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Life Health > Long-Term Care Planning

Confusion Reigns in PPACA's Wake

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The Affordable Care Act (technically, the Patient Protection and Affordable Care Act; ACA here) is confusing, to say the least. As employers, hospitals, doctors, patients and others (drug manufacturers?) sort things, disorientation will probably be the order of the day. As to investing, one should probably think about what companies and institutions will be rewarded by the act over the long haul. Clearly, people will not stop having conditions that require prescription drugs, and just as clearly, government will pay a bigger slice and some manufacturers will receive a bit less. Hospitals will continue to have patients, and people will visit doctors — although there is the threat of losing physicians who are unhappy.

There was a part of ACA that addressed long-term care, but it seems to have vanished. Benefits from the plan were hard to understand and did not seem to last long enough. Nevertheless, long-term care is a crushing need for seniors. Because of this risk — said to be 45%, so a huge risk in fact — many state governments, through partnership plans for people at or below certain income thresholds, offer good programs and forgive some “spend-down” asset accumulation. These state plans need more attention. The problem with attention by financial planners generally is that they gravitate toward well-to-do customers, and those who qualify for state partnership plans are hardly in that category.

The main reason financial planners pay attention to the wealthy is this: those who have money are serious about money. Those who don’t have much in the way of financial assets are not serious at all, either about dollars or investing. The non-serious are the people who withdraw money from 401(k)s to buy a bass boat, after filling out paperwork that says the “emergency withdrawal” is for something different, or who cash in an IRA on a whim. I could not explain well enough to a nurse how difficult it is to accumulate capital to keep her from withdrawing practically all of the money from her IRA and using it to pay off debt. She is only a few years from retirement, and the debt, some low-interest, could have been handled differently. My guess is that she will never again have $35,000 in one place, although I pray that I am wrong. The $90 monthly from that IRA (and more when RMDs began) would have made a difference, added to monthly Social Security benefits.

Maybe some companies should adopt the state partnership plans and market them dynamically through life and health insurance agents — the need is certainly there. In thinking about health care exchanges, which are now being considered by most states — to expand Medicaid or not to expand is the question — perhaps long-term care exchanges would work (as in state partnership plans). It’s for sure that long-term care in a Medicaid facility is less desirable than in a private one.

Confusion reigns about health care going forward, doesn’t it? But it will be ultimately sorted out.  And I’m not very optimistic about repeal if there is a change in government. Keep in mind that the Democrats have been working on universal health care since the 1940s, and remember, too, that the Republicans — if there is a sweep — won’t actually take office until mid-January of next year. Many things have to happen in a certain way — in a fashion like the popular 1960s word, serendipity — for ACA to be repealed or seriously changed.

Have a serendipitous week and stay cool, okay? 

For more from Richard Hoe, see:

Bad News


Surviving Shaky Markets


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