5.3 million in 2030. Yet only 330,000 of those aged 65 to 74 will be cared for in nursing homes, compared with 1.46 million adults over age 85. In 2030, the 65-to-74 age group will have increased to 650,000, but the over-85 age group in nursing homes will swell to 2.69 million. Although one in five persons will need long-term care sometime this year, 65 percent of those who are older than 85 will need long-term care during this same period (2000-2030).

Medicaid nursing home expenditures--$29 billion in 2000--will climb to $134 billion, a 470 percent increase in just 30 years.

"Who will pay for your long-term care?" Baby boomers answered:

80 percent did not know how they would pay for long-term care; 50 percent had not given long-term care any thought;
51 percent did not know "poverty" was a qualification for Medicaid;
41 percent were willing to pay $1 to 49 per month (the real cost for nursing home care is $3,500 to $4,000 per month);
25 percent were not willing to pay anything for long-term care; and
15 percent could identify Medicaid, not Medicare, as the primary payer of long-term care.

Divorced Baby Boomers Less Likely to Care for Elderly Parents: (Johns Hopkins 2000) Baby boomers have higher rates of divorce and remarriage, two factors that can affect the parent/child relationship later in life, and the likelihood of reliance on formal paid care for the elderly. Elderly divorced parents are less likely to live with a child, which has potential for increased demands on public programs, such as Medicare home health.

World Care for the Elderly (2000) This issue of Health Affairs provides a look at long-term care financing, provision, and reforms around the world.

ElderCare: (2000) Elder care programs continue to grow in popularity with 47 percent of employers now providing assistance, up from 40 percent in 1998 and 24 percent in 1994, according to a newly released survey of 1,020 U.S. employers by Hewitt Associates, a leading global management consulting firm. Of those employers offering elder care programs, dependent care spending accounts (32 percent), resources and referral services (40 percent), long-term care insurance (17 percent) and counseling (4 percent) are the most prominent.

Long Term Care: (Center for Long Term Care 2000)"Medicare cut-backs and Medicaid's parsimony have driven one in ten nursing home beds into bankruptcy. Nevertheless, public expenditures for nursing home care have increased ten percent in the past ten years, while out-of-pocket expenditures are down ten percent. In the meantime, the public's perception of nursing home quality has plummeted while litigation against nursing homes has skyrocketed."

( "The Medicare+Choice Program: Is It Code Blue?") Private Medicare HMOs serving the lion's share of beneficiaries receive annual federal funding increases of two percent, while the annual cost of medical care has increased around eight percent, and the cost of prescription drugs - offered by most Medicare HMOs - is increasing around 15 percent each year. These inadequate payments, as well as the crushing cost of excessive government regulation, are causing HMOs to withdraw from the Medicare program "at an alarming rate. Enrollment growth of private Medicare HMOs dropped from 36 percent in 1996 to less than one percent in the first four months of 2000. Since 1998, a total of 86 HMOs stopped providing Medicare coverage, while another 112 have pulled out of various counties throughout the country. As a result, he says, hundreds of thousands of Medicare beneficiaries have had their coverage disrupted, and hundreds of thousands more likely will face similar problems as Medicare HMOs announce plans to withdraw for 2001.

LTC: (NY Times 2000) About 22 percent of nursing homes in Texas, with an estimated 23,000 beds, are in bankruptcy, and this could jump to as much as 45 percent. The state would need to increase nursing home spending by as much as $800 million in the 2002-2003 budget to help the industry. Earlier this year, the state adopted a 3.7 percent increase in nursing home reimbursements, but industry officials said it was too small. The industry said it needed a 7 percent increase to offset the rising costs of liability insurance and labor. Industry officials say Texas nursing homes lost money every day on Medicaid patients in 1999. Health care providers say the state's $78-a-day average payment was one of the lowest in the country last year while liability coverage has tripled since 1998.

Did you note the comment about Medicaid??? There's the problem. If you want the best of care- even adequate care- and you have money, buy a LTC policy and use it to get into the private pay nursing homes that are not impacted by Medicaid fees.

