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January 18, 2007
LONG TERM CARE LEGISLATION
Wednesday, January 10, 2007, was the deadline for filing bills for the 2007-2008 Massachusetts legislative session. I am following three of the bills that are of interest to seniors across Massachusetts. Today, I’ll be discussing the bill that affects anyone with, or thinking about buying, long-term care insurance.
Whenever a bill is introduced to the legislature, it is done so by a Representative or Senator, and they are referred to as the lead sponsors. Other Representatives and Senators who are interested in passage of the bill then sign on as co-Sponsors. The lead sponsors for the long-term care insurance bill are Senator Robert S. Creedon, Jr. and Representative Christopher G. Fallon. The following Representatives have signed on as co-sponsors; Eldridge, Balser, James Murphy, Sannicandro, L’Italien, M. Walsh, Brownsberger and Doug Peterson.
I am listing the sponsors and co-sponsors because if you don’t see your Representative or Senator listed, you need to call them and ask them to “sign on” to this bill. You can reach them at (617)722-2000. We only have until January 22nd to add additional co-sponsors. The bill is known as the Long Term Care Insurance Bill, with a temporary House docket number of HD244.
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 for two years, to be a qualified policy. 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.
Many people have purchased long-term care insurance based upon representations from insurance salesmen that the purchase of the long-term care insurance policy will make their home an exempt asset. The Massachusetts Division of Insurance thought that this was enough of a problem that on March 12, 2004 they issued Bulletin 2004-03 that requires anyone purchasing a long term care insurance policy to sign a “warning” notifying current and prospective insureds that their home will only be protected if on the day the person enters the nursing home their policy meets the minimum standards of two years coverage and $125 per day benefit.
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. This MassHealth policy encourages premature nursing home placement and limits the use of long-term care insurance by frail elders by placing them in a situation where their choice is to stay home and lose the protection of their home, or enter a nursing home sooner rather than later.
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