The deficit-reduction proposal released Tuesday by the reconvened Gang of Six would repeal the Community Living Assistance Services and Supports Act (known as the CLASS Act).
Created as part of health reform legislation passed last year by Congress political experts refer to the CLASS Act as one of the late Sen. Ted Kennedy’s most cherished programs. It is also a favorite target of Republicans.
"America is facing a future long-term care crisis as the aging population balloons," explains Jesse Slome, executive director of the American Association for Long-Term Care Insurance, the insurance industry's national trade group. "CLASS has been highly controversial because on one hand it is at least some effort to address the problem though many see it as a very costly future new taxpayer-borne entitlement program."
The President-appointed fiscal commission led by former Senators Alan Simpson and Erskine Bowles singled the CLASS Act out as an “unsustainable” entitlement that would most likely saddle taxpayers with a major new liability, a finding that deficit hawks have latched on to in their attacks.
"Despite the fatal flaws of the CLASS Act, the Obama administration continues to push ahead in implementing this unsustainable entitlement program,” Sen. John Thune (R-S.D.) said in a statement last week. He added that the Department of Health and Human Services is ignoring “all of the red flags raised by the massive new entitlement program that is being created.”
CLASS establishes a voluntary long-term disability insurance program that would pay disabled enrollees a cash benefit for assistance with basic daily living activities such as dressing, bathing and eating. The insurance would be offered through the workplace, where employers who agree to participate would sign up their employees automatically — but also give them a chance to decline the coverage. If they keep the coverage, they’d be able to use the benefits after they’ve paid the premiums for five years.
CLASS Act critics including many leading industry actuaries with decades of experience in pricing and marketing long-term care insurance products argue that the voluntary CLASS program is vulnerable to adverse risk selection. "Critics expect that primarily health-challenged people will sign up for CLASS, those with expensive health problems which means CLASS would not be sustained by premiums alone," Slome explains. "Or, if they artifically price it too low in order to attract more healthy individuals, you face a serious shortfall when they ultimately go on claim."
Some of these problems were intended to be worked out before the Affordable Care Act was passed, but because of its unusual route to becoming law, that never happened experts acknowledge. "The nation definitely needs to discuss how to handle providing care for aging Americans," Slome concludes. "Kicking the can down the road isn't going to keep people from growing older and needing costly long-term care."
To learn more about the CLASS Act visit the American Association for Long-Term Care Insurance website at http://www.aaltci.org/class.
Showing posts with label Medicaid. Show all posts
Showing posts with label Medicaid. Show all posts
Thursday, July 21, 2011
Tuesday, December 23, 2008
Comment on Congressional Budget Office Long-Term Care Proposals
Received several notes from people regarding the information posted from the Congressional Budget Office's report on Long-Term Care proposals.
I thought I would share comments (below) from one leading expert whom I respect as one of the more knowledgable LTCi industry pros. On a personal note, I completely concur that the proposals will cost taxpayers and will do nothing to keep Medicaid solvent to meet the future needs of consumers. The American Association for Long-Term Care Insurance is not chartered as a lobbying entity but we'll do our best to keep everyone apprised and if the time comes to raise our voices ... we will. My goal for this blog is to be information (not an ongoing rant) ... but I'm personally glad to see some folks have signed-up. You can post comments to the blog.
Let's keep building ... we have some wonderfully bright and passionate minds (on our side!)
Jesse Slome
One Expert Comments to the CBO Proposals for Long-Term Care
"I won't go into the problems the Medicaid suggestions raise: How does a minimally trained case worker in a county get info about expenditures made 7 years ago from anyone much less from a cognitively impaired 85 year old! But the LTC insurance piece does concern me. I'm surprised you were not more critical of the CBO report proposal.
As I look at it, it would severely impact LTCi sales opportunities and harm the public.
1. Even where a person made $100K over 40 years, a savings account of 1.2% of income would only accumulate about $53K. Scarcely adequate to buy LTCi for a 65 year old 40 yrs from now. If the client had used the 1.2% right along to pay premiums rather than put money into the Treasury account it would work, but not the way this concept is set up.