Here are the average daily nursing home costs per region for a private room: (Met Life 2000)

Albany, NY $200 Miami, FL $123

Atlanta, GA $110 Middlesex Cty., NJ $195

Baltimore, MD $163 Milwaukee, WI $179

Battle Creek, MI $195 Minneapolis, MN $106

Birmingham, AL $105 Nashville, TN $135

Boston, MA $278 New Brunswick, NJ $161

Bristol County, VA $199 New Haven, CT $227

Buffalo, NY $193 New Orleans, LA $97

Charleston, SC $108 New York, NY (Manh) $295

Chattanooga, TN $136 Newark, DE $139

Cherry Hill, NJ $193 Newark, NJ $228

Chicago N. Suburbs $165 North Metro Atlanta, GA $131

Chicago S. Suburbs $138 Oakland, CA $157

Chicago, IL $120 Oklahoma City, OK $134

Cincinnati, OH $127 Omaha, NE $149

Cleveland, OH $200 Orlando, FL $125

Columbia, SC $120 Pensacola, FL $123

Columbus, OH $162 Philadelphia, PA $163

Dallas, TX $149 Phoenix, AZ $152

Dayton, OH $162 Pittsburgh/Napa Cty., CA $127

Denver, CO $141 Pittsburgh, PA $181

Des Moines, IA $102 Portland, ME $192

Detroit, MI $113 Portland, OR $144

Dover, NH $200 Providence, RI $160

Fairfax County, VA $172 Provo, UT $135

Flint, MI $134 Raleigh, NC $120

Florence & Decatur Cty., AL $108 Richmond, VA $147

Fort Wayne, IN $137 Rochester, NY $187

Gary, IN $98 Salt Lake City, UT $135

Grand Rapids, MI $154 San Antonio, TX $114

Greensboro, NC $132 San Diego, CA $149

Hartford, CT $210 San Francisco, CA $169

Hibbing, MN $90 Savannah, GA $103

Houston, TX $111 Seattle, WA $174

Huntsville, AL $113 Springfield, MA $181

Indianapolis, IN $161 Stamford, CT $286

Int. Falls, MN $91 St. Louis, MO $138

Jacksonville, FL $150 Summit, NJ $242

Kansas City, KS $117 Syracuse, NY $196

Las Vegas, NV $133 Tampa, FL $128

Lehigh Valley, PA $167 Toledo, OH $128

Long Beach, CA $138 Trenton, NJ $195

Los Angeles, CA $122 Tucson, AZ $149

Macon, GA $98 Washington, DC $165

Maryland (Suburban D.C.) $173 Winston-Salem, NC $137

Here are the average hourly home health care aide costs from a licensed agency in selected areas:

Alameda, CA $19 Mercer County, NJ $16

Allegheny, PA $16 Miami, FL $14

Atlanta, GA $15 Milwaukee, WI $17

Baltimore, MD $15 Minneapolis, MN $19

Battle Creek, MI $15 Monroe County, NY $17

Birmingham, AL $14 Nashville, TN $14

Boston, MA $19 New Castle, DE $20

Chattanooga, TN $15 New Orleans, LA $13

Chicago, IL $17 New York, NY $14

Cleveland, OH $17 Oklahoma City, OK $14

Columbia, SC $13 Omaha, NE $16

Columbus, OH $16 Onandaga, NY $15

Dallas, TX $15 Orlando, FL $15

Danbury, CT $21 Pensacola, FL $14

Dayton, OH $16 Philadelphia, PA $14

Denver, CO $22 Phoenix, AZ $17

Des Moines, IA $18 Providence, RI $15

Detroit, MI $17 Raleigh, NC $15

Essex, NJ $16 Richmond, VA $13

Ft. Wayne, IN $17 San Antonio, TX $12

Gary, IN $16 San Francisco, CA $17

Grand Rapids, MI $16 Savannah, GA $12

Hartford, CT $24 Seattle, WA $19

Hibbing, MN $14 St Louis, MO $19

Houston, TX $16 Stamford, CT $19

Indianapolis, IN $17 Tampa, FL $16

Jacksonville, FL $14 Toledo, OH $15

Kansas City, KS $16 Tucson, AZ $15

Lansing, MI $16 Washington, DC $16

Las Vegas, NV $18 Winston-Salem, NC $14

Los Angeles, CA $17

TABLE 30C: PERCENTAGE OF NURSING HOME RESIDENTS AGE 65 OR OLDER WHO ARE INCONTINENT AND DEPENDENT IN MOBILITY AND EATING, BY AGE GROUP AND SEX, 1985 AND 1997

