Ronald R. Hagelman

I have often heard from my brothers and sisters in brokerage distribution a suggestion that perhaps as they near retirement they might like to do some consulting work. I would humbly submit to be careful what you wish for. As an example, I have gradually over time limited my practice to the Long Term Care Conundrum and as a result I have signed so many NDAs, all of which are focused on the same problem, that I’m not sure anymore what I can say about current activities designed specifically to take advantage of what we have learned. I can say we have learned…and that we are indeed not doomed to repeat our past failures. For the foreseeable future in this column I will continue to bang pots and pans as loud as possible to illuminate the absolute essentials that will finally at least take the edges off of what in my mind remains America’s largest unprotected and underfunded risk. The absolute “Truths” that have revealed themselves over the last 20 years are:

• We failed to understand the nature of the problem in the beginning. By continuing to progressively limit our sales activity to those with wealth, we have defined the solution as replacing known risk with adequate and equal amounts of insurance. In our defense this was always what we did—measure the financial dimensions of the problem and balance with a liberal application of insurance. However, as premiums rushed in to meet the reality of the risk, we have simultaneously day by day diminished the ranks of those who could afford to take action and be prepared. Recent estimates are that our singular focus may have left as many as 50 million Americans behind. Specifically all those middle class consumers that we were offering the incorrect (and knowingly unaffordable) solution to the wrong problem.
• In a recent Harris Poll Health Care Costs in Retirement, it is abundantly clear that Americans are concerned about retirement and, frankly, the real possibility that they will run out of money. Seventy-two percent were concerned about unplanned medical expense; 70 percent knew they would not have monies for long term care; 69 percent knew that government support would be inadequate and two-thirds knew their retirement dollars would not last. And this was most true where the household income was less than $150,000. Perhaps if we focused on our past historic sales failures, specifically the 90 percent we have been unable to convince to buy or the 40 percent or more that got declined when we took an application, our opportunity to be helpful would increase dramatically.
• The point is that the American people do understand. Yes, it’s about money, but only as it relates to the quality of care. It’s first and foremost about  freedom of choice and doing everything in your power to remain a Private Pay patient. As reported recently on NPR “Nursing homes that rely on Medicaid tend to provide the worst care for their residents.” Medicaid should not be anyone’s goal. It is discounted care by definition. The 2015 funding shortfall was $7 billion. A recent Heritage Foundation report on Poor Medicaid Care was adamant that, “American’s enrolled in Medicaid have less access to healthcare, and when they do receive care the quality is often inferior to the care provided to similar patients.” (Suggesting someone access support from Medicaid is like recommending someone should spend time at a Spa currently battling the  Black Plague with motel soap and stagnant water. Sorry my passion on this subject may have gotten me a little carried away.)
• The theme I intend to return to repeatedly is that we missed the whole side of the barn when we aimed our insurance resources at the problem. It is not how much insurance is needed to pay for care, but how little insurance is needed to help someone remain the primary decision maker in their own claims destiny.  Let’s scrape it all together and see what retirement really looks like for those in need of chronic care assistance. Although the average SSI benefit in 2017 was $1,360 per month, the maximum available payment is $3,538—with many Americans receiving more than $2,000 per month. The mean retirement dollars between age 65 and 74 is $77,000. The median home equity at the same age is between $125,00 and $130,000. According to the latest U.S. Census, the typical American net worth at age 65 is $194,226. Now we know, as is frequently reported, that 83 percent of all LTCI  claims would fall under $100,000. I don’t care how you construct the math associated with these facts, it does not require hundreds of thousands of insurance dollars to allow the monthly cost of private care to remain a journey of quality, dignity and personal control.

“Contrariwise,” continued Tweedledee, “If it was so, it might be; and if it were so, it would be; but as it isn’t, it ain’t. That’s logic.”

Other than that I have no opinion on the subject.

I strongly suspect that it’s not just death and taxes that Americans accept as inevitable. I believe there is a general cultural consensus that as we near the end of the journey there will be an inordinate level of expense and that it will have something to do with our declining health. Unfortunately, it does appear that the fear itself is nebulous, generalized and grossly underestimated. I am also certain that those perceived future expenses have been jumbled all together and that medical expenses for acute /subacute out-of-pocket versus custodial care finances have all been tossed into the same vague mental tumbler. Clearing up this confusion is often where a sales process begins. It’s not one pot of money, there are two distinct financial potholes lying in wait over the horizon. Although we all too often begin the process with an insurance conversation about how much insurance we need for both  problems (sold separately), we usually end up with “How little can still do the job?” 

