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The Counseling Perspective: Educating New York City about  Long-Term Care Insurance Heather J. Bates, LMSW, Coordinator  N...
Who We Are <ul><li>The Long-Term Care Insurance Resource Center is located within the Area Agency on Aging’s State Health ...
Our Mission <ul><li>To educate baby boomers about their long-term care financing options. </li></ul><ul><li>Our Annual Fun...
NYS LTC Facts <ul><li>3.6 Million Baby Boomers in NYS </li></ul><ul><li>34 Billion spent on Medicaid expenses </li></ul><u...
LTC Costs in NYC <ul><li>Home Care Costs $15-$20 per hour for home attendant skill level </li></ul><ul><ul><li>Higher skil...
LTCI Pays Individual Pays <ul><li>$100-$350 per day (DBA) </li></ul><ul><ul><li>Average policy $200 DBA </li></ul></ul><ul...
The NYS Partnership for LTC <ul><li>The NYS Partnership started in 1993 </li></ul><ul><li>Cumulative Applications Received...
Types of Partnership Models: Total Asset Protection Vs. Dollar for Dollar  <ul><li>In general, Partnership policies allow ...
Difficulties with Partnership <ul><li>Partnership policies have minimum standards when it comes to duration and access to ...
LTCI Annual Premium Costs <ul><li>Traditional </li></ul><ul><ul><li>The premiums of individuals for NON-PARTNERSHIP cost $...
In Theory We… <ul><li>Educate those who desire to purchase a policy & understand contractual terms  </li></ul><ul><ul><li>...
Confusion About…  <ul><li>Medicare and Medicaid </li></ul><ul><li>Many think they have long-term care insurance when they ...
Most Counseling Sessions Involve… <ul><li>Defining the umbrella term, “long-term care” </li></ul><ul><ul><li>Services and ...
Reading the Crystal Ball <ul><ul><li>“ How much care will I really need?” </li></ul></ul><ul><ul><li>“ How long will I nee...
Consumer Fears & Anxieties <ul><li>Discussing Long Term Care touches on mortality </li></ul><ul><ul><li>Indecision </li></...
What We Have Learned… <ul><li>No two policies look-alike </li></ul><ul><li>Contractual terms are not always clearly define...
Oddities We Have Seen in Policies <ul><li>“ When we are notified of your death, we will make a refund of any unearned prem...
Our Resource Center Achievements <ul><li>Since 2005, we have counseled over 1,500 individuals & couples </li></ul><ul><li>...
We Are Required to Share <ul><li>NYS Disclaimer </li></ul><ul><li>“ The information provided by our Education and Outreach...
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Counseling NYC Residents about Private Long Term Care Insurance

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This presentation was given in conjunction with a policy presentation with the Georgetown Finance Project for Long Term Care during the 2008 Families USA Health Action Conference.

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Counseling NYC Residents about Private Long Term Care Insurance

  1. 1. The Counseling Perspective: Educating New York City about Long-Term Care Insurance Heather J. Bates, LMSW, Coordinator NYC Department for the Aging Long-Term Care Insurance Resource Center Families USA Annual Conference Winter 2008
  2. 2. Who We Are <ul><li>The Long-Term Care Insurance Resource Center is located within the Area Agency on Aging’s State Health Insurance (and Assistance) Program – SHIP (aka HIICAP) </li></ul><ul><li>For over a decade we have counseled individuals about Medicare & Medicaid </li></ul><ul><li>Since 2005 - received non-competitive funding through the State Office on Aging to educate individuals, professionals about long-term care insurance </li></ul><ul><ul><li>Including, the NYS LTC Partnership </li></ul></ul>
  3. 3. Our Mission <ul><li>To educate baby boomers about their long-term care financing options. </li></ul><ul><li>Our Annual Funding Requirements (NYC): </li></ul><ul><li>To educate at least 1000 individuals per year about long-term care insurance </li></ul><ul><li>Conduct at least 15 annual trainings </li></ul><ul><li>Become a known resource to NYC about long-term care insurance information for ages 45 and older </li></ul>
  4. 4. NYS LTC Facts <ul><li>3.6 Million Baby Boomers in NYS </li></ul><ul><li>34 Billion spent on Medicaid expenses </li></ul><ul><ul><li>1/3 spent on LTC services </li></ul></ul><ul><li>4% of LTC services paid for by LTC insurance </li></ul><ul><ul><li>Total Number of LTC policy holders 296,953 </li></ul></ul><ul><ul><li>15% are Partnership policies </li></ul></ul><ul><li>Average Age of Purchaser 62 </li></ul><ul><li>Average Age of Claims Filed 75 </li></ul><ul><li>Average Years of Claims Paid 7.6 </li></ul><ul><li>Top Three Insurers in Order </li></ul><ul><ul><li>John Hancock </li></ul></ul><ul><ul><li>Genworth </li></ul></ul><ul><ul><li>Met Life </li></ul></ul>“ Long Term Care Insurance Options,” A Report to the Governor & Legislature. Prepared by NYS Dept. of Insurance in consultation with NYS Dept. of Health & NYS Office for the Aging, 2005.
