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Dear Everyone!
Yes, I know I missed an edition. I try to get this fish-wrap out every two weeks, but sometimes I am too busy... or I'm traveling... to get this missive written.
There is a lot of stuff going down about health finance reform. I'm all for it. Yes, I'm the only agent on the planet who says "Put me out of a job... let's find a way to have affordable coverage for EVERYONE!"
This has not endeared me to some of my fellow agents, but that's fine with me. If I never sold health insurance again, it would be OK. I'd rather sell life, disability, long term care, and annuity anyway.
Except for Medicare Supplements, the entire health insurance sector is a total mess... both group and individual.
So if the Federal government steps in and legislates me out of business, no big deal. I'd rather lose the profit of selling health care than to have to tell so many people they can't get a plan they can afford and that there is nothing I can do to keep them from going bankrupt if they get terribly ill.
This week's stories contain a rebuttal to my previous rant on mini-meds as well as a description on what I consider the best way to plan for long term care.
As always, call me or refer me. Please.
-Al
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Mini-Med: A Different Viewpoint
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Note: I get a lot of letters about my Tattler, and I'm always happy to publish a different or opposing point of view. This one comes from a good friend... Mr. Terry McNeil of T.D. McNeil Insurance Services in Folsom. Terry is whom I refer my clients to for home and fire insurance.
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Mini-health plans follow the government model. Take, for example, Medi-Cal. It does a very good job of covering routine short term illness, but is terrible at covering long term serious illness. That, sadly is deliberate. People with minor or short term illnesses tend to vote, while people with more serious illnesses, tend to die. People who die, other than in places like San Francisco and Chicago, tend to stop voting.
If you research this you will find the same pattern in every country where there is socialized medicine. Not necessarily because these are designed by evil people, but rather because the reality is that there is only so much money. So in the case of socialized medicine, you want to give benefits to as many voters as you can.
By the way, I have negotiated many times with unions and they have the same approach. They would rather see a plan with no deductibles than a plan that would provide mega-benefits for someone seriously ill. The reason is the same, they want to give benefits to as many voters (union members) as possible and don't worry about the seriously ill, because they stop becoming union workers anyway.
Most major insurance carriers and large corporations, have the exact opposite value system. They would prefer to pay less on the average, but to take better care of someone with a catastrophic illness. Of course some insurance carriers just want to avoid paying anyone.
There are certain cost considerations that cannot be avoided. We can now keep someone alive on life support for an almost indefinite period of time. Unfortunately, that comes at great expense. In addition, some of the "experimental" programs, such as self-bone marrow transplants are very expensive, seldom work, and tend to destroy what is left of the patients quality of life. I had a niece who died of breast cancer when she was 30. She had 5 children. The decision was made to do the self-bone marrow transplant. It cost hundreds of thousands of dollars. It did not work. It did not extend her life at all and in fact it probably just made her last six months more miserable.
Now if it's your wife, or your daughter, or your niece, you probably say we will take any chance, no matter how risky or how expensive, because that is our only hope. I understand that, having been there. But, I cannot criticize those who say we need to find a better way to make these decisions or we will be spending money we don't have, on people who benefit little, at the expense of those who can be helped.
My real fear of these mini programs is that they are, to some extent, just shoving the problem off to someone else. The major medical costs do not suddenly disappear, they are just shifted to the government. However, as an agent, I think the ethical decision is to just make sure people understand what is and is not covered and let them make their own choices. It is not really our job to tell people what decision to make, it is only our job to give them the information to help them make their own decision.
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Long Term Care... Surviving Medicaid
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Having Medicaid pay for long-term care expenses may look good to you ... that is until you're living with it. If you also need life insurance, there are solutions that can help you pay those expenses while keeping control of your assets and dignity.
You've probably heard about "Medicaid Planning." It's a tactic that more and more people are using. They give away their assets to qualify for Medicaid and intend to avoid paying their own long-term care expenses so they can leave more to their heirs. But are you aware of the issues that could arise if you use it?