Recent retirement surveys have estimated that for those 65 and older the aggregate cost of out of pocket medical expenses for a couple is somewhere between $250,000 and $400,000 over a 20 year period. When you throw in medical inflation costs I’m also sure few would argue that your possible long term care expense puts up similar numbers. Each year, late in the fall, I am amazed at the frenzied mad scramble to re-valuate Medicare supplement options and the depths of the conversations about benefits and cost in this regard. Frankly I’m a little envious. If only we could focus our aging population attention in the same way as it regards the reality of custodial care  expense. At any rate we need to do our best to help our clients understand that two plus two really is four. 

However you have accomplished moving the sales conversation in the right direction, the next critical math evaluation is “How much is enough?” That needs to begin, of course, with what you are trying to accomplish with the insurance in the first place. Our sales over the last twenty years have been focused primarily on a “primary” insurance transaction: Evaluate the size of the potential “total” risk and replace that personal liability with a comprehensive insurance plan to cover the problem. This is of course the best plan and for many years it held promise as the panacea. Slowly, but inexorably, we began to separate from what we knew was the most direct choice because, as we grew to understand the real size of the risk, we began to price ourselves out of our market. We became a choice only for some, and each year that choice seems to be available to fewer and fewer. That market continues to shrink. Reductions in available companies and benefits continues, coupled with a seemingly permanent low interest environment which was never part of initial pricing. We have learned the hard way that although almost all insurance products are built on a measurable lapse philosophy, there is one product—long term care insurance—that has defied our logic. Care providers have followed the money, and my mind has trouble imagining the number of new ALFs under construction or the Home Health Advisory/Providers opening as new business start-ups.

Although the potential exists for a $250,000 or much larger LTCI claim, what we do know at this point is that eight out of 10 claims to date would fall within $100,000 of insurance dollars. We must embrace a much humbler mission. What dollars are needed to supplement existing assets and income to maintain personal private control of your claim? Perhaps we should also begin to do a better job of determining what that coverage should most look like: Health or life or some combination. Less is so much more!

Other than that I have no opinion on the subject.

This may indeed be my shortest column. It doesn’t take long to admit your powers of reasoning were simply headed in the wrong direction. Not just that you were looking at the problem from the wrong perspective or that your line of attack to solve the problem was flawed at the beginning. In truth, it has simply taken me over 20 years to “change.” Change is good, but we all resist it at our core. I still don’t Twitter but I may…yet.  We like the familiar. The more something is like what we are already comfortable with, the better our mental health and the more likely we are to travel familiar highways.

I almost feel like Alice  peering through the looking glass and discovering a topsy turvy world where all normal meanings are the opposite of what should be expected.  I just spent the last 20 years constantly anticipating the consequences of inaction and poor planning that would not occur for 30 years out into the future. When I should have been focused on the immediate “point of care” financial and emotional catastrophe evolving in real time. How long has it taken us to learn that the only predisposition to install a layer of insurance protection takes place among those who are currently in the process of getting on their boots, or who recently experienced all the joys of caregiving in America and are still actively engaged in getting it off their boots. Just think of all the wasted sales energy squandered on illuminating the strong possibility that, in the not too distant future, you may indeed step in it.

How long has it taken us to learn it makes little difference which product genre you choose to address the risk. It is inertia, inaction and denial that matter. The adult children standing around the caregiving conflagration do not need to be sold anything. They are simply waiting for someone to help them make an informed decision as to how best to avoid a repeat experience for their children.

Again, for the last 20 years we have all been focused on how much insurance will be needed to replace the  risk, when in my humble opinion the most important question is how little insurance is required to  maintain control of your own claims destiny. We stood by, experiencing what we thought were circumstances beyond our control, as premiums rose, application length expanded, declines mushroomed and those carriers only interested in easy answers abandoned us as if somehow continuing to  care about our customers was our personal weakness.

Even the dramatic rise of asset-based combo sales has been anecdotally attributed to the wealthy acquiescing in wiser asset repositioning equations and theoretically  better informed financial decisions when, in fact, they really simply represent a dramatic reduction in the  cost of the risk itself.

 Perception has never been reality in the Wonderful World of Chronic Illness Risk Abrogation.  It really is time to turn the Kaleidoscope 180 degrees and take a really hard look. The patterns  our experience  has established in that evolving collage of colors must be based in fact and focused on whatever we need to do to position ourselves to have the right conversation at the right time with the right people. 

