Contact: Dorothy McMahon
Phone: (248) 844-9787


In general, people are reluctant to change. It’s been said that most people only make the decision to change when the pain of the status quo becomes worse than the pain associated with change.

The same can be said about governments and long-term care reform. For years, U.S. public policy has largely ignored the impending fiscal train wreck of an aging population that shows little appetite to privately fund its future long-term care needs. Instead, the government’s Medicaid program is the de facto long-term care funding mechanism for Americans who have either a small bank balance or a willingness to hide money to qualify.

If there’s one good thing that can be said about the current recession, it’s that it may lead us to rational Medicaid reform. At the very least, economic uncertainty is sharpening the debate about what services the taxpayers should be paying for, what those services will look like and who qualifies for government-provided services.

Before the recession caused tax receipts to fall precipitously, politicians could avoid and delay the topic of Medicaid reform. Now, with many states on the verge of bankruptcy, and Medicaid one of their largest line items, that’s no longer the case. Since Medicaid is funded by both states and the federal government, it’s getting attention at both levels of government.

One of the best examples of Medicaid reform is happening right now in the smallest state in the union: Rhode Island. The state was granted the first ever “global waiver” by the federal government in regards to its Medicaid program. What this means is that Rhode Island is allowed to revamp/reinvent the way that it delivers Medicaid benefits without having to ask permission of the Center Medicare and Medicaid Services (CMS). Stakeholders and politicians in “Little Rhodie” are just now figuring out what the future of Medicaid will be in the state. Like New Hampshire is to presidential elections, what happens in Rhode Island may have influence clear across the country as governments grapple with long-term care funding.

Lest you think the United States is alone in facing the financial burden of an aging population, the Taipei Times ran a letter in its July 20, 2009 edition titled “Programs that matter, not empty promises.” The paper described how Taiwan’s Cabinet Task Force on long-term care insurance recently held its first meeting to report preliminary results. Two suggestions were made: a national insurance plan and compulsory insurance for those older than 40.

Meanwhile, the U.S. Senate’s version of Health Care Reform includes the Class Act: a federal long-term care insurance plan designed to pay an average benefit of $50/day to people that have paid in premiums for at least five years.

Often overshadowed by the economy, health care reform and Iraq, long-term care financing may not be front page news. However, it’s showing up frequently in legislative briefings, agendas and bills. The economy may finally force the kind of reform that will make long-term care insurance as mainstream as Medicare supplements.


Dorothy McMahon, president of McMahon and Associates in Bloomfield Hills, is a specialist offering “Straight Talk about Long-Term Care Insurance.” She has brought her program to professional associations, family support groups, meetings, and conferences. Contact her at (248) 844-9787 or ltcinsusa@aol.com and visit www.mcmahonltcins.com.

    

Is it possible that planning for your long-term care could actually leave you in a more vulnerable position than if you had made no plans?

One of the ways to plan for future long-term care is to move into a continuing-care retirement community (CCRC). CCRCs offer a variety of living arrangements and support, including independent living, assisted living and skilled nursing care. The financial arrangements and amenities on site are designed to provide peace of mind to residents, and some new residents are motivated to move to a CCRC thinking it's the last move they will ever make.

Although the premise of a CCRC is relatively consistent across states and operators, the promise of a worry-free future is only as strong as the legal entity on the other side of the contract. That's a tough lesson being learned by the 200 or so residents of Covenant at South Hills, a CCRC community in Mt. Lebanon, Pennsylvania. Covenant is under Chapter 11 bankruptcy protection and attorneys are trying to work out a sale that would allow two bondholders to recoup the almost $50 million they say they are owed.

Covenant at South Hills is typical of the ‘flat price, no matter what care you need’ financial model. Residents pay a fee to move in, usually several hundred thousand dollars. Thereafter, they pay a monthly fee of several thousand dollars. A large percentage of the entrance fee usually is refunded when a resident leaves or dies. While living at Covenant, a resident pays the same monthly fee, whether or not they are receiving care. Another CCRC model is the ‘pay-as-you-go model,’ where care expenses are paid when incurred, above and beyond regular monthly fees. As reported in the May 17, 2009 issue of the Tribune-Review, Covenant had promised lifelong care; and with an average age of 87, the residents are hardly in a position to regroup and rebound from the negative implications of the bankruptcy.

Pouring salt in the wound, the CCRC was built using $59 million in tax-exempt bonds, and the sponsoring organization is a highly-respected international religious charity. Some residents thought that the religious charity would back up the promises being made. However, the charity was not legally guaranteeing the risk.