- After the transfer of assets to children, you lose legal control of those assets and would need to ask the children for money that used to be yours
- If you are married, "spousal impoverishment" provisions limit what the at-home spouse may keep to:
1. The primary residence, a car, personal and household items and a small amount for burial
2. A maximum of $104,400 in financial assets (for 2008) in most states
3. Maximum income of $1,711/month (2008) in most states; Social Security and pension benefits count toward this limit and cannot be hidden
- The at-home spouse may convert assets to non-countable income with an annuity, but the state must receive any remainder funds, up to the amount Medicaid paid
- You may not get to live where you want; nursing homes aren't required to accept new patients on Medicaid (though they have to keep current residents who can no longer private-pay and go on Medicaid); many nursing homes refuse to take new patients on Medicaid; some nursing homes require proof that the patient can pay privately for a defined period before they'll accept an application
- Medicaid tends to use nursing home care as the only choice, rarely leaving community-based services like assisted living, home health care and adult day care as options
- Medicaid pays on average two-thirds as much as private-pay patients; although Medicaid patients must, by law, receive the same care as patients who can pay their own bills, they won't get private rooms, and if they're not happy with the care they're getting, they may have limited ability to change facilities
The Deficit Reduction Act of 2005 also made it harder for seniors in need of long-term care to get assistance under Medicaid.
The new law:
Look-back period - Five years for all transfers
Beginning date - The later of: the date the person enters the nursing home or the date the person applies for Medicaid
The old law:
Look-back period - Three years for most transfers,
Five years for certain trusts
Beginning date - The date the assets were transferred
There's a better way than impoverishing yourself.
Let's look at how a type life insurance protection can help you keep control of your assets and your dignity:
- You keep control of your money
- With proper planning, the lifestyle for the at home spouse is less likely to be affected
- The LTC policy can provide the proof of private pay capability needed to get into the nursing home of your choice
- Most people prefer to stay in their home as long as possible; home health care, assisted living and other community based services remain an option with long-term care insurance benefits
- Private rooms are an option, and if you are unhappy with the care or facility, you simply move to a different facility
- You're more likely to maintain the style of living you had when living independently
How do we do this? Simple. There are life insurance plans that simply add a long-term care rider to your life coverage. There's an additional cost, but the amount may surprise you - in a good way. And look at how it lets you keep control of your life and long-term care decisions:
- If you need long-term care, it's a lifeline that lets you tap into the death benefit for help covering expenses
- If you're lucky enough to never need long-term care, it's a legacy for your loved ones just like you planned
- The insurance company pays the income tax-free benefits indemnity-style - directly to you, the insurance owner - so you can use excess benefits not needed for care as you wish
Keep in mind that, as an acceleration of the death benefit, the LTC rider payout will reduce both the death benefit and cash value. Care should be taken to make sure that your life insurance needs continue to be met even if the rider pays out in full. There is no guarantee that the rider will cover the entire cost for all of your long-term care as these vary with the needs of each insured.
That said, $500,000 paid out to you at $8,000 a month will keep you in a fairly nice home for over 5 years... and the truth is that most people don't last more than five years when they go on LTC.
How does the long-term care rider work? Let's look at at a plan offered by Nationwide.
You choose the total amount of long-term care coverage, called the long-term care specified amount, when you apply. It can be as much as 100% of the total death benefit, as little as 10% of that death benefit or anywhere in between.
They will pay you the long-term care specified amount in monthly installments. The monthly benefit will be the lesser of 2% of the long-term care specified amount or the HIPAA per diem amount ($280 for 2009) times the number of days in the month.
The indemnity-style design pays you directly - no need to send them bills or receipts -
You qualify once you have the inability to perform two activities of daily living (ADLs) or have major cognitive impairment, and after a 90-day waiting period.
Monthly benefits are tax free since they're an acceleration of the death benefit.
There is a plan by John Hancock that works in a similar (and better but more expensive) fashion. If you can afford it and are healthy enough to pass underwriting, this is the best way to get LTC.
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Well, that's a wrap for this issue. I hope you've found some of the info above useful and interesting. If you have questions about life or health coverage, safe-money annuities, or employer group benefits just give me a call or send email.
Sincerely,
Alan N Canton
InsuranceSolutions123 Agency
InsuranceSolutions123.com
916-962-9296
CA License # 0F31110
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Al Canton, Owner
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I'm Al Canton, owner of the Insurance Solutions Agency.
Everyone promises the best service, etc. So I won't bore you with that message.
Bottom line, I know health insurance, work-supplements, medicare, life, and annuities.
Most importantly, I'm honest. I will not put you in a product just for the money. I've been here 25 years and I've built my business reputation on integrity and honor.
It's that simple.
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