2. Second, I couldn't find anything in the report about treasury bills. Nothing in the report that says any interest would be paid which makes affordability of decent LTCi at 65 even more unlikely.
3. Why buy LTCi at all until 65 when the windfall occurs. We've fought the "Medicare covers LTC" myth for years. This would be a million times worse especially since the feds will be touting the plan. Windfall is also an appropriate word. The concept implies a single premium. There is no other way to explain the report's provision that allows funds remaining after the "best" policy is purchased to go back to the accountholder (after taxes). If the CBO authors had envisioned annual premiums, this would never come up because remaining funds would be premised on death or LTC eligibility .
4. The report says insurers would have huge opportunities to sell new products. I agree, but not the products we do today nor products that actually help our clients. CBO optimism is premised on the idea that the cost of LTCi is driven primarily by negative selection. Not so. If everyone had to buy coverage, the cost of policies would go down (maybe 15%), but not enough to make even modestly adequate coverage affordable under this plan. So, at age 65, people would find that unless they were willing to kick in a lot, their promised coverage would be next to nothing. As to insurers, our sales outside the 65 mandated group would be even less than they are today.
On the bright side, we'd have the opportunity to sell new products that matched the limited account funds. On the downside, those products are likely to be standardized (whatever that means to the CBO) products (like Medigap) but dominated by NTQ minimal indemnity coverage akin the old hospital indemnity policies."
I thought I would share comments (below) from one leading expert whom I respect as one of the more knowledgable LTCi industry pros. On a personal note, I completely concur that the proposals will cost taxpayers and will do nothing to keep Medicaid solvent to meet the future needs of consumers. The American Association for Long-Term Care Insurance is not chartered as a lobbying entity but we'll do our best to keep everyone apprised and if the time comes to raise our voices ... we will. My goal for this blog is to be information (not an ongoing rant) ... but I'm personally glad to see some folks have signed-up. You can post comments to the blog.
Let's keep building ... we have some wonderfully bright and passionate minds (on our side!)
Jesse Slome
One Expert Comments to the CBO Proposals for Long-Term Care
"I won't go into the problems the Medicaid suggestions raise: How does a minimally trained case worker in a county get info about expenditures made 7 years ago from anyone much less from a cognitively impaired 85 year old! But the LTC insurance piece does concern me. I'm surprised you were not more critical of the CBO report proposal.
As I look at it, it would severely impact LTCi sales opportunities and harm the public.
1. Even where a person made $100K over 40 years, a savings account of 1.2% of income would only accumulate about $53K. Scarcely adequate to buy LTCi for a 65 year old 40 yrs from now. If the client had used the 1.2% right along to pay premiums rather than put money into the Treasury account it would work, but not the way this concept is set up.
2. Second, I couldn't find anything in the report about treasury bills. Nothing in the report that says any interest would be paid which makes affordability of decent LTCi at 65 even more unlikely.
3. Why buy LTCi at all until 65 when the windfall occurs. We've fought the "Medicare covers LTC" myth for years. This would be a million times worse especially since the feds will be touting the plan. Windfall is also an appropriate word. The concept implies a single premium. There is no other way to explain the report's provision that allows funds remaining after the "best" policy is purchased to go back to the accountholder (after taxes). If the CBO authors had envisioned annual premiums, this would never come up because remaining funds would be premised on death or LTC eligibility .
4. The report says insurers would have huge opportunities to sell new products. I agree, but not the products we do today nor products that actually help our clients. CBO optimism is premised on the idea that the cost of LTCi is driven primarily by negative selection. Not so. If everyone had to buy coverage, the cost of policies would go down (maybe 15%), but not enough to make even modestly adequate coverage affordable under this plan. So, at age 65, people would find that unless they were willing to kick in a lot, their promised coverage would be next to nothing. As to insurers, our sales outside the 65 mandated group would be even less than they are today.
