Don Levin, JD, MPA, CLF, CSA, LTCP, CLTC

Most people are particularly bad at assessing risk. For instance, although there is great concern about getting attacked by a shark at the beach, the probability of being attacked and killed by a shark is just one in 3.75 million.¹ Meanwhile, over 50 percent of individuals turning age 65 are expected to require long term care at some point.² Why is it that some pay far more attention to the risk of a shark attack than that of requiring long term care?

When long term care is mentioned, many people immediately think of a nursing home. In reality, most requisite care takes place in the home. That’s why it’s crucial for clients to consider long term care as an event to plan for rather than a place. Not to mention, planning ahead for long term care gives clients more options for their future care and helps them avoid exhausting their life savings by paying the high monthly bill.

Paying for Long Term Care
Traditional long term care insurance became available in 1974. Additional amendments to the Social Security Act enforced compliance with certain standards for facilities to participate in Medicare and Medicaid, including staffing levels, staff qualifications, fire safety, and delivery of services. With these changes, several insurance companies launched private long term care insurance (LTCI), which gave individuals the opportunity to purchase an insurance product to mitigate the risk of either paying for these services themselves or becoming reliant upon the public welfare system.

Plus, in order to qualify for long term care assistance via Medicaid, an individual must spend down their assets to a state-specific limitation (typically $2,000). (For applicants who are married, the healthy spouse can retain a separate amount that varies by state but is no more than $148,620.) To prevent applicants from giving away assets to meet these resource allowances, Medicaid enforces a lookback period of 60 months. If an applicant or their spouse has disposed of assets by gift or by sale for less than fair market value during the lookback period, they can and will be penalized and determined ineligible for benefits.

In addition to the difficulty of meeting Medicaid’s strict qualifications, the ever-aging population in the U.S. and resulting long term care services required threatens to run our public welfare systems dry.

Despite nearly 50 years of long term care insurance sales and the high risk of requiring care, only 10 percent of the general population has LTCI.³ As a result, Medicaid remains the number one payer of long term care in the U.S.—currently sitting at 42.1 percent.⁴ While Medicaid is both federally and state funded, the program is regulated on the state level, meaning rules and requirements vary by state. What remains a constant is that Medicaid continues to be the largest line item in every state’s budget and is the primary reason that more and more states are on the brink of insolvency. As more Americans turn 65 and require financial assistance for long term care, relying fully on Medicaid to cover these costs threatens the overall collapse of the Medicaid system.

Qualifying for Long Term Care Insurance
With the advent of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the federal government standardized private insurance company offerings by mandating certain features and benefits for traditional long term care insurance plans. Features include tax-qualification, allowing policyholders to deduct the cost of the premium based on annual attained age ranges, and benefit qualification factors based on basic triggers such as requiring assistance with at least two activities of daily living (ADLs) or evidence of cognitive impairment. ADLs consist of transferring, bathing, dressing, toileting, eating. Organic cognitive impairment includes chronic conditions such as Alzheimer’s disease, dementia, Lewy Body Dementia (LBD), and Parkinson’s disease. Non-organic cognitive impairment may be caused by a traumatic brain injury (TBI) incurred during an accident or injury but may also include cases of depression and other behavior-related conditions that impair a person’s ability to safely care for themselves.

Like other forms of insurance, long term care insurance is designed to mitigate the risk of loss to the individual and their family. However, unlike other forms of insurance, LTCI is stringently underwritten based on an applicant’s current health and health history and is priced based on attained age. In other words, the older the applicant, the more premium they will pay. Additionally, the less healthy the client, the more likely they are to be declined LTCI coverage. For many years insurance carriers collected family health history for anecdotal purposes only, but now most utilize it when considering the insurability of an applicant. To this end, applicants aged 40 to 45 have about a 12.4 percent chance of being declined coverage, and that risk jumps to 47.2 percent for those aged 70 to 74.⁵ This is further evidence that LTCI is paid for with money as well as requisite health.

Since long term care insurance must be purchased when an individual is healthy, it can be challenging for some to determine whether they are a good candidate. In general, individuals who meet the following criteria have a higher likelihood of qualifying for LTCI: Have never been prescribed a handicap sticker; do not require help with any activities of daily living; have never been diagnosed with AIDS, HIV, or ARC disorders; have never been diagnosed with or presented symptoms of Alzheimer’s disease, dementia, memory loss, multiple sclerosis, muscular dystrophy, ALS, or Parkinson’s disease; and, are capable of walking four blocks or climbing two flights of stairs.

