I can give your group new program called “Long-Term Care Insurance (LTCi) Mythbusting.” It lasts a half hour and is available in your workplace or for your civic or trade association.

Here are the four LTCi myths this talk will bust:

1) LTCi is expensive.

2) LTCi rates go up and become unaffordable.

3) I don’t need LTCi yet.

4) The government will pay for my care.

Correct long-term care planning requires knowledge. Knowledge is power. I would be delighted to accept an invitation to speak to your group.

A September 1, 2010 article in the Washington Post, titled “Federal Spending Rises a Record 16%” reports: “Federal domestic spending increased a record 16 percent, to $3.2 trillion, in 2009, the Census Bureau reported Tuesday, largely because of a boost in aid to the unemployed and the huge economic stimulus package enacted to rescue the sinking economy.”

This increase in spending was the largest since 1983, when the Census Bureau began measuring it.

The stimulus package has thrown our nation a trillion dollars further into debt.

The largest chuck of federal spending (46 percent of the $3.2 trillion) was spent on Medicare, Medicaid, Social Security, and other entitlement programs that are expected to swell as the population ages.

Long-term care insurance (LTCi) premiums can be as low as $50 a month. You’ve put off buying long-term care insurance because you expect the government to pay for your care?

Honey speaking at Senior Market Advisor Expo

I’ve just returned from the tenth Senior Market Advisor Expo in Las Vegas. There, I was most most honored to be a featured speaker on long-term care insurance (LTCi). My talk was titled, “Sitting on a Goldmine: LTCi”. 

The conference was attended by about 550 fellow advisors who specialize in various aspects of financial planning in the senior marketplace. My presentation was about current events in the nation and the LTCi industry and their implications in LTC planning.

Some collegues present an interesting perspective I hadn’t thought of. The article, “LTC Expert says Long Term Care ‘Eats’ Almost Three Square Feet of Average American Home Every Day” explains how they’ve caluculated exactly how much of your home value, measured in square feet, is gobbled up each day if care is needed and you don’t have long-term care insurance (LTCi).

They are basing their calculation on average daily nursing facility cost and average home cost and size.

“The National Association of REALTORS(R) reports that the median price for U.S. homes is currently $183,700, according to their latest survey. With an average 2,422 square feet per home, according to the U.S. Census Bureau, that equals $75.85 per square foot, about enough to pay for a third of a day of nursing home care.”

Very simple arithmetic. Makes sense to me.  Hope stories like this prompt you to act. I urge you to purchase long-term care insurance if you are insurable and have not done so already.

In recent weeks we’ve had a spate of reporting from the Associated Press, New York Times, Wall Street Journal, and all the other major news sources on Medicare and its trust fund.

An August 6, 2010 Associated Press article by Stephen Ohlemacher and Ricardo Alonso-Zalidvar states that according to the annual report by Medicare and Social Security trustees, Medicare will have enough money to run a dozen years longer than earlier projected.

Top Medicare actuary Richard Foster warned that the report’s financial projections “do not represent a reasonable expectation.”

Kathleen Sebelius, Secretary of Health and Human Services and one of the trustees, said the report was based on proposed cuts in Medicare payments, which she doubts will happen.

Related articles point out that job loss and the current recession are causing people to collect Social Security sooner than anticipated. They also note that health care reform includes reducing payments to Medicare providers and reducing future Medicare spending.

If you don’t own long-term care insurance, I hope information like this will prompt you to act accordingly and buy it now. It should be obvious that the government can’t—and won’t—pay for your long-term care.

A recent blog at favstocks.com caught my eye due to its title: “How to Know Whether or Not You Need Long-Term Care Insurance.”

Lo and behold, the piece exhumed Jean Chatsky’s proffered fable that you don’t really need to be concerned with buying long-term care insurance (LTCi) if you have over $2.5-$3 million in assets…because you’ll just simply be able to self-insure for the $60,000 to $90,000/year costs of long-term care – no problem.

This brings back fond memories that inspired a series of blogs I did on Ms. Chatsky’s completely irrational and nonsensical advice. Unfortunately, I’m sorry she gave me the motive to draft them.

Ms. Chatsky evidently still resists spending time researching facts, or even thinking through how irrational her advice is. Happily, she is more and more alone in her opinion. Other nationally recognized experts like Suze Orman and Terry Savage, who have far more credibility, heartily disagree with her. So does the majority of media coverage nowadays. Yet Ms. Chatsky she does not appear to be deterred.

Here’s the latest lingering evidence of Jean Chatsky’s bad advice from the www.favstocks.com blog:

“Before I give the details, I need to mention that the book says that there are two schools of thought on long-term care insurance. The first says that you need it no matter what your financial situation. The second says that you need it only if you fall within certain financial parameters.” Jean Chatzky, the author of the book, agrees with the latter way of thinking. As such, she offers this suggestion for telling when you do and don’t need long-term care insurance: If you have a significant amount of assets — upward of $2.5 million or $3 million — you don’t need insurance for long-term care because you’ll be able to pay for your own care. If you have little or no assets — less than $300,000 — you’ll spend them down and then Medicaid will pick up the tab.”

Here’s my official response to this blog:

Honey Leveen says:

08/06/2010 at 8:31 am PDT

Jean Chatsky is way far off the deep end. Publicly recognized figures like her, in positions of influence should refrain from spouting off about things it is obvious they know little about. The advice Chatsky gives on LTC is simply illogical and not thought through. One of a series of blogs I did about Chatsky http://www.ltcqueen.com/?p=10 describes and shows what her irrational LTC advice was. These blogs http://www.ltcqueen.com/?s=jean+chatsky are the follow-ups to it.
Chatsky’s advice is foolish because the income $3 million throws off is just not that huge and is counted on to produce an ordinary lifestyle. Imagine what an unplanned, ongoing $60-90K/year caregiving expense would do to the ordinary lifestyle anticipated from $3 million.
And as you point out, who in their right mind would want Medicaid-paid care? It is already quite substandard. You don’t have to be a rocket scientist to figure out what will happen to Medicaid provided LTC as we Boomers who refuse to plan responsibly for LTC start needing care in droves.
BTW few other public financial figures agree with Chatsky. Terry Savage’s “The New Savage Number” is the book you should be referring to instead. Unlike Chatsky, she’s done extensive research on LTC and gives advice based on facts that are thought through.