On the bright side, we'd have the opportunity to sell new products that matched the limited account funds. On the downside, those products are likely to be standardized (whatever that means to the CBO) products (like Medigap) but dominated by NTQ minimal indemnity coverage akin the old hospital indemnity policies."
Friday, December 19, 2008
Congressional Budget Office Recommends New Savings Program To Fund Purchase Of Long-Term Care Insurance
Congressional Budget Office Recommends Savings Program To Enable Americans To Purchase Long-Term Care Insurance
To aid the incoming 111th Congress and the Obama Administration, the Congressional Budget Office (CBO) has just released a 235-page report outlining 115 budget options for health care reform. The report expands on one the CBO's regular reports to the House and Senate Committees on the Budget. The authors claim the report presents ideas for reducing "and in some cases, increasing" federal spending on health care, altering federal health care programs and making (in again their words) "substantive changes to the nation's health insurance system.
When it comes to the long-term care section according to Jesse Slome, Executive Director of the American Association for Long-Term Care Insurance, most of the changes will increase spending adding costs to an already strained federal program.
One proposal would require workers to contribute a percentage of their pretax wages to an individual account reserved specifically to pay for long-term care insurance. In the Congressional Budget Office’s estimation, a contribution of 1.2 percent of income subject to the Social Security payroll tax would meet the option’s funding requirements. Non-wage earners, such as stay-at-home spouses, would not be covered under this option.
Under the proposed plan, the accounts themselves would be administered by a federal entity, which would invest them in Treasury securities. The money in the account would be the property of the individual and would be part of the individual’s estate if he or she died before turning 65. At age 65, the balance of the account would be required to be used to purchase the most generous long-term care insurance policy available given that balance.
Here is a summary of the other proposals and some preliminary estimated costs:
1. Increase States' Flexibility to Offer Home- and Community-Based Services Through Medicaid State Plan Amendments. This option would increase Medicaid’s spending by an estimated $2.7 billion over the 2010–2014 period and by $8.1 billion over the 2010–2019 period.
2. Make Home and Community-Based Services a Mandatory Benefit Under Medicaid. This option would increase Medicaid spending by approximately $20 billion over the 2010–2014 period and by about $90 billion over the 2010–2019 period. That estimate incorporates a reduction in nursing home spending as a result of a modest decline—compared with current law—in the number of Medicaid beneficiaries who receive care in nursing homes and a subsequent increase in the number of individuals receiving home or community-based services.
3. Increase the Federal Matching Rate for Home and Community-Based Services and Decrease the Federal Matching Rate for Nursing Home Services. This option would increase Medicaid spending by about $8 billion over the 2010–2014 period and by about $13 billion over the 2010–2019 period.
4. Clarify Medicaid's Definition of Permissible Asset Transfers. This option would explicitly define which types of transfers are permissible. Because the rules are ambiguous, states tend to interpret them narrowly. This option would clarify that the following types of transfers are permissible:
Providing financial assistance to a family member for educational expenses;
Assisting a family member with medical expenses;
Assisting a family member facing a financial crisis, including a failing business or family farm;
Assisting an individual who is a caregiver for a family member or person with whom he or she lives; or
Donating funds to a church, religious organization, or charity.
Implementing this change would increase mandatory federal spending by about $2.6 billion over the 2010–2014 period and by $6 billion over the 2010–2019 period.
5. Increase the "Look-Back" Period for Transfers of Assets in Medicaid. This option would further extend that period from 60 months to 84 months for transfers made on or after October 1, 2009. Transfers made prior to that date would be subject to the 60-month look-back period. The look-back period would increase to 84 months over time, with the option generating its first budgetary effects in year six of the 10-year period from 2010 to 2019—that is, after 60 months had passed. Therefore, this change would have no effect on federal spending until 2015; over the period from 2015 through 2019, it would reduce spending by approximately $220 million.
