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Davidow, Davidow, Siegel & Stern, LLP
Long Island's Elder Law, Special Needs & Estate Planning Firm

Friday, September 26, 2008

Long Term Care Insurance Rises

Just when America was warming up to the idea of purchasing long term care insurance to protect family assets from the devastating costs of custodial care, the three largest insurance companies have shaken up the market by raising prices on existing policies, not just on policies to be sold in the future. How should that impact your planning?

Long term care insurance policies are sold with the “assumption” of level premiums that won’t increase much over the years. That’s the incentive to buy when you are young, healthy, and prices are lower. Insurers have the right to go to state insurance commissioners to seek approval of a price increase on everyone who bought a certain policy, if claims significantly exceed expectations.

When insurers first created long term care policies, it was hard to predict how their costs would turn out. But as insurers gained more experience in the last 10 years, it has been expected that the risk of price increases on the more recently issued policies would be slim and that any premium increases would be minimal.

Those who bought early to “lock in” lower prices are now being surprised by significant premium increases.

In the last year, Genworth requested increases ranging from 8 percent to 12 percent on some policies already owned by its customers. John Hancock announced a 14 percent increase in some policies in May. Nearly all of these policies were issued before 2000. But last week, MetLife announced it will raise annual premiums an average of 18 percent for policyholders who were younger than 70 when they purchased their policies from 1998 through 2005.

In effect, the insurers are admitting they made a pricing mistake. The only other explanation is that they priced policies artificially low to compete for business.

David Acselrod, MetLife Vice President, long term care and critical illness insurance, said: “Quite simply, we expect to pay out substantially more in claims than we originally anticipated. Some of the assumptions that drive LTC pricing include policy lapses, interest rates, the number of people requiring care and the duration of care, to name a few. Following a review of our experience, we concluded that we had to make changes to ensure that we are pricing the products appropriately on behalf of all of our policyholders.”

Isn’t it the job of the insurance company to assess trends that impact pricing before they go to market?

The ultimate cost
In 2007, according to the American Association for Long Term Care Insurance, 180,000 Americans received benefit payments through long term care insurance. Executive director Jesse Slome says: “The total value of claims paid in 2007 was $3.5 billion – money that families didn’t have to pay, and money that taxpayers didn’t have to pay for impoverished seniors.”

The population of Americans over age 65 is expected to more than double in the next 15 years. Few of the soon-to-be elderly have saved enough to cover home health care, assisted living, or nursing home care – approaching $100,000 a year in major cities.

Steve Moses, President of the Center for Long Term Care reform, a national policy think tank, defends private insurers, saying: “The government has not set aside any money for the future to back up its promises that Medicaid will care for frail seniors. At least, the private insurance industry has bitten the bullet and is increasing prices so they will have adequate reserves to pay the claims when they start coming in.”

Moses suggests the market for private LTC insurance will never expand, as long as the government is “giving away” the same service insurers are trying to sell. He points out that the middle class and even the affluent have learned the tricks of qualifying for Medicaid nursing home coverage.

They’ll be surprised when they learn that Medicaid provides care primarily in nursing homes that will only become more underfunded and understaffed. Moses says the burden of long term care needs will crush the system, wiping out the possibility of such government-provided benefits in the future.

It’s quite likely that state insurance commissioners will approve the requested increases. Unfortunately, a side effect is likely to be that fewer people will buy long term care insurance. Then, when the real burden of caring for aging baby boomers hits in the next 10 or 15 years, the states will have to shoulder the cost through their Medicaid programs as boomers run out of their own money.

Still good deal
Buying long term care insurance still makes sense. If locking in rates is a concern, consider a 10-pay policy where your coverage is fully paid up in 10 years. Janice Axelrod, an independent long term care insurance broker in Chicago, says this is particularly attractive for some businesses (C-corporations) that are allowed to deduct the annual payment.

Don’t bury your head in the sand about the very real possibility that in your old age you’ll need help dressing or bathing or getting out of bed. Can you count on your children to be there for you? Would you even want them to do that? Or will you run out of money trying to pay for care on your own? Those are questions to ask yourself as you consider the value of long term care insurance.