DEPENDENT MOBILITY INCONTINENT DEPENDENT EATING DEPENDENT MOBILITY, EATING, AND INCONTINENT

1985 1997 1985 1997 1985 1997 1985 1997

TOTAL

65 OR OLDER 75.7 79.3 55.0 64.9 40.9 45.1 32.5 35.7

65 TO 74 61.2 73.1 42.9 59.2 33.5 42.1 25.7 30.7

75 TO 84 70.5 77.1 55.1 64.3 39.4 44.8 30.6 34.5

85 OR OLDER 83.3 82.6 58.1 66.9 43.9 46.1 35.6 37.8

MEN

65 OR OLDER 71.2 76.3 54.2 65.0 36.0 42.8 28.0 33.6

65 TO 74 55.8 72.3 38.8 60.1 32.8 42.7 24.1 32.9

75 TO 84 65.7 75.1 54.4 65.9 32.6 43.7 25.5 34.6

85 OR OLDER 79.2 78.3 58.1 65.6 39.2 42.1 30.9 33.0

WOMEN

65 OR OLDER 77.3 80.2 55.4 64.8 42.4 45.6 33.9 35.9

65 TO 74 64.5 73.7 45.4 58.6 34.0 41.6 26.7 29.2

75 TO 84 72.3 78.0 55.3 63.6 42.0 45.3 32.6 34.4

85 OR OLDER 84.3 83.5 58.1 67.2 45.0 46.9 36.7 38.8

Note: Residents dependent in mobility and eating require the assistance of a person or special equipment. Residents who are incontinent have difficulty in controlling bowels and/or bladder or have an ostomy or indwelling catheter. Rates for the 65 or older category are age-adjusted using the 1995 National Nursing Home Survey population.
Reference population: These data refer to the population residing in nursing homes. Persons residing in personal care or domiciliary care homes are excluded.
Source: National Nursing Home Survey.

Assisted Living: (2000) Assisted-living facilities can provide an alternative to long-term care in a nursing home. A recent national study of assisted-living facilities found that there were 11,472 assisted-living facilities nationwide, accommodating 558,400 residents. Assisted-living administrators estimated that 24 percent of their residents received assistance with three or more activities of daily living, such as bathing, dressing, and mobility. They estimated that about one-third of the residents had moderate to severe cognitive impairment.

LTC Policy increases and the NAIC: (2000)Insurance companies that persistently file for rate increases could be banned from doing business in states that adopt the new long term care regulatory amendments.

LTC: Over the last five years, the average daily nursing home benefit has increased by 28 percent - higher than the overall inflation rate. Also, the proportion of policies that cover both institutional care and home care grew from 37 percent in 1990 to 77 percent in 2000

Chart of Average Health Care Expenditures Among Medicare Beneficiaries Age 65 or Older, in 1996 Dollars, by Age Group, 1992 to 1996. See text for details.

Chart of Major Components of Health Care Expenditures Among Medicare Beneficiaries Age 65 or Older, 1992 and 1996. See text for details.

Chart of Percentage of Nursing Home Residents Age 65 or Older Who Are Incontinent and Dependent in Mobility and Eating, by Age Group, 1985 and 1997. See text for details.

Chart of Rate of Nursing Home Residence Among Persons Age 65 or Older, by Sex and Age Group, 1985, 1995, and 1997. See text for details.

LTC (2000)The Department of Health and Human Resources says that patients need, on average, two hours of care each day by a nurses aide but that 54% of nursing homes fall below this minimum standard. The lack of care has caused an increase of severe bed sores, malnutrition and abnormal weight loss.

Now tell me- do you want your loved one to go to a Medicaid ward? If you have money, buy a policy an

AL	103	CT	202	ID	136	LA	90	MS	100	NJ	192	OR	142	TX	130	WI	166
AK	413	DE	129	IL	133	ME	175	MO	105	MN	144	PA	149	UT	115	WY	100
AZ	137	DC	184	IN	141	MD	151	MT	100	NY	178	RI	155	VT	100	AVG	140
AR	118	FL	120	IA	101	MA	201	NE	142	ND	100	SC	118	VA	115
CA	156	GA	102	KS	110	MI	127	NV	130	OH	151	SD	100	WA	177
CO	117	HI	127	KY	127	MN	133	NH	199	OK	92	TN	126	WV	125

Female	76%
Average Age	83.6
Male	24%
Average Age	81.8
Average number of ADLs	3.1
Cognitively impaired	49%
Hospitalized before moving into an ALF	42%
Average Income	$26,138
Reasons for Discharge
Death	26%
Move to Nursing Home	39%
Move to Relative's house	4%

Company	Age 65 Premium	Age 75 Premium
Lincoln Benefit	$1,575	3,803
CNA	1,823	4,042
GE Capital	1,678	3,866
John Hancock	1,850	4,190
Fortis	1,680	3,190
Travellers	2,400	5,690

