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Episode 1922
Long Term Care
Brown: Natalie Bullock Brown, host
M-W: S. Y. Mason-Watson
Boone: Vincent Boone
Willis: Timothy Willis
Brown: Many of us plan well for death, making sure that our families will be provided for in allocating money for our funeral and burial, but are we planning for long life, matched with illness and possible disability? We'll discuss what you need to know about long-term care, tonight on Black Issues Forum.
Voiceover: This program was made possible by contributions to UNC-TV from viewers like you. Thank you.
[THEME MUSIC]
Brown: Good evening everyone, I'm Natalie Bullock Brown. Welcome to Black Issues Forum. According to national statistics, Americans are now living longer due to advancements in medicine and technology, but in many instances, Americans who live longer may be battling illness at home, in the hospital, or hospice, requiring constant care and medical attention that can drain a family's resources. Although we may plan for death through the purchase of insurance and other protection, we rarely plan for the lingering sickness of our parents, our spouse or ourselves, and the results of this lack of planning can be devastating, both financially and otherwise. Unfortunately, most people are not even aware that they should be concerned about this issue, so tonight we've brought together a group of experts on the topic of long-term care to talk about what we need to know to cover ourselves, just in case. With us tonight, we have S. Y. Mason-Watson, a partner with the law firm of Mason-Watson, Obiera and Singletary, in Charlotte, whose expertise includes estate administration and planning; Vincent Boone, a licensed agent with State Farm Insurance; and Timothy Willis, an only child who recently experienced the long-term sickness and death of his father. Welcome all of you to Black Issues Forum.
Several: Thank you, thanks for having us.
Brown: Now, I want to start off with just as many numbers as we can possibly punch in here. We're going to start with you, Vincent. What are some statistics that people should know about how long people live now, and are projected to live in the future, with sickness?
Boone: Well as you stated, the advancements in the technology, men and women are living longer. I believe the current age is 77, 78 respectively. Some people live longer than that. Noteworthy is the fact that Americans over 65 years of age or older, probably about 50% of them are going to indeed need long-term care at some point. There's a lot of data out there and it's very important that we address that issue.
Brown: And that's why before we begin taping, you were mentioning that there's even a difference in terms of who will need long-term care between men and women, is that right?
S-W: Yes, that is true. There are different health issues for women as they advance in age, particularly given the new attention to the risks of heart disease for women, also hormone replacement therapy which is also a very significant issue for women as they age, and osteoporosis leading to bone fractures, etc.
Brown: Let me stick with you for a minute and ask, what can people do now to plan for the possibility of having to take care of a sick parent or spouse?
S-W: One of the most important documents, legal documents, that a person can execute, is called a healthcare power of attorney. There are oftentimes where a person has a debilitating illness and they're unable to make a decision regarding surgery or healthcare treatment, and someone else has to be in place to do that. Traditionally a spouse is looked to to make the decision for the ailing spouse, but in situations where it's your parent or a friend or a cousin, sibling, what have you, that individual needs to execute a healthcare power of attorney which directs the physicians and medical staff as to who can make decisions about treatment, surgery, etc., for that person.
Brown: Tim, I know that you have personal experience with this issue. Was your family prepared to deal with the long-term sickness of your father and how did you handle it, what did you have to do proactively and reactively?
Willis: We were not prepared. My parents are great planners and they planned meticulously for death: funeral plans were already in place, burial plots, all that was all paid for. What they did not plan for with my father, who had diabetes, to get sick and end up in a hospital and then in a long-term care facility, and the sheer cost of that, his care was $150 a day, and that was the base, so that was sheerly room and board. On top of that, they had to pay for transportation to the dialysis clinic, physical therapy and all those types of things. When Medicare ran out, because that took care of a portion of it, we tried to get onto Medicaid. The problem there was that assets that were needed for the person going on Medicaid were in South Carolina, you could only have $2,000 worth of assets. Easy to get him there; the problem was my mother. And she was only allowed, I believe the figure was $62,000. So that required then all the years of hard work, my parents invested in the stock market, they had property, all those things would need to be sold. So in our particular case, we ended up paying for it out of our pocket, and it was very, very expensive. One of the things that I asked the Social Services person was, take me, I'm in my 40s, what would you tell me as I plan for tomorrow? And the answer came back was number one, you need a game plan; number two, you need to look into long-term care insurance.