The process of applying for LTCI coverage begins with an interview conducted by an LTCI professional, who will ask the applicant questions regarding their personal health, finances, family health history, and what they want the policy to cover. The LTCI professional will then tailor a plan to fit the applicant’s specific situation. In some cases, the insurance carrier may request the applicant’s medical records, typically based on age or health concerns. With the submission of a completed application, the entire underwriting process usually lasts four to eight weeks often depending on the promptness with which doctors respond to requests for their patient’s medical records.

LTCI funds are typically available either on a reimbursement or indemnity basis after an individual qualifies for benefits. Again, basic triggers include a doctor’s diagnosis of cognitive impairment or certification that assistance is required with at least two activities of daily living for a period of at least ninety days.

Discussing LTCI with Clients
The most common reasons individuals purchase long term care insurance include a desire to avoid being a burden on their family and loved ones, the preservation of assets, access to quality medical care, the maintenance of independence and decision-making, avoiding welfare services, and, finally, peace of mind.

Some clients may push back against paying for something they may not utilize or evade purchasing LTCI coverage simply due to the sheer expense of a policy. As a result, carriers developed an alternative to traditional long term care insurance. These products, often labeled as hybrid, combination, asset-based, or linked benefit policies, are largely built on a life insurance policy or an annuity contract. Unlike a traditional long term care policy, an asset-based policy offers more than just long term care benefits. It also provides a death benefit typically equal to or more than the premiums paid. Therefore, the benefit is paid whether or not the policyholder needs long term care. Any amount of the death benefit not used for long term care while the policyholder is living is subsequently paid tax-free to beneficiaries. Adding even more flexibility, asset-based policies also offer liquidity which allows the policyholder to redeem their cash value at will. For all these reasons these plans present the policyholder ultimate flexibility when it comes to LTCI.

Despite a growing need for long term care, the decades of policy data from both government and insurance carrier sources, as well as personal experience with family members requiring care, there is still a level of resistance, akin to denial, to purchasing LTCI. In most cases, a primer on LTCI will impart the requisite knowledge necessary for the client to make an informed decision that will lead them to purchase LTCI protection. Whether it is to mitigate risk, institute a stop-loss if they elect some level of co-insurance, or protect their portfolio and financial legacy, the wide range of coverage that is available today allows each individual client to obtain a policy that is tailored to their specific needs, desires, and financial circumstances.

Estate planning and elder law attorneys are in a unique position to have this crucial conversation with their clients. A failure to do so may expose practitioners to a degree of liability if the client, or a loved one, can establish that they were reliant on them for advice regarding the preservation of their estate.

Conclusion
With the advent of new medical procedures and advancements in the pharmaceutical industry the population continues to live longer, prompting an ever-increasing need for expensive long term care services. Unless more of the general population elects to privately insure this risk, the Medicaid system will be under an unrelenting burden to cover these services. Fortunately, with the availability of both traditional and asset-based long term care insurance policies, individuals can tailor their LTCI plan to suit their specific situation.

Since many people fail to properly assess their risk of requiring long term care, it is imperative that attorneys discuss this risk with clients and guide them to fund a long term care insurance policy before it’s too late.

Reference:

1. The International Shark Attack File 2022 Shark Attack Report, Florida Museum of Natural History.
2. Projections of Risk of Needing Long-Term Care Services and Supports at Ages 65 and Older, U.S. Department of Health and Human Services, January 2021.
3. Long-Term Care Perceptions & Preparation: A Middle-Income Market Study, Arctos Foundation and HCG Secure, January 2022.
4. Who Pays for Long-Term Services and Supports?, CRS analysis of National Health Expenditure Account data obtained from the Centers for Medicare and Medicaid Services, Office of the Actuary, December 2021.
5. American Association for Long-Term Care Insurance, LTC Insurance Applicant Denials, 2021.

In the spirit of education and awareness, it’s vital to understand the various sundry myths put forth by clients, and unfortunately sometimes by their advisors, on the concept of self-insuring themselves against the risks of long term care.

With millions of years of policy data from insurance carriers and an even greater array of statistics compiled by various government agencies and private entities, we know the risk of requiring long term care services at the end of one’s life is over 70 percent. For couples, this number soars to more than 90 percent, and single females (never married, divorced, widowed) are more than 79 percent. Rather than referring to the “chance” of requiring long term care, it’s more appropriate to use the word “probability.” After all, the numbers associated with this risk have simply become too overwhelming to ignore.

Many clients and, sadly, some of their financial advisors and/or estate planning attorneys think that insuring for long term care is something primarily for the middle class with only limited funds that require protection, and that more affluent clients can afford to self-insure against this risk.

