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The Last Word On LTCI...
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Ronald R. Hagelman Jr.
May 2018 Issue

The 500 pound canary squatting squarely in the middle of any conversation about custodial care remains our gift from  Lyndon Johnson. I do not mean to extend any normative values to Medicaid.  In many ways it may be our single most effective exercise at establishing and funding social justice. Because it is primarily a state run program there are naturally many variations of its benefit availability, severity of debt collection from heirs, and the basic rules of interaction with Medicare and the adult children who become entangled in it’s execution. It is difficult to put it in perspective. Medicaid’s codependence with the Affordable Care Act continues to percolate at the center of today’s political debate. It is important to remember that although long term care costs are it’s greatest expense, in terms of head counts children are the largest beneficiary of  needed assistance.

Medicaid is not bad care, it is simply limited and discounted. What is lost as a participant in the program is, in my opinion, profound. Choice of location is gone. Any extras in service and movement in your community are gone. Control of any remaining assets is gone. Care at home is most likely either not available or the waiting list is beyond your mortality. Choice of a roommate is gone and your spouse can usually only see you during visiting hours. In 2017 funding for Medicaid was $7 billion “short.”  Some of that difference has to be assessed to the private pay patients.

We know members of the “mass affluent” segment of our population, representing about five million households, will either choose to leverage the risk with insurance or, in our opinion, unwisely opt to self-fund.  At the other polar end of that spectrum, almost 50 percent of Americans will fall below the 250 percent of the poverty line. Where we must turn our attention is to the 34 million households in the “middle” market. There is now a plethora of product options for those who can afford to replace the risk with insurance, and Medicaid is waiting for those in the greatest need. Why must the choice for those American’s in-between those extremes be to hire an attorney and artificially impoverish themselves, deplete or demolish their hard earned savings, call upon the available largesse of family members, or simply count the days until the money runs out?

It’s the great “in between” where we can do the most good and frankly have the greatest effect. Forgive me, but the Class Act’s $50 a day was a pretty good number. Ultimately the only remaining mystery is, “Where will that dollar come from?”  Private insurance or an expanded welfare system? The question that cannot be avoided is, “What happens when (and perhaps more importantly if) you run out of sufficient monthly income and assets to maintain private pay status?” Let’s touch on a few issues  that immediately come to mind. Most care communities do have Medicaid beds. They are, in my opinion, there specifically to “catch” residents that were private pay and have exhausted resources.  We are aware that the basic premise of government assistance usually prevails: “If you take money from them (as in Medicare skilled nursing dollars) it follows that you must take Medicaid as well. Therefore beginning your journey for care assistance in private pay status accommodations will most likely help you to be allowed to remain at that address. You will be  moving into a semi-private room of course, and you will not be able to choose your “roomie.” There are states that mandate that care must be equal between private and Medicaid care. This is rare and, at least in my mind, hard to accept as true in practice.

Now, for fun, you might ask in your state if you can “upgrade” Mom to a private room. Happy to pay the difference to restore some quality of life. There is no consistency by state. Some do allow it, in some it is by practice of the nursing home, and some will not allow it at all. Once declared basically indigent you must wear and live with that Scarlet Letter for the duration. The last item I suggest that you do some investigation of is how “aggressive” your state Medicaid program will be in trying to recover the loan. Medicaid did not give anyone anything. It is a debt, and many heirs have been shocked when the notice for sale appears on the old family home.

 I have been accused of writing the same column over and over. There may some truth to that.  Just to be perfectly clear, I am not afraid to talk about the largest provider of care—I just don’t like to do so. Medicaid is not the enemy, it is simply the court of last resort. When we come to understand that it takes so little additional funding to maintain the freedom of choice and personal dignity that we would wish for all our clients, then and only then do we change our sales success.

Other than that I have no opinion on the subject.

Author's Bio
Ronald R. Hagelman Jr., CLTC, CSA, LTCP
CLTC, CSA, LTCP, has been a teacher, cattle rancher, agent, brokerage general agent, corporate consultant and home office executive. As a consultant he has created numerous individual and group insurance products. A nationally recognized motivational speaker, Hagelman has served on the LIMRA, Society of Actuaries, and ILTCI committees. He is past president of the American Association for Long Term Care Insurance and continues to work with LTCI company advisory boards. He remains a contributing "friend" of the SOA LTCI Section Council and the SOA Future of LTCI committee. Hagelman is president of Broadtower Insurance Solutions, a national IMO helping BGAs enhance LTCI production. Hagelman can be reached at Broadtower Insurance Solutions, Inc., 156 N. Solms Rd., New Braunfels, TX 78132. Telephone: 830-620-4066. Email: rhagelman@broadtowerinsurancesolutions.com. Website: www.BroadtowerInsurance.com.