Understanding the Coming Collapse of Long-term Care Insurance

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Routine estimates predict that about 50 percent of older adults will require long-term care at some stage of their lives. If you are an adult 65 or more, the percentage moves up to 70 percent. However, the demand for long-term care far outnumbers an affordable or even existing supply. For years the private sector long-term care insurers have been fleeing the marketplace. Americans who currently carry long-term care insurance are a small fraction, about 7 percent, adults over 50 years of age. There is a private sector inability to meet Americans’ overwhelming long-term care needs at an affordable price. The US healthcare system’s long-term care options are rapidly faltering as it is impossibly expensive, inefficient, and a poor performer for both seniors and industry.

Long-term care provides a broad array of supports and services to elderly patients and the disabled in daily life activities. These activities include bathing, toileting, dressing, transferring, and eating. Long-term care is also support for patients who have Alzheimer’s, dementia, diabetes, and other chronic conditions. Providers of long-term care operate in nursing homes, assisted living facilities, and private homes. Fewer than one in thirty Americans own a long-term care (LTC) insurance policy, and only about seven percent are adults are over the age of 50. Despite the aging US population, the raw figure of 7.5 million LTC insured has barely moved since 2008. According to prospect.org, these statistics come as no surprise as LTC insurance premiums keep increasing while average policy benefits decrease, as shown below.

When long-term care became part of the health care insurance industry in the 1970s, there was a wild mispricing error due to poor actuaries, which severely underestimated the cost of such plans. Subsequently, some insurers have abandoned the market altogether. In the year 2000, there were 100 policy providers; there are fewer than a dozen today, and it is harder than ever to become qualified. Insurers strain to deny policy applications to as many people as possible.

The American Association for Long-Term Care Insurance (AALTCI) finds that between 44 to 51.5 percent of applicants aged 70 or more are declined coverage. Nearly one-third of adults between 60 and 65 are refused. Even those in their 50s experience a 21 percent rate of application refusal. Rejection is prevalent because any combination of two or more chronic conditions is a basis for near-automatic disqualification. Certain diseases are also grounds for denial, such as AIDS, diabetes requiring insulin shots, stroke history, and multiple sclerosis, to name a few.

Despite large premium increases and increasingly difficult qualifications, long-term care claim losses still exceed expectations and have since 2008. Under current market conditions, insurers find it impossible to structure a profitable long-term care program. Moreover, many insurance coverages for the senior living industry are experiencing increases in their rates and premiums. Some insurance brokers report that even accounts with a clean loss history are experiencing premium increases at a minimum of 12 to 15 percent. Additionally, in the next year to two years, assisted facilities’ insurance costs could double or triple. Average policy benefit payouts will find it difficult to address the future long-term care needs. Carriers are consolidating to remain profitable, but this is shrinking senior living market coverage. Facilities have fewer options, and remaining insurance carriers increase premiums as they continue to restrict coverages and limits. The situation is bad news for seniors and near seniors, as rising business costs are generally passed on to the consumer.

Elements of sticker shock, denial of need, and wishful thinking keep most Americans from purchasing a long-term care plan even though they will most likely need one in their later years. Meanwhile, private long-term care insurance is in jeopardy as a result of industry non-profitability. Even with critical needs, without government intervention, there is a looming collapse of the long-term care insurance market.

If you are concerned about how you or a loved one will pay for long-term care, we can help. Contact us to set up a time to discuss planning opportunities that may be available to help lessen the financial burden of long-term care.  Please contact our Ruston, LA office by calling us at (318) 255-1760 or schedule an appointment to discuss how we can help with your long-term care needs.

The Risks of Do-It-Yourself Estate Plan Documents

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We hear this question all the time: “Can’t I just grab a will off the internet, do a transfer-on-death deed for my land, put my kids on my bank account, and be done with my estate plan?”

It’s just not a good idea. For the estate plan to work as you would want it to, it should account for plenty of complications. A good plan should protect your spouse and your children from loss of valuable government benefits, if anybody is or becomes disabled. The plan should avoid the delay and expense of probate court. The plan should protect money from children’s creditors or divorce or remarriage. It should be crafted to serve family harmony and to avoid disputes between children as joint owners.

Even a relatively simple situation is made up of many moving parts. Internet documents and joint-ownership devices just won’t do the job.

