AARP recently reported an unimaginable dearth of understanding when it comes to what American Baby Boomers don?t understand about long-term care? In fact, many think that either they have coverage when they don?t or that the government will take care of them. Allow me to address the latter issue today.
What is it that Baby Boomers don?t understand about the following true and declarative statements?
- Medicare does not cover the vast majority of long-term care services; and
- Medicaid (Medi-Cal) is available only to individuals with low assets and income.
All one needs to do is log onto the following page on the U.S. Department of Health & Human Services website (Long-Term Care) and they can read the following:
Medicare doesn?t pay for long-term care. Medicare pays only for medically necessary skilled nursing facility or home health care (skilled care at home). However, you must meet certain conditions for Medicare to pay for these types of care. Most long-term care is to assist people with support services such as activities of daily living like dressing, bathing, and using the bathroom. Medicare doesn?t pay for this type of care called “custodial care”. Custodial care (non-skilled care) is care that helps you with activities of daily living. It may also include care that most people do for themselves, for example, diabetes monitoring.
And
Medicaid is a State and Federal Government program that pays for certain health services and nursing home care for older people with low incomes and limited assets. In most states, Medicaid also pays for some long-term care services at home and in the community. Who is eligible and what services are covered vary from state to state. Most often, eligibility is based on your income and personal resources.
So why are Americans confused about this? Even the government isn?t confused! In fact, they are telling people on their website that they need to handle their long-term care planning needs pretty much on their own. Even if the government did pay for our long-term care, which they don?t, are these the folks we want caring for us when we can least care for ourselves? Think DMV!
Terry Savage, a financial reporter for the Chicago Sun-Times and a nationally recognized advocate for long-term care planning says it?s all about DENIAL. In an October 2004 article she states:
I’ll say it again. The next great financial crisis facing our retirement assets is not another bear market. It’s the cost of long-term care. A new study released this week by Met Life shows that the cost of care in a nursing home now averages $70,000 a year!
Savage cites a MetLife Mature Market Institute study done a few years ago that shows that only 2% of those Americans surveyed scored B or better on a long-term care and long-term care insurance I.Q. test. So let me test your I.Q.; whose job is it to educate Americans regarding this topic and to shake them out of their complacency and denial?
A. The government
B. Insurance agents
C. Financial advisors
D. All of the above
Next question; who wins if Americans take responsibility for their long-term care planning?
A. Americans
B. Insurance agents
C. Financial advisors
D. Future generations of Americans
E. All of the above
Final question; what?s the common denominator between the two questions above?
A. Insurance agents
B. Financial advisors
C. All of the above
Like many of you, I?ve been in the insurance business a fair amount of time; 31 years. In all these years I?ve never met anyone who wants to buy insurance unless they have been touched by an angel or it is already too late for them to qualify. Additionally, when it comes to all forms of voluntary insurance coverages, the vast majority that purchased had the need explained to them in ways that they understand it and probably more than once.
If you are not talking to your clients over the age of 45 about long-term care planning and how long-term care insurance is the most cost-effective way to take care of the problem you need to be. Even if after you broach the topic you turn it over to a specialist who handles the details you need to keep long-term care planning front and center. If you have spoken to your clients about this and they?ve put you off or don?t want to deal with it, keep trying. It?s our job and someone needs to do it.
In coming weeks I will be sharing and reviewing some of the latest intercompany long-term care experience data from the Society of Actuaries released yesterday. Its dry stuff but important to know. Stay tuned.