Long-Term Care in America

Table of Contents

Introduction		1
Chapter 1: What is Long-Term Care?		2
	Defining Long-Term Care	2
	A Changing Market	2
	Protecting Assets	3
	Where Do You Go for Long-Term Care?	4
	Understanding the Need for Long-Term Care	8
Chapter 2: Policy Options		9
	What is a Long-Term Care Policy?	9
	Policy Issue	9
	Medicare Benefits	10
	Looking at Medicare benefits in detail 1-6	11
	Part A Skilled Nursing Care	13
	Part B (Outpatient Care)	14
	Part B provides the following services 1-57	14
	Medigap Insurance Policies	21
	Chart	22
	Protecting Assets	23
	Medicaid Benefits	24
	Relying on Insurance for LTC Payment	28
	State Requirements	28
	Age and Premiums	28
	The Underage Market	29
	Increasing Premiums	30
	Insurance Pricing	30
	Premium Mode	30
	Reducing Benefits to Save Premium	31
	Example	31
	Policy Renewal	31
	Policy Review: 30 Day “Free Look”	32
	Number One Best Selling Unread Document	32
	No Policy Covers Everything	32
	Policy Schedule	32
	Policy Terminology	33
	Elimination Periods in Policies	36
	Policy Termination	36
	Hospitalization Requirements	36
	Home and Community Based Benefits	37
	Bed Reservation Benefit	38
	Waiver of Premium	38
	Selecting Other Types of Care	39
	No Policy Covers Everything	39
	Age Misstatement	40
	Forgetfulness: Notifying a Third Part of Premium Due	40
	Reinstatement of a Lapsed Policy	41
Chapter 3: The Evolution of a Major Industry		42
	Born of Need	42
	Children as Caregivers	42
	Can Families Make it Through?	43
	Paid Home Care	44
	Better Health Equates into Longer Life	44
	The Early Policy Years	44
	Policy Benefits Improve Over Time	45
	Remaining at Home	46
	Qualifying for Medicare-Funded Home Care	46
	How Does Medicare Decide What is a Covered Service?	46
	Finding a Home Care Provider	47
	Recognizing the Need and the Market	48
	Insurers Figure Out the Risks of LTC Insurance	48
	The LTC Marketplace	50
	Dramatic Policy Improvement, But Also Rising Premium Rates	50
Chapter 4: Who is at Risk?		51
	The Loss of Family Members as Caregivers	51
	Who Will Need Long-Term Care?	51
	A Graying Nation	52
	Frailty a Major Issue	52
	Considering Insurance	53
	Women are Especially Vulnerable	53
	Earning Retirement Benefits	54
	Medicaid is the Major Payer of LTC Benefits	54
	Medicare Drug Legislation	54
	Encouraging HMO Coverage	55
	Health Care for those not yet on Medicare	55
	Preventing Impoverishment	56
	Family History can be a Guideline	57
	Activities of Daily Living	57
	Following the Statistics	58
	Case Managers	58
	Are Premiums Affordable for a Number of Years?	59
	Who Buys LTC Insurance?	59
	HIAA determined who would purchase LTC	60
Chapter 5: Designing a Personal Policy		62
	What Will the Choices Include?	62
	Daily Benefit Options	63
	Expense-Incurred and Indemnity Methods of Payment	63
	Determining Benefit Length	64
	Policy Structure	64
	Home Care Options	64
	Inflation Protection	65
	Simple and Compound Protection	65
	Required Rejection Forms	65
	Elimination Periods in LTC Policies	66
	Policy Type	66
	Home Modification Benefit	67
	Rental of Medical Devices	67
	Caregiver Training	67
	Restoration of Policy Benefits	67
	Preexisting Periods in Policies	67
	Is Hospitalization First Required?	68
	Choosing Federal Tax-Qualified or State Non-Tax Qualified Policies	68
	Nonforfeiture Values	69
	Waiver of Premium	69
	Unintentional Lapse of Policy	70
	Bed Reservation Option	70
	Policy Renewal Features	70
	Items Not Covered by the LTC Policy	71
	Extension of Benefits	71
	Partnership Policies	71
	Partnership Plans Protect Assets, Not Income	72
	Partnership Benefits are Not Portable	72
	Partnership Commissions	72
	Robert Wood Johnson Foundation	72
	Affordability of Contracts	73
	Dollar-for-Dollar Asset Protection	73
	Example	73
	Standardized Definitions	74
