The Last Word On LTCI...
Just Say No
Ronald R. Hagelman Jr.
October 2017

I have always been impressed by the single minded purpose and passion of our dwindling cadre of LTCI specialists. To my knowledge no one has stayed as laser focused and dedicated to basic reason, sometimes painful truths and necessary reform of the long term care financing conundrum as Stephen A. Moses, president of the Center for Long Term Care Reform. He has recently released a report for The Foundation for Government Accountability titled How to Fix Long-Term Care Financing. Stephen’s message is, as usual, well documented, and his conclusions about the cause and effect of the poorly crafted, deservedly maligned and strategically counter-productive Medicaid federal boondoggle are “spot on.”. This definitive analysis should be required reading for all those involved in the struggle to fix a system that is clearly broken. It has often been concluded in this column that there are no easy answers, no single strategy to turn around a system that clearly rewards bad behavior and inadvertently reduces the quality of care that should be its core mission.  Stephen has convinced me that I may have been wrong. (Again.) There may be one most critical pressure point. One laser focused missile might destroy America’s most prolific “Death Star.”  Before that final reveal let’s revisit, just for context, what should be for most of us familiar territory. We should all be familiar with the basics by now:

  • Although children are three fourths of those receiving Medicaid benefits, they only account for one third of the expenditure. However, the disabled represent the corollary opposite ratio of participants to funding assistance.
  • Today’s current industry and political thinking on better preparing Americans for the certainty of caregiving costs are suggestions to raise taxes and create even more well intentioned but counterproductive federal/state bureaucracies.
  • The problem that won’t go away is that no solutions are even attempted or put into play until after the problem arises.
  • As Stephen has so eloquently insisted, the Emperor has no clothes. The myth of Medicaid “spend down” is a tall tale concocted by those with self-serving agendas. “Medicaid long term care benefits do not require impoverishment.” As we know a well versed elder law attorney can successfully remove from the eligibility equation unlimited assets and income. If there is no real risk, how could we have expected insurance or recovered dollars from actual spend down to have helped alleviate the problem?
  • As Stephen has so often explained, it is the Home Equity Exemption that is the most glaringly incongruous. Increasing each year, it currently stands at between $560,000 and $840,000. According to the report, “Medicaid diverts a substantial portion of over $2 trillion of home equity from personal long term care financing liability into a likely public expenditure.”

We have long suspected that the original intentions of Medicaid to help those most in need had been long subverted by a specific intent to defraud the American taxpayer. It seems there have always been  those who somehow created a rationalization process that believes any and all means of exercising legal “loopholes” to knowingly circumvent the intent of the program is acceptable. We know that most Americans could and should prepare for the inevitable. Why bother to seek shelter from the storm when you know it will never rain directly on those willing and able to perceive cheating as an entitlement?  The report also points out the lack of any substantial financial risk to begin with—where almost 90 percent of nursing home costs never invaded anyone’s savings and less than 10 percent was spent out of pocket for home health care.

We know there must be risk and clear consequences of not taking action to protect yourself and your family for anyone to plan ahead. We should know that far too many believe the government should pay for their care, and that if that is what they want they can have it if they are willing to pay the required minimal legal fees. Two unavoidable truths stare back at us from this concise review: Medicaid pays, and if you wish for them to pay they will! Before revealing the report’s suggestion of what I believe is an insightful and potentially successful reform, I would like to try to shift the arguments to where I believe they can do the most good. Medicaid is critically underfunded—meaning all care at Medicaid facilities is discounted care where the government controls all facets of your claim and the quality of what remains of your time on this earth. Frankly, my job is to make sure that no one I try to help ever goes near Medicaid.  Only one question begins each day for me: “What do I have to do to complement or supplement existing assets/incomes or enhance existing coverages to grant my clients the dignity of private pay?” I know it’s politically incorrect, but I do not want the government to come near anyone I love—and if that happens I have failed.

Now let’s return to the reform suggestion that could do the most to bring down a system that is doomed to continue to remain it’s own worst enemy. All American’s have left is qualified savings and home equity. Of the two it is, I believe, the potential loss of home equity that would strike the greatest fear in the hearts of those who have so far failed to plan. Instead of constantly adjusting the limitations, perhaps the time has come to remove permanently the entire home equity exemption from the Medicaid eligibility equation. Just say no and Americans would scramble to hedge their exposure. Just say no and new monies would flow into the private care market. You would, of course, have to close the back door by extending the look back period. Potentially utilizing home equity to pay for long term care expenses would force folks to rethink their property inheritance decisions, bringing insurance back into the equation. Using their own money for care would improve services offered and could dramatically enhance the desire to remain at home for care in the first place. Honestly, I was not a fan of the original “Just Say No!” campaign as I thought it was simplistic and unrealistic  and overbearing. Maybe not this time!

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: Website:

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