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 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.

These are uncertain times, indeed.

An article in today’s New York Times titled “Biggest Defaulters on Mortgages Are the Rich” by David Streitfeld discusses the fact that the rich have stopped paying their mortgages at a rate that exceeds the rest of the population.

According to research compiled by CoreLogic for the New York Times, one in seven homeowners with loans in excess of a million dollars is seriously delinquent. By contrast, only about one in 12 mortgages below the million-dollar mark is delinquent.

There are now 11 million or so homeowners who owe more than their houses are worth. This has created something called strategic defaults, where people deliberately walk away from their homes.

Maybe it’s time to reconsider the wisdom of choosing to self-insure for long-term care. We’ve always believed our homes are the safest business investment we’ll ever make. Now this appears to be not necessarily true.  Maybe self-insuring for long-term care really isn’t such a smart strategy after all. The odds that any of us will need care are very high. Care costs can be $40-75,000/year, depending on the type of care you want and where you live. People often need care for years.

The right long-term care policy, by comparison, has a paltry premium and offers dignity, options, and choices.

The following 3 articles hit the news Thursday and Friday of this week. The message here: it’s unrealistic to expect the government to be able to pay for long-term care. Long-term care insurance needs to be a core part of your financial planning. 

The total federal deficit is expected to exceed $14 trillion next year – about $47,000 for every US resident.

Medicaid rolls swell by 3.3 million nationwide By Catherine Candisky, Columbus Dispatch. Feb 18, 2010, Between June 2008 and June 2009, Medicaid enrollment rose by 7.5 percent and all 50 states saw increases, according to an analysis released Thursday by the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured. Medicaid currently pays for approximately 50% of long-term care in the US.  

States consider Medicaid cuts as use grows By Kevin Sack and Robert Pear, New York Times. Feb 19, 2010 States are already unable to make budgetary ends meet with the influx of Medicaid recipients resulting from the country’s economic woes, yet health care reform could add more than 15 million more people to the rolls. Many states are considering cutting vision and dental care which are considered optional benefits, and some other states are discussing new taxes on tobacco or levies on doctors and hospitals.

Deficit panel: Budget cuts will hurt By Andrew Taylor, Associated Press, February 19, 2010. In a poisonous legislative atmosphere, almost no one is willing to go on the record with budget solutions like raising the Social Security retirement age, ordering broad-based tax increases, or increasing co-pays and deductibles for Medicare. On Thursday, President Obama created the new National Commission on Fiscal Responsibility and Reform, charged with coming up with a plan by December 1, 2010 that will reduce the government’s annual deficits to 3 percent of the national economy by 2015. 

“Tony Marshall Avoids Prison Term: Mom Owned LTCi” could very well have been the headline, if longtime philanthropist and beloved doyenne of New York society, Brooke Astor, had owned long-term care insurance (LTCi).

From a professional standpoint, and as a native New Yorker who remembers Brooke Astor well, I’ve followed this story with great interest since it broke about 3 years ago.

According to the New York Times on December 22, 2009, 85 year old Anthony (“Tony”) Marshall, son of Brooke Astor, was convicted on 14 counts and sentenced to 1 to 3 years in prison. The most serious charge was first-degree grand larceny for siphoning off millions from his mother before she died.

What is so interesting to me is that the success of these convictions  seems to have hinged on  the issue of Brooke Astor’s long-term care. Tony Astor’s son, Philip, made headlines when he filed a guardianship petition asserting that his father was neglecting his grandmother’s care. Philip proved his father’s negligence and gained guardianship of his grandmother. From that point on, the case seems to have gained its traction.

Tony Marshall is in his own right, extremely affluent. I remember reading of the neglectful state of Brooke Astor’s long-term care with astonishment.

We long-term care insurance agents frequently get asked how just how affluent someone should be in order to not need long-term care (LTCi).

There is no such thing as being too wealthy to need LTCi! I have sold LTCi to many extremely affluent people. I know Suze Orman and Terry Savage own LTCi. Reliable sources tell me Warren Buffet and Oprah Winfrey own it: they’re even more affluent than Brooke Astor was.