6. Implement Policies That Encourage the Use of Advance Directives. Provided that appropriated funds were available, implementing those activities would increase federal discretionary spending by about $60 million over the 2010–2014 period and by $110 million over the 2010–2019 period. There would be a savings to Medicare of about $30 million over the 2010–2014 period and $100 million over the 2010–2019 period resulting from the portability of advance directives.
Here is the link to access the full report click on this link or paste the following address into your Web browser. The long-term care provisions are contained in Chapter 10 that actually begins on page 193. http://www.cbo.gov/ftpdocs/99xx/doc9925/12-18-HealthOptions.pdf
To aid the incoming 111th Congress and the Obama Administration, the Congressional Budget Office (CBO) has just released a 235-page report outlining 115 budget options for health care reform. The report expands on one the CBO's regular reports to the House and Senate Committees on the Budget. The authors claim the report presents ideas for reducing "and in some cases, increasing" federal spending on health care, altering federal health care programs and making (in again their words) "substantive changes to the nation's health insurance system.
When it comes to the long-term care section according to Jesse Slome, Executive Director of the American Association for Long-Term Care Insurance, most of the changes will increase spending adding costs to an already strained federal program.
One proposal would require workers to contribute a percentage of their pretax wages to an individual account reserved specifically to pay for long-term care insurance. In the Congressional Budget Office’s estimation, a contribution of 1.2 percent of income subject to the Social Security payroll tax would meet the option’s funding requirements. Non-wage earners, such as stay-at-home spouses, would not be covered under this option.
Under the proposed plan, the accounts themselves would be administered by a federal entity, which would invest them in Treasury securities. The money in the account would be the property of the individual and would be part of the individual’s estate if he or she died before turning 65. At age 65, the balance of the account would be required to be used to purchase the most generous long-term care insurance policy available given that balance.
Here is a summary of the other proposals and some preliminary estimated costs:
1. Increase States' Flexibility to Offer Home- and Community-Based Services Through Medicaid State Plan Amendments. This option would increase Medicaid’s spending by an estimated $2.7 billion over the 2010–2014 period and by $8.1 billion over the 2010–2019 period.
2. Make Home and Community-Based Services a Mandatory Benefit Under Medicaid. This option would increase Medicaid spending by approximately $20 billion over the 2010–2014 period and by about $90 billion over the 2010–2019 period. That estimate incorporates a reduction in nursing home spending as a result of a modest decline—compared with current law—in the number of Medicaid beneficiaries who receive care in nursing homes and a subsequent increase in the number of individuals receiving home or community-based services.
3. Increase the Federal Matching Rate for Home and Community-Based Services and Decrease the Federal Matching Rate for Nursing Home Services. This option would increase Medicaid spending by about $8 billion over the 2010–2014 period and by about $13 billion over the 2010–2019 period.
4. Clarify Medicaid's Definition of Permissible Asset Transfers. This option would explicitly define which types of transfers are permissible. Because the rules are ambiguous, states tend to interpret them narrowly. This option would clarify that the following types of transfers are permissible:
Providing financial assistance to a family member for educational expenses;
Assisting a family member with medical expenses;
Assisting a family member facing a financial crisis, including a failing business or family farm;
Assisting an individual who is a caregiver for a family member or person with whom he or she lives; or
Donating funds to a church, religious organization, or charity.
Implementing this change would increase mandatory federal spending by about $2.6 billion over the 2010–2014 period and by $6 billion over the 2010–2019 period.
5. Increase the "Look-Back" Period for Transfers of Assets in Medicaid. This option would further extend that period from 60 months to 84 months for transfers made on or after October 1, 2009. Transfers made prior to that date would be subject to the 60-month look-back period. The look-back period would increase to 84 months over time, with the option generating its first budgetary effects in year six of the 10-year period from 2010 to 2019—that is, after 60 months had passed. Therefore, this change would have no effect on federal spending until 2015; over the period from 2015 through 2019, it would reduce spending by approximately $220 million.
