December 2014

Comparing Strategies to Pre-Plan for Long Term Care Costs

Posted on December 18, 2014 by Jim Koewler — No Comments ↓

Today’s blog post continues the series about possible ways to plan ahead to protect against long term care costs.

My December 11, 2014 post discussed doing nothing ahead of time to protect your assets against the possibility of long term care costs in the future.

Previously, my blog discussed giving money away as a method to plan ahead for protection against long term care costs. My post of September 19, 2014, the first installment of the discussion on gifting, described how the Medicaid “Aged, Blind and Disabled” program and the Department of Veterans Affairs “Pension” (aka VA “Aid and Attendance”) program look at assets given away. My post of September 25, 2014 discussed transferring assets to a trust for protection against long term care costs. My post of October 2, 2014 discussed transferring assets to a Limited Liability Company for protection against long term care costs. My post of October 9, 2014 discussed transferring assets to your children (or other family members) for protection against long term care costs. My post of October 16 discussed transferring assets to a charity as a way to protect against long term care costs. My post of October 23, 2014 discussed transferring assets to your spouse as a way to protect against long term care costs. My post of November 26, 2014 compared the various gifting strategies.

Before that, my blog discussed long term care insurance as an approach to planning ahead for long term care costs. In the long term care portion of this discussion, my post of May 22, 2014 discussed whether to buy long term care insurance at all. My post of May 29, 2014 suggested looking for a stable, proven insurer. My post of June 5, 2014 described how to identify a proven, stable Long Term Care insurance company. My post of June 12, 2014 discussed the importance of protection against inflation. My post of June 19, 2014 suggested planning to use insurance to pay for four or five years of long term care. My post of June 22, 2014 suggested a daily rate to choose when purchasing long term care insurance. My post of July 10, 2014 advised to look carefully at the list of Activities of Daily Living that can trigger coverage from the long term care insurance policy. My post of July 17, 2014 described the differences between a “period of time” kind of coverage and a “pile of money” kind of coverage. My post of July 25, 2014 advised to make sure that the long term care insurance includes coverage for cognitive impairment. My post of July 30, 2014 described the differences between tax-qualified and non-qualified policies. My post of August 5, 2014 discussed the value of long term care insurance policies that qualify for the Partnership program. My post of August 14, 2014 discussed hybrid policies that combine long term care insurance with life insurance. My post of August 21, 2014 described how a long term care insurance policy with a return of premium rider can be used to construct a “hybrid” life insurance/long term care insurance policy. My post of August 28, 2014 described how to use a partnership policy to protect just enough of your life savings while holding down the cost of the insurance. My post of September 5, 2014 described how to coordinate long term care insurance with potential veterans benefits. My post of September 12, 2014 discussed how an elder law attorney can help maximize the value of long term care insurance.

The introductory post in the series on planning ahead for long term care costs appeared on May 15, 2014.

Today’s post compares the possible strategies for planning ahead for long term care costs previously discussed in this series. We will use the criteria for comparison set out in my post of May 15, 2014. (It’s hard to believe that this discussion goes all the way back to May.) Those criteria are:

Your level of worry about long term care costs,
Cost to implement the strategy,
Risk of abnormal loss of assets,
Convenience to implement,
Control over your money, and
Likelihood of success.

Long Term Care Insurance

Great at relieving worry about long term care costs;
Relatively expensive to implement compared to the other pre-planning strategies (but still inexpensive compared to long term care costs);
No risk of abnormal loss of your assets (just your normal investment risks);
Convenient to implement (just buy a good policy);
You keep control over your money;
High likelihood of success in protecting your assets if you get an elder law attorney to help you at the time you need care.
(If you don’t protect your assets when you first make a claim against the policy, you are putting those assets at risk, and you are failing to get full value from the policy.)

Giving assets away

Good, but not great, at relieving worry about long term care costs (You might worry whether you’ve given away too little or too much);
Inexpensive to implement;
High risk of abnormal loss of assets (you’ve put your money at the mercy of someone else);
Convenient to implement -just give stuff away (a gift tax return may be necessary);
You completely sacrifice control over your money;
Medium likelihood of success in protecting your assets from long term care costs
(You have to hope that the look-back period, currently 5 years for Medicaid, passes before you need long term care.)