Which means it is also time to journey off the political correctness reservation momentarily for all the right reasons—the very day the adult children are gathered around the table to determine how they will help pay for the best available private care for a parent. It is that day that all options to leverage cost must be present including life settlements utilized for care.  I am not going to embark on a debate as to where the life insurance industry achieves its profits: Investment. mortality or lapses. We should all know that the vast majority of all the life insurance policies ever sold never paid a death benefit. A number of states and the Innovation Committee of the NAIC have come to recognize these often abandoned or ignored assets can alleviate pressure on the cost of Medicaid as well as the pressure on so many to become wards of the state in the first place. Therefore I cannot personally imagine any “policy review” process conducted by an insurance professional that did not include the possibility of converting a dormant or no longer needed life insurance contract into an income stream specifically purposed for care!

Other than that I have no opinion on the subject. 

I have always been impressed by the single minded purpose and passion of our dwindling cadre of LTCI specialists. To my knowledge no one has stayed as laser focused and dedicated to basic reason, sometimes painful truths and necessary reform of the long term care financing conundrum as Stephen A. Moses, president of the Center for Long Term Care Reform. He has recently released a report for The Foundation for Government Accountability titled How to Fix Long-Term Care Financing. Stephen’s message is, as usual, well documented, and his conclusions about the cause and effect of the poorly crafted, deservedly maligned and strategically counter-productive Medicaid federal boondoggle are “spot on.”. This definitive analysis should be required reading for all those involved in the struggle to fix a system that is clearly broken. It has often been concluded in this column that there are no easy answers, no single strategy to turn around a system that clearly rewards bad behavior and inadvertently reduces the quality of care that should be its core mission.  Stephen has convinced me that I may have been wrong. (Again.) There may be one most critical pressure point. One laser focused missile might destroy America’s most prolific “Death Star.”  Before that final reveal let’s revisit, just for context, what should be for most of us familiar territory. We should all be familiar with the basics by now:

• Although children are three fourths of those receiving Medicaid benefits, they only account for one third of the expenditure. However, the disabled represent the corollary opposite ratio of participants to funding assistance.
• Today’s current industry and political thinking on better preparing Americans for the certainty of caregiving costs are suggestions to raise taxes and create even more well intentioned but counterproductive federal/state bureaucracies.
• The problem that won’t go away is that no solutions are even attempted or put into play until after the problem arises.
• As Stephen has so eloquently insisted, the Emperor has no clothes. The myth of Medicaid “spend down” is a tall tale concocted by those with self-serving agendas. “Medicaid long term care benefits do not require impoverishment.” As we know a well versed elder law attorney can successfully remove from the eligibility equation unlimited assets and income. If there is no real risk, how could we have expected insurance or recovered dollars from actual spend down to have helped alleviate the problem?
• As Stephen has so often explained, it is the Home Equity Exemption that is the most glaringly incongruous. Increasing each year, it currently stands at between $560,000 and $840,000. According to the report, “Medicaid diverts a substantial portion of over $2 trillion of home equity from personal long term care financing liability into a likely public expenditure.” If you want to find out more about home equity, you can visit https://equityexperts.org/.

We have long suspected that the original intentions of Medicaid to help those most in need had been long subverted by a specific intent to defraud the American taxpayer. It seems there have always been  those who somehow created a rationalization process that believes any and all means of exercising legal “loopholes” to knowingly circumvent the intent of the program is acceptable. We know that most Americans could and should prepare for the inevitable. Why bother to seek shelter from the storm when you know it will never rain directly on those willing and able to perceive cheating as an entitlement?  The report also points out the lack of any substantial financial risk to begin with-where almost 90 percent of nursing home costs never invaded anyone’s savings and less than 10 percent was spent out of pocket for home health care.

We know there must be risk and clear consequences of not taking action to protect yourself and your family for anyone to plan ahead. We should know that far too many believe the government should pay for their care, and that if that is what they want they can have it if they are willing to pay the required minimal legal fees. Two unavoidable truths stare back at us from this concise review: Medicaid pays, and if you wish for them to pay they will! Before revealing the report’s suggestion of what I believe is an insightful and potentially successful reform, I would like to try to shift the arguments to where I believe they can do the most good. Medicaid is critically underfunded-meaning all care at Medicaid facilities is discounted care where the government controls all facets of your claim and the quality of what remains of your time on this earth. Frankly, my job is to make sure that no one I try to help ever goes near Medicaid.  Only one question begins each day for me: “What do I have to do to complement or supplement existing assets/incomes or enhance existing coverages to grant my clients the dignity of private pay?” I know it’s politically incorrect, but I do not want the government to come near anyone I love-and if that happens I have failed.