Age 73 with health problems is not the right time to acquire long-term care insurance (LTCi).  Today I got a call from such a person’s son, eagerly wanting to buy LTCi for his mom from me.

I get more calls of this nature then you can possibly imagine !

These folks often appear to be incredulous upon hearing they’re not eligible for LTCi. I am “the heavy”, having to deliver this news.

I always suggest that now is the optimal time for the healthy, younger caller, to find very reasonable rates for LTCi. We talk about how the parent’s circumstances are the ideal illustration of what havoc can be wreaked without LTCi. Few take me up on my offer to teach them the basics of LTCi with no obligation. Evidently, the family is in a predictable state of panic, damage control and duress caused by the loved one’s need for care and lack of finances to pay for it. All they appear to be consumed with when we talk is trying to douse the fire caused by lack of owning LTCi.

What is it that causes people to avoid talking about and planning for the future responsibly, while they are able to insure their dignity, options, choices, and wealth with very reasonably priced LTC insurance? I think I will never fully understand this part of the human nature.

I’m getting asked a lot about the new, government run CLASS (Community Living Assistance Services and Supports) LTC program that is part of the healthcare reform passed earlier this year.

Here’s a quote related to CLASS that I’ve seen over and over: CLASS LTC ”is a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of.” Senate Budget Committee Chairman Kent Conrad (D-ND) said this.

CLASS LTC is not due to be off the ground and running until sometime in 2012. Prior blogs I’ve done on CLASS LTC will give you additional background.

The Congressional Budget Office (CBO), the American Academy of Actuaries, and Medicare’s Chief Actuary (Rick Foster) are all in agreement that CLASS LTC funding will not be sustainable, and will attract enrollees with the highest costs.

Mr. Foster predicts that the program will run deficits in 2025 and thereafter. He states premiums will initially need to average about $240/month for CLASS LTC to remain in the black. He calls CLASS LTC “an insurance death spiral.” Due to the program’s high costs, it is likely to attract the most expensive enrollees and discourage young and healthy people from enrolling. This is likely to cause premiums that continue to increase.

The CBO said CLASS “…would add to budget deficits in the third decade – and succeeding decades – by amounts on the order of tens of billions of dollars for each 10-year period.”

Two articles entitled “The CLASS ACT: Repeal Now, or Face Permanent Taxpayer Bailout Later“, by Brian Riedl and James Capretta, and “No CLASS: How Congress Saddled Taxpayers with Another Costly Entitlement,” by Brian Blase, were recently published by the Heritage Foundation. The second piece gives a great description of the CLASS LTC program and its history. It also graphs its projected economic failure.

There is now a bill to being proposed by Dr. Charles Boustany (R-LA) to rein in the CLASS Act. Click here for an article that will give more information on Dr. Boustany’s bill.

A July 16, 2010 article by John Leland of the New York Times states that since the start of the recession, at least 25 states and the District of Columbia have curtailed programs that enable low income, disabled people to remain at home.

In Oregon early this month, 4,500 low-income residents received letters stating that their state-paid home health care benefits would end. Cuts affecting an additional 10,500 residents are scheduled for October 1. This is due to Oregon’s $577 million budget deficit.

Ironically, what is likely to happen is that due to cut services, many of the affected will wind up in Medicaid-paid nursing homes, which are far more costly. Oregon’s average cost of nursing homes is $5,900/month, while the cost of the slashed home care services averages $1,500/month.

These cuts do not seem logical, but they are.

Medicaid is a joint state and federal program. Its rules require states to provide nursing home care (but not home health care) in order to receive federal money. In Oregon’s case, over half of its Medicaid dollars are spent on the home health care services being cut. The easiest place for it to save money and balance its budget without jeopardizing Medicaid funds is to slash home health care benefits.

Unfortunately, such money-saving cuts are likely to be “penny-wise and pound-foolish”. Many of those affected may wind up having incidents that will cause them to need nursing home placement in short order.

In the past Medicaid has paid for care for indigent, disabled people. Sadly, it is increasingly obvious that Medicaid as we’ve known it is simply unsustainable.

A favorite excuse for many wanting to avoid a conversation about responsible long-term care planning has been to insist that the government will pay for their care if they need it. I hope this blog helps readers understand how unwise this belief is.

When reasonably priced long-term care insurance is available, why would you ever want to self-insure for long-term care in such uncertain times?

The nation’s total federal debt next year is expected to exceed $14 trillion — about $47,000 for every U.S. resident.

Republican Alan Simpson, the former Republican senator from Wyoming, and Erskine Bowles, the former White House chief of staff under Democratic President Bill Clinton, head an 18-member commission assigned to come up with a plan by Dec. 1 to reduce the government’s annual deficits to 3 percent of the national economy by 2015.

”This debt is like a cancer,” Bowles stated at a meeting of the National Governors Association this month.

In a July 12, 2010 Associated Press article reported by Glen Johnson, Bowles and Simpson said that everything needs to be considered — including curtailing popular tax breaks, such as the home mortgage deduction, and instituting a financial trigger for gaining Medicare coverage.

So if your long-term care planning included current government benefits and tax breaks to help you self-insure, you would be wise to reconsider.