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Only the Beginning
By Dr. David Edward Marcinko; MBA, CMP™
[Publisher-in-Chief]
As a Certified Financial Planner™ and licensed insurance agent for more than a decade, I am aware of how much the industry is promoting long term care insurance [LTCI] as one solution to the aging baby boomer crisis. And, there is no doubt that a legion of agents and “advisors”, along with readers of the Medical Executive-Post, are aware of the fat commissions these products produce. Of course, I have been criticized for opinions against this product for some time now, along with a philosophy of personal accountability.
Only the Beginning
And so, it is no surprise that Penn Treaty American Corporation [PTAC], a long-term-care insurance company, recently said it would stop issuing new LTCI policies. PTAC said its primary insurance subsidiary will be considered insolvent unless it can raise at least $100 million by January 1st, and that it will accept letters of interest from prospective investors and purchasers through mid-October, while deciding on a course by the end of the year.
Assessment
According to the Philadelphia Inquirer on October 4, the company needs about $100 million to $120 million to cover reinsurance agreements it intentionally dropped because the cost to keep them was more than the value of the agreements.
Conclusion
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Filed under: Health Insurance, Insurance Matters, Retirement and Benefits | Tagged: LTCI |
The Leading Business Education Network for Doctors, Financial Advisors and Health Industry Consultants 
LTC Insurance
LTC insurance is sold by playing upon peoples’ fears.
We often hear stories about a person spending down their estate during a long-term stay in a skilled nursing facility. The truth is that most individuals will never spend a long period of time in such a facility. For those who are admitted to a nursing home, the mean length of stay is about one year, while the median length of stay is about 30 days.
In other words, the vast majority of those admitted only stay for a short time, but there is a small number who stay for much longer. So, the best way to protect your assets in a cost-effective manner is to purchase a policy with a long waiting period. For a shorter length of stay you will pay out-of-pocket, but a longer-term stay will not break the bank.
Brian J. Knabe MD CMP™
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Brian,
Dr. Marcinko wrote on this topic several years ago for an insurance magazine. Essentially, he stated that the average LOS for a nursing home patient was about six months. Cause of stay followed a hip fracture with ultimate demise from pneumonia.
The ire of responding insurance agents was felt by phone and email communication.
Dave held an insurance license for 15 years!
Hope Hetico RN, MHA
http://www.CertifiedMedicalPlanner.com
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The Future of Long-Term Care
In the future, hospitals will be reduced to handling only critical care and trauma, and fewer physicians will be needed.
http://www.hhnmag.com/hhnmag/HHNDaily/HHNDailyDisplay.dhtml?id=4670004804
Finally …. an essay by a doctor and futurist; not an insurance agent!
Craig
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LTCI for Medical Professionals
Despite the hype and fear mongering of the insurance industry, most medical professionals do not, and will not, need LTCI. Here is why?
Based on the asset rule-of-thumb that I often cite, anyone with less than about $250,000 in cash or liquid funds may find the cost of LTCI premiums too prohibitive.
On the other hand, those with a portfolio of more than $2.5-M or so, should have enough to pay out-of-pocket for almost all necessary medical care expenses, regardless of length required.
So, considering our 2005 study with Physician’s Money Digest that suggested the average 65 year old physician had an estate of about $5.5-M, LTCI seems a financial product to be avoided.
Your call! Do you trust the insurance industry, or not? How about the LTCI facility, its’ healthcare providers, “nurses” and related coterie of assistants? How will they economically compensate for reduced Federal Government reimbursement rates?
Dr. David Edward Marcinko MBA [Certified Medical Planner™]
http://www.CertifiedMedicalPlanner.org
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U.S. Won’t Start Long-Term Care Insurance
The U.S. won’t introduce a long-term medical and disability care insurance program ordered under the 2010 health law because it isn’t fiscally viable, said Health and Human Services Secretary Kathleen Sebelius.
http://firstread.msnbc.msn.com/_news/2011/10/14/8325174-obama-administration-halts-part-of-heath-care-law
http://www.fa-mag.com/fa-news/8858-us-wont-start-long-term-care-insurance-sebelius-says.html
Baxter
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The Untimely Death of Long-Term Health Insurance
Baxter – The Administration’s decision to pull the plug on long-term health insurance in the new healthcare law (so-called Community Living Assistance Services and Support or, as it was known by healthcare insiders, CLASS) offers an important lesson.
An essay by Robert Reich.
http://thehealthcareblog.com/blog/2011/10/18/the-untimely-death-of-long-term-health-insurance/
Ann Miller RN MHA
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Genetic Markers and LTCI
Ann – One of the reasons that most people do not purchase private Long Term Care Insurance (LTCI) is the lack of a clear risk signal for need when people are young, and premiums are low.
