Long-Term Care

March 26, 2019

By Lois A. Bowers– Mcknight’s Senior Living

Almost one-fourth (24.5%) of private long-term care insurance claims began in assisted living in 2018, and two percent more (26.5%) ended there, according to new data from the Los Angeles-based American Association for Long-Term Care Insurance.

The steadiness reflects trends across all settings where private long-term care insurance is used — most claims end where they first began, according to AALTCI Director Jesse Slome.

“For the most part, people with long-term care insurance begin care in a specific setting — typically their home — and that’s where the claims ends due to death, recovery or the exhaustion of policy benefits,” he said.

In 2018, 72.5% of all long-term care insurance claims ended because of death, 14% ended because of recovery and 13.5% of claims ended because benefits were exhausted, the AATLCI found in a January study, for which the association gathered data from seven national long-term care insurance companies.

“There are many misperceptions about long-term care insurance, and we conduct these studies to provide consumers with current and relevant insights,” Slome said. “For example, most consumers associate long-term care insurance with nursing home care. Less than one in four new LTC claims begin with someone receiving care in a nursing home.”

More than half (51.5%) of claims began in home settings in 2018, and 43% ended there, according to the association. By comparison, 23% began in nursing homes and 29.5% ended there. One percent of claims began and ended elsewhere.

Long-term care insurance companies paid out a record $10.3 billion in claims in 2018, according to the American Association for Long-Term Care Insurance.

“The industry passed the $10 billion mark for the first time,” American Association for Long Term Care Insurance Director Jesse Slome said.

Benefits were paid on more than 303,000 traditional, health-based long-term care insurance policies, which represent the majority of policies. “Traditional long-term care insurance pays when care is needed at home, in assisted living communities or in a skilled nursing home environment,” Slome said.

The 2018 totals compares with total claims amounting to $9.2 billion paid to approximately 295,000 people in 2017, according to the advocacy organization.

The AALTCI expects claimants paid in 2019 to exceed 303,000.

Greg Says believes there is a need for more education regarding long-term care insurance. There are now several approaches to this valuable coverage besides the traditional long-term care insurance policy which is cost-prohibitive for many people today.  One approach that’s gaining popularity is a life insurance policy that includes a living benefits rider.

Premiums for tax-qualified LTC insurance policies are considered a medical expense.

By Marlene Satter| November 19, 2018 | ThinkAdvisor

Traditional tax-qualified long-term care insurance policies now have new tax deductibility limits, according to the IRS.

Premiums for tax-qualified long-term care insurance policies are considered a medical expense, according to the American Association for Long-Term Care Insurance, and for an individual who itemizes tax deductions, medical expenses are deductible to the extent that they exceed the current amount required to meet the individual’s adjusted gross income (AGI).

Neither hybrid nor linked benefit (life plus LTC or annuity plus LTC) policies qualify for the deductions. However, individual taxpayers can treat premiums paid for tax-qualified long-term care insurance for themselves, their spouse or any tax dependents (such as parents) as a personal medical expense.

The new 2019 limits for traditional LTC insurance premiums (that can be included as “medical care”) are as follows: If the policyholder’s attained age before the close of the taxable year is 40 or younger, $420 in premiums are deductible, unchanged from 2018. For policyholders 41 to 50, the limit is $790, versus $780 in 2018.

For those 51 to 60, the limit is $1,580, up from $1,560 in 2018, while for those 61 to 70, the limit is $4,220, up from $4,160. The largest deduction, for those more than 70 years old, is $5,270, up from $5,200.

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‘Greg Says’ believes this is good news for older policy holders who can benefit from the potential of a $5,270 qualifying expense (deduction) for a single person, or up to a $10,540 expense for a couple where one spouse now has big medical/dental/vision bills.

Filial laws put kids on the hook for parents’ health-care costs

The laws underscore the need for a long-term-care planning strategy

Nov 22, 2017

By Greg Iacurci

State laws known as filial responsibility laws have the potential to stick unwitting family members with relatives’ hefty long-term-care costs.

One of the best-known examples comes from a court case in Pennsylvania, in which a man was ordered to pay $93,000 to cover his mother’s outstanding debt to a nursing home.

The case, Health Care & Retirement Corp. of America v. Pittas, showed how filial laws, on the books in about 30 states, can wreak financial havoc on families that don’t prepare for long-term-care needs.

Some observers point to a more recent case, though, to demonstrate the breadth of how courts enforce filial laws, which basically establish that children have a duty to care for their parents, and which experts believe will become more relevant as lifespans increase and healthcare costs swell.

The case, Eori v. Eori, broadens the net of financial responsibility — while the Pittas case was an example of an institution recouping money from a patient’s child, the Eori case pits siblings against each other. It determined that each had a financial responsibility to financially support their ailing mother, who required in-home care.

“This should open [financial advisers’] eyes to, even if you don’t have that client that ends up in a nursing-care facility, they’re still going to have end-of-life costs, and if they become indigent or broke and rely on others, that could have a big impact on all the family members,” said Jamie Hopkins, professor of retirement income at The American College of Financial Services.

‘FAIR READING’

While states’ filial laws differ, the Eori case — also from Pennsylvania — is a “fair reading” of what may be expected in other states, Mr. Hopkins said.

While there haven’t been many lawsuits involving filial laws and long-term care in the public eye, Hyman Darling, president of the National Academy of Elder Law Attorneys, believes it’s “just a matter of time before there are more of these cases,” especially because a few have gotten some traction in the courts.

“When it gets out there and people see it, they know there’s an opportunity to hang their hat on it to try to get some money,” said Mr. Darling, who’s also a partner at law firm Bacon Wilson.

The Eori case pitted Joseph Eori, who helped care for his 90-year-old widowed mother Dolly, against his siblings Paulette and Russell (who, after the lawsuit began, changed his name to Joshua). Because they weren’t providing financial assistance to their mother, Joseph sued under the state’s filial laws.

The mother had cancer, dementia and Alzheimer’s disease, and required 24-hour care that came via adult day care as well as three in-home caregivers, the cost of which exceeded her Social Security income, according to a court document.

Ultimately, a Pennsylvania state court mandated in 2014 that the brother, Joshua, pay $400 per month in support — or, $4,800 a year — which was upheld on appeal. The daughter consented, before appeal, to also pay $400 a month.

Interestingly, the court found that the mother wasn’t “destitute,” but needed extra income to help meet her monthly expenses and therefore was considered “indigent.”

Roughly half of Americans turning age 65 today will require long-term care. In 2017, the national median monthly cost for a home health aide was about $4,100, according to Genworth Financial Inc. The monthly cost swells to more than $7,100 for a semi-private room in a nursing home. As life expectancy continues to rise and the cost of care creeps up, there’s a growing need for financial advisers to be knowledgeable about long-term-care funding mechanisms to help clients choose the best one — or combination.

Long-term-care coverage is delivered primarily through “private” means. Roughly 55% of expenditures from age 65 through death are via these private forms of payment, with 2.7% of that from insurance and the remainder from out-of-pocket expenses, according to the U.S. Department of Health…