Brown: And that's a great segue to Vincent, because as an insurance agent, one of the things that you can sell to a consumer would be long-term care insurance, but what are the benefits, what are you really getting if you purchase a long-term care insurance?
Boone: Long-term care insurance is going to provide you some asset protection. As Tim indicated, he spent a lot of money providing care to his parents by not having long-term care insurance. So that insurance would have been the substitute for him spending money out of his pocket, and therefore the insurance company would have paid for some of that care based on the design of the policy. But you also get freedom of choice; you have some options in terms of whether you want to receive the care in your home, assisted living facilities, community programs as well. You also allow your parents to maintain some independence because there are some families out there that don't have truly the financial resources to pay for the care themselves, and therefore they are becoming the care providers. So those are some of the things that you're going to receive. You're going to receive the independence, the freedom of choice, asset protection.reduce some of that emotional strain that you're going to endure when you're dealing with that issue.
Brown: And just to piggyback on that, basically when you talk about freedom of choice, if you don't have the insurance, a parent could end up in a nursing home facility that is not the best, is that correct?
Boone: That's correct, because now your choices are limited to how much money you want to spend. You also get into whether you try to downsize your assets to qualify for Medicaid; the Medicaid facilities are uniquely different from some of the facilities that won't accept Medicaid. And so your choices become issues dealing with finances. So it's very important that you are aware of it at least.
Brown: Right. That's why as an attorney, how do you get around, or how do you address downsizing assets? What do people need to know?
M-W: Well, one of the things that I think most people are unaware of is that there are Medicare eligibility qualifications and Medicaid eligibility qualifications, and they differ. By and large when an individual-let's say someone is 70 years old and they fall and break their hip and they're going to require rehabilitation after the surgery and the hospital stay, they will need Medicare coverage for skilled nursing care. The period of time that Medicare will cover your stay is limited, and a percentage of your costs, for instance, are covered by Medicare. Someone looking at Medicaid eligibility is looking at extended care in a skilled nursing facility that accepts Medicaid patients, and that individual may be looking at staying there for a significantly longer period of time. Your assets, as Tim was saying earlier, have to be limited. And so if you are not eligible for the program, for Medicaid for instance, some people will try to spend down or disperse their assets so that they do qualify for Medicaid.
Brown: What can people do now? Like for instance, I'm about to be 35, I believe that there is some limit or there's a ceiling or a wall as to how far in advance you can sell your house or downsize your assets in order to be able to qualify for the care that you're going to need, is that correct?
M-W: Recently the requirement has been that any assets that are distributed within a three-year period of time of you trying to qualify can be considered in determining eligibility for Medicaid. For someone who is in their mid-30s, let's say, and trying to prepare for themselves, they need to consider whether they will be able to afford to purchase a long-term care insurance policy, maybe not purchasing it at age 35, but by the time you reach 45, certainly 50, that would be something you want to look into. The cost for long-term care insurance increases as you age, and so from my own experience with my parents, having to assist them in obtaining insurance after age 70, the cost is astronomical.
Brown: And so did it make it cost prohibitive, or what were your alternatives?
M-W: The alternative was to have no long-term care insurance at all. And it was particularly problematic for us because my mother was the person who became ill first. She had a brain aneurism and we did not have long-term care insurance. She had worked over 30 years teaching and had managed to have some savings, she and my father together. So unfortunately a lot of the savings were depleted because we had to pay for nursing care and assisted living after she passed the hospital stay-out of pocket. That also meant that she was not going to be eligible for a policy herself. My father did qualify for a long-term care policy; the company that we found was one that covered my mother by a rider, so if my father becomes in need of using the policy, my mother's care will be covered, but that's the only condition under which she will be covered, and it is extremely expensive.