As it turns out, many self-made affluent individuals who could certainly afford to insure against this risk often choose not to self-insure because they do not want to place their hard-earned fortunes at risk. Take, for example, a client from 1999, who was a retired orthopedic surgeon with three luxurious homes in Chicago, Scottsdale, and Palm Springs. According to his calculations, his annual expenses related to the upkeep of these homes, country club memberships, cars, and other ordinary life expenses exceeded $300,000 ($546,271 in 2023 dollars). Plus, this client could lay his hands on ten million dollars cash in just 24 hours’ time. The premium would be next to nothing for him. Some advisors or attorneys might have asked themselves, “Why am I even here? Why bother?”

However, this client understood the importance of having a plan in place. He knew that if his wife suddenly fell ill, he could care for her as a doctor. But as her husband, he would be a complete basket case. That’s why he was so earnest in his questions regarding the scope of the proposed policy. He knew it would take just a phone call to have a team of professionals put together a plan of care, find the caregivers, and even raise the commodes, lower the vanities, and put grab bars in the shower. And that’s exactly what he wanted.

For this client, it wasn’t about the money. He could afford to pay for the necessary services and even considered buying a barebones policy just to have access to all the services that the policy will offer. However, when looking at it from a dollars and cents point of view, why would he use his own money to pay for some services when he can use an insurance policy to pay for all of these services? This way, he is leveraging his money and protecting the estate he and his wife want to leave to their children and grandchildren as well as to charity.

This man knew exactly why he was purchasing this protection. In addition to affording himself, his wife, and their family the advantages of insuring their portfolio, he was also presenting a gift to all of them by eliminating the need for his children to become uncompensated informal caregivers and allowing them to be care managers who oversee the activities of professional caregivers. Unfortunately, not all clients have proven to be this insightful.

Why else should people of affluence purchase long term care insurance? People of affluence tend to avail themselves of better medical care, often have healthier lifestyles, and as a result tend to live longer lives. Studies show that the longer you live the more likely you will need long term care. As a result, the good health these clients enjoy may bring a greater chance of needing long term care in the future.

When affluent clients do require these care services, they will likely pay more for them than their middle-class contemporaries. Why? The reasons for this assumption are somewhat obvious when placed in context. The affluent tend to want better quality long term care, which translates into higher daily costs. Like most clients, the affluent are more likely to want to stay at home regardless of the associated cost to do so. They often live in conditions that some can only dream about, and do not want to sacrifice the quality of life to which they have become accustomed.

If deteriorating health conditions dictate that they leave their home, these very same affluent people are only going to enter the choicest of long term care facilities in the more upscale area of the municipality in which they reside. It is also reasonable to assume that they will insist upon a more costly private room if not a suite of rooms.

A review of associated demographics indicates affluent people may be less likely to receive care from their children because the education and upbringing these children have enjoyed may have thrust them into higher profile and/or demanding jobs. With fewer children being born and more women in the workforce, we have grown beyond the society portrayed by the Waltons. Multi-generational homes are largely a thing of the past, and the questions of dignity and self-determination loom even larger with this caste group.

Unfortunately, because these people of affluence are often healthier than other cohorts, they are also more prone to deny long term care will be part of their future. When dealing with clients like these, it’s important to become a denial-buster. Rather than bombarding them with the numbers associated with the risk of needing these long term care services, pivot and instead address the consequences of making the wrong decision to not purchase a LTCI policy.

Once we enter this realm, quietly begin asking them to consider the consequences and potential impact on their spouse, their children, their financial portfolio, and the very quality of life that they may have to give up when they can no longer cover escalating costs with their own money. The unfortunate reality is many families have to sacrifice assets to pay for professional long term care services that they can no longer provide to ailing loved ones.

Ask clients which of their assets they will liquidate to pay for these services, forcing them to consider selling off the boat, the vacation home, or some of their other prized collectibles.

A review of their portfolio and positioning long term care as an invasion of principal that will not recover with the passage of time (as it did after the market crashes of 1987 and 2008) will often provide the sobering reminder that pre-crisis planning is a far more economical way to protect their life and lifestyle than self-insurance.

While there are fewer carriers with traditional long term care products than 25 years ago, there is a more varied array of products offered by a smaller pool of carriers. For clients who do not want to risk paying for something that they may not avail themselves, it’s crucial to pivot and offer them additional life insurance coverage with a long term care or chronic illness rider. For some clients, a linked benefit, asset-based, hybrid, or combination product might make sense. The key is that these products all offer a stop-loss feature against the ravages of long term care and allow the policyholder to again avoid the potential pain of complete self-insurance.

