Ronald R. Hagelman

The 500 pound canary squatting squarely in the middle of any conversation about custodial care remains our gift from  Lyndon Johnson. I do not mean to extend any normative values to Medicaid.  In many ways it may be our single most effective exercise at establishing and funding social justice. Because it is primarily a state run program there are naturally many variations of its benefit availability, severity of debt collection from heirs, and the basic rules of interaction with Medicare and the adult children who become entangled in it’s execution. It is difficult to put it in perspective. Medicaid’s codependence with the Affordable Care Act continues to percolate at the center of today’s political debate. It is important to remember that although long term care costs are it’s greatest expense, in terms of head counts children are the largest beneficiary of  needed assistance.

Medicaid is not bad care, it is simply limited and discounted. What is lost as a participant in the program is, in my opinion, profound. Choice of location is gone. Any extras in service and movement in your community are gone. Control of any remaining assets is gone. Care at home is most likely either not available or the waiting list is beyond your mortality. Choice of a roommate is gone and your spouse can usually only see you during visiting hours. In 2017 funding for Medicaid was $7 billion “short.”  Some of that difference has to be assessed to the private pay patients.

We know members of the “mass affluent” segment of our population, representing about five million households, will either choose to leverage the risk with insurance or, in our opinion, unwisely opt to self-fund.  At the other polar end of that spectrum, almost 50 percent of Americans will fall below the 250 percent of the poverty line. Where we must turn our attention is to the 34 million households in the “middle” market. There is now a plethora of product options for those who can afford to replace the risk with insurance, and Medicaid is waiting for those in the greatest need. Why must the choice for those American’s in-between those extremes be to hire an attorney and artificially impoverish themselves, deplete or demolish their hard earned savings, call upon the available largesse of family members, or simply count the days until the money runs out?

It’s the great “in between” where we can do the most good and frankly have the greatest effect. Forgive me, but the Class Act’s $50 a day was a pretty good number. Ultimately the only remaining mystery is, “Where will that dollar come from?”  Private insurance or an expanded welfare system? The question that cannot be avoided is, “What happens when (and perhaps more importantly if) you run out of sufficient monthly income and assets to maintain private pay status?” Let’s touch on a few issues  that immediately come to mind. Most care communities do have Medicaid beds. They are, in my opinion, there specifically to “catch” residents that were private pay and have exhausted resources.  We are aware that the basic premise of government assistance usually prevails: “If you take money from them (as in Medicare skilled nursing dollars) it follows that you must take Medicaid as well. Therefore beginning your journey for care assistance in private pay status accommodations will most likely help you to be allowed to remain at that address. You will be  moving into a semi-private room of course, and you will not be able to choose your “roomie.” There are states that mandate that care must be equal between private and Medicaid care. This is rare and, at least in my mind, hard to accept as true in practice.

Now, for fun, you might ask in your state if you can “upgrade” Mom to a private room. Happy to pay the difference to restore some quality of life. There is no consistency by state. Some do allow it, in some it is by practice of the nursing home, and some will not allow it at all. Once declared basically indigent you must wear and live with that Scarlet Letter for the duration. The last item I suggest that you do some investigation of is how “aggressive” your state Medicaid program will be in trying to recover the loan. Medicaid did not give anyone anything. It is a debt, and many heirs have been shocked when the notice for sale appears on the old family home.

 I have been accused of writing the same column over and over. There may some truth to that.  Just to be perfectly clear, I am not afraid to talk about the largest provider of care—I just don’t like to do so. Medicaid is not the enemy, it is simply the court of last resort. When we come to understand that it takes so little additional funding to maintain the freedom of choice and personal dignity that we would wish for all our clients, then and only then do we change our sales success.

Other than that I have no opinion on the subject.

Fast review: It’s what you don’t have that creates the problem. Everyone wants the best available level of care at home or in a care community. (Stop using the word “facility”.) LTCI sales will remain stuck among only the most affluent until we change the basic goals of the exercise. The purpose of our professional actions must be to maintain “Private Pay” status. We understand the polarity of the economic spectrum—those wealthier citizens who will never go near the government welfare system and those who by circumstance will have no choice. It gets fuzzy in between. When the adult children assemble and determine who will have the Power of Attorney, the conversation is about The Gap. The difference between what is readily available for a monthly commitment  and the best choice for the added need for care. Making up that difference may be complicated by differences in state Medicaid eligibility regulations. Regardless of the size of the shortfall, some careful thought must be given as to where all this may end up. Frankly consideration must be given to the possibility of running out of “sufficient” funds to remain among those receiving the highest level of care.

On the day the family members who care accept the inevitability of the need for custodial  assistance, the first order of business is to assemble and attempt to leverage every available source of monthly funding. Remember all ALF leases are month to month. HHC is in essence the same: Ordered and scheduled “pay as you go.” As a target monthly requirement and for discussion purposes only, I am generally comfortable with the notion of  “assembling” about $4,000 a month for basic services at an ALF and about $25 dollars an hour for HHC  (I know it can vary greatly by state). As a life-long Texan I understand that there may be those who  have trouble accepting Texas as average regardless of their viewing perspective.