Do Nothing

Very little or no relief from worry about long term care costs (except for people who have the “I’ll deal with it when it happens” attitude);
No cost to implement;
No abnormal risk of loss of assets (just the normal risk of your investment choices);
Convenient to implement (What could be more convenient that doing nothing?);
You maintain control over your money;
BUT there is little chance of protecting the bulk of your assets from long term care costs.
(Frequently, an elder law attorney can help save something, even at the time you need long term care, but rarely can the bulk of your assets be saved.)

There is no clear winner that fits everyone. No two people have the same risk tolerance, and, likewise, no two people have the same level of desire to keep control of their assets. The differences among these strategies are big enough that you might like one approach while your neighbor prefers a different approach. It good even be your spouse that has an opinion different from yours. (That would be a tricky plan to figure out.) Pre-planning for long term care costs is not easy stuff.

Above all else, please remember that the strategies discussed in this series are for long term care PRE-PLANNING (i.e., when you are worried about, but don’t yet need, long term care.) The analysis in this series is not appropriate for someone who needs care now or will probably need care within 5 years.

Note: Don’t count on a blog post the next two weeks because of Christmas and New Years. I might publish blogs during those times but probably not.

For more information, visit Jim’s website.

Jim Koewler’s mission is
“Protecting Seniors and People with Special Needs.”

For help with long term care or with planning for someone with special needs,
call Jim, or contact him through his website.

Doing Nothing to Plan Ahead for Long Term Care Costs

Posted on December 11, 2014 by Jim Koewler — No Comments ↓

Today’s blog post continues the series about possible ways to plan ahead to protect against long term care costs.

The introductory post in the series on planning ahead for long term care costs appeared on May 15, 2014.

Today’s post discusses doing nothing to pre-plan for long term care costs.

It’s okay to do nothing to protect your assets against the possibility of long term care costs in the future. It’s easy. It doesn’t cost anything. It doesn’t give your money away while you’re still healthy.

Doing nothing does have a high degree of risk, however. To decide to do nothing you must determine whether you’re “losing sleep” about the risk of long term care in your future. If you’re aware of the possibility of long term care needs in the future but that awareness doesn’t cause you to worry, then doing nothing is okay. (Doing nothing through procrastination or decision-making inertia is NOT the same as determining how worried you are about long term care in your future.)

Doing nothing is especially okay if the cost of long term care insurance would bother you or the inconvenience and loss of control of your money that comes from giving away substantially all of your assets would bother you.

I can’t stress enough, however, that doing nothing is risky. (I know I’m repeating myself, but that is probably the most important thing to know about doing nothing to plan ahead.)

Even if you do nothing to plan ahead for long term care costs, there is the possibility of crisis planning at the time you need long term care that can allow you to keep some of your assets in the family (or wherever you want your assets to go.) Crisis planning won’t save nearly as much as pre-planning would have saved, but it will probably save something.

For more information, visit Jim’s website.

Jim Koewler’s mission is
“Protecting Seniors and People with Special Needs.”

For help with long term care or with planning for someone with special needs,
call Jim, or contact him through his website.

“My Care Ohio” could cut off your Long Term Care Benefits

Posted on December 4, 2014 by Jim Koewler — No Comments ↓

My Care Ohio is cutting off Medicaid payments for some seniors who need long term care. Without payment, the providers can’t afford to provide long term care.

The insurance companies that “manage” care for Ohioans who are covered by both Medicare and Medicaid have started to identify people who, in the opinion of employees of the insurance company employees, are not eligible for Medicaid and then have cut off Medicaid payments for those people. To be blunt, this seems very much like the “death panels” that Republicans claimed would result from the never-adopted Clinton health plan.

For those who have not followed the My Care Ohio discussion from its start earlier this year, My Care Ohio is a system of “managed care” for people on both Medicare and Medicaid (called “dual eligible” but more accurately described as “dual covered”) in the populous areas of Ohio. It is an attempt to control the state’s costs for long term care paid from the state budget.