Brown: Can you just give us a ballpark figure of what you're talking about when you say it's astronomically expensive?
M-W: We're talking almost $2,000 quarterly.
Brown: $2,000 quarterly.
M-W: Over and above anything else that you're paying for, that's just the long-term care insurance; that's not paying for things that are not covered.
Brown: Okay, gotcha.
Willis: And that's also age. The younger you are, the cheaper it is. What we found out with our research, we just got my wife a policy, was that I believe it's $800 every six months for hers. And there are a lot of pieces that go with the policy: paying for the room, but you can also get in-home care. I mean, it has a lot of parts. It's a very detailed thing. And it takes a lot to go through, but the savings, the money you spend up here, you really get back 30 years from now when you need this care. And if you look at the cost today, the research that we did said in Wake County, the average room for assisted living costs $150 a day. The industry increases its rates at 5% per year. 30 years from now that same room will cost $600. Long-term care can eat through your assets very, very quickly.
Brown: Vincent, Tim just said that he and his wife just recently purchased a policy for her; is there any urgency in getting one for a wife before a husband, does it matter-what determines who should get one?
Boone: and that's an excellent question, because we started having a discussion as to whether a person should purchase it at 35 or 45. The biggest issue really is insurability. You have to qualify for the policy with your health. So if you develop certain health issues. Diabetics that are dependent on insulin may be declined for long-term care, rheumatoid arthritis with certain medications may be declined for long-term care; some forms of cancer are probably going to be declined, if you're disabled currently you're going to be declined. So when do you address the issue of qualifying for long-term care? When are you going to become unhealthy, we don't know. So you can't necessarily say let's wait until age 45. I purchased a policy at age 40 because I was concerned with my medical condition can change, and then I would be uninsurable. People are being declined for long-term care. In terms of rates, rates are based on, you could have standard rates you could also have preferred rates. So it's really not one set rate for each individual. You also have to design the policy. The policy has various elements, whether you want $100 a day benefit, to $400 a day benefit, going in increments of $50, that's going to affect the price. When do you want the policy to kick in? There's a time deductible, a waiting period, so to speak, that will also affect the policy, whether you want it to kick in after 30 days or you can go a little longer and it starts at 90 days, will affect the price. So generally you can find something that will fit within your budget by designing a policy that's useful for you.
Brown: So does that mean that you can take, you can pick and choose what you want to include in a policy or are there things that a long-term care policy simply are not going to cover?
Boone: Each organization may have some uniquenesses to their policy, like they may only cover 80% of in-home care, versus State Farm covers 100% of in-home care. So you have to look at the policy carefully. But generally the policies are going to be standard in terms of we're going to pay for in-home care, assisted living facilities, adult daycare during the day so that a loved one could go to work. Some of those things are indeed going to be standard. Skilled care would be standard, respite care would be standard. But again you still have to design the policy in terms of how much coverage do you want. Just like life insurance, you choose and amount of coverage where you're going to do the same thing in terms of the long-term care.
Brown: So when you say you need to avoid being taken advantage of, what do you mean, or how can you avoid that?
Boone: Well, not necessarily being taken advantage of, just analyzing the policy carefully, making sure that it's going to fit your needs, because if you obtain a policy that only pays 80% of in-home care, and that was your desire to stay at home, versus as long as you can, in lieu of an assisted living facility, and then you're surprised that it's not covering 100% of the care and now you have additional out-of-pocket expenses, that issue needs to be addressed up front.
Brown: Let me just follow up with one quick question, as far as when to purchase an insurance policy for long-term care; if we have viewers that are listening to us now that are 40 and above, would you say that this is the time to start thinking about this? 50 and above, if you're taking a gamble if you're 35 and above? What would you recommend?
Boone: Some of that decision of course is based on the individual and their plans. This is financial planning. I mean, you purchase auto insurance in case you have a serious auto accident, disability, health insurance. Well, long-term care is that other piece of the puzzle that you have to address to protect assets, savings, investments, home equity. So in terms of when you address it, you should really be addressing it immediately, because your health can change in a day. I had a young lady to call me yesterday and say, "Vincent, forgive me for not getting back with you, but I was diagnosed with breast cancer." Well, the first thing I thought of was, she's uninsurable at this time. And she was 28 years old, by the way.