Company	Actual Earned Premium	Actual Incurred Claims	Actual Loss Incurred to Premium Earned %	Anticipated Loss Incurred to Premium Earned %	Number of Lives Covered
AIG	116,537	23,000	19.7	21.2	291
Allianz	42,387,732	6,591,953	15.6	21.9	18,448
Bankers	1,564,474,541	519,288,909	33.2	38.7	161,917
Conseco	1,654,889,082	797,278,743	48.2	46.3	265,857
CNA	1,418,046,068	407,089,149	28.7	29.9	236,554
Fortis	237,598,917	59,744,468	25.1	17.4	62,898
GE	1,882,628,731	420,399,034	22.3	20.1	312,785
John Alden	59,286,214	59,286,215	12.0	19.0	12,591
John Hancock	931,236,717	931,236,717	18.3	22.4	242,703
MEDICO	181,431,654	99,253,256	54.7	48.7	9,259
Penn Treaty	226,294,993	94,007,257	41.5	36.7	33,612
PFL	366,489,172	98,786,046	27.0	22.1	69,118
Pioneer	440,036,357	232,288,950	52.8	52.8	29,597
TransAmerica	73,089,622	17,609,455	24.1	12.7	21,814
Travelers	563,990,539	91,683,516	16.3	23.8	105,047
UNUM	391,220,778	196,324,969	50.2	46.1	29,807

TABLE 30C: PERCENTAGE OF NURSING HOME RESIDENTS AGE 65 OR OLDER WHO ARE INCONTINENT AND DEPENDENT IN MOBILITY AND EATING, BY AGE GROUP AND SEX, 1985 AND 1997
	DEPENDENT MOBILITY		INCONTINENT		DEPENDENT EATING		DEPENDENT MOBILITY, EATING, AND INCONTINENT
	1985	1997	1985	1997	1985	1997	1985	1997
TOTAL
65 OR OLDER	75.7	79.3	55.0	64.9	40.9	45.1	32.5	35.7
65 TO 74	61.2	73.1	42.9	59.2	33.5	42.1	25.7	30.7
75 TO 84	70.5	77.1	55.1	64.3	39.4	44.8	30.6	34.5
85 OR OLDER	83.3	82.6	58.1	66.9	43.9	46.1	35.6	37.8
MEN
65 OR OLDER	71.2	76.3	54.2	65.0	36.0	42.8	28.0	33.6
65 TO 74	55.8	72.3	38.8	60.1	32.8	42.7	24.1	32.9
75 TO 84	65.7	75.1	54.4	65.9	32.6	43.7	25.5	34.6
85 OR OLDER	79.2	78.3	58.1	65.6	39.2	42.1	30.9	33.0
WOMEN
65 OR OLDER	77.3	80.2	55.4	64.8	42.4	45.6	33.9	35.9
65 TO 74	64.5	73.7	45.4	58.6	34.0	41.6	26.7	29.2
75 TO 84	72.3	78.0	55.3	63.6	42.0	45.3	32.6	34.4
85 OR OLDER	84.3	83.5	58.1	67.2	45.0	46.9	36.7	38.8
Note: Residents dependent in mobility and eating require the assistance of a person or special equipment. Residents who are incontinent have difficulty in controlling bowels and/or bladder or have an ostomy or indwelling catheter. Rates for the 65 or older category are age-adjusted using the 1995 National Nursing Home Survey population. Reference population: These data refer to the population residing in nursing homes. Persons residing in personal care or domiciliary care homes are excluded. Source: National Nursing Home Survey.

AL	103	CT	202	ID	136	LA	90	MS	100	NJ	192	OR	142	TX	130	WI	166
AK	413	DE	129	IL	133	ME	175	MO	105	MN	144	PA	149	UT	115	WY	100
AZ	137	DC	184	IN	141	MD	151	MT	100	NY	178	RI	155	VT	100	AVG	140
AR	118	FL	120	IA	101	MA	201	NE	142	ND	100	SC	118	VA	115
CA	156	GA	102	KS	110	MI	127	NV	130	OH	151	SD	100	WA	177
CO	117	HI	127	KY	127	MN	133	NH	199	OK	92	TN	126	WV	125

AL	103	CT	202	ID	136	LA	90	MS	100	NJ	192	OR	142	TX	130	WI	166
AK	413	DE	129	IL	133	ME	175	MO	105	MN	144	PA	149	UT	115	WY	100
AZ	137	DC	184	IN	141	MD	151	MT	100	NY	178	RI	155	VT	100	AVG	140
AR	118	FL	120	IA	101	MA	201	NE	142	ND	100	SC	118	VA	115
CA	156	GA	102	KS	110	MI	127	NV	130	OH	151	SD	100	WA	177
CO	117	HI	127	KY	127	MN	133	NH	199	OK	92	TN	126	WV	125