I teach a class on long term care planning for Lane Community College, in Eugene Oregon. While doing research for the class, I saved all the links together in one spot. This was both to document the information I shared in the class, and to provide good material for students. Copy and paste the link below into your browser’s address bar in order to open a PDF document with all the links: http://www.tbplan.com/resources/lcc-links.pdf

The Veteran’s Administration has two branches which pay for care. VHA is very limited. VBA offers a supplemental pension benefit for those who qualify. VBA offer aid to a much broader demographic, compared to VHA. Eligibility has similarities to Medicaid (5 requirements):
1) war time era service
2) non-residence assets (typically must be below $80,000)
3) family income
4) medical need of claimant
5) family medical expenses
I think this is better than Medicaid because it’s an earned pension benefit: if you receive benefits, it’s up to you to decide how to use the funds. Supplemental pension benefits range about $1000-$2000 per month.
This is a complex program and my knowledge is limited. In addition to contacting the VA, check with your state or county. The state or county government may have created positions so that their employees can help explain these benefits & provide answers & assistance.

As you saw in image from the prior post, Medicaid paid for 49% of all care in the US, as of 2005. Medicaid pays for about 1/2 of all long term care. The question is, ‘is that good news, or bad news’?

It’s good news because Medicaid offers a safety net for impoverished Americans. It’s bad news because Medicaid only pays for care in the event you are impoverished. For example on that same graphic in my prior post, you’ll see that about 18% of care is paid by ‘out of pocket’ funds. If those people paying for care first exhaust all their money, Medicaid will in many cases, pay for care. But exhausting your funds means you have very little disposable income, and very little in the way of assets. So once Medicaid starts paying, you are very dependent on the government, and your freedom of lifestyle and standard of living are greatly reduced.

Medicaid is a means tested program. You are allowed to keep very little income or assets (excluding your primary residence IF you have a spouse who remains living there, while you are confined in a facility) in order to qualify for Medicaid. The value of your car and checking/savings accounts for example, must be about $2,000 or less. Medicaid benefits are not charity. They are in effect a interest-free loan to your estate. After your death, Medicaid will come back after it’s money, to make the taxpayers who funded your care whole if possible. For example in 2003, the state of Oregon collected $20,000,000 from the estates of deceased individuals.

I have oversimplified the situaiton. But the bottom line is that you don’t want to be a recipient of Medicaid-paid care. If you qualify for Medicaid-paid care, it means your quality of life and control of your destiny are reduced, and financial independence is not an option.

This is the first in a series of entries, giving an overview of any and all possible ways & means of paying for long term care. You’ll be surprised-guaranteed!
There are 13 sources of payment as best I can tell. Some are simlple & single faceted, some have many permutations. Two are from the government and the other 11 come from your existing assets and the insurance industry. I’ll start with Medicare.

Technically speaking, Medicare doesn’t pay for long term care. Practically speaking, you could say it pays for 20% of care. This chart above is from longtermcare.gov, and the data is from 2005.

The technical side is that Medicare is health insurance. Health insurance pays to correct adverse health conditions. Long term care is for people whose health is degrading or stable. If you meet all the criteria, Medicare will pay for up to 100 days of care in your lifetime. Long term care is typically defined as 90 days or longer-so again, technically speaking, the 91st-100th day of care which Medicare MAY pay for, is long term care. The first 90 days are not. Medicare only pays for this type of care if you first are hospitalized at least 3 nights in the hospital-and there are further requirements.

The practical side is that as of 2005, about 20% of the type of care typical of people receiving long term care in the U.S., was paid by Medicare. This 20% is for care to rehabilitate people after they leave the hospital. Medicare pays for this care in a nursing home because nursing homes have the staff to provide the skilled care that people need after leaving the hospital, and they are less expensive than the hospital. After a maximum of 100 days of care in a nursing home, Medicare quits paying.