  5. 5. LTC Costs in NYC <ul><li>Home Care Costs $15-$20 per hour for home attendant skill level </li></ul><ul><ul><li>Higher skill level costs much more (e.g. nurses aide, home health aide) </li></ul></ul><ul><li>Nursing Home, shared room in NYC costs upwards of $375 per day based on geographic location </li></ul><ul><ul><li>Family want their relative accessible and nearby </li></ul></ul><ul><li>Assisted Living room and board costs upwards of 50K annually and this does not include services </li></ul>
  6. 6. LTCI Pays Individual Pays <ul><li>$100-$350 per day (DBA) </li></ul><ul><ul><li>Average policy $200 DBA </li></ul></ul><ul><ul><li>Policy pays on average 2-5 years </li></ul></ul><ul><ul><ul><li>Depends on length of benefit – which can be in either dollars or time used </li></ul></ul></ul><ul><li>Annual Premiums of $900 - $12,000 depending on age, health status & policy inclusions at time of purchase </li></ul><ul><li>Pay premiums on average 7-10 years before filing claims </li></ul><ul><ul><li>Younger one buys, while policy is cheaper, longer one pays </li></ul></ul><ul><ul><li>Higher likelihood of lapsing the policy if buy too young </li></ul></ul><ul><li>100% of costs during 0-180 day elimination period </li></ul><ul><li>Difference in daily costs not reimbursed in DBA </li></ul>
  7. 7. The NYS Partnership for LTC <ul><li>The NYS Partnership started in 1993 </li></ul><ul><li>Cumulative Applications Received since 1993 - 104,431 </li></ul><ul><ul><li>81% approved for coverage </li></ul></ul><ul><ul><li>Majority are Female & Married </li></ul></ul><ul><li>58,400 Active Partnership Policyholders (Currently paying premiums) </li></ul><ul><ul><li>68 of which live outside of NYS and would have to return to use Extended Medicaid </li></ul></ul>The New York State Partnership for Long-Term Care Quarterly Update. Volume 15, Number 1, Jan.-Mar. 2007.
  8. 8. Types of Partnership Models: Total Asset Protection Vs. Dollar for Dollar <ul><li>In general, Partnership policies allow one to have a higher asset test when and if they need NYS Medicaid </li></ul><ul><li>Total Asset – protects all assets once private portion of policy is exhausted </li></ul><ul><li>Dollar for Dollar – protects a set amount of assets established at the time of purchasing the policy, this amount is also equal to the benefits that will get paid out by the private insurer </li></ul>
  9. 9. Difficulties with Partnership <ul><li>Partnership policies have minimum standards when it comes to duration and access to Medicaid, but the same add-on options apply </li></ul><ul><ul><li>No two partnership policies alike </li></ul></ul><ul><li>Once exhausted private portion, still have to apply to Medicaid and meet income criteria </li></ul><ul><ul><li>Higher Asset Test </li></ul></ul><ul><ul><ul><li>Why spend money on premiums and instead see an elder lawyer? </li></ul></ul></ul><ul><ul><ul><li>NYS refers to Medicaid as “competition” for LTCI </li></ul></ul></ul><ul><li>One still has to meet Medicaid Income Eligibility </li></ul><ul><ul><li>Difficult if living off of income from assets </li></ul></ul>
  10. 10. LTCI Annual Premium Costs <ul><li>Traditional </li></ul><ul><ul><li>The premiums of individuals for NON-PARTNERSHIP cost $3,324 annually. </li></ul></ul><ul><ul><li>The premiums for group enrollees cost on average $2,306 (group rates can be less). </li></ul></ul><ul><li>Partnership </li></ul><ul><ul><li>The average rate for PARTNERSHIP was $4,037 in annual premiums (partnership includes the 5% compounded inflation protection automatically which increases premiums). </li></ul></ul>The New York State Partnership for Long-Term Care Quarterly Update. Volume 15, Number 1, Jan.-Mar. 2007.