Now let’s return to the reform suggestion that could do the most to bring down a system that is doomed to continue to remain it’s own worst enemy. All American’s have left is qualified savings and home equity. Of the two it is, I believe, the potential loss of home equity that would strike the greatest fear in the hearts of those who have so far failed to plan. Instead of constantly adjusting the limitations, perhaps the time has come to remove permanently the entire home equity exemption from the Medicaid eligibility equation. Just say no and Americans would scramble to hedge their exposure. Just say no and new monies would flow into the private care market. You would, of course, have to close the back door by extending the look back period. Potentially utilizing home equity to pay for long term care expenses would force folks to rethink their property inheritance decisions, bringing insurance back into the equation. Using their own money for care would improve services offered and could dramatically enhance the desire to remain at home for care in the first place. Honestly, I was not a fan of the original “Just Say No!” campaign as I thought it was simplistic and unrealistic  and overbearing. Maybe not this time!

Other than that I have no opinion on the subject. 

Making the point is of course the mission of this column. I’m sure some would suggest I’ve simply kept attempting to make  the same point over and over without sympathy, empathy or remorse for my similarly unrepentant long term care friends that read this column. Therefore one more time:

• The point remains we are facing a worldwide financial crisis of our own making. I take small doses of my blood pressure medications every eight hours because it’s a “maintenance” program—one among many that extends and maintains the longevity of individuals in each and every industrialized nation on this planet. None of us was in any way prepared for an aging population with numerically insufficient working adults to support the cost (or an adequate supply of caregivers) to provide the basic required services.
• The inescapable point is that the need for custodial care is a virtual certainty. That cost exposure is of course best illuminated by our failure to place sufficient insurance. We have no expectation that we can rest on our sales laurels. More and more we must turn our attention to what we did not get done. What happens to the 90-plus percentage that refused to take action or the 50-plus percentage that tried and were declined for coverage.
• The frustrating point is that according to recent consumer research conducted by Nationwide,  three fourths of Americans know that health care costs are likely to derail their retirement plans. Not surprisingly, the same three fourths  also know they will not have money to pay for unplanned medical expenses or long term care.
• The maddening point is that in the same survey two thirds of those surveyed “knew” that long term care expenses would use up their retirement dollars and the same two thirds said they would rather die than go to a nursing home.
• The inevitable financial point is that most care is informal, taking place in the home, and the personal hard dollar cost to those mostly female caregivers is in the hundreds of thousands of dollars.
• The most important point is that 70 percent of those who receive care were able to “choose” care at home or the assisted living facility of their choice. This may be the most important point:  How much additional leveraged risk insurance is needed to supplement income to facilitate that freedom of choice?
• There have always been two points of claim engagement. Two strategically different approaches to attempting to resolve an impending inevitability: 1) Measure the size of the potential financial problem and recommend the purchase of insurance to replace an “average” care claim event—for those with sufficient financial ability this remains the only intelligent response to the problem; or, at least in my mind a much more important level of engagement, 2) help establish a “supplemental” side fund designed specifically to add to existing assets and income to maintain a personal psychological threshold of assurance that your client will remain a private-pay care recipient.
• The point we must take to heart is that most claims are of a fairly short duration and that insurance dollars will always be added to the existing dynamics of all financial resources. We must also recognize that most claims therefore only require a modest addition of supplemental support.
• The only really important point is the “Point Of Care.” The goal that matters is freedom of choice and personal control of the how, where, and by whom of a need for custodial care.
• This is the market that matters. This is the line in the sand where we must stop and defend our choice of profession. The “Point Of Care” is our new frontier of product innovation, supplemental protection strategies, technology deliverables and risk leveraging strategies. It cannot ever be too late. I would challenge all to dig in here, at the edge of defeat, and do all you can to try to be helpful to those who chose not to prepare or whose health had already begun to turn inevitable corners. I would humbly submit that being a solutions champion to those precariously perched above an impending need for care will place you in the right time and the right place to have the right conversation with the adult children. This may be the only way we break the cycle.

Other than that I have no opinion on the subject.

