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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.

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Presentation on theme: "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."— Presentation transcript:

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 The Long-Term Care Insurance Resource Center is located within the Area Agency on Agings State Health Insurance (and Assistance) Program – SHIP (aka HIICAP) For over a decade we have counseled individuals about Medicare & Medicaid Since received non-competitive funding through the State Office on Aging to educate individuals, professionals about long-term care insurance Including, the NYS LTC Partnership

3 3 Our Mission To educate baby boomers about their long-term care financing options. Our Annual Funding Requirements (NYC): To educate at least 1000 individuals per year about long-term care insurance Conduct at least 15 annual trainings Become a known resource to NYC about long-term care insurance information for ages 45 and older

4 4 NYS LTC Facts 3.6 Million Baby Boomers in NYS 34 Billion spent on Medicaid expenses 1/3 spent on LTC services 4% of LTC services paid for by LTC insurance Total Number of LTC policy holders 296,953 15% are Partnership policies Average Age of Purchaser 62 Average Age of Claims Filed 75 Average Years of Claims Paid 7.6 Top Three Insurers in Order John Hancock Genworth Met Life 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 Home Care Costs $15-$20 per hour for home attendant skill level Higher skill level costs much more (e.g. nurses aide, home health aide) Nursing Home, shared room in NYC costs upwards of $375 per day based on geographic location Family want their relative accessible and nearby Assisted Living room and board costs upwards of 50K annually and this does not include services

6 6 LTCI PaysIndividual Pays $100-$350 per day (DBA) Average policy $200 DBA Policy pays on average 2-5 years Depends on length of benefit – which can be in either dollars or time used Annual Premiums of $900 - $12,000 depending on age, health status & policy inclusions at time of purchase Pay premiums on average years before filing claims Younger one buys, while policy is cheaper, longer one pays Higher likelihood of lapsing the policy if buy too young 100% of costs during day elimination period Difference in daily costs not reimbursed in DBA

7 7 The NYS Partnership for LTC The NYS Partnership started in 1993 Cumulative Applications Received since ,431 81% approved for coverage Majority are Female & Married 58,400 Active Partnership Policyholders (Currently paying premiums) 68 of which live outside of NYS and would have to return to use Extended Medicaid The New York State Partnership for Long-Term Care Quarterly Update. Volume 15, Number 1, Jan.-Mar

8 8 Types of Partnership Models: Total Asset Protection Vs. Dollar for Dollar In general, Partnership policies allow one to have a higher asset test when and if they need NYS Medicaid Total Asset – protects all assets once private portion of policy is exhausted 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

9 9 Difficulties with Partnership Partnership policies have minimum standards when it comes to duration and access to Medicaid, but the same add-on options apply No two partnership policies alike Once exhausted private portion, still have to apply to Medicaid and meet income criteria Higher Asset Test Why spend money on premiums and instead see an elder lawyer? NYS refers to Medicaid as competition for LTCI One still has to meet Medicaid Income Eligibility Difficult if living off of income from assets

10 10 LTCI Annual Premium Costs Traditional The premiums of individuals for NON- PARTNERSHIP cost $3,324 annually. The premiums for group enrollees cost on average $2,306 (group rates can be less). Partnership The average rate for PARTNERSHIP was $4,037 in annual premiums (partnership includes the 5% compounded inflation protection automatically which increases premiums). The New York State Partnership for Long-Term Care Quarterly Update. Volume 15, Number 1, Jan.-Mar

11 11 In Theory We… Educate those who desire to purchase a policy & understand contractual terms daily benefit amount elimination period level premiums waiver of premium etc. Discuss their expectations about long- term care and facilitate their own assessment of their financial situation to help them determine which policy best

12 12 Confusion About… Medicare and Medicaid Many think they have long-term care insurance when they do not People confuse long-term care insurance with catastrophic medical insurance 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 What exactly is tax deductible Federally, must meet 7.5% AGI medical expenses NYS has 20% above the line tax credit on premiums

13 13 Most Counseling Sessions Involve… Defining the umbrella term, long-term care Services and costs Explaining that Medicare pays for acute based, intermittent, medically necessary prescribed care Clarifying the difference between Medicare and Medicaid Exploring whether or not Long-Term Care Insurance is what they want or need Cost factors, health, lifestyle (obesity, smoker, no family, live in 5 th floor walk-up, rent, etc) Will insurance company be around later when filing claims No one understands in the first session On average, most need 3-4 counseling sessions

14 14 Reading the Crystal Ball How much care will I really need? How long will I need care? What happens if I outlive my policy? Who will provide this care for me? I dont want to be a burden (to my family). I dont have any family and am all alone. How will I find the right provider? What if I can no longer afford the premiums? Should my spouse & I both get coverage? What if I never use the policy? Can I Will the money to someone?

15 15 Consumer Fears & Anxieties Discussing Long Term Care touches on mortality Indecision Familial and individual expectations Quality of Life concerns Projected needs and wants when most vulnerable (nursing home vs. home care) Concerns they may never use the policy Spending money on premiums preparing for infirmity instead of living (vacations, income producing investments, gifts, etc.) Negative impressions in press and Media Concern about paying claims Concern about companys solvency Concerns about premium increases (for classes) Concerns about company doctors having to certify their need in order to enact policy

16 16 What We Have Learned… No two policies look-alike Contractual terms are not always clearly defined We meet with individuals who already have a policy and do not understand it – even if they have been paying for over ten years Many are too undecided to choose People think they will self-insure Many want information about other ways to finance long-term care that have equity (life insurance, etc) Medical underwriting for new purchasers instills anxiety and fear that they will not get coverage at all, let alone concerns about affordability 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

17 17 Oddities We Have Seen in Policies 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 ??? Individuals who purchase two policies while insurable One to cover the elimination period of the first policy 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 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

18 18 Our Resource Center Achievements Since 2005, we have counseled over 1,500 individuals & couples We have conducted or participated in over 35 educational presentations citywide No matter how much we advertise, we have never had more than 25 in attendance at any forum We have maintained one full-time staff person and at least one part-time (both are consultants) All staff are required to participate in NYS Partnership training for Agents and brokers

19 19 We Are Required to Share NYS Disclaimer 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.

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