6. Implement Policies That Encourage the Use of Advance Directives. Provided that appropriated funds were available, implementing those activities would increase federal discretionary spending by about $60 million over the 2010–2014 period and by $110 million over the 2010–2019 period. There would be a savings to Medicare of about $30 million over the 2010–2014 period and $100 million over the 2010–2019 period resulting from the portability of advance directives.
Here is the link to access the full report click on this link or paste the following address into your Web browser. The long-term care provisions are contained in Chapter 10 that actually begins on page 193. http://www.cbo.gov/ftpdocs/99xx/doc9925/12-18-HealthOptions.pdf
Wednesday, December 17, 2008
2009 Medicaid Impoverishment Limits Impact Long-Term Care Planning
Consumers as well as agents and brokers who market long-term care insurance should have a current knowledge and understanding of Medicaid's Spousal Impoverishment rules that come into play when an individual or a spouse enters a nursing home.It is important to understand that far too many people fail to properly plan for the potential risk of needing long-term care. At a point in time when they finally anticipate the need, they are generally in too poor health to qualify. Counting on government programs such as Medicaid is certainly not going to be a viable answer going forward as Federal and State programs become more severely strapped for cash.
The expense of nursing home care, which according to the 2008 LTC Insurance Sourcebook, published by the American Association for Long-Term Care Insurance ranges from $4,000 to $7,000 a month or more, can rapidly deplete the lifetime savings of elderly couples. The cost of home care as well as assisted living can be costly as well. Generally government programs such as Medicaid do not pay for this care and, as a result, as personal savings were depleted many people were (and are) forced into nursing homes.
In 1988, Congress enacted provisions to prevent what has come to be called "spousal impoverishment" that can leave the spouse who is still living at home in the community (as they refer to it) with little or no income or resources. These provisions are designed to help ensure that this situation will not occur and that community spouses are able to live out their lives with independence and dignity.
2009 Resource Eligibility (According to CMS)
The spousal impoverishment provisions apply when one member of a couple enters a nursing facility or other medical institution and is expected to remain there for at least 30 days. When the couple applies for Medicaid, an assessment of their resources is made. The couple's resources, regardless of ownership, are combined. The couple's home, household goods, an automobile, and burial funds are not included in the couple's combined resources. The result is the couple's combined countable resources. This amount is then used to determine the Spousal Share, which is one-half of the couple's combined resources.
To determine whether the spouse residing in a medical facility meets the state's resource standard for Medicaid, the following procedure is used: From the couple's combined countable resources, a Protected Resource Amount (PRA) is subtracted.
The PRA is the greatest of:
The Spousal Share, up to a maximum of $109,560 in 2009;
The state spousal resource standard, which a state can set at any amount between $21,912 and $109,560 in 2009;
An amount transferred to the community spouse for her/his support as directed by a court order; or
An amount designated by a state hearing officer to raise the community spouse's protected resources up to the minimum monthly maintenance needs standard.
After the PRA is subtracted from the couple's combined countable resources, the remainder is considered available to the spouse residing in the medical institution as countable resources. If the amount of countable resources is below the State's resource standard, the individual is eligible for Medicaid. Once resource eligibility is determined, any resources belonging to the community spouse are no longer considered available to the spouse in the medical facility.
Income Eligibility
The community spouse's income is not considered available to the spouse who is in the medical facility, and the two individuals are not considered a couple for income eligibility purposes. The state uses the income eligibility standard for one person rather than two, and the standard income eligibility process for Medicaid is used.
Post-Eligibility Treatment of Income
This process is followed after an individual in a nursing facility/medical institution is determined to be eligible for Medicaid. The post-eligibility process is used to determine how much the spouse in the medical facility must contribute toward his/her cost of nursing facility/institutional care. This process also determines how much of the income of the spouse who is in the medical facility is actually protected for use by the community spouse.
The process starts by determining the total income of the spouse in the medical facility. From that spouse's total income, the following items are deducted:
A personal needs allowance of at least $30;
A community spouse's monthly income allowance (between $1,750 and $2,739 for 2009), as long as the income is actually made available to her/him;
A family monthly income allowance, if there are other family members living in the household;
An amount for medical expenses incurred by the spouse who is in the medical facility.