Time worn clichés do have a way of appearing on a regular basis in this column. I am only marginally contrite but I do apologize. It’s just the convenience of immediately defining exactly the concept you are trying to illuminate. “Timing is everything!“  As a consultant to insurance companies  since 1988 and a veteran of the chronic illness wars, this is the one truth I know above all others. You must be “ready” to sell or subsequently buy. Truthfully it never really matters how great an idea you may have to offer.  If the circumstances surrounding the desire to take action are not ripe and fit almost perfectly into the current reality of the company or the consumer nothing meaningful is going to happen.

Our industry’s historical attempts (and I believe honest and valiant ones) to solve the chronic illness in America conundrum certainly fall into this time worn and experience tested pattern. There is much we have learned, and much of that learning has been the hard way. We know this is the exposed risk that will not go away of it’s own accord. I have seen estimates concerning the cost of caregiving for the boomers exceeding 10 trillion dollars and yet we remain almost completely unprepared  for that absolute certainty.  A pending financial and emotional train wreck of cosmic proportions.  We have actually done a fairly good job of helping those with money who have been directly or indirectly exposed to the caregiving conflagration. The number thrown around is about 10 percent have chosen wisely to protect themselves and their families. We simply cannot remain unconcerned about the other 90 percent who did not make those wise decisions earlier in their lives.

When that claim finally arrives, it is the adult children that are huddled together to find the funding to provide the highest level of care they can afford. This is that moment in time and space when you do not need to explain need or quote statistics or attempt to explain an ever expanding inventory of insurance products that attack the problem. I cannot imagine a more precipitous moment to have a conversation about making sure that their own children do not find themselves in exactly the same dilemma in 15 to 20 years. We have always known that those directly exposed to scrambling to assemble adequate and sustainable funding are the most likely to buy protection for themselves. They understand that outliving your savings is more than just a speculative worry. After my mother joined her “care community” of choice (because her brilliant insurance agent son encouraged her to buy a lifetime benefit with five percent compound inflation protection policy in 1999) her most frequent philosophical question was, “Why am I still here?” That was followed immediately by “Did my reimbursement check from that insurance company arrive?” so she could make her $6,000 monthly payment to the ALF on the first of the month when it was due.

I must strongly encourage all insurance professionals to never again tell someone confronting the reality of the cost of care that it’s too late… that there is nothing you can do to help. Even for those who did not plan ahead, did not take our advice, refused to believe that this would happen to them, there are now multiple answers to help facilitate large and persistent needs for money. Each and every potential source of funding should be examined. Remember you are only looking to supplement existing assets and income to provide the highest level of care. Are there assets that could be enhanced and payments guaranteed by using an underwritten SPIA? Are there life insurance policies that can be converted to caregiving dollars either by accessing existing benefits within the policy or looking at a life settlement designed to maximize caregiving dollars? Have you adequately examined the possible eligibility for receiving Veterans benefits? Have you carefully considered a reverse mortgage?  Can you help with cash flow concerns by recommending a “bridge loan” until all financing is in place?

Now, I know these are not perfect answers. The perfect answer was to buy insurance when you were younger and healthier. The only way to avoid the funding struggle outlined above for the children of the adult children now lining up with pails of money to try to put out the fire, is to stop and take action on themselves right now. Placing yourself in the right place at the right time to have the right conversation is our mission and that timing has always defined our purpose.

Other than that I have no opinion on the subject.

We need a good visual to begin this conversation. Maybe Charleston Heston parting the Red Sea exposing dry ground or the inexorable movement of tectonic plates with continents drifting slowly but surely apart. Bottom line is we cannot ignore the obvious—there are two polar ends of our expanding chronic illness universe. American’s choosing to do something about an obvious risk has, as we know, stayed fairly consistent over the last ten years at about a half a million new owners of some form of protection each year. Rising premiums flavored by the necessity of rigid underwriting have continued to expose the reality of the socio-economic elitism of chronic illness risk abrogation. Clearly those better educated, with more money to protect both themselves and their parents, have developed a predisposition to buy something and not ignore the potential  financial conflagration. At this point, no one would argue that price has not mattered. There is simply a cash flow ceiling defining what consumers are willing to allocate to solve the care conundrum. In my mind the American consumer has made it abundantly clear that they can and will only do so much before they are willing to accept the default of governmental care warehousing.