The Tribune-Review also reported only 74% of the apartments are full. When a CCRC built for 270 has only 200 residents, it's financially handicapped. The financial cushion that could be provided by an additional 70 residents is not there, and if a significant number of the 200 residents unexpectedly need more care sooner or for longer than anticipated, the financial model falters quickly.

This points to one of the flaws in trying to use a micro approach to long-term care risk as opposed to a macro approach. The ultimate micro-approach would be for your spouse or child to take care of you. That plan has obvious risks. Your spouse may predecease you. Your child may be unable or unwilling to provide proper care over months or years, while holding down a job and juggling other responsibilities.

Compare that to the millions of policies issued by long-term care insurance companies. Insurance companies benefit from a macro approach: the health of 200 people is irrelevant to insurance pricing. Medical underwriting, the process of deciding whether to enter a contract with the individual, is often much more stringent when done by an insurance company than a CCRC admissions employee.

When making long-term plans, it's prudent to consider who or what is legally behind the promise. Even in this economic downturn, insurance holding companies stand relatively unscathed compared to investment firms and banks. Meeting contractual promises for worst-case scenarios in the future is the bread-and-butter premise of insurance companies. It's their premise, and a promise on which policyholders can rely.


Dorothy McMahon, president of McMahon and Associates Ltd. in Bloomfield Hills, is a specialist offering straight talk on Long-Term Care Insurance. She has brought her program “Speaking from the Heart on Long-Term Care” to professional association and family support group meetings, conferences and neighborhood coffees. Contact her at (248) 844-9787 or LTCINSUSA@AOL.COM to schedule an appointment or a program for your group.

    

The days are growing shorter and we all know what that means: Fall is on the way. Clubs and associations resume meetings, television shows launch new seasons, kids go back to school and it’s time again to get serious.

Is this the best season to consider purchasing long-term care insurance? If you think you may want it at anytime in the future, now’s the best time.

It’s an especially good time if you have a birthday coming up in the next three months. Long-term care policy premiums are based on your age when you apply; it would be a shame to pay a higher rate for years simply because you delayed your application for a few weeks.

How much more would a policy cost if you wait until after your next birthday to apply? Although the exact answer varies depending on the insurance company, the policy design you select, your age and your health, you can expect to pay approximately 10% higher premium for each year that you delay purchasing equivalent coverage.

By equivalent coverage, here’s what I mean. Suppose you are looking at a policy with a $200 daily benefit and the policy includes 5% inflation protection. If you delayed the purchase for one year, you would then need to purchase a policy with a daily benefit of $210 to equal the benefit of the previous policy.

If you are getting the feeling that putting off buying long-term care insurance doesn’t make sense, you understand intuitively how insurance works.

While an insurance company looks at a variety of factors in pricing a policy, let’s focus on the most relevant factor: your current age relative to the typical claim age.

Actuaries calculate how many years you are likely to pay premiums before making a claim. Now suppose the typical age of claim is 82. If you purchase a policy at age 79, you will pay for three years before the insurance company is on the hook to start paying your policy benefit.

However, if you went on claim at age 82, but purchased your policy at age 49, you would have paid premiums for 33 years. It doesn’t take a rocket scientist to understand that the premium at age 49 can be significantly less, simply because the insurance company has many more years to cover their expenses, set up policy reserves and so on, until claim time.

Here’s the kicker: the 49-year-old who purchases a policy has coverage for 33 years. That policy can pay for long-term care, triggered by any accident or illness, for decades. And you have locked in coverage when young and healthy. As long as you pay your premiums, coverage can’t be cancelled.

Here’s kicker number two: Assuming the same claim age, although the 79-year-old will only pay for three years, he or she typically would pay no less than the 49-year-old when you take into account the time value of money, depending on the interest rate, regardless of their age when they purchased the insurance.

So when is the best time to buy long-term care insurance? Since you can’t save money by waiting, the best time is now. The cost only increases if you wait, and so does the likelihood that, like the ducks and geese of summer, your health goes south. Then you can’t get coverage at any price!


Dorothy McMahon, president of McMahon and Associates in Bloomfield Hills, is a specialist offering straight talk on Long-Term Care Insurance. She has brought her program “Speaking from the Heart on Long-Term Care” to professional association and family support group meetings, conferences and neighborhood coffees. Contact her at (248) 844-9787 or LTCINSUSA@AOL.COM to schedule an appointment or a program for your group.