First I need to fix an image in your mind. Please tell me who would “want” a semi-private room. Of course under Medicaid you will have nothing to say about the relative congeniality of your very near and intimate neighbor.  If you can jumpstart your thinking before each conversation with everyone’s obvious and intrinsic desire for a private room today, tomorrow and forever, you begin at the heart of the matter. The most important component of our offered assistance is the combination of personal freedom, choice, respect, dignity and privacy—particularly from Government hegemony!

Again, for consideration only, let’s run down the available inventory. Insurance dollars never stand alone:

• Begin with Social Security, which it may help to remember is the first thing you sign over at a Medicaid nursing home admission.  The average monthly payment was $1,360 in 2017. The maximum possible benefit is now $3,538, with many Americans receiving over $2,000 per month.
• American’s do have savings. At age 75 or more, the median available for retirement savings accounts is $35,000, but when you add in all assets including home equity, the family net worth median jumps to $213,000.
• Median home equity at age 75+ is $130,000. Reverse mortgages should be considered but bear in mind only about 10 percent of these were used to fund care. Most are used to establish an early “line of credit” with favorable tax treatment.
• Potential Aid and Assistance VA Benefits for Veterans and widowed spouses should always be recommended. However, if your goal is to die in a government (semi-private) welfare bed, Medicaid  income planning must be considered. Monthly benefits for a Veteran and one dependent is $2,160 a month.
• Seniors also walk away from billions of dollars of life insurance death benefits that could have been converted to monthly income for care. On average, as someone currently defined as disabled, they could have gained access to 30 to 40 percent of the face value or approximately 10 times remaining cash values.  You wouldn’t walk away from your home mortgage without taking the equity with you, why would you knowingly walk away from the intrinsic value of all those premium years? Particularly when those dollars could be converted into tax privileged income for care.

My suspicions are that if you are reading this column your goal is not to take advantage of our seriously underfunded  government bureaucracy social safety net. There is also an extensive conversation concerning filial responsibility that would require another column. Suffice it to say the adult children, the proverbial “loved ones,” may need to kick in to fill the The Gap. Unable I can understand. Unwilling I  will never understand! Replacing the risk with insurance  (now available in all sizes, shapes and colors) as the primary source of funds for those able to afford that option remains constant and immutable. But, understanding how little it takes to fill a very small gap that can dramatically transform the quality of care is so  much more important. Remember that 83 percent of all claims have been less than $100,000. Until we transform our mission into providing “supplemental” assistance in the form of available resources to fill up The Gap we will never move this market forward.

Other than that I have no opinion on the subject.

“I know there were a hundred ways to tell her I loved her It’s so funny how they’re all so clear today.”—Frank Sinatra, 1981

The siren’s call of hindsight is a temptation too great for most mortals. I think perhaps at least in our own minds we have danced around what should now be painfully obvious. We have turned a blind eye because of too much prideful hard work and squandered corporate treasure. Have we simply begun to acquiesce in a growing revisionist sales history? The companies never really gave us the product tools we needed to succeed. The consumers never understood the inescapable urgency of the risk. The underwriters never really granted us the flexibility to help those who came to us in need. Premiums always seemed to be just beyond the reach of those most willing to buy.  In my own humble opinion the  TQ chronic illness risk abrogation aftermath of HIPAA has institutionalized a market based on holistically stubborn, socially elitist, politically incorrect, comically redundant and myopically rigid product assumptions. When do we  finally find the courage to  openly and publicly admit maybe just maybe we got it all wrong from the beginning?

A quick review (at least from this jaded observer) may be in order:

• We thought this was just another Medicare Supplement policy complete with a neatly outfitted 100 day elimination period where medically supervised skilled care would be followed, as day does night, by universally unwanted  warehoused custodial care complete with green Jell-O and the proverbial unwanted screamer in the next bed. We got it all wrong. In fairness we could not have foreseen the explosion of quality home care services or ALFs where my own Mom’s first meeting was with the chef to discuss her culinary preferences.
• Persistency, or the lack thereof, has been discussed ad nauseum. We didn’t just miss the side of the barn, it simply never materialized and remains a mirage of wishful thinking. In truth we had every reason to suspect it would behave as all it’s individual accident and health predecessors. We got it really wrong.
• We had every reason to believe that the long term interest rate environment would remain somewhat irrational, but that the traditional ebb and flow of inflation would at least persist and keep the pot on the boil. We remain wrong for the foreseeable future.
• We built product designed to extinguish the  maximum measured possibility of a catastrophic risk and we dutifully followed tried and true outlines of the past complete with elimination periods, formulaic co-pays and optional cash indemnities. Spurred on by market competition we loaded on non-insurance benefits such as family caregivers, multiple pools of money and modal premiums, permanently petrifying underpriced product and loading on benefits that have nothing to do with risk.
• I clearly remember standing around at the first ILTCI Conference lamenting over cocktails about the lack of claims experience. Careful what you wish for! However innocently or courageously we walked into this, the as yet never ending drum beat of large and onerous rate increases has given us all a black eye. Rate stabilization has helped. The elimination of superfluous benefits has helped. But we still  got it wrong for a very long time. Twenty years of sales has given us a world of closed blocks of premium subject to the inevitable pressure of their own slow yet inevitable rate spirals. Make no mistake, the largest and most embarrassing rate increases on existing premium are yet to come and the storm clouds are now approaching just over the horizon. 