The truth is that, for those who take action, either they understand that the only magic available to leverage risk is insurance or they are currently experiencing the cognitive or financial dissonance created by participating as a  family member fiduciary or a coerced-by-circumstance observer. Consumer survey responses have seen a rise in those identifying the necessity of protecting assets. There now exists a virtual cornucopia of choices and alternative financial instruments available to the more affluent to solve a growing perception of what  has become, in the minds of many, an inevitable potential risk. Both the demographic of the aging baby boomer generation caring for family members and the clearly visible rise in the cost of care are finally helping to create a growing awareness and buying momentum to do something.

Unfortunately, the good news for agents working the more productive ground of classic risk replacement among the more affluent only exacerbates the exposure of all those middle class families who might also wish to not find themselves at the mercy of governmental bureaucracy. It is also impossible to ignore that the forces that drive  the aggregation of sales among the more affluent is in part based on commission levels. 

We must admit, at least to ourselves, that getting a stand-alone LTCI or chronic illness combo policy issued and paid is often a somewhat onerous, lengthy and difficult process regardless of your choice of product. With few exceptions what we have to offer has many moving parts, and how the insurance instrument of choice actually works is often difficult for consumers to process. Simplifying the product and streamlining of underwriting remains the only real hope of better delivery to the middle class market. They need guarantees and benefit promises addressing appropriate levels of risk creating actionable levels of premium acceptance.

What is wrong is that, for whatever reason, we have left far too many exposed. Our focus must be on the 90 percent that have not prepared for what, for many of us, could be a devastating financial eventuality. Perched on the horizon are a couple of potentially successful directions.

The most obvious and necessary is a return to the worksite, where a more dynamic and inclusive strategy is most likely to succeed. We can shift our thinking in terms of what we are trying to accomplish with the actual enrollment from replacing the entire risk to providing supplemental protection focused on remaining in control of one’s own claim destiny. This would allow us to offer meaningful coverage to a much wider audience. This would contribute significantly to helping achieve critical mass in terms of middle market sales penetration.

The second major approach is to try to help the 40 percent of those who are declined, and the God knows how many who were afraid to even try based on health considerations. There are methods to avoid excess adverse selection. “Actively at work” underwriting concessions with sufficient participation can fuel multi-life list bill opportunities.  Strategies for grading in benefit selection over time can also help with better participation for voluntary enrollments.

On the individual level the morbidity risk associated with life combo is in the seven to 10 percent range.  This is still a life sale with only a small risk of prefunding. The ability to accept some level of mild impairment therefore should be possible as well.

Where I see the best hope for market opportunity has been reported in this column before. There are a number of methods to help those individuals about to go on claim and the singed complexions of loved ones surrounding the bomb blast. For those in the greatest need it is now possible to leverage existing assets using a medically underwritten (specifically focused on caregiving concerns) SPIA. There are also life settlement options to provide extra dollars earmarked specifically for caregiving purposes. In addition, assistance is available to facilitate a reverse mortgage, apply for Veterans benefits and secure bridge loans  even for those in the greatest need.

Being able to help those who have accelerated their need for care places us squarely among the adult children who no longer have to be convinced of the reality of the claim. If you are unable to put insurance in place among those intimately already involved in a claim, perhaps you should be looking at a profession other than sales.

Other than that I have no opinion on the subject.

Perhaps a leisurely perambulation through the fevered mind of a demented and unrepentant Long Term Care Insurance Specialist is in order. A stream of consciousness laundry list of continuing frustrations that haunts our chosen corner of wholesale insurance distribution. An attempt to at least catalogue what we rise to do each day, what we attempt to accomplish, and why we insist on not giving up on what we perceive as America’s largest unprotected risk. And why, in the face of diminishing courage and sporadic commitment among the providers of independent chronic illness insurance product, we tenaciously persist.

Let’s begin with what we know for absolutely certain: “It’s all about the adult children!” The LIMRA and AHIP (longitudinal) Buyer-Non Buyer Survey paints a clear 20 year picture. Those who buy have more assets to protect, are better educated and understand that insurance leverages risk. Those who buy are those who have been touched by the caregiving angel of financial and emotional pain. The pressure of an aging population experiencing exponential growth and diminishing resources to fund that demand for care and support services is a global demographic disaster within every industrialized nation on earth. Diminishing birth rates compounded by extended medical longevity continues to fuel a crisis of available caregiving resources. 