Next: Medicaid

President Obama’s health care reform bill included a proposal to start a Federal long term care insurance program, called the CLASS Act. Virtually nothing is certain about this coverage, including whether it will eventuate at all. It may be struck down/out of the reform bill. I’ll give a brief overview here of what it may look like, however, and direct you to other resources on the CLASS Act. CLASS stands for ‘The Community Living Assistance Services and Supports Act’.
CLASS will allow anyone working enough hours, to pay a monthly premium for the coverage. They may keep the coverage after retiring as long as they work at least and pay in at least 3 years prior to retiring. The plan has a waiting period of 5 years before one can claim benefits. Private ltc insurance plans have no waiting period. The premiums continue into retirement. There is no underwriting. The benefit may end up being about $50 per day to pay for long term care. Because there is no underwriting and the premiums will be high, it is expected to attract only those folks who expect to file a claim. This is called ‘adverse selection’ in the industry and the stability of funding for this program is debatable because of this. Because of the modest $50/day benefit, this should only be seen as a small part of one’s over all long term care plan. Again, no one knows how this will end up looking, but I will keep you updated as we get closer to rolling the program out. It’s supposed to start in 2013. For more information follow this link: http://www.ltcexperts.com/information/AboutCLASS.aspx

Here are a couple of nice ads which I had produced for local TV. They get at the heart of the emotions of family members involved in a LTC situation.

Lane Community College class announcement #1

Lane Community College class announcement #2

The Pension Protection Act (PPA) was signed into Federal law in 2006, and took effect January 1, 2010. Although a few hybrid-ltc products existed before 2010, the PPA makes them much more appealing. There are two basic families of hybrid plans: life insurance & annuities. Generally these policies are meant to be funded via lump-sum deposits. If you never need care or if you later want to cash these life or annuity policies out, they behave mostly like traditional life and annuity policies. But if you need long term care, these hybrid policies can pay as much as 2-3 times out for care, compared to the initially deposited lump-sum.

In a hypothetical example, let’s say you deposit $100,000 into a hybrid life insurance policy and later need care. The policy could pay for $300,000 worth of care. The PPA makes the additional $200,000 ‘leveraged’ benefit, tax free. The PPA also makes the payout of your initial $100,000 deposit tax free when received to pay for care-even if initial deposit came from gains in a prior annuity which had been rolled into the hybrid annuity. (The amount of leverage depends on age, sex, and the design of the plan. Don’t write to me and tell me I promised that you’d get 3X back on your money).

Because hybrid life insurance policies can leverage your money in the event of adverse health, they are underwritten for health conditions. Generally, however, it is ‘simplified’ underwriting-far more lenient underwriting compared to applying for regular, traditional life insurance. The hybrid annuities are underwritten for health conditions as well, for the same reason. Annuities aren’t normally underwritten for health conditions, so that’s a strike against the hybrid annuity products. The underwriting is simplified, however, and thus not too prohibitive.

Here’s a good article from the Mayo Clinic on planning for long term care. Planning for long term care involves much more than just the financial aspect. http://www.mayoclinic.com/health/long-term-care/HA00054/NSECTIONGROUP=2

Money-Zine.com has a nifty free calculator posted on their website. You enter the amount of cash on hand allocated to pay for care, put in the cost of care in your area, the number of years of care you wish to prepare for, and the annual inflation you expect to impact the cost of care in the future, and voila! You’ll have a dollar amount which you need to scrape together for care in the future. You could buy long term care insurance equal to that amount, leverage your current cash on hand with a long term care annuity, etc. Check it out: http://www.money-zine.com/Calculators/Insurance-Calculators/Long-Term-Care-Calculator/

You may have been scouring the Internet trying to find an online rating tool for long term care insurance, and arrived at this page. Maybe you’ve submitted a quote request, thinking a computer would spit one out and email it to you-but instead, a real, live human called you on the phone!

Without a prior discussion, accurate rates truly can’t be sent via email because of all the variables that are factored in when rating LTCi plans. Having said that, I can recommend this site for an online rate estimate. Just bear in mind that the rates you get will include nearly every available discount. For example, if you are single and not in super health, your rates could be as much as double the rate this engine will provide: http://www.ltcconnects.com/insurance-estimate.php. (I belong to the ltcconnects group, fyi – and to my knowledge this is the only online ltci quote link on the web). It takes a phone call to get an accurate rate. Feel free to email or call me for more info.