Simply wiping the blackboard clean is insufficient. We must hold every sacred premise up to the light and make better decisions about our intentions and how we get there. As an example we have had great success with asset-based combo options. But we must ask ourselves: Why? And does our responsibility stop at the edges of those affluent enough to have their cake and eat it too? We need to consider that maybe it was not just that they had the ability to make wise financial decisions to leverage dollars, but that they were able to move the chronic illness risk to the  end of the payment line and therefore slashed it’s actual cost.

All our futures in long term care insurance must now be guided not by our past success of  a mere 8 million policy owners after 20 years, but by the 54 million we failed to encourage to “do the right thing.” The truth is we have been looking at this from the wrong end of the telescope. It was not how big and simple that was needed—it was how small and customized to the actual circumstance and dimensions of the most likely claim experience!  The corollary truth is that for too long our goal has been to replace as much risk as possible with insurance. The affluent have always done just that and I see no reason for them to stop. Our goal should have been how many can we save from the intrinsic inadequacies of government dependence. How little is needed to maintain the freedom of choice that comes from remaining a private pay patient?

Frankly I’m a little tired of all of us reviewing with great anticipation each “new” product introduction and the first exercise in our minds is to pidgeon hole the new option by which existing product it already looks most like. More and more of the same has me reaching for the Xanax.

“But it’s easy looking at the game the  morning after
Knowing how you’d play it if the chance to play over ever came
But then a Monday morning quarterback never lost a game.”

Other than that I have no opinion on the subject . 

The entire long term care/chronic illness industry must face the reality of our unsuccessful attempt to soften the economic and emotional blow of an extended need for care and to finally accept that many of our overly optimistic rationalizations about future outcomes may have been structurally flawed at inception. We must publicly and politically recognize the inevitable and  potentially expensive nature of the risk for most Americans.  The truth is we can now measure our failure. We currently have about 8 million brilliant consumers who bought policies, will keep their policies, and will maintain the freedom of choice and dignity of control of their own claims. Unfortunately the most recent numbers I’ve seen suggest that over the last 20 years we have left over 50 million behind. Those who could have and should have done something. Blame for the failure is irrelevant. Mistakes in pricing assumptions are hopefully, for the most part, just history. We now live in a world of closed blocks of premium continuing to fester from the weight of our own false assumptions. We have certainly learned that more of the same is hubris on steroids.

Frankly what is required is a little humility. Most claims are financially manageable and some extra “supplemental” insurance assistance can make a world of difference to a much wider audience. The goal for the affluent needs to remain that the best way to replace the risk with insurance. But the underlying need to maintain private pay status must become the industry’s new “Battle Cry!” Current claims analysis is definitive: 90+ percent are over in three years, 83 percent of all past claims reviewed would have been covered by $100,000.  Stop asking,  “How much insurance is enough?”  The question is, “How little is needed to keep you free of government dependence?” Medicaid care is not necessarily bad, it’s just inferior. It is discounted care by definition. I apologize for repeating myself but the fact is that last year alone it was $7 billion short of the actual cost. Please do not misunderstand: God Bless Lyndon Johnson my fellow Texan. This country desperately  needed a social safety net for those most in need of care. However, after a 20 year friendship with Stephen Moses,  I am morally required to humbly suggest that: If those who  could and should afford their own care did not artificially impoverish themselves and steal from those truly in need, the quality of governmental warehoused care would improve. I am happy to proclaim from the highest mountain top that “I am in the Medicaid prevention business and that I am ready, willing and able to make sure that never happens to those I care about.”

Our futures in long term care planning need to move to opposite corners of the decision making processes. We must openly recognize our failures.  We can increase our sales success by refocusing our goals. More middle class Americans must understand that a little goes a long way to maintaining basic human freedom of choice. We must acknowledge all the dollars that can come into play at the point of claim and make absolutely sure we have added sufficient supplemental protection to keep those we care about in complete control of their own claim destiny. And we must acknowledge that the 90 percent we left behind still need our help at “The Point of Care” when it hits the fan, and then be prepared to do all in our power to leverage every available source of funding. Medicaid is wrong for those we love and it does take so little additional protection to guarantee personal control and freedom of choice. Eliminate absolutes, take no prisoners when placing some level of supplemental help, and do not forget all those we missed the first pass through the orchard.

Other than that I have no opinion on the subject.

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.