And so, Austin Frakt PhD, over at the Incidental Economist performed a study in which he analyzed the ability of a genetic marker–the APOEe4 (e4) genotype to predict actual nursing home admission (NH) in a community based sample of elderly persons.
http://theincidentaleconomist.com/wordpress/genetic-markers-and-ltc-insurance/
The upshot: Could this be a good marker of LTC need – and thus become the worst nightmare of patients and insurance companies?
Karen
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LTCI
As a fee-only advisor, I occasionally see a need to recommend a LTC policy to a client.
Of course, in such cases, we work with a low load provider (or the client’s agent) and I get $0 commission. I agree with the spirit of the comments here that most LTC policies are sold, not bought, and that most statistics used to sell LTC policies are fear-based and half-truths.
Even the Department of Health and Human Services gets into the fear mongering on their website quoting that “about 70 percent of people over age 65 require some type of long-term care services during their lifetime” (http://www.longtermcare.gov/LTC/Main_Site/Planning/Index.aspx ). Deceptive statistic as it omits the length of long-term care needed in these 70% of cases. You can bet it is not 3+ years in all these cases.
With the recent stamp of approval by the SCOTUS on the ACA, we may be looking at social LTC insurance in the US like other social medicine countries and give up on private LTC insurance altogether. Germany introduced mandatory long-term care insurance in 1995. Japan and France also have a LTC tax funded insurance plan.
David K. Luke MIM
Physician Financial Planner,
Certified Medal Planner™ candidate
http://www.CertifiedMedicalPlanner.org
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Dr. Knabe and Dr. Marcinko,
You are both correct; in as much as two-thirds of those older than 65 require less than two years of formal paid long-term care services, according to the SCAN Foundation, a nonprofit charity that addresses healthcare issues for seniors.
And, the poor utilization and growing risks associated with long-term care insurance, are leading a growing number of financial planners to recommend alternatives to their clients.
Thanks for being ahead of the curve.
Brighton
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Dying at Home
The new trend is away from LTCI and toward sheltering at home – living at home and dying at home.
This is the way it should be. Dying should not be a for-profit industry.
Dr. Gino
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One Third of Skilled Nursing Patients Harmed in Treatment
A study by Medicare’s inspector general of skilled nursing facilities says nearly 22,000 were injured and more than 1,500 died in a single month – a higher rate of medical errors than hospitals.
http://www.propublica.org/article/one-third-of-skilled-nursing-patients-harmed-in-treatment?utm_source=et&utm_medium=email&utm_campaign=dailynewsletter
Mary
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Blood Test May Predict Alzheimer’s
A blood test has been developed that can predict with 90 percent certainty whether a senior will suffer from dementia such as Alzheimer’s disease within the next few years, researchers report.
http://www.webmd.com/alzheimers/news/20140309/simple-blood-test-may-have-power-to-predict-dementia-risk?utm_source=Copy+of+Copy+of+3.6.14&utm_campaign=11713&utm_medium=email
So, what are the implications on LTCI?
Gregory
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Mike Kitces
[On How to Fix LTC Insurance]
What was once a higher-cost, lower-probability risk is halfway to being a sure thing.
http://www.financial-planning.com/news/insurance/kitces-how-to-fix-ltc-insurance-2691716-1.html?utm_campaign=daily-jan%2022%202015&utm_medium=email&utm_source=newsletter&ET=financialplanning%3Ae3691459%3A86235a%3A&st=email
That means existing policies may be a bad deal.
Dr. David Edward Marcinko MBA
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Annual U.S. Median Cost of Long Term Care
According to the Genworth Cost of Care Survey:
Home Health Care
• Homemaker Services [2] – Annual Cost – $44,616 – 5 year Annual Growth [3] – 2%
• Home Health Aide [2] – Annual Cost – $45,760 – 5 year Annual Growth [3] – 1%
Adult Day Health Care [1]
• Annual Cost – $17,904 – 5 year Annual Growth [3] – 3%
Assisted Living Facility [4]
• Annual Cost – $43,200 – 5 year Annual Growth [3] – 2%
Nursing Home Care
• Semi-Private Room [5] – Annual Cost – $80,300 – 5 year Annual Growth [3] – 4%
• Private Room [5] – Annual Cost – $91,250 – 5 year Annual Growth [3] – 4%
Note: [1] Based on 5 days per week by 52 weeks. [2] Based on 44 hours per week by 52 weeks. [3] Represents the compound annual growth rate based on Genworth Cost of Care Survey. [4] Based on 12 months of care, private, one bedroom. [5] Based on 365 days of care.
Source: Genworth
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LTCI
After doing research on long-term care insurance, I decided to pass. High premiums on the policies, and new research suggesting that budget-busting extended care will be needed by fewer elderly people than previously thought, were factors.
Lacey
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