    

Are you relying on the federal government’s program to cover your living expenses in the event you become disabled?

Probably not, Social Security’s Disability Program is notorious for its long wait for benefits and its stringent qualification requirements.  Even if you meet its definition of disability, benefits aren’t payable until the fifth full month after disability begins.  The Question and Answer page on Disability Benefits states “It can take a long time to process an application for disability benefits (three to five months) [http://www.ssa.gov/pubs/10029.html ].”

Because Social Security Disability can’t be counted on for comprehensive income protection, employers often sponsor and sometimes pay for private disability coverage.  Some self-employed people, and even some employees who have coverage at work, choose to purchase private individual disability policies to help replace their income if they were to become disabled.  These plans, combined with social security disability program benefits, can provide peace of mind in case the unthinkable happens and you can no longer work.

Not to change the subject, but are you relying on the federal government’s program to provide you with a comfortable retirement income?

I hope not, since, as the government itself states, Social Security Retirement Income will replace only about 40% of your income if you have average earnings [http://www.socialsecurity.gov/r&m6.htm ], and the “percentage is lower for people in the upper income brackets.” On the same web page, the program notes “You'll need to supplement your benefits with a pension, savings or investments.”

Let’s recap:

We cannot rely on government programs to provide for a comfortable quality of life if we become disabled, or when we retire.

So, why do many of us expect a government solution when it comes to long-term care?

We don’t solely rely on the government for disability protection or for retirement income, but ironically many of us do expect to rely on the government when we become disabled in retirement!

As of now, there is no federal government program financed by payroll deductions, like Social Security, that provides a long-term care benefit.  The only federal program that covers any long-term care is Medicaid.  You know Medicaid; it pays for the kind of care you least desire, such as nursing-home care, and requires that you be poor to qualify.

The Health Care Reform proposal currently making its way through the Senate includes a groundbreaking provision for a government long-term care program.  Premiums would be paid for by workers.  However, the coverage is designed to provide an average daily benefit of just $50 to allow people to bring services into their homes.  This coverage would be available after you have paid premiums for five years.

The proposal making its way through the House of Representatives includes no such new program for a federal long-term care program.

From experience with Social Security disability and retirement income benefits, we know that even if the proposal were to become law, most of us wouldn’t want to count on it.  We’d supplement it with private insurance and our own nest eggs.

Have you ever heard a baby boomer say that they are not going to worry about long-term care planning? That, because there are so many of us, the government will have to come up with a plan to fix the problem?

When you take a look at all the other solutions that government has offered us, there’s only one logical response: “Don’t count on it!”


Dorothy McMahon is a Long-Term Care Insurance Specialist who works with people who want straight talk about Long-Term Care insurance.  She is the President of McMahon and Associates in Bloomfield Hills.  She has brought her program “Speaking from the Hear on Long-Term Care,” to professional association meetings, family support group meetings, conferences and neighborhood coffees.  Contact her at (248) 84409787 or LTCINSUSA@AOL.COM  for additional information.

    

How much you'll pay for long-term care insurance is based on three factors. Your age, when you apply, how much protection you want and your health when you apply. Where you live today and where you plan to retire also play a part.

But here is information that's most important for Bloomfield Hills, MI residents. Your long-term care insurance can be far more reasonable than you think.

Let me share a few ways people I work with significantly reduce the cost of long-term care insurance. Before I share, I thought the following statistic from the American Association for Long-Term Care Insurance was especially interesting. In 2008, individuals between the ages of 55 and 59 paid as little as $844-a-year for LTC insurance protection. The maximum paid by someone in this age range was $6,939.

So, how can one reduce the cost? Start by considering a policy that might protect a specific amount of your savings and assets. The coverage you buy today can increase in value over time. So, a policy that provides $115,000 of protection today can grow to $305,000 in 20 years. If you are married, some long-term care insurance policies allow one spouse to access the other spouse's benefit pool. That's an option well worth looking into.

Consider adding a deductible to your long-term care insurance policy. Most people have a deductible on their car insurance and their homeowner's policy. When it comes to long-term care insurance, adding a deductible will significantly reduce the cost and the majority of people select a 90-to-100 day period. The average savings will be about 20 percent annually.

Finally, know that costs vary significantly from one long-term care insurance company to another. I am a member of the industry's long-term care insurance association and they share enormous information. Once a year they undertake a Price Index Study and the costs for almost identical coverage can vary by as much as 100 percent depending on your age and marital status.