There are three ways to pay for the long term care that the majority of us will likely require before we leave this earth: Be very rich (where self-insurance is possible, if not practical), be very poor (where the government steps in with Medicaid assistance), or be insured.

So, if you have a spare million dollars and no desire to leave a legacy, then self-insurance might be for you! As for the rest of us, we will continue to pay our long term care insurance premiums, even with the accompanying in-force rate actions, because the alternative of self-insurance is just so unappealing and ever increasingly expensive.

Free Stock photos by Vecteezy

For 66 percent of retirees, Social Security is their primary source of income.¹ This may not have been a daunting financial undertaking for the federal government when the Social Security Act was originally signed into law in 1935. After all, life expectancy was just 63 years old at the time. Today, however, the population is living longer, much of the Baby Boomer generation is either in or nearing retirement, and current workers barely outnumber beneficiaries collecting Social Security. Therein lies a huge problem. Social Security was designed as a supplement to retirement income, not to be the primary source of income.

In the 1990s, the average retiree owned their home clear of any mortgage encumbrance, had a pension, and was receiving the supplemental Social Security benefit, as it was intended. However, the average client planning for retirement today is often in their third, fourth, or fifth job or company and still has a mortgage payment. Meanwhile, they are also attempting to save something for retirement while paying for their children’s college educations and often bearing the burden and expense of providing long term care for their parents. Unfortunately, managing these additional costs and burdens can result in a loss of income and cause physical, emotional, and financial suffering for the individual as well as their loved ones.

For many current clients, realizing these additional costs and caring for their aging parents has prompted them to consider their own future care. After all, the probability of needing long term care for individuals aged 65 and older is approximately 56 percent.² That’s where long term care insurance comes in.

The History of Long Term Care Insurance and State Partnership in the United States
In 1935, President Franklin D. Roosevelt signed the Social Security Act (SSA) into law. Under the SSA, the Old Age Assistance program makes federal money available to the states to provide financial assistance to poor seniors. The law specifically prohibits making these payments to anyone living in public institutions, thus spawning the creation of the private nursing home industry.

In 1950, an amendment to the SSA required payments for medical care to be made directly to nursing homes rather than beneficiaries of care. Under the amendments, states were also required to license nursing homes to participate in the Old Age Assistance program.

In 1965, President Lyndon B. Johnson signed legislation enacting Medicare and Medicaid as amendments to the SSA. Medicare’s focus is on acute care only and does not provide for long term care. Medicaid allows for coverage of long term care in institutions but not in the home, creating a bias in favor of institutional care. Under this legislation, the federal and state governments became the largest payers for long term care, while nursing home utilization increased dramatically along with government expenditures.

In 1974, SSA amendments authorized federal grants to states for social services programs, including homemaker services, protective services, transportation, adult day care, training for employment, nutrition assistance, and health support. Final regulations for skilled nursing facilities were put into effect and enforcement of compliance with standards such as staffing levels, staff qualifications, fire safety, and delivery of services became a requirement for participation in Medicare and Medicaid. Several insurance companies launched the private long term care insurance industry with the intent of allowing individuals to purchase insurance policies that will pay for these necessary services and remove them from the public welfare system. Later policies expanded from coverage only for nursing homes to include home health care, assisted living facilities, memory care, and other variants often covered under alternate plans of care.

In 1992, four states (California, Connecticut, Indiana, and New York) implemented qualified state long term care partnership programs for their citizens. The following year, Congress enacted the Omnibus Budget Reconciliation Act, which prevented the expansion of these programs to the other forty-six states.

The Omnibus Budget Reconciliation Act of 1993 (or OBRA-93) was a federal law that was enacted by Congress and signed into law by President Bill Clinton on August 10, 1993. In terms of long term care insurance, this legislation established minimum standards to improve the quality of private insurance for long term care and tax incentives to encourage its purchase.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA), Public Law 104-191, was enacted on August 21, 1996. HIPAA created tax qualified plans, deductibility of premiums paid, based on age. Individual and group plans that provide or pay the cost of medical care are covered entities. Health plans include health, dental, vision, and prescription drug insurers, health maintenance organizations (HMOs), Medicare, Medicaid, Medicare Choice and Medicare supplement insurers, and long term care insurers (excluding nursing home fixed-indemnity policies).