Source: Chicago Sun Times, September 15, 2008, by Terry Savage.

Friday, September 19, 2008


How to Enroll for Health Benefits
You can fill out the form to enroll for health benefits online at https://www.1010ez.med.va.gov/sec/vha/1010ez or you can receive the form by calling 1-877-222-VETS (8387). Once you complete and sign the form, mail it to your local VA health care facility.

Disability Benefits
The VA offers two disability programs. Disability compensation is available only for veterans with service-connected disabilities, while the disability pension benefit is available to anyone who served during wartime and has a disability. The disability does not have to be related to military service.

Disability Compensation
If you have an injury or disease that happened while on active duty or if active duty made an existing injury or disease worse, you may be eligible for disability compensation. The amount of compensation you get depends on how disabled you are and whether you have children or other dependents. You will need to look at the current compensation rates. Additional funds may be available if you have severe disabilities, such as loss of limbs, or a seriously disabled spouse.

Disability Pension Benefit
The VA pays a pension to disabled veterans who are not able to work. The pension is also available for surviving spouses and children. This pension is available whether or not your disability is service-connected, but to be eligible you must meet certain requirements. In addition, your income must be below the yearly limit set by law; called the Maximum Annual Pension Rate (MAPR). The MAPR for 2008 are below:

Veteran with no dependents...........$11,181
Veteran with a spouse or a child....$14,643
Housebound veteran with no dependents....$13,664
Housebound veteran with one dependent...$17,126
Additional children..........$1909 for each child

Your pension depends on your income. The VA pays the difference between your income and the MAPR. The pension is usually paid in 12 equal payments.

Example: John is a single veteran and has a yearly income of $5757. His pension benefit would be $5424 (11,181 - 5757). Therefore, he would get $452 a month.

Your income does not include welfare benefits or Supplemental Security Income. It also does not include unreimbursed medical expenses actually paid by the veteran or a member of his or her family. This can include Medicare, Medigap, and long-term care insurance premiums; over-the-counter medications taken at a doctor’s recommendation; long-term care costs, such as nursing home fees; the cost of an in-home attendant that provides some medical or nursing services; and the cost of an assisted living facility. These expenses must be unreimbursed. This means that insurance must not pay the expenses. The expenses should also be recurring - this means they should recur every month.

Aid and attendance
A veteran who needs the help of an attendant may qualify for additional help on top of the disability pension benefit. The veteran needs to show that he or she needs the help of an attendant on a regular basis. A veteran who lives in an assisted living facility is presumed to need aid and attendance.

A veteran who meets these requirements will get the difference between his or her income and the MAPR below (2008 figures):

Veteran who needs aid and attendance and has no dependents.......$18,654
Veteran who needs aid and attendance and has one dependent.......$22,113

How to Apply
You can apply for both disability benefits by filling out VA Form 21-526, Veteran’s Application for Compensation Or Pension. If available, you should attach copies of dependency records (marriage & children’s birth certificates) and current medical evidence (doctor & hospital reports). You can apply online at http://vabenefits.vba.va.gov/vonapp

Source: www.elderlawanswers.com

Friday, September 12, 2008



There are no costs for certain veterans and low-income veterans. The following veterans are eligible to receive cost-free health care benefits automatically:

-A service-connected veteran receiving VA compensation benefits
-A veteran seeking care for a specific service-connected disability
-Former POWs
-Purple Heart Medal recipients
-A veteran with conditions related to exposure to herbicides during the Vietnam-era, ionizing radiation during atmospheric testing, ionizing radiation during the occupation of Hiroshima and Nagasaki
-A veteran who sustained a service-related condition while serving in the Gulf War, in combat in a war after the Gulf War, or during a period of hostility after November 11, 1998
-A veteran with military sexual trauma
-A veteran with cancer of the head or neck caused by nose or throat radium treatments given while in the military
-A veteran who is participating in a VA approved research project

If you don’t fit into one of those categories, the VA will ask you to provide your household income and net worth from the previous year. If your income is below certain thresholds, you will not have to make a co-payment. In addition, you must not have more than $80,000 in property. Those whose income exceeds the threshold or who refuse to submit to the means test may have to make a co-payment.