Also, assembling the moving parts so they work smoothly is just the first step. Your estate plan needs maintenance too, just like your car has a “check engine” light. Major family events like serious illness or death, marriage, birth, or financial reversals are alerts that you should tune up your plan to reflect those changes. Your plan shouldn’t be “one and done.”

It takes expertise to coordinate the various strategies available. Don’t risk a result that will cause your family problems and unnecessary expense. Call us to create a plan that harmonizes the moving parts, so the gears will work together and you will leave the legacy you intended.

At Goff & Goff, we specialize in building estate plans that are unique to your situation to safeguard your assets for your family and their future. Please contact our Ruston, LA office by calling us at (318) 255-1760 or schedule an appointment to discuss how we can help. We welcome the opportunity to speak to you about your estate planning needs.

7 Negative Effects of putting off your Estate Plan

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  1. My family and I don’t own much. Can’t we put off planning until we can afford it?

You shouldn’t. It is crucial to give legal authority to a person of your choice, to care for your children if anything should happen to you. You don’t want your children to become wards of the court, or to be delivered to a family member you don’t like. Second, the cost to you at the front end (now) is much less than it could be later when you might face steep legal fees to get the job done. We’re all in favor of lawyers earning a living. We just never want any of our clients to have to pay for costs that are unnecessary or avoidable.

  1. My son just graduated from high school. He owns nothing but an autographed baseball and a 1997 Chevy pickup. Surely I don’t have to worry about an estate plan for him?

You should. Estate planning isn’t just about owning property. Life needs protecting, too. If your child should lose consciousness in an accident, and he or she is over the age of 18, you as a parent will no longer have the legal authority to decide what medical treatment he should receive.  Insurance companies might refuse to deal with you.

Just imagine the stress of it. You’d be there to help, but nobody would be legally required to listen to you. You would have to go to court and get guardianship – over your own child.

Instead, just think how much easier (and less expensive) it would be to get your adult child to come in to see us, while all is OK now, to make out powers of attorney. Those are documents that convey legal authority onto you, or on people of your adult child’s choice, to act on your child’s behalf if he or she becomes unable

  1. Our kids are grown and married. Can’t my spouse and I postpone planning?

You shouldn’t. First, you can never tell when disaster might strike. Second, your kids may seem happily married now, but there’s no telling how long for – and you don’t want to see their, and possibly your, money and property lost in bitter divorce proceedings or lawsuits or bankruptcies.

  1. Our kids are able-bodied, thank goodness. Why should we worry about protecting disability benefits for them if they don’t need them?

They might not need those benefits now. But if they become disabled in the future, and if they inherit money from you, inherited money could cost them thousands of dollars a year in benefits. We will help you to take simple steps to protect that money if your children do become disabled.

  1. My doctors know best. I’m not going to tell them how to do their jobs, and I don’t want anyone else doing that either. What’s wrong with that?

Do you want to be kept alive on machines, possibly for years, when you no longer can care for yourself, recognize loved ones, converse, or even swallow? These days, medical machines can breathe for you through a tube in your throat, keep your heart beating, and deliver food and fluids through a tube in your stomach. Many who are on these machines die in the hospital, their arms tied down to prevent dislodging the tubes. Health-care providers are ethically obligated to keep you alive to the bitter end. Few of us want that. You can decline those extreme measures with our carefully crafted legal documents.

  1. Can’t I just grab a will off the internet, do a transfer-on-death deed for my land, put my kids on my bank account, and call it done?

Just look at some of the complications, in the above answers. An estate plan should protect disabled children’s inheritances from the loss of valuable government benefits. It should avoid probate court. It should protect money from creditors or divorce or remarriage. It should avoid disputes between children as joint owners.

Even a relatively simple situation contains many moving parts. It takes expertise to coordinate the various strategies. Don’t risk a result you wouldn’t want. Call us to create a plan that harmonizes the moving parts, so the gears will work together and you will leave the legacy you intended.

  1. Can’t I just forget the whole thing and let my kids deal with it after I’m gone?

Sure you can. But your kids will not thank you for leaving a disorganized mess behind, and that may be how they remember you.