If you’d like to learn more on long term care insurance please take a moment to call me at (248) 844-2392 or e-mail me at LTCINSUSA@aol.com.


Dorothy McMahon, president of McMahon and Associates in Bloomfield Hills, is a specialist offering straight talk on Long-Term Care Insurance. She has brought her program “Speaking from the Heart on Long-Term Care” to professional association and family support group meetings, conferences and neighborhood coffees. Contact her to schedule an appointment or a program for your group.

    

Under Age 65?  Need Health Insurance?  We offer individual health insurance.

And you will want to talk with us about other insurance products such as: Life Insurance and Voluntary Benefits for Employees including: Disability Income Insurance, Life, Health, Short and Long Term Disability, Critical Illness Coverage, Accidental Death, Long-Term Care, Dental / Vision  and Critical Illness insurance.

Additionally, McMahon and Associates is affiliated with a Property Casualty Insurance Agency that can fill all your Personal and Business insurance needs.

    

The May 2, 2009 issue of Kiplinger's Personal Finance magazine includes an article on the topic of Long-Term Care claims (click here to read: Make Sure Your Insurer Pays Up).

It’s a decent piece of work, and as the author says, "getting a long-term-care claim approved is the easy part." Here I'd like to offer a few observations and pointers based on 20-plus years experience as a Long-Term Care Insurance professional.

Making a claim on your Long-Term Care Insurance (LTC) should be no more difficult or complicated than making a claim on a homeowners, auto or disability insurance and there are many things you can do at claim time to simplify and speed the process.

If you're just now buying LTC insurance, buy from a knowledgeable agent who cares about his or her clients. An agent can be a tremendous help at claim time. The agent should be intimately familiar with your policy and can often help you avoid miscommunications and other problems during what can be a highly emotional time.

At claim time, your first phone call should be to your agent. He or she can often guide you through the claims process and help eliminate needless frustration and delays.

Since many years typically pass between when a policy is purchased and when a claim is made, you likely would benefit from reviewing your policy, paying attention to these points:
 

• Deductible: Review how the deductible, usually called an ‘elimination period’ is covered.
  
  
• Licensing requirements: Pay attention to the caregiver’s licensing requirements to make sure you maximize the benefits from your policy.
  
  
• Proof of licensing: Make sure your claim paperwork includes copies of any required proof of licensing, or the claim could be delayed. Call your claims representative with any questions to make certain your claim is not delayed due to insufficient documentation.

Also, pay attention to the process

• Start a file: Dedicate a spiral bound notebook to the claim. Keep a record of any and all phone conversations with the claims representative, care coordinator and caregivers. Include date, time, who initiated call and who you spoke with. Keeping everything in one place will make it easier if there is a problem.
  
  
• Send all claims forms via return receipt mail so you know when they have been received at the insurance company. Give the insurer several days to process the paperwork before you call and ask for a status. Proof of receipt is important in the event of a claims appeal, since your contract will state the number of days the insurer has to respond to your appeal (day one is the date they receive your paperwork to respond).
  
  
• Keep your policy handy, not in a safe deposit box. Give a complete photocopy of your policy to a close relative or friend in case you are unable to find your policy at claim time.
  
  
• Name at least one person in the third-party notification section of your application. That person will be notified if your policy is ever in danger of lapsing. Whether the danger is from an extended trip, an oversight, or because of a lapse in cognitive ability, this safeguard is designed to make sure your policy is in force at claim time! If you don't name someone during the application process, you can do it any time after the policy is issued.

A report by the National Association of Insurance Commissioners said the Long-Term Care insurance industry has no systemic issue in regards to claims payments. However, there are many things you can do to simplify and speed the process of making a claim.

Long-Term Care doesn't have to be a complicated and unpleasant subject. In fact, taking responsibility for your own health and welfare can help you avoid years of poverty or substandard care. Everyone must have a Long-Term Care plan in place that will fit their lifestyle and budget.

Dorothy McMahon, president of McMahon and Associates in Bloomfield Hills, is a specialist offering straight talk on Long-Term Care Insurance. She has brought her program “Speaking from the Heart on Long-Term Care” to professional association and family support group meetings, conferences and neighborhood coffees. Contact her at (248) 844-9787 or LTCINSUSA@AOL.COM to schedule an appointment or a program for your group.

    

It wasn't that long ago that wealthy people would brush off the idea of long-term care insurance assuming they could self insure. But the drop in the Dow Jones Industrial Average has shown many investors that they, and their retirement plans, are no longer invincible. If they weren't worried about outliving their money before, they may be worried now. Burden their financial picture with the cost of possible long-term care, and the worry escalates.