In 2005, Congress enacted the 2005 Deficit Reduction Act (DRA) which eliminated $40 billion of federal funding from state administered Medicaid programs but also provided the balance of the states the option of enacting their own partnership programs. The DRA provided federal funding to states to expand community-based care; authorized the Medicaid Money Follows the Person (MFP) Rebalancing demonstration program; allowed states to add an optional Medicaid state plan benefit for HCBS; and allowed states to offer self-direction of personal care services. It also lengthened the look-back period for transfers of assets for nursing home Medicaid applications from 36 to 60 months. In addition, it allowed for qualified state long term care partnerships, which encourage individuals to purchase long term care insurance while still allowing them to qualify for Medicaid if their care needs extend beyond the period covered by their insurance policy.

The Government Takes Action
In 2023, the largest line item in most state budgets is Medicaid. Even with funding from the federal government, states struggle with this particular expense because of the ever-growing need for long term care required by its citizens. If the Baby Boomers as a cohort require the level of long term care that is anticipated and if they have not purchased private long term care insurance, this comprehensive expense will break the Medicaid bank.

Congress has made a token gesture at preventing this disaster by passing legislation that encourages the purchase of private long term care insurance, tax qualifying these plans with accompanying deductibility of premiums, as well as the advent, and eventual expansion, of the partnership programs.

Currently, the states themselves are finally taking action to prevent this tsunami from breaking their respective banks. In 2021, Washington State launched the Washington Cares Fund,³ which created a 0.58 percent tax on all W-2 employees aged 18 years and older. This prompted the public to purchase some 470,000 traditional and non-traditional long term care policies in order to opt out of this tax.⁴ Whereas Washington State generated only about three percent of national LTCI sales in 2020, this surge in sales ultimately accounted for 60 percent of national sales in 2021.⁵ To date, there are 10 other states in various stages of considering a like program for their own citizens.

Qualifying for Medicaid
Despite the WA Cares Fund and other states considering similar programs, the reality is Medicaid continues to be an essential resource for seniors who require long term care. However, in order to qualify for Medicaid assistance, an applicant must have assets and income below specific levels established by each state. Applicants in most states are limited to $2,000 in countable assets in addition to exempt assets, such as a marital home, one vehicle, and other personal effects. Applicants typically must spend down any assets that exceed these limits to meet this threshold and financially qualify for Medicaid.

Medicaid also has a standard lookback period of five years in most states. The two most notable exceptions to the five-year lookback period are California, which limits it to 30 months, and New York, which is in the process of fielding a similar provision. During this period, the applicant may be penalized based on any divestments made by them or their spouse. If Medicaid determines the lookback period has been violated, the applicant will be penalized based on the dollar amount they have transferred to others. This penalty is calculated using a state-specific penalty divisor, which is determined based on the average monthly cost of a nursing home in a specific state.

Example: Calculating the Medicaid Penalty Period
John applies for long term care Medicaid on January 2, 2023. Within the lookback period of 60 months, Jim sold his cottage to his son for $20,000, much lower than the fair market value of $120,000, and gifted his granddaughter $15,000 for college. John has disqualifying transfers in the amount of $115,000 ($100,000 for the house + $15,000 gifted). In John’s state, the penalty divisor is $8,500/month. For every $8,500 gifted or sold under fair market value, John will be penalized with a month of Medicaid ineligibility. Therefore, John will be penalized with 13.5 months of ineligibility ($115,000 ÷ $8,500 = 13.5 months), during which time John must pay privately for his care before Medicaid begins.

How the LTCI Policy Works with the Medicaid Program
State partnership-qualified long term care insurance policies essentially form a partnership, or better, a collaboration, between private insurance companies and the public government. Partnership policies exist for the expressed purpose of encouraging the purchase of these policies to help cover the costs of long term care while diminishing the burgeoning burden on the states to pay the high costs associated with long term care, which continues to be the single largest line item in each state’s Medicaid budget.

State partnership plans offer policyholders dollar-for-dollar protection and can serve as excellent estate planning and asset preservation tools. Owners of partnership qualified LTCI plans can protect some, or in some cases all, of their estates, depending on the depth and breadth of the plan and the size of the estate as well as the length and degree of required care.

In the event the policyholder exhausts their LTCI benefits and must continue with care under Medicaid, the assets that were protected by a partnership qualified LTCI policy are also safe from Medicaid’s mandated asset recovery program, further ensuring these assets remain as inheritance for family after the passing of a Medicaid recipient. This also allows Medicaid recipients to, in essence, retain assets above and beyond the limits set forth by Medicaid.

