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LTCI Watch: Look up

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Last week, I was looking at a press release from a company that helps clients qualify for Medicaid nursing home benefits by putting their assets in a trust.

The firm was describing private long-term care insurance (LTCI) as a rip-off.

Whoever wrote the original version of the release (this was over the holidays; let’s be charitable and assume it was a holiday fill-in) couldn’t tell Medicare from Medicaid. The author of the release said older Americans prefer to arrange their assets so that they can rely on Medicare to pay their nursing home bills when they get older.

Of course, all of this is complicated. Medicare is actually paying for plenty of home care and some nursing home care these days, and who knows what it will do 20 or 30 years from now. 

And secretly, I’m a wild optimist. I personally think the solution will be that scientists will soon come up with effective cures for Alzheimer’s disease and Parkinson’s. I think we’ll either have dramatic, tush-saving improvements in health care or starve to death in caves. I can’t imagine a middle ground where we’ll live in a reasonable level of general comfort and still have a lot of Alzheimer’s.

But that’s just me daydreaming. Hard-headed planners have to assume that curing Alzheimer’s will take some time. 

See also:  In Japan, bank tellers become caregivers

The people looking at the products of the private LTCI issuers and pointing to cracks in the hull of the LTCI rowboat clearly have a point. Very low interest rates have let smelly water seep through gaps that might have been a minor annoyance if rates were better, but, sure, the cracks are there.

But, then, think of the alternatives as camping gear.

Medicaid is like a summer camping tent without a drop cloth underneath. We can already feel the rocks and pine cones poking through. Once a hard rain starts to fall, you’d better have all of your gear in heavy-duty plastic bags or say goodbye to anything made of paper.

Medicare has a thick, comfy drop cloth — made of a polyester-cotton blend bed sheet. 

People talking about how baby boomers will put their assets in trusts to qualify for “Medicare (no, oops, sorry, Medicaid) nursing home benefits need to look harder at actual baby boomers. Even the kinds of baby boomers who live in nice homes and drink nice coffee typically have a level of retirement savings and other assets such that those assets, in camping terms, are the equivalent of a couple of name-brand lawn clipping trash bags. The assets might be enough to get that moderately affluent boomer through a few LTC showers, but that’s about it.

Meanwhile, look up. That’s not a little long-term care (LTC) needs rainstorm heading our way. That’s a 30-foot-tall wall of water.

The LTCI boats have turned out to be smaller and leakier than expected, but they’re boats. Many boomers loathe the phrase silver tsunami – because it’s accurate. 

The LTCI issuers employ merciless bill collectors who insist that the policyholders send them more, and more, and more premium money, or risk seeing their policies canceled. Most of the policyholders send money to those relentless bill collectors rather than enjoying using the money to eat out more often and go on more trips.

The result: Those policyholders who cling to their small, leaky LTCI boats and go on claim will start out with enough benefits coming in to look appealing to an LTC provider. They will have a chance to work their way into the hearts of the decent providers who can pull them up out of the tsunami water. 

“At least, if the worst happens, private LTCI might give you a fair shot at having the same quality of life as a non-organic, caged chicken, instead of drowning immediately” is not the kind of slogan any company is going to put a billboard any time soon, but I think that’s the reason private LTCI, and well-thought-out hybrid arrangements, are still critical. They have their faults, but they exist. They might float. That’s something.