• What if insurance product actually did not matter?  If you are waiting for the perfect new insurance innovation to finally solve the sales deficit conundrum—“forget about it.” Product is not the problem or the answer.
• What if we could  acknowledge that technology is merely a tool for better service and does not take on a life of it’s own, but that efficient and fast delivery does contribute to success?
• What if we could finally come to accept the notion that chronic risk abrogation is a market unto itself? It is not an additional or corollary conversation added on to some other sale.
• What if we could simply acknowledge that long term care insurance, as HIPAA has so carefully and thoughtfully explained, is health insurance? Because if we had universal certification and mandatory agent training, much of the rationalization for ADBR strategies would evaporate.
• What if we openly admit that choice of product solution is not a popularity contest?
• What if every initial conversation with a prospect should begin with a careful analysis of the best 1035 strategy to upgrade protection?
• What if we finally internalize the concept that the center of our  future sales universe is a dedicated focus on the adult children of those already in need or about to begin that journey?
• What if we could embrace the notion that it is “never too late” to help those in need?  We must change our thinking and our focus to counsel, advise and explain all the options to help those directly involved in the reality of the claim—medically underwritten SPIA’s leveraging existing assets, reverse mortgages, real estate leveraging strategies, life settlements designed to provide care funding, VA Benefit assistance, bridge loans and even Medicaid annuities.
• What if it is simply time to put on our Wellington’s and wade directly into the heart of the claim beast itself?

I would humbly submit for your kind consideration that everyone observing your efforts will become predisposed to be better prepared themselves.  It’s the adult children. It has always been the adult children.

Other than that I have no opinion on the subject.

“Don’t cry for me Argentina. The truth is I never left you. All through my wild days my mad existence I kept my promise, don’t keep your distance.”

I guess it just seems too many appear to have somehow wandered off, lost purpose, ignored urgency and abandoned focus. Even though stand-alone LTCI sales have experienced substantial decline over the last 10 years, the truth is the relative number of consumers doing “something” and buying some level of protection to blunt the impact of the risk has been consistent. Buyers of some level of chronic risk have been hovering around about a half a million Americans each year for over 10 years. Unfortunately the chronic risk conversation remains far too often a limited choice scenario. It may not be what is meant exactly but what I seem to hear from the field is: “I tried but it’s just so hard. Rate increases, carrier flight, onerous underwriting and continued consumer confusion forced me to take a path of least resistance. Either I defer or ignore the conversation or simply recommend one of those ‘living benefit’ riders.” The readers of this column know that at that point my internal mind is screaming at the top of my lungs, “OK I get it, but I don’t like it and it’s simply all wrong!”

This is the problem that will not go away. There were never enough soldiers to win a war in the first place. Frankly we never understood our enemy and we fought some of the wrong battles in the wrong locations. But our intentions were of the highest order. I know many began earlier but the advent of the modern comprehensive stand-alone LTCI policy began with the birth of the TQ policy. The “Special Forces” that have valiantly fought these battles each day for over 20 years have placed billions of dollars of potential coverage in place and created a rising tide of insurance funded care all across the caregiving landscape and none of it was easy. Long term care specialists do share a common bond. It is specifically the intensity of emotional commitment to the cause that clearly identifies us and keeps us pushing forward.

We deal with some truths that may even be considered “politically incorrect.” Even though it may be an intrinsically desired goal of our great Republic, we do not live in an egalitarian society. We have always had two clear approaches to this protection. First, to transfer as much of the potential risk as possible to the insurance company for those who can afford the cost. Next, and I might argue more important, dedicate ourselves to preventing as many as possible from becoming a ward of the state. “Private Care and Freedom of Choice” is our battle cry. We know the truth about this future potential family tragedy. It simply doesn’t take that much additional insurance to supplement existing assets and retirement income to guarantee that common goal. One size has never fit all and, now that you clearly have an abundance of alternatives to deal with the problem, there is no excuse to step back from your responsibility.

I have long predicted a 1035 firestorm gaining momentum as a direct result of the PPA provisions. I believe that storm is now moving inland. It took longer than anticipated, but there has never been a greater need for policy review. Again, please carefully read policy benefits and riders. Chronic illness riders are not created equal and some may come back to haunt your future fiduciary health. There are no perfect and easy answers as we approach each client. I would, however, again remind all concerned that the “Suitability” provisions of Section 24 of the NAIC LTC Model Regulations, as I read them, require a complete and thorough comparison of all the good and all the bad of all the choices when comparing the benefits of chronic illness alternatives with existing coverages.