	Minimum Partnership Requirements	74
	Benefit Duplication	74
	Partnership Publication	74
	Partnership Continuing Education Requirements	75
Chapter 6: Comparing Qualified and Non-Qualified Plans		76
	HIPAA	76
	Existing LTC Policies	76
	Benefit Triggers	76
	Activities of Daily Living (ADL)	77
	Six ADLs included under HIPAA	78
	Understanding the Difference in Benefit Triggers	79
	Federal Criteria	79
	IRS Notice 97-31	80
	State Laws May Vary	81
	Policy Conversions Were Offered	81
	Who Will Benefit?	82
	Defining “Chronically Ill”	82
	Qualifying Contracts for Tax-Favored Status	82
	Accelerated Death Benefits	83
	Purchasing Contracts for Financial Protection	83
	Pre-1997 Long-Term Care Policies	84
	The Treasury Responds with Exceptions	84
Chapter 7: The Deciding Factors		86
	Who is Most Likely to Buy LTC Insurance?	86
	Ongoing Long-Term Medical or Personal Care	87
	Some States Requiring Specific LTC Education	87
	Limited Benefits in Early Products	88
	No Durational Coverage Under Medicare	88
	Remaining at Home	88
	Home Care Insurance Policies	89
	Home Care Benefits Under Medicare	90
	Medicare Qualification	90
	Assessing Care at Home	91
	Gatekeepers	92
	Protecting Against Catastrophic Costs First	92
	Knowing Industry Terminology	92
	Receiving the Benefits Expected	95
	The Buying Decision	95
Chapter 8: Selecting a Suitable Company		96
	An Ethical Obligation to the Consumer	96
	Assets = liabilities + owner’s equity	97
	Guaranty Funds	99
	Signs of Company Trouble	100
Chapter 9: Alternatives to Purchasing Insurance		102
	Assessing the Need	102
	Realistically Speaking	102
	Asset Inventory	104
	Liabilities	105
	Estate Planning Tools	105
	Asset Transfer	106
	Reverse Mortgages	106
	Paid Family Members	108
	Accelerated Life Insurance Benefits	108
	The Largest Payer of LTC: Medicaid	109
	Asset Transfers for Medicaid Eligibility	110
	Examples	111
	Trust Shelters	112
	Catastrophic Coverage Act of 1988	113
	Information Required When Applying to Medicaid	114
	Viatical Settlements	114
	Any Income Available	115
Chapter 10: Agent Ethics		116
	According to Webster (definition of ethics)	116
	Establishing Insurance Ethics	117
	Linking Risk Management and Ethics	120
	Adequate Underwriting is an Ethical Duty	121
	Due Diligence	124
	Long-Term Care Due Diligence	125
	Product Suitability	128
	Long-Term Care Insurance Suitability Worksheet	129
	Suitability Determination/Personal Suitability Worksheet	130
	Long-Term Care Insurance Suitability Letter	132
	Insurance Dilemma	133
	Confidentiality	135
	Simultaneous Representation	135
	Common Sense	135
	Promoting Ethical Conduct	135
	Presenting Insurance Benefits	136
	Minimizing Misunderstandings	137
	The Ethical Path	138
	Professional Ethics	139
	Establishing a Code of Ethics	139
	Mandated Education	140
	Keeping track of CE (chart)	141
	Principles Versus Rules	142
	Legal Issues	143
	Integrity	144
	Objectivity / Competence	145
	Example	146
	Fairness / Confidentiality / Professionalism / Diligence	147
	Express and Ostensible Authority	147
	Example	148
	Ethics and Risk Control	148
	Agent Liability	149
	Company Insolvencies	149
	Third-Party Liability	149
	Hidden Costs of Litigation	149
	Documenting Procedures for Self-Protection	150
	Unwritten, Invisible or Implied	150
	Honesty – A Moral and Legal Obligation	151
	Churning Policies	152
	A Personal Choice	153
	The Exceptional Man	154
	Taking the Moral Path	155
	Developing a Work Ethic	156
	Acting in the Best Interest of the Majority	156
	Listening Our Way to Success	157
	Fulfilling Our Obligation to the Client	157
	Policy Presentations	158
	Duty to Represent Insurers Fairly	158
	Acknowledging Our Moral Obligations	159
	Agents Are Also Clients	159
	Is It Too Good to be True?	160

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