I must wonder if Tony Astor would have been sentenced to prison if Brooke Astor owned LTCi. If she had owned LTCi, ample funds would have been directly allocated to her care. Tony Marshall would have been incapable of siphoning these funds off.  Detailed reporting on the extent of Mrs. Astor’s care would have been required in order to collect. Her policy probably would have provided her with a care-coordinator to advocate for her.

In addition, Brooke Astor was not capable of expressing her desires in her final years. The funds available from her LTCi would have provided those around her with the blueprint of her wishes and desires for care.

If you cherish your dignity and options, and strive to keep your family intact under the most stressful of financial circumstances, there is no such thing as being too affluent to need long-term care insurance.

The front page of today’s New York Times talks about the marked increase of car accidents due to cell phone usage.

How does this tie-in to long-term care insurance? Denial is involved.

Please pay attention to the last sentence of this quote from the article: “When we ask people to identify the most dangerous distraction on the highway today, about half — correctly — identify cellphones,” said Bill Windsor, associate vice president for safety at Nationwide. “But they think others are dangerous, not themselves.”

I love the last line of the quote. It confirms over 20 years of my own observations in the area of LTC planning. I believe this explains why well-educated people can read facts confirming the extremely high risks, high costs, high odds that they may need care, and still not purchase very reasonably priced long-term care insurance!

These same people have often been involved with a mother, father, aunt, sister, neighbor, or brother, who needed care for a prolonged period of time. Their loved one did not own long-term care insurance. They witnessed firsthand, the financial catastrophe, family stress and dysfunction, and loved one’s lack of dignity and control, all caused by failure to honestly talk about the possibility  of needing care when they were healthier and younger. These same folks often still don’t want to buy reasonably priced long-term care insurance for themselves!

I believe that denial is built-in to our human psyche. Denial can be useful in certain situations, but the use of denial in long-term care planning is not a success strategy.

An article in today’s NY Times,  titled In Turnabout, Children Take Caregiver Role, talks about a disturbing new trend. According to a 2005 study, about 3 percent of households with children ages 8 to 18, have child caregivers.

There is a wonderful video that accompanies this article.

Experts say that many child caregivers are from single-parent, low-income families, but others are from middle-income families whose insurance does not cover home care. Experts admit that they are seeing more child caregivers than before, as chronically ill patients leave hospitals sooner and live longer, and the recession compels patients to forgo paid help.

If you haven’t purchased your LTC insurance yet, are you sure you want to continue putting off your decision to buy it?

I grow more and more fond of “cash” type LTC policies as time goes on, and I acquire perspective that only experience brings.  Readers may recall my October, 19, 2008 post describing how these “cash” type LTC policies will pay for care all over the world.

Yesterday’s New York Times ran a front page story on how electronic devices and the internet are being used to provide care. As time goes on, can you imagine how much care might be given this way? I can’t! But I know it will be an enormous amount. Here’s a link to a slideshow showing the growing use of electronics in caregiving, and here’s the accompanying article from yesterday’s New York Times.

“Cash” type LTC policies will pay for innovative caregiving options like these.

nov-29-08-NYT-men-as-caregivers

An excellent story in today’s New York Times is a great advertisement for the purchase of long-term care insurance.

This very poignant article describes increasing situations where men “default” into becoming primary caregivers, largely because no prior thought or conversation about planning for long-term care ever occurred.

Here’s how the article starts:

“ When Peter Nicholson’s mother suffered a series of strokes last winter, he did something women have done for generations: he quit his job and moved into her West Hollywood home to care for her full time.

Since then, he has lost 45 pounds and developed anemia, in part because of the stress, and he is running out of money. But the hardest adjustment, Mr. Nicholson said, has been the emotional toll.

“The single toughest moment was when she said to me, ‘And now who are you?’ ” he said. “My whole world just dropped. That was the pinnacle of despair.””

My question to readers is, if Mr. Nicholson’s mother had purchased affordable long-term care insurance while she was able, how differently would this situation have turned out?