The S&P 500 is down 41% in the last year; that's a handy number for estimating the losses that stock market investors have sustained. Using this index, a stock portfolio worth $1 million a year ago is now worth less than $600,000. What was $2 million is now less $1.2 million; $10 million is now less than $6 million. Those are some scary numbers!

What's an investor to do?

One smart strategy is to leverage the dollars that are left by purchasing insurance. Instead of burdening a portfolio with having to be both big enough and liquid enough to self-insure, a policy can be purchased. Once a new policy is in place, the newly-insured investor has now dramatically shored up his or her financial situation if they need care. Though he or she may no longer be in a position to write large personal checks for long-term care, he has bought, for pennies on the dollar, an LTC insurance policy that will write the checks on his behalf. Investors can find some consolation when they realize that, once the financial risk of needing long-term care is shifted to an insurance company, the need to recoup recent stock market losses is mitigated.

The LTC insurance solution is superior to self-insuring in several ways. The policy can be written to include a guaranteed inflation benefit (such as 5% compound) that is independent of market forces. The insurance policy premium can sometimes be tax-deductible and the proceeds are almost always tax-free. Compare this to the cost of tapping into a qualified retirement plan to pay for long-term care, or the market risk inherent if the self-insurer had to sell either real property or stocks.
 
The losses that investors have sustained in the stock market should serve as a wake-up call. Even wealthy individuals can be vulnerable if they are dependent on stock market values to pay for their long-term care. Now more than ever, it makes sense for even wealthy people to purchase long-term care insurance.


STRAIGHT TALK ABOUT LONG-TERM CARE INSURANCE – Dorothy McMahon is a Long-Term Care Insurance Specialist. She is the President of McMahon and Associates located in Bloomfield Hills. Contact her at (248) 844-9787, LTCINSUSA@aol.com or visit her web site at www.BuyLTCInsuranceNow.com.
 

    

The American Association for Long-Term Care Insurance (AALTCI), the national trade organization for professionals dedicated to serving the Long-Term Care planning needs of individuals, has established November as Long-Term Care Awareness Month, an expansion from the highly successful Awareness Week conducted last year.

“The awareness campaign which we commenced in 2001 continues to grow and involve more leading national organizations and governmental agencies,” explained Jesse Slome, the Association’s executive director. “Two years ago, the U.S. Congress issued a Resolution (H.R. 133) in support of Long-Term Care Awareness Week, and several Governors declared the week in their states. Michigan was one of them.

Across the country, insurance professionals conducted awareness programs reaching out to one million individuals. “By expanding the campaign to a full month, there will be more time to implement awareness and educational programs,” Slome notes. “The aging of 76 million boomers makes it more relevant than ever to create awareness of the risk and the importance of planning. “Eight million Americans already own Long-Term Care insurance and the average age of purchasers today is 57 (Source: 2008 LTCI Sourcebook published by the American Association for Long-Term Care Insurance). “Clearly we have an enormous opportunity to reach millions of those who have not started to plan," Slome adds.

For more information about the awareness campaign, contact Dorothy McMahon at (248) 844-9787 or LTCINSUSA@AOL.COM.

    

Straight Talk About Long-Term Care

Long-Term Care is the type of assistance that a person of any age needs when that person is unable to perform basic activities such as bathing, dressing, eating, toileting, continence or transferring. It is also the best option for a person who needs care because of Alzheimer’s disease or any other form of memory loss.

Long-Term Care is NOT nursing home care for the 85 year old. It’s not a place, it is an event!

Some Food For Thought:

• Today, 43% of people receiving Long-Term Care are not seniors but people between the ages of 18 and 64.
• Today 40% of all caregivers are male.
• Today 52% of all working males are caregivers for a person over age 18.

Long-Term Care Insurance will help you to:

• Protect your retirement savings. Do you want to pay for care with money from your portfolio?
• Protect your 401K
• Maintain independence and allow choice as to where you or a family member will receive care.
• Avoid physical, financial and emotional stress, whether you become the caregiver or the care recipient
• Pay for better care for a longer period.

Purchasing Long-Term Care Insurance is a decision to keep yourself (or a loved one) out of a nursing home and from moving in with your kids.

Think of Long-Term Care Insurance as a good pair of shoes. You purchase them for protection so you can go the distance in comfort and style. Without them you are going nowhere.