Here’s one good idea:

Come see us now. The documents we create for you might be “just pieces of paper,” but they are worth a great deal more than that. At a stressful time when additional hurdles are the last thing you need, powers of attorney and other estate planning options could save you and your family delay, expense, and heartache. Please contact our Ruston, LA office by calling us at (318) 255-1760 or schedule an appointment to discuss how we can help with your estate planning needs.

What is the Role of an Elder Law Attorney for Your Legal Matters?

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The senior citizen population of the United States is increasing rapidly as the baby boomer generation ages, and the influx of international migration continues. Although the US average life expectancy has seen a slight three-year decline, many Americans, men, and women live well into their 80s, 90s, and beyond. An elder law attorney works with seniors, taking a holistic approach to the legal issues people commonly face as they age. These include matters of housing, physical and financial health, estate planning, and more. There are as many issues as there are seniors, as life circumstances are different for everyone. An attorney who specializes in the host of the problems senior citizens face can be a wise investment.

Whether you have a lucrative business and many assets, or a small home with a modest bank account, estate planning can be overwhelming. However, having your affairs in order is a final gift to your family. An estate plan is much more than creating your will though it is generally the first step. There are multiple types of wills, and while most people think of their last will and testament, there are also living wills, joint wills, pour-over wills that work in conjunction with trusts, and more. The type of will(s) you need to best control what happens to you and your assets throughout your life, and your death, are best explained by an elder law attorney. An elder law attorney specializing in estate planning helps you navigate wills, trusts, guardianships, advance medical directives, and the financial management of life insurance policies, annuities, IRAs, and 401ks. All of these can have tax implications for managing and settling your estate.

Government programs on federal and state levels may be available to seniors. Individual qualifications and the application processes can be complicated and confusing, especially when enrolling for the first time. An elder law attorney can help you understand Medicare Part A (hospital, skilled nursing, some home health, and hospice), Part B (medical insurance covering certain services by doctors, preventative services, medical supplies, and outpatient care). Medicare Part C (Medicare Advantage Plans, a private company insurance plan you purchase that dovetails with Medicare) and Part D (covering prescription drugs). If you are a veteran, programs are available through the Veteran’s Administration and can provide you with further and more specialized assistance because of your military service. Veteran program qualifications can be highly complex, so look for an elder law attorney who is accredited by the Veterans Administration.

Medicaid provides health care benefits for low resource and low-income adults, pregnant women, elderly adults, children, and people with disabilities. If you qualify, you may receive both Medicare and Medicaid benefits. Medicaid qualifiers have their healthcare premiums and out of pocket medical expenses covered through the program. Medicaid also includes custodial care and addresses long-term care expenses if you begin living in a nursing home. An elder law attorney understands how Medicare and Medicaid can work to your best advantage.

Social Security benefit amounts change depending on the age range you choose to receive your benefit. You can currently apply and qualify for your benefits at 61 and nine months of age; however, the full retirement age for social security is 67, and cashing in early has long-term consequences for your payout. An elder law attorney can help you determine the best age to receive your social security benefits based on your health and financial situation. Suppose you also receive disability benefits before full retirement age or become disabled at that age. In that case, an elder law attorney can ensure you receive the proper benefits based on your condition.

Long-term care is known to be an expensive proposition whether you are trying to afford long-term care insurance upfront or pay for it out of pocket if you require it in the future. Not addressing the issue of long-term care is a big gamble to your financial well being. Morningstar reports that 52 percent of Americans turning age 65 will need some long-term care services in their lifetime. An elder law attorney can help you understand policy premiums and how they can increase if you purchase long-term care insurance. They can also guide you through Medicaid planning or estate planning that can help you qualify for the best financial arrangements for long-term care. Sometimes, it is beneficial to spend down your estate to be eligible for Medicaid, and your elder law attorney will know what is required by law to do it properly.

Other issues, such as employment discrimination, elder abuse, and elder fraud, even grandparent visitation rights, fall under an elder law attorney’s scope. An attorney who practices elder law has a more comprehensive list of capabilities to help you through your senior years than those attorneys without expertise in this area.

We focus on elder law.  We would be honored to speak to you about how we can help you come up with a comprehensive legal plan covering many of the topics above so you can enjoy your senior years without unnecessary worry. We look forward to hearing from you. Please contact our Ruston, LA office by calling us at (318) 255-1760 or schedule an appointment to discuss how we can help with your elder law needs.