When the implementation of My Care Ohio started earlier this year, I tried to provide an overview on how the My Care Ohio program will work (Managed care for Ohio Medicare/Medicaid “Dual Eligibles”) on February 22, 2014. On February 28, 2014, I explained how My Care Ohio is an attempt to cut costs through insurance company command and control methods rather than empowering people to choose lower cost care by making it easier to qualify for in-home care Medicaid through PASSPORT or for the Assisted Living Waiver instead of maintaining the current financial incentive to choose a nursing home, with its higher cost per person (My Care Ohio: A Triumph of the Stick over the Carrot.) On March 7, 2014, I described the decisions that dual eligibles must make when My Care Ohio comes to their county: (1) whether to accept managed care for Medicare for this first year; (2) which Managed Care Organization to join; and (3) whether to accept managed care for Medicare for years two and three. (Your Options in “My Care Ohio,” managed care for Medicare/Medicaid “Dual Eligibles”) On March 13, 2014, I outlined what to choices to make when enrolling in My Care Ohio. (What to choose in “My Care Ohio,” managed care for Medicare/Medicaid “Dual Eligibles”.)

When all of 2014’s enrollees were placed into the My Care Ohio program, I described how enrollees could minimize the likelihood that needed care services would be cut by opting out of Medicare participation in My Care Ohio (Keep your doctor separate from your Managed Care Organization in the “My Care Ohio” program) in my July 4, 2014 post. On November 13, 2014, I reiterated my suggestions about My Care Ohio enrollment with the opening of the renewal period for next year. (“My Care Ohio” Enrollment for 2015)

As it happens, just as we muddle through the 2015 enrollment period, we also get feedback from long term care service providers about the treatment of their clients/patients at the hands of the My Care Ohio insurance companies. That feedback is not good news for Ohio’s dual-covered seniors. The insurers are looking for people whom they can cut off from coverage using the opinions of insurance company doctors to justify their decisions.

These people would not have been covered by Medicaid in the first place if their own doctor had not determined that long term care was necessary. So, for these people under insurance company scrutiny, we have a repeated difference of opinions between doctors. It seems, however, that only the opinion of the insurance company doctor matters.

My biggest fear for people in the My Care Ohio program is that their managed care organization (i.e., the insurance company to which they are assigned, whom we will call an “MCO”) will reduce services (in order to cut costs) that the managed care organization/insurance company deems unnecessary. For example, if the person is in a nursing home and is doing well, the MCO might decide that the person can go home and receive home care (with a resulting big reduction in costs.) Sadly, my biggest fear seems to have come to pass.

These MCOs are quick to tell the people whom they de-fund that the insurance company hasn’t cut off their long term care. If the long term care stops, that’s the decision of the care provider (nursing home, assisted living facility, or home-care provider, etc.) That, however, is a disingenuous story. The real story should be that the insurer is cutting off payments to the provider and the provider is not in a position to provide long term care for free.

Now, this process is not the insurers’/MCOs’ fault (not all their fault anyway.) This is a state of Ohio decision to cut costs by cutting off care. An MCO’s job is to be the actual “hatchet man.”

So, if you or a loved one is dual covered (both Medicaid and Medicare) in Ohio, protect against service cuts. The best protection against unwise cuts in services is keeping your personal doctor and keeping your doctor away from undue influence by the MCO. To avoid MCO influence over the doctor, I urge all people in the My Care Ohio program to:

Opt out of the Medicare portion of My Care Ohio;
Find out which MCO works best with the care providers (other than the doctor) that you would like to use and enroll with that MCO; and
Choose a Medicare supplement (not an Advantage Plan) from an insurer that is not one of the MCOs in the My Care Ohio program.
If you can’t get a supplement, then get the best Advantage Plan you can find, just make sure it’s not from a My Care Ohio MCO.

For example, a person who can choose between United Health Care and CareSource as their MCO (as in Summit County where I live) would look at these insurers’ provider lists for the care providers that they prefer. Then, the person would tell Ohio Medicaid that they choose to OPT OUT of Medicare’s participation in My Care Ohio. Then the person would sign up for a Medicare supplement with a company other than United or CareSource. (Get the supplement enrollment done before December 7.) After taking these steps, the person’s doctor is paid by someone other than the MCO and would be immune to perceived pressure from the MCO to acquiesce to questionable care decisions.

Remember, in this second year of My Care Ohio, the program assumes that Medicare will be opted into My Care Ohio. You must take steps to notify the program that you choose to opt out for Medicare.

For more information, visit Jim’s website.

Jim Koewler’s mission is
“Protecting Seniors and People with Special Needs.”

For help with long term care or with planning for someone with special needs,
call Jim, or contact him through his website.