For those who may have temporarily lost their way, please understand that the party is not anywhere near over. With new adequate and informed LTCI stand-alone pricing the future profitability, potential growth and rate stability of those traditional sales are stronger than at any time in our past. There are at last count approaching 70 life companies that have filed competitive chronic illness Section 101g ADBRs, and most of them have the correct definition of risk not requiring a permanent disability. Single premium hybrids are competing for a larger audience with more premium payment option strategies. Worksite sales are reviving. Association discount sales are again on the move. Conversations about corporate premium deductibility are again gaining momentum. It doesn’t really get any better than no FICA, no FUTA and no W-2s culminating in tax free benefits. The drumbeats of 1035 efficacy are getting louder. New and innovative approaches to help those who failed to plan ahead are now available.

We do indeed live in exciting times. Don’t cry for me… some of us never left the party anyway! I would invite those who may have become distracted or disoriented to belly up to the bar again and join us. The drink selection is prolific and everyone goes home happy.

Other than that I have no opinion on the subject.

I am perpetually amazed at the degree of cognitive dissonance stirred up in my own mind every time I ask myself this most basic rhetorical question:  “How can anyone in their right mind ignore the probability of an expensive and extensive need for care?”  The absolute unvarnished truth is that no matter how well you have constructed your plans for retirement and the disposition of your estate, an extended need for custodial assistance can blow up all your carefully crafted expectations. A lifetime of savings and financial planning for retirement hopefully culminates in an introspective consideration of a classic estate plan that defines how assets are to be transferred to the people to whom you wish them to go, and when and under what circumstances you want them to go there.  Wills, powers of attorney, medical directives and trusts establish the mechanics and basic structure. Insurance strategies should then arise to facilitate the preservation of assets, leverage risk more economically, address issues of fairness and ameliorate potential taxes.

After all that careful introspection, family soul searching, insurance leveraging and brilliant financial planning, why would anyone leave such a well thought out structure twisting in the wind of a highly possible catastrophic risk? Why would anyone question the validity of building a firewall around that plan?  To paraphrase our good friends at CLTC “What is your Plan to protect the Plan?” 

How can anyone governed by fiduciary obligations avoid a conversation about chronic illness risk? More important, why would an insurance professional not only avoid a clear and present danger to everyone’s hard work, but apparently blindly step away from the opportunity to review and illuminate possible insurance solutions and product revisions particularly in the light of the available plethora of combo policies that now come in all sizes, shapes and dimensions?

Readers of this column recognize that LTCI has never been the main insurance event—we have always seemed to turn up further down a client’s dance card. It just seems there may very well be some major considerations that have been overlooked. Therefore, in no particular order of significance, I humbly submit for your consideration:

• When an estate plan is under construction, that is the time to express concern about Living Revocable Trusts. “Incapacity” is the primary ingredient of that exercise, determining  what happens if you cannot make  your own decisions. Cognitive deficiencies are of course the most likely claim. When you are putting those decisions in place it might be nice to provide the monies to fuel the plan.
• Every interview begins with an evaluation of what is already in place. Policy review that considers ownership, beneficiary designations and whether original objectives are still progressing as planned should not avoid a conversation about chronic illness. A frequent point of departure is that new product has now become available. The PPA has given us license to 1035 freely in behalf of establishing chronic illness protection.
• Establish a relationship with a law firm that has estate planning expertise and a clear understanding of the importance of an estate plan protected by long term care/chronic illness protection. A reciprocal referral opportunity should be your goal as you move forward with common cause. Contracts and expectations are always subject to review.
• Establishing the ultimate availability of protection as early as possible is always our immediate goal. Health will change and premiums will rise. There are now term life policies that can guarantee insurability and conversion to the best permanent policy available that holds the most current definition of chronic illness that does not require a permanent disability. This conversion privilege is less than 10 percent of premium and allows an early planning and highly affordable opportunity to begin the conversation about ultimate mortality and morbidity.
• We now live in a world of creative and effective “supplemental benefits.”  The concept of living benefits rolls smoothly off many tongues. Just make sure your definitions are the most current. I remain concerned that many still speak with forked tongue in this regard.
• There is a new market in development working diligently to address the reality that is the direct converse of our lack of success with stand-alone sales. The great and vast majority of Americans simply failed to plan at all. We simply cannot abandon those in greatest need. Medically underwritten single premium annuities, life settlements used exclusively for care, and reverse mortgages should be readily available in every agent’s briefcase. 

Build it, leverage its purpose with life insurance, and then demand that the big bad wolf stalking the caregiving landscape continues to need an inhaler.

Other than that, I have no opinion on the subject.