To date, nearly all states have their own version of partnership. States that do not currently have partnership are Alaska, Hawaii, Mississippi, and the District of Columbia.

The huge advantage of the asset protection afforded by a partnership qualified LTCI policy is that an individual, or couple if purchasing a shared plan, can protect additional funds, dollar-for-dollar, based on the amount of coverage paid out by the plan, and subsequently qualify for coverage. For most people, the single largest asset that they possess is the family home. With a qualified partnership LTCI policy, a Medicaid recipient can declare their home as a “protected” asset, thus protecting it from the mandated Medicaid estate recovery program. This allows the home to remain with the family as inheritance.

Example: Partnership Qualified LTCI
Scott has always been a planner, so when he met with his advisor he decided to purchase a partnership qualified LTCI policy. He faithfully paid the premiums over the years, and because of the inflation rider partnership required, the policy’s pool of benefits grew. Eventually, Scott’s family and doctor determined that Scott’s declining health and his inability to perform two of the six activities of daily living warranted filing a claim with his LTCI carrier. Ultimately, over the course of three years, he received reimbursed benefits totaling $300,000 before the policy pool was exhausted. Still very much alive and in need of care, Scott’s family assisted him in applying for Medicaid. At the time of application, Scott’s house was valued at $225,000, and he had modest cash on hand in a checking account of about $85,000. Because of his partnership qualified LTCI policy, Scott was eligible to retain $300,000 (his home and cash assets) in addition to his standard allowance of $2,000 while still qualifying for Medicaid.

Requirements for a Policy to Be Eligible for a State Partnership Program
A long term care partnership policy provides the added benefits of offering those who own them a way to protect their assets, dollar-for-dollar, in the amount of policy benefits paid out on their behalf in the event they ever need to apply for long term care benefits under a particular state’s Medicaid program. Additionally, a long term care partnership policy has beneficial tax treatment and requires inflation protection features that protect younger purchasers from increases in expenses caused by inflation.

For most people, the benefits of a partnership policy are likely to cover all the care they will ever need. However, because of the unique asset protection feature, they won’t have to impoverish themselves if they run out of benefit coverage and still need care. The individual plans must conform with federal guidelines in terms of tax qualification, benefit triggers, and other defined conditions. Partnership plans are portable and can be utilized in any state, provided both states have partnership programs and mutual reciprocity agreements.

Partnership plans accentuate the very reasons people have purchased this form of insurance for nearly fifty years since they prevent them from becoming burdens on their family. Additionally, long term care insurance assists in maintaining their independence, prevents the dissipation of assets, and preserves their personal dignity. It also prevents them from becoming dependent upon the government for welfare assisted services.

The Table To The Right Shows States That Have Approved Long Term Care Partnership Insurance.⁶

Alternative Policy Design Options Your Clients May Want to Consider
Traditional long term care insurance saw its high-water mark in 2002 with over $1.024 billion in policy sales.⁹ Since that year, sales for the traditional product offerings have dropped (with only an occasional bump in sales that reversed this trend) with more and more consumers and producers flocking to hybrid/combination/asset-based products that usually consist of life insurance with a long term care rider or an annuity with a long term care rider.

These policies have great appeal to people who fear they will not use the policy and essentially waste these premium dollars. For them, the “Live Die Quit” mantra may be presented because if they do live and require long term care, the policy will have available benefits; if they do not use the long term care aspect of the policy, they will eventually die and their beneficiaries can avail themselves of the death benefit; or, if they change their mind down the road, they can recover their invested principal.

Conclusion
With the advent of new pharmaceuticals, advancements in the practice of medicine, and changes to lifestyle and eating habits, as a society we are lingering longer. When Theodore Roosevelt was President of the United States at the beginning of the twentieth century, life expectancy was only 47 years of age. Today, it is more than 81. While the U.S. is faring better than many other countries, our demographics reveal a population that is aging in place with diminished available savings and a growing need for long term care.

As more Americans require long term care, Medicaid continues to be the largest payer of these costs. Therefore, the elderly will only continue to apply for benefits in order to meet long term care needs at the end of their lives. Long term care insurance, particularly those plans that are partnership-qualified, will make a huge difference in the lives of individuals, their families, and on society as a whole.

Because of the growing need for long-term care insurance, the wide array of available products makes it a must-have for all portfolios. State partnership has proven to be a wonderful addition to the formula, as people can safeguard assets, establish and protect financial legacies, and still enjoy the much-needed care they will likely need at the end of their life.

