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December 16, 2004
LONG TERM CARE INSURANCE
Today’s legislative topic is the bill filed by Representative Kathleen Teahan concerning long term care insurance.
Long-term care insurance provides benefits for home care, care while at an assisted living facility, as well as nursing home care. Long-term care insurance provides two major benefits for those who are healthy enough to acquire it. The first benefit is that the policy will pay for care you receive in your home. I think everyone would agree that they would prefer to stay home rather than being placed in a nursing home. The other benefit is that if you purchase a long-term care insurance policy, your home may be protected in the event that you need nursing home placement.
LONG TERM CARE INSURANCE BASICS - In Massachusetts the policy must have a minimum of a $125/day benefit to be a qualified policy. Further, the policy must have benefits available sufficient to cover at least 730 days in a nursing facility. This is a trap for the unwary. If you buy a 2-year policy and use 1 day of home care benefits this would leave you only 729 days left for the nursing home, one short of the required minimum. The Division of Medical Assistance has decided to use the date you enter the nursing home as the measuring date for the evaluation of the benefits remaining on your long-term care insurance policy. This means that your home will not be protected anymore.
THE PROPOSED CHANGE – The Bill that has been filed is a very simple bill. It only asks that a long-term care insurance policy be evaluated on the date of purchase and not some time “down the road” when the person has entered a nursing home.
Many people have purchased long-term care insurance thinking that they will qualify to have their home protected because their policies meet the standards. However, this is only true if you did not use any of your days for home care.
The current regulations have the following negative impact on elders:
· The regulations discourage elders from aging in place. Elders have overwhelmingly expressed a preference to remain home as long as possible.
· The regulations create a disincentive for using private home care benefits, adding more cost to the MassHealth budget.
· The regulations unfairly penalize some elders who bought long-term care insurance policies with an understanding that they would qualify for protection of the home.
· The regulations will unfairly benefit insurers by creating disincentives to use the benefits covered under the long-term care insurance policy and paid for by policyholders.
Many of the Bills that come before our legislature pass of fail based upon what the cost is to the Commonwealth. To me, this Bill is a no-brainer because the end result would be many more people would purchase these long-term care insurance policies to finance their own health care. At a recent talk I gave to the retired Mass Teachers Association, almost one third of the people had long-term care insurance. If this disincentive were removed, how many more would purchase this insurance?
This article gives general information and not specific advice on individual matters. Persons wanting individualized advice on matters discussed should contact an advisor experienced in those matters. To the extent this article provides information on legal matters, it is based on law in effect in Massachusetts on the date of posting (laws in effect in other states are often quite different).
Ronald H. Surabian is a CPA and attorney who works at the Elder Law Center in Saugus, Massachusetts. He also holds masters in accounting and a masters in tax law. He currently serves on the board of directors of the Massachusetts Chapter of the National Academy of Elder Law Attorneys. If you have any questions please call me at the Elder Law Center, One Essex Street, Saugus, MA 01906 (781)233-4444. To view this or any prior article, please visit our web site at www.elderlawcenter.org