Unlike the Medicaid program, there is no penalty for transferring assets before applying for veterans benefits, including long-term care. Remember, however, that if you do transfer assets it may affect your eligibility for Medicaid.

Even if your income is above the threshold, you do not have to make co-payments for the following services:

-Special registry examinations offered by the VA to evaluate possible health risks associated with military service
-Counseling and care for sexual trauma
-Compensation and pension examination requested by the Veterans Benefit Administration
-Care that is part of a VA-approved research project
-Out-patient dental care
-Readjustment counseling and related mental health services for Post Traumatic Stress Disorder
-Emergency Treatment at other than VA facilities
-Care for cancer of the head or neck caused fro nose or throat radium treatments given while in the military
-Publicly announced VA public health initiatives, i.e. health fairs
-Care related to service for veterans who served in combat or against a hostile force during a period of hostilities after November 11, 1998
-Laboratory services such as flat film radiology services and electrocardiograms

Out-patient co-payments
The following are the out-patient co-payments for non-service-related conditions:

-Services provided by a primary care clinician are $15 (in 2008) for each visit
-Services provided by a clinical specialist are $50 (in 2008) for each visit

Preventive care services (such as screenings and immunizations) are free.

In-patient co-payments
The inpatient co-payment is calculated by adding:

-$10 per day of hospitalization (in 2008), and
-$1,024 for the first 90 days of hospitalization and $512 for each additional 90 days (in 2008).

There is a reduced co-payment rate (20 percent of the full in-patient rate) for certain individuals whose income is above the VA income thresholds, but below the Geographic Means Threshold (GMT).

Prescription co-payments
Prescription co-payments are charged only for out-patient treatment. The following veterans do not have to pay anything for medications:

-A veteran who is 50 percent disabled or more with a service-connected disability
-A veteran who has been determined by the VA as unemployable due to his service-connected conditions
-A veteran who needs medication to treat a specific service-connected disability
-Former POWs
-A veteran whose income is below the maximum annual rate for a VA pension
-A veteran who needs medication to treat conditions related to a veteran’s exposure to herbicides during the Vietnam era ionizing radiation during atmospheric testing, or ionizing radiation during the occupation Hiroshima and Nagasaki
-A veteran who served in the Gulf War, in combat after the Gulf War, or during a period of hostility after November 11, 1998, and who needs medication to treat a service-related condition
-A veteran who needs medication to treat a military sexual trauma
-A veteran with cancer of the head or neck caused by nose or throat radium treatments given while in the miliary
-A veteran participating in a VA approved research project

If you don’t fit into one of these categories, you must pay $8 (in 2008) for each 30 days or less supply of medication. If you are in one of the Priority Groups 2 through 6, there is an annual limit on the amount you have to pay for prescriptions. You will not be charged more than $960 during the calendar year. If you are in Priority Groups 7 and 8, you will have to pay the full co-payment amount, with no annual limit.

The Medicare prescription drug benefit
As part of the new Medicare law enacted in December 2003, Congress added a modest prescription drug benefit, which took effect January 1, 2006. The benefit is available to anyone who is eligible for Medicare Part A or B coverage. The benefit is completely voluntary, so you must decide whether you want to participate in a plan or not based on your own situation. If you decide to participate in the Medicare plan, your VA prescription drug coverage will not be affected.

Most Medicare beneficiaries must choose a plan or be subject to significant financial penalties for late enrollment. However, because the VA prescription drug coverage is considered “creditable coverage,” you will not face a penalty if you do not sign up for the Medicare plan. If you disenroll or lose your VA prescription drug coverage, you will have 62 days to sign up for a Medicare plan without being subject to a penalty.

Long term care co-payments
The first 21 days of long term care are free. Co-payments start on the 22nd day. Long term care co-payments are calculated differently from other co-payments - they are set based on the individual veteran’s financial status. Veterans must fill out a financial assessment to determine their co-payments. This is a separate form from the form veterans had to fill out to determine if they were eligible for free health care. This form assesses your current income as opposed to the previous year’s income. The co-payment will be adjusted for each individual veteran based on his or her ability to pay. Once you have submitted a form, a social worker will contact you to let you know how much your co-payments will be.

