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COVID-19, Medicare, and Long-Term Care: Fact or Fantasy

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A line chart showing that the spring COVID-19 death figures were much higher for older people than for younger people (Credit: CDC)

On Oct. 5, President Trump was released form Walter Reed National Military Medical Center following three days of treatment for severe acute respiratory syndrome coronavirus 2 — a virus that has infected 11.6 million US citizens and killed 250,000 since March.

At 74 years of age, Trump seemed to shake off COVID-19 and its effects,

He received an experimental “polyclonal antibody, oxygen, the antiviral drug remdesivir and the steroid dexamethasone. The average citizen probably could not afford, or get access to, the combination that brought about Trump’s remarkable recovery.

The U.S. COVID-19 outbreak first drew attention in late February, when it affect a nursing home in Kirkland, Washington. In spite of strict lockdowns, no-visitor policies, and public scrutiny, many states reported a high number of COVID-19 deaths in nursing homes.

(Related: LTC Type Has Big Effect on COVID-19 Infection Rates: Provider Survey)

This uptick in nursing home deaths laid bare clients’ concerns about aging parents, and about where those parents can get care when they need it.

The term “long-term care” (LTC) refers to a range of services and support for personal care needs.

LTC services, which are sometimes called custodial care services, include help with everyday task like bathing, dressing, and using the bathroom. Those activities are often classified as “activities of daily living,” or ADLs. These services can be provided in assisted-living facilities, nursing homes or an individual’s own home.

Genworth commissioned an LTC cost survey in 2019. It found that the median cost of a home health aide was $4,385 per month, or $52,000 a year. That includes up to 44 hours of care per week. For around-the clock care, the cost is much higher. The cost is also higher in areas where the overall cost of living is high.

Medicare does not cover long-term care if that is the only care an individual needs. A Medicare beneficiary pays 100% of the cost for non-covered services, including most long-term care.

COVID-19 has made the kind of coverage that does pay for LTC services, long-term care insurance (LTCI), more complicated to buy.

Many carriers have adjusted, by:

1. Changing underwriting procedures and requirements

Some carriers have changed the maximum issue age.

Many now require in-person meetings for cognitive screening, assess mobility and issues like knee or hip problems

2. Giving extra scrutiny to people who tested positive for COVID-19

Applicants have to show they have received a negative test three to six months earlier.

3. Offering faster application processes for healthy young people

For younger people, carriers are conducting phone interviews along with electronic medical records.

4. Increasing premiums for some

Rates have gone up from 5% to 50% for some new insureds, and, in some cases, insurers have reduced spousal discounts from 30% to 15%.

Note that an insurer cannot raise one customer’s rates due to that customer’s individual circumstances. To raise rates, insurers must obtain approval from the state and increase premiums for an entire block of policies.)

In 2012 I wrote an article about financing long-term care, in that article I also addressed facts vs fantasy about long-term care.

The attention being brought to nursing homes, COVID-19 diagnosis of residents of these facilities and the death of residents left languishing in facilities along with states that instituted no-visitor policies, now is a perfect time to look at those “facts vs fantasy” about long-term care again.

Fact v. Fantasy

1. Fantasy: “The government will pay….”

The fact is Medicare will not pay.

Medicaid will pay, but are they prepared to deal with the price they have to pay?

Medicare is a federal health insurance program for seniors who are over 65 and are eligible to participate as a part of the Social Security program.

Medicare is designed to cover the costs associated with hospitalization and acute illness. It is not a program designed to cover the costs associated with chronic care needs such as nursing home stays.

And while you can look to Medicaid for long-term care needs the eligibility requirements for Medicare requires you to be impoverished.

Is that what your planning; to spend down your assets you have spent a lifetime accumulating so Medicaid can manage the years you have left?

2. Fantasy: “My family will take care of me.”

We need to discuss with our clients the real issues involved with our family taking care of us. The physical, time and financial demands associated with family care giving.

Will their spouse be physically capable of providing care at the age they might need it, to have their spouse use their physical strength to lift them off the bed should they be bedridden.

Will family members have the time or money to provide eldercare when the time comes, will they have the temperament to do this, is that what they want for their kids, their grandkids?

The family and medical leave laws do permit time off to attend to these types of needs — however this time off is without pay.

Will their children or grandchildren be able to afford the loss pay?

Is this what they would expect?

Moreover, the stress for family members much less your clients in having our children or grandchildren attend to personal care needs such as bathing, toileting or dressing can have a negative effect on their family members.

3. Fantasy: “I’ll stay in my home. It’s nicer, and, besides, it’s cheaper.”

Not necessarily.

While most of our clients would want to stay in their home, Medicare home care benefits are designed for short-term needs.

When more extensive services are needed is when the problems begin.

Household help is often needed in addition to medical care and those services can run several hundred dollars or more a week. Should round the clock care be needed your client may need to hire more than one person, how long can they or their family be expected to cover these costs before they start depleting their assets.

And any money used to cover these cost is not “earning” them money, it’s lost assets that could be used to build additional asset to help them manage in their home a little while longer or to have any assets to leave for their spouse at their passing should the spouse need care later.

While on the surface long-term care insurance is not the answer for everyone, the stark realities of aging mean long-term care could be an acceptable option for many of our clients.

Unlike Medicare, long-term care insurance is designed to cover the costs associated with an inability to perform the acts of daily living.

Unlike Medicaid, a long-term care insurance provider does not require that your clients become impoverished before using the benefits.

There are hybrid policies that have evolved to provide these living benefits, essentially a life insurance policy combined with long-term care coverage. A hybrid policy lets the policyholder use the funds funds accumulated in the life insurance policy to pay for custodial care.

Heirs receive the remaining death benefit upon the policyholder’s death

This allows your client’s family members to concentrate on offering companionship and advocating on your client’s behalf, rather than on fighting for care or services.

Moreover, the benefits of many long-term care plans can provide funds that will help your client stay at home longer,  while preserving assets for the client’s spouse.

At a time of record low interest rates, with many of your clients having their money in conservative investments such as certificates of deposit, now may be a time to offer a solution to the problem of how to pay for long-term care.

Many of your clients have been afraid to tap into these funds because they were concerned about outliving their income.

Long-term care is something your prospects and clients are already talking about. The question is: Will you talk about it?

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Lloyd Lofton (Photo: Lofton)Lloyd Lofton is the founder of Power Behind the Sales and the author of The Saleshero’s Guide To Handling Objections.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.