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Executive: Private LTC Can Help Save Medicaid

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Creating an “above-the-line” deduction for people who buy long term care insurance can help the federal government and states reduce the soaring cost of Medicaid.

Joyce Ruddock, vice president of long term care insurance at the main life insurance unit at MetLife Inc., New York, delivered that message, Wednesday at a hearing on Medicaid waste organized by the Senate Finance Committee.

“By the year 2030, Medicaid’s nursing home expenditures could reach $134 billion a year – up 360% over 2000 levels,” Ruddock said.

Ruddock, who testified on behalf of the American Council of Life Insurers, Washington, as well as MetLife, said encouraging the purchase of private LTC insurance through tax incentives increase the number of Americans who can pay for their own long term care.

Ruddock spoke during a hearing session that dealt with the issue of families transferring the assets of loved ones in an effort to get Medicaid to pay for the loved ones’ long term care.

Other sessions dealt with issues such as drug costs and fraud.

Sen. Charles Grassley, R-Iowa, chairman of the Senate Finance Committee, opened the hearing by saying it “is about identifying problems and fixing them in order to maintain Medicaid as a strong safety net.”

Ruddock talked about S. 1244, a bill that would provide a deduction for purchase of LTC coverage as well as provide a $3,000 tax credit for individuals with long term care needs and their caregivers. The bill has been introduced as H.R. 2682 in the House.By paying policyholders’ nursing home bills == and by keeping policyholders out of nursing homes by paying for home- and community-based services == private LTC insurance could reduce Medicaid’s institutional care expenditures by $40 billion a year, or about 30%, Ruddock said, citing ACLI research.

Ruddock also talked about the Partnerships for Long Term Care program, a pilot program developed by the Robert Wood Johnson Foundation, Princeton, N.J., that encourages consumers to buy high-quality LTC insurance by allowing those consumers to keep some assets and qualify for Medicaid LTC benefits if their private LTC benefits run out.

Partnership programs are operating in California, Connecticut, Indiana and New York.

“ACLI believes that some type of simplified uniform approach to the long term care partnership program that includes eligibility for benefits for any approved tax-qualified long term care policy, state reciprocity, dollar-for-dollar asset protection, uniform…annual reporting to a single repository, and consumer education can play an important role in encouraging the purchase of long term care insurance and help provide important savings to Medicaid,” Ruddock said.


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