  11. 11. In Theory We… <ul><li>Educate those who desire to purchase a policy & understand contractual terms </li></ul><ul><ul><li>“ daily benefit amount” </li></ul></ul><ul><ul><li>“ elimination period” </li></ul></ul><ul><ul><li>“ level premiums” </li></ul></ul><ul><ul><li>“ waiver of premium” etc. </li></ul></ul><ul><li>Discuss their expectations about long-term care and facilitate their own assessment of their financial situation to help them determine which policy best </li></ul>
  12. 12. Confusion About… <ul><li>Medicare and Medicaid </li></ul><ul><li>Many think they have long-term care insurance when they do not </li></ul><ul><li>People confuse long-term care insurance with catastrophic medical insurance </li></ul><ul><li>People are encouraged by Human Resource Departments of their employers to buy policies they (nor their employers) may not fully understand & sometimes cannot afford later in life </li></ul><ul><li>What exactly is tax deductible </li></ul><ul><ul><li>Federally, must meet 7.5% AGI medical expenses </li></ul></ul><ul><ul><li>NYS has 20% above the line tax credit on premiums </li></ul></ul>
  13. 13. Most Counseling Sessions Involve… <ul><li>Defining the umbrella term, “long-term care” </li></ul><ul><ul><li>Services and costs </li></ul></ul><ul><li>Explaining that Medicare pays for acute based, intermittent, medically necessary prescribed care </li></ul><ul><li>Clarifying the difference between Medicare and Medicaid </li></ul><ul><li>Exploring whether or not Long-Term Care Insurance is what they want or need </li></ul><ul><ul><li>Cost factors, health, lifestyle (obesity, smoker, no family, live in 5 th floor walk-up, rent, etc) </li></ul></ul><ul><ul><li>Will insurance company be around later when filing claims </li></ul></ul><ul><li>No one understands in the first session </li></ul><ul><ul><li>On average, most need 3-4 counseling sessions </li></ul></ul>
  14. 14. Reading the Crystal Ball <ul><ul><li>“ How much care will I really need?” </li></ul></ul><ul><ul><li>“ How long will I need care?” </li></ul></ul><ul><ul><ul><li>“What happens if I outlive my policy?” </li></ul></ul></ul><ul><ul><li>“ Who will provide this care for me?” </li></ul></ul><ul><ul><li>“ I don’t want to be a burden (to my family).” </li></ul></ul><ul><ul><li>“ I don’t have any family and am all alone.” </li></ul></ul><ul><ul><li>How will I find the right provider?” </li></ul></ul><ul><ul><li>“ What if I can no longer afford the premiums?” </li></ul></ul><ul><ul><li>“ Should my spouse & I both get coverage?” </li></ul></ul><ul><ul><li>“ What if I never use the policy?” </li></ul></ul><ul><ul><ul><li>“Can I Will the money to someone?” </li></ul></ul></ul>
  15. 15. Consumer Fears & Anxieties <ul><li>Discussing Long Term Care touches on mortality </li></ul><ul><ul><li>Indecision </li></ul></ul><ul><ul><li>Familial and individual expectations </li></ul></ul><ul><ul><li>Quality of Life concerns </li></ul></ul><ul><ul><li>Projected needs and wants when most vulnerable (nursing home vs. home care) </li></ul></ul><ul><ul><li>Concerns they may never use the policy </li></ul></ul><ul><ul><li>Spending money on premiums preparing for infirmity instead of “living” (vacations, income producing investments, gifts, etc.) </li></ul></ul><ul><ul><li>Negative impressions in press and Media </li></ul></ul><ul><ul><ul><li>Concern about paying claims </li></ul></ul></ul><ul><ul><ul><li>Concern about company’s solvency </li></ul></ul></ul><ul><ul><ul><li>Concerns about premium increases (for “classes”) </li></ul></ul></ul><ul><ul><ul><li>Concerns about company doctors having to certify their need in order to enact policy </li></ul></ul></ul>
  16. 16. What We Have Learned… <ul><li>No two policies look-alike </li></ul><ul><li>Contractual terms are not always clearly defined </li></ul><ul><li>We meet with individuals who already have a policy and do not understand it – even if they have been paying for over ten years </li></ul><ul><li>Many are too undecided to choose </li></ul><ul><li>People think they will self-insure </li></ul><ul><li>Many want information about other ways to finance long-term care that have equity (life insurance, etc) </li></ul><ul><li>Medical underwriting for new purchasers instills anxiety and fear that they will not get coverage at all, let alone concerns about affordability </li></ul><ul><ul><li>Those who are concerned re: insurability, if they find a company to insure them, are then concerned with whether or not the company will actually pay claims later </li></ul></ul>
  17. 17. Oddities We Have Seen in Policies <ul><li>“ When we are notified of your death, we will make a refund of any unearned premium paid for the period beyond your death.” from CNA policy purchased in 1998 </li></ul><ul><ul><li>??? </li></ul></ul><ul><li>Individuals who purchase two policies while insurable </li></ul><ul><ul><li>One to cover the elimination period of the first policy </li></ul></ul><ul><li>Rider sent years later after purchase of AXA policy that made the policy null and void if he ever filed claims and acquired any kind of arthritic condition including gout </li></ul><ul><li>Written exactly, “The best time to clear up any questions is now, before a claim arises!” in a non-tax qualified, Mutual of Omaha Limited Benefits policy covering one year of home care at $100 per day sold in FL </li></ul>
  18. 18. Our Resource Center Achievements <ul><li>Since 2005, we have counseled over 1,500 individuals & couples </li></ul><ul><li>We have conducted or participated in over 35 educational presentations citywide </li></ul><ul><ul><li>No matter how much we advertise, we have never had more than 25 in attendance at any forum </li></ul></ul><ul><li>We have maintained one full-time staff person and at least one part-time (both are consultants) </li></ul><ul><ul><li>All staff are required to participate in NYS Partnership training for Agents and brokers </li></ul></ul>
  19. 19. We Are Required to Share <ul><li>NYS Disclaimer </li></ul><ul><li>“ The information provided by our Education and Outreach Program is intended for the sole purpose of educating consumers in regard to the choices available for financing their long term care needs. Particular emphasis is placed on understanding long-term care insurance. Nothing herein is intended nor should it be construed as an endorsement by the State of New York of any specific insurance product or of any insurer.” </li></ul>

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