The Connecticut Elder Law Blog

Help with Long Term Care Insurance Premiums Coming in January

One of the main reasons that most of my clients don't purchase long term care insurance, despite my insistence that it's a much better alternative to Medicaid planning, is the cost.  Well, help is coming in January 2010 thanks to the Pension Protection Act (PPA) which was signed into law in 2006.

The PPA will allow people who have built up equity in a life insurance policy or annuity to trade in those policies for long term care insurance.  This is perfect if you have life insurance and feel like you don't need it anymore (maybe the kids are old enough now to take care of themselves if you pass away). 

There is also a big tax advantage since cashing out a life insurance policy or getting payments from an annuity triggers income tax liability.  There would be no such tax issue if you converted your life insurance or annuity to long term care insurance in accordance with the PPA.

Keep an eye out for new long term care insurance programs from insurance companies in light of the pension law.

Click here for the full story at MainStreet.com.

Long Term Care...to Insure or Not to Insure?

Long term care insurance is an issue that is coming up for my clients with more and more frequency as the population in general pays more attention to financial issues and the health of the national economy.  It's smart to consider this type of insurance since the average monthly cost of a nursing home in Connecticut is, officially, $9,464.  But remember that's the average, so half of the nursing homes have costs which are higher than that figure, with some being substantially higher.  This means that there's a very good chance that a long-term nursing home placement would be the most costly event in one's life.

In general, I would say that shopping around pays off due to the wide disparity in premium prices from company to company, and shop around while you're still relatively young since the premiums obviously increase with age.  I would also say that if paying the premium would have an impact on your standard of living then the cost is probably too prohibitive and you'll just have to hope for the best.  Remember that the statistics say there's roughly a 50/50 chance that you'll need a nursing home stay at some point.

The "back-up plan" would be Medicaid planning which is much less appealing than having long term care insurance coverage.

I would also ask your agent to discuss the CT "Partnership" Program which could allow you to keep substantially more assets than you normally could if you ever apply for Medicaid benefits.  Under the Medicaid program a single person can only keep $1,600 in assets.  But if the applicant has a $100,000 Partnership long term care insurance policy then the asset limit for Medicaid jumps to $101,600.  This would allow you to pass a legacy onto your beneficiaries...a luxury that most Medicaid recipients do not have.

Furor Over Long Term Care Insurance Rate Hikes in CT

The Hartford Courant is reporting that some legislators are calling for public hearings regarding Genworth's proposed 9% rate increase for long term care insurance premiums.  But that's chump-change compared to proposed increases from other insurers ranging between 29% to 49% or higher!  Ouch!

I've always counseled clients to try to get long term care insurance if they're insurable and if they can swing the premiums without taking a hit in their standard of living.  This is because the long term care insurance route is generally the preferred approach compared to Medicaid planning.  But if premium rates continue to rise like this then the preferred approach is going to be a viable option for fewer and fewer clients.

I don't know how much of an impact these proposed public hearings will make, but I suppose they can't hurt.  I'll keep my ear to the ground on this issue.

Court Calls Assisted Living Facility "Long Term Care"

In a case regarding coverage under a long term care insurance policy, a U.S. District Court in Ohio has decided that an assisted living facility qualifies as a "long term care" facility, even though it did not have a nurse on site 24/7.

In this case, Hoekenga vs. Continental Casualty Company (U.S. Dist. Ct., S.D. Ohio, No. 1:06-cv-458, April 18, 2007), Mrs. Hoekenga took out a long term care insurance policy that provided coverage as long at the facility provided 24-hour-a-day nursing services.  The assisted living facility in this case provided nursing services 24/7 with a nurse supervising the care.  But the nurse was not on-site 24/7 and the insurance company attempted to use this as a reason to deny coverage.

The Court agreed with Mrs. Hoekenga and decided that the term "supervision" does not require that a nurse be on site at the facility on a 24-hour-a-day basis.