What to do if you can’t afford co-payments
There are several options if you cannot afford your co-payments. One option is to request a waiver. You will have to submit proof that you can’t financially afford to make payments to the VA.

If your income changed since you applied for free health care, you can request a hardship determination. This will change your priority group assignment. To do this, you will need to provide current financial information to the VA.

Another option is to request a compromise and make a partial payment. Most compromise offers that are accepted must be for a lump sum payment payable in full 30 days from the date of acceptance of the offer.

Source: www.elderlawanswers.com

Friday, September 5, 2008


Medical Care
The Veterans Administration (VA) provides health care benefits to veterans. The plan covers a number of health care services, including preventative services, diagnostic and treatment services, and hospitalization. It may also cover nursing home and other long term care options.

Who is Eligible?
To receive care, most veterans must be enrolled in the VA health system. Eligibility for the health system depends on a number of factors, including the nature of your discharge from military service, your length of service, whether you have service-connected disabilities, your income level and available VA resources, among others.

To be eligible, you must not have been dishonorably discharged from the military. Your length of service may also be important. Former enlisted persons who started active duty before September 8, 1980, and former officers who first entered active duty before October 17, 1981, do not have a length-of-service requirement. Otherwise you must have 24 months of continuous active duty military service, though there are several exceptions for reservists, national guard members, service-connected disabilities, and hardship discharges, among others.

Certain veterans do not need to be enrolled in the VA health system to receive benefits if: you are 50% or more disabled from a service-connected disability, you are seeking care for a VA rated service-connected disability, or it has been less than one year since you were discharged for a disability that the military determined was caused or aggravated by your service, but the VA has not yet rated the disability.

The VA has limited resources, so if you are eligible for services, you will be assigned to a priority group. The priority groups range from 1-8 with 1 being the highest priority for enrollment. As of Jan. 17, 2003, veterans assigned to priority 8 are not eligible for enrollment or care for non-service connected conditions.

What is Covered
The standard benefits package includes: Preventative care services, out-patient diagnostic and treatment services (including mental health and substance abuse treatment), in-patient diagnostic and treatment services, prescriptions, and long term care (including nursing home care for some veterans).

Long Term Care: The VA offers a number of long term care options through its health plan.

All enrolled veterans are eligible for the following services:

-Geriatric evaluation - provides either an in-patient or out-patient evaluation of a veteran’s ability to care for him or herself
-Adult day health care - a therapeutic day care program that provides medical and rehabilitation services to veterans
-Respite care - provides either in-patient or out-patient supportive care for veterans to allow caregivers to get a break
-Home care - nursing, physical therapy and other services provided in the veteran’s home
-Hospice/palliative care - provides services for terminally ill veterans and their families

Some services are limited to certain veterans: nursing home care and domiciliary care are not automatically available to all veterans enrolled in the VA health plan.

The following veterans automatically qualify for unlimited nursing home care:

-Veterans who are seeking nursing home care for a service-related condition
-Veterans with a service-connected disability rating of 70% or more
-Veterans who have a service-connected disability of 60% and are unemployable

A service-connected disability is a disability that the VA has officially ruled was incurred or aggravated while on active duty in the military and in the line of duty. The VA must rule that your illness/condition is directly related to your active military service, and it assigns each disability a rating. The ratings are established by VA regional offices around the country.

The VA may provide nursing home care to other veterans if space permits. Veterans with service-connected disabilities receive priority.

There are also state-run veteran’s nursing homes. The VA provides funds to states to help them build the homes and pays a portion of the costs for veterans eligible for VA health care. The states, however, set eligibility criteria for admission.

A Domiciliary is a VA facility that provides care on an ambulatory self-care basis for veterans disabled by age or disease who are not in need of acute hospitalization and who do not need the skilled nursing services provided in a nursing home. Domiciliary care is available to low-income veterans with a disability.

Careful planning by a knowledgeable elder law firm is crucial in applying and becoming eligible.

Part 2 will discuss Co-Payments.

Source: www.elderlawanswers.com