Private long term care insurance is an economical way for individuals and couples to protect their savings and provide themselves with a variety of options regarding their long term care. It allows them to pay for these services without exhausting their retirement assets or family savings. It also affords them choice as to where they wish to receive these services. A partnership-qualified plan further allows them to safeguard, on a dollar-for-dollar basis, a portion of their estate equal to the amount of money disbursed by the issuing carrier on a reimbursement basis.

Reference:

1. A Precarious Existence: How Today’s Retirees Are Financially Faring in Retirement, TransAmerica Center for Retirement Studies, December 2018, https://www.transamericacenter.org/docs/default-source/retirees-survey/tcrs2018_sr_retirees_survey_financially_faring.pdf.
2. Projections of Risk of Needing Long-Term Services and Supports at Ages 65 and Older, U.S. Department of Health and Human Services, January 2021, https://aspe.hhs.gov/sites/default/files/private/pdf/265136/LTSSRisk.pdf.
3. WA Cares Fund, 2021, https://wacaresfund.wa.gov/about-the-wa-cares-fund/.
4. Washington State Retools First-in-the-Nation Long-Term Care Benefit, Kaiser Health News, April 2022, https://khn.org/news/article/washington-state-retools-first-in-the-nation-long-term-care-benefit/.
5. 2022 Milliman Long Term Care Insurance Survey, Broker World Magazine, July 2022, https://brokerworldmag.com/2022-milliman-long-term-care-insurance-survey/.
6. American Association for Long-Term Care Insurance, March 2014, https://www.aaltci.org/long-term-care-insurance/learning-center/long-term-care-insurance-partnership-plans.php.
7. The Effective Date is the date the U.S. Department of Health & Human Services approved the state plan amendment. Original Partnership indicates one of the four original partnership states.
8. Policy Reciprocity indicates whether the state will honor partnership policies from other DRA partnership states when it comes to allowing asset disregard when filing for Medicaid. All DRA states plus New York, Indiana, and Connecticut have reciprocity. California does not.
9. LTC Insurance and Medicare Supplement Executive Summary, Annual 2002, LIMRA International.

In our previous article we talked about the importance that marketing events can play in the creation of selling opportunities. Notice that we refer to selling opportunities and not to “appointments” or “leads.” Selling opportunities are so much better than leads or simply appointments. Our experience is that you will close virtually one hundred percent of those who are health qualified with a significantly higher placement rate as well. It all starts with the relationship that you start to build when they attend your marketing event.

It is important to remember that these marketing events are really client appreciation and client development events and not merely public events. In the past week alone, my wife and I combined received five invitations to public events from financial planners or law firms interested in soliciting us as their clients. While the restaurants are tempting, we have no desire to attend these events. However, there are a great number of people who will attend these events. Some of them attend every event they are invited to, and for that reason we have good-naturedly dubbed them professional “plate lickers.” We do not want to engage with these people because with their attendance they literally and figuratively consume valuable marketing dollars and your time with no intention of ever utilizing your services.

Hindsight being 20/20, it is easy to look back on what did and did not make our marketing events both memorable and profitable. After years of conducting these events, debriefing them afterwards, and compiling a list of lessons learned, here are a few of the key learnings that we have filed away.

Key points regarding client events:

• Think outside the box—in terms of the audience you wish to draw, the variety of topics you may wish to offer—keep it fresh for your clients and yourself by varying the venue. We had one client who attended no less than seven of our events in one calendar year, dutifully bringing a different couple to each event, resulting in over $35,000 in premium (2011 dollars). In terms of topics, for whatever reason, any time we invited someone from the Social Security Administration as a guest speaker, we packed the hall. As people are nearing retirement age, they want this interaction with someone who can answer their questions.
• Invite both your clients (to show genuine appreciation) and to expose them to your strategic partner’s practice, and their friends (for potential growth) and of course your strategic partner’s clients and their friends for the same reasons. The gentleman I referenced in the previous paragraph would “talk people up” about the benefits of buying a long term care policy while they are young and healthy during the dinner portion of the event. He more than earned every meal he consumed!
• You want to conduct events that have an extended “shelf life.” While dinner events at popular restaurants will never go out of style, creating an experience for the client will pay dividends well into the future. One such event that I had to be convinced was worth the investment of our time and money was an event where all participants would be invited to learn the art of sushi making. For months after the event I would receive texts, emails, or phone calls from those who had been in attendance, telling me how much they enjoyed the opportunity to acquire the skill, how much fun they have had sharing their newfound expertise with friends and family, and how “Every time I eat sushi, I think of you guys!” Can an event have any more desired outcome? Other memorable events that we put on included sponsoring a chef’s private table, golf lessons from a professional, and of course catered events on a 42-foot Chris-Craft as we cruised Lake Michigan and/or the Chicago river, affording guests the opportunity to view the Chicago skyline. One of the more outside the box events we sponsored was an after-hours event at a jewelry store, where attendees could receive free appraisals and cleaning of their jewelry, and enjoy a chocolate fountain. To this day I marvel at the business that this event produced for us. Fishing trips, special sporting events, and anything you think would be entertaining become memorable events if you take the time to plan it right.
• In a nutshell, make the events fun and memorable so that when people encounter something in their regular life, such as eating sushi, they think of the time that their advisor team created an environment in which they learned how to make it. They will share these experiences with their family and friends, and referrals will follow. I did receive a phone call from the friend of a client who called me solely to be “put on the list” for one of our next “fun” events. They later became clients as well.