The community spouse's monthly income allowance is the amount of the institutionalized spouse's income that is actually made available to the community spouse. If the community spouse has income of his or her own, the amount of that income is deducted from the community spouse's monthly income allowance. Similarly, any income of family members, such as dependent children, is deducted from the family monthly income allowance.
Once the above items are deducted from the institutionalized spouse's income, any remaining income is contributed toward the cost of his or her care in the institution.
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The expense of nursing home care, which according to the 2008 LTC Insurance Sourcebook, published by the American Association for Long-Term Care Insurance ranges from $4,000 to $7,000 a month or more, can rapidly deplete the lifetime savings of elderly couples. The cost of home care as well as assisted living can be costly as well. Generally government programs such as Medicaid do not pay for this care and, as a result, as personal savings were depleted many people were (and are) forced into nursing homes.
In 1988, Congress enacted provisions to prevent what has come to be called "spousal impoverishment" that can leave the spouse who is still living at home in the community (as they refer to it) with little or no income or resources. These provisions are designed to help ensure that this situation will not occur and that community spouses are able to live out their lives with independence and dignity.
2009 Resource Eligibility (According to CMS)
The spousal impoverishment provisions apply when one member of a couple enters a nursing facility or other medical institution and is expected to remain there for at least 30 days. When the couple applies for Medicaid, an assessment of their resources is made. The couple's resources, regardless of ownership, are combined. The couple's home, household goods, an automobile, and burial funds are not included in the couple's combined resources. The result is the couple's combined countable resources. This amount is then used to determine the Spousal Share, which is one-half of the couple's combined resources.
To determine whether the spouse residing in a medical facility meets the state's resource standard for Medicaid, the following procedure is used: From the couple's combined countable resources, a Protected Resource Amount (PRA) is subtracted.
The PRA is the greatest of:
The Spousal Share, up to a maximum of $109,560 in 2009;
The state spousal resource standard, which a state can set at any amount between $21,912 and $109,560 in 2009;
An amount transferred to the community spouse for her/his support as directed by a court order; or
An amount designated by a state hearing officer to raise the community spouse's protected resources up to the minimum monthly maintenance needs standard.
After the PRA is subtracted from the couple's combined countable resources, the remainder is considered available to the spouse residing in the medical institution as countable resources. If the amount of countable resources is below the State's resource standard, the individual is eligible for Medicaid. Once resource eligibility is determined, any resources belonging to the community spouse are no longer considered available to the spouse in the medical facility.
Income Eligibility
The community spouse's income is not considered available to the spouse who is in the medical facility, and the two individuals are not considered a couple for income eligibility purposes. The state uses the income eligibility standard for one person rather than two, and the standard income eligibility process for Medicaid is used.
Post-Eligibility Treatment of Income
This process is followed after an individual in a nursing facility/medical institution is determined to be eligible for Medicaid. The post-eligibility process is used to determine how much the spouse in the medical facility must contribute toward his/her cost of nursing facility/institutional care. This process also determines how much of the income of the spouse who is in the medical facility is actually protected for use by the community spouse.
The process starts by determining the total income of the spouse in the medical facility. From that spouse's total income, the following items are deducted:
A personal needs allowance of at least $30;
A community spouse's monthly income allowance (between $1,750 and $2,739 for 2009), as long as the income is actually made available to her/him;
A family monthly income allowance, if there are other family members living in the household;
An amount for medical expenses incurred by the spouse who is in the medical facility.
The community spouse's monthly income allowance is the amount of the institutionalized spouse's income that is actually made available to the community spouse. If the community spouse has income of his or her own, the amount of that income is deducted from the community spouse's monthly income allowance. Similarly, any income of family members, such as dependent children, is deducted from the family monthly income allowance.
Once the above items are deducted from the institutionalized spouse's income, any remaining income is contributed toward the cost of his or her care in the institution.
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