Key considerations of client events:

• They are a lot of work!
• Consistency and regularity are absolute musts.
• Use a calendar and plan your events out for the next 180 days. Reserve desired venues. Nothing is more frustrating than to have a great idea and to be frozen out of a desired venue.
• If you are conducting an event with a strategic partner, be prepared to manage the relationship. Odds are you will have to be the professional planner in the relationship.
• Establish and follow a process and timeline that you can reduce to a checklist.
• Ask your agency to help promote and support the events either financially or with personnel support. If you have five tables of eight that is forty people and probably 20-25 households when you account for couples and singles in attendance. You want a host at each table, and you want people to talk to them as they mill around at the end of the event and you are encouraging them to sign up for appointments later that week.
• To this end, I liked to do events on Monday and Tuesday evenings, so that we could encourage them to sign up for appointments over the remainder of the week. Their interest in seeing you is never going to be higher than at the conclusion of the event. You have planted the seeds, so we want to see them as soon as possible and to get them to the end of the buying cycle as soon as possible.

For agency managers and marketing leaders:

• Plan events that will facilitate the launch of new agents utilizing their Project 100 lists.
• Get involved with your local Chamber of Commerce and host events for fellow chamber members.
• Encourage agents to partner with other agents in your firm, particularly if they have complementary skills to one another.
• Leverage the success of these events to promote more events.
• Get potential new agents to buy in to these events during the recruiting process.
• Use existing resources as much as possible.
• For those agency leaders who struggle with getting their producers to adopt this time-tested business practice, remember that as leaders you must “Know it, Model It, and Be Involved.”
• First line supervisors must be able to “apply it and monitor it,” and the best way to do this is to be modeling the way with your own events.
• As always, a best practice includes tracking activity and success, debriefing events, and looking for ways to improve the process.

Additional networking opportunities through the strategic alliance partner

• Who do they know?
• Have them make personal introductions to their own Centers of Influence that can help you mutually expand your long term care sphere of influence.
• Health Benefits Brokers—the new wave. We have found that this is especially important when dealing in the business-to-business (B2B) arena, where even after you have convinced the decision maker of the business that long term care makes sense for the company and the individual employee, he will often default to “Let me check with my benefits person.” Rather than being frozen out, it is so much easier if the benefits broker is the one making the introduction and opening the door for you. We enjoyed great success by partnering with a health benefits broker and sponsoring these types of events.

Concluding thoughts on formal and informal marketing events:

• Marketing must become part of your lifestyle and DNA, and not remain just a series of separate events in which you occasionally participate.
• Just do it!
• Face and conquer your fears.
• Talk to everybody about what you do! Have fun!
• Have an elevator speech that flows off your tongue and that prompts questions from those with whom you are speaking.
• “I help people protect their financial futures…” How?
• “I am a long term care planning specialist.” What is that?
• “I educate people on their options for safeguarding themselves and their families against the ravages of long term care and of outliving their money.” How do you do that? Can you help me do that?
• “I can protect your future.” Oh really. How can you do that?
• “I help people plan for the events in life that they do not wish to talk about.”

To quote the Godfather II, “This is the business we have chosen.” Where you are right now is the business you chose for yourself. The key is to be both happy and successful in all your endeavors. In this day and age, marketing is the key to success.

Marketing does not need to be intimidating or expensive. These marketing events are fun to conduct, and it is a genuine rush when you walk out of these events with a paper calendar that contains selling opportunities in the guise of appointments that people have signed themselves up for over the next few days. Remember that in service industries such as ours, people have a choice as to whom they will work with and refer their friends and family to. For this reason, marketing is not an event, but rather a lifestyle. Embrace it, and you will enjoy tremendous success.