Brown: Wow. Okay, that's why.are there alternatives to long-term care insurance? Are there other ways that we can plan financially for long-term care without purchasing a policy?
M-W: I think that something that Tim mentioned earlier about his own parents is important. Very often we have parents-those of us who are in our 40s, 30s, what have you, we have parents who have worked hard and have managed to save money. Often they have done so without the benefit of expert, if you will, financial planning advice. And so their savings maybe have appreciated in value at a lower rate than they would have had they invested more cautiously or done some other things. I think that it's important, especially for homeowners and people who have an interest in investments to think carefully about how those investments are going to be made. What risk factors are you willing to accept in terms of stock market investments or buying property and having those as assets that you can liquefy at a period of time? One of the things that Tim mentioned was that his mother had too many assets to assist in getting his father qualified for Medicaid. In a situation like that, you're forced to consider selling property that may have been family property, inherited property that there's significant sentimental attachment to, and you have to decide what's more important: caring for you parent, your grandparent, what have you, or selling the property. So the investment issues I think are very critical for all of us as we age and consider having to take care of ourselves and our families.
Brown: Well, Tim, I'd like to ask you, what do you wish you had known before the experience that you had with your father?
Willis: I wish I'd just known about long-term care. I did not know anything about long-term care. Somebody mentioned it, one of my employees actually was 38, mentioned it at work, he had signed up for a policy, and I just thought that was strange. I, like most people, I worry about that later-everybody's healthy, we're going to be fine. And then the situation comes upon us where daddy gets sick and we've got to figure out, okay, what are we going to do? And when my mother called and said "We cannot continue on the path we're on, at the rate of spending that this appears it's going to take. So that's one of the reasons that at our church we were trying to put together a seminar entitled "Growing Old in America." So young people, and young being those 35 to 45 age range, can start thinking about, this is what happens over time. And if you life long enough, right, you will probably need long-term care. So this how you go and prepare for it. That's why I just wish we had done better planning, and just knew more about it, somebody had had a seminar for us to go to.
Brown: Well I'm hoping that this will expose people to just the whole idea of the fact that there is such a thing as long-term care, and something they need to think about. Vincent, what do people need to think about when researching a long-term care insurance policy and how do they know what sort of insurance company to go to? I mean, what are the best benefits that you could possibly get?
Boone: You definitely want to go with an organization that has financial strength. There's some companies out there that rate insurance companies and will give them a certain rating in terms of what their financial strength is. And you want to be with an organization that's strong and that will be in business years to come.
Brown: How do you find out this rating, how do you look that up?
Boone: You probably can go on the internet, and also each organization should be able to provide you some data concerning their financial strengths. You said also.repeat the question please.
Brown: Just what do you need to know or think about, when you're researching an insurance company, you're trying to find a legitimate one, one that is reputable, is going to basically do what they say they're going to do?
Boone: You also want to look at what type of-particularly when you look at the policy. The policy comes into play once certain triggers occur, and those are based on daily living activities such as bathing, incontinence, dressing, eating, transferring from one chair to another, using the bathroom. And some organizations may say that you have to not be able to do three out of the six, in order to be eligible for their long-term care policy to commence, based on a doctor stating that this is valid. Some organizations say only two out of six, so that's significant when you can find one that says two out of six versus three out of six. I'll also mention earlier that you want to look at what percentage of care they're going to cover, if your desire is to stay in the home, are they paying 100% of in-home care or 80% of in-home care? And so those are some of the little fine intricacies that you might want to look at when you're researching a long-term care policy.
Brown: Thank you.
Boone: There's also National Association of Insurance Commissioners has a pamphlet out that talks about long-term care.
Brown: Great, thank you for that. That's why I'm going to give you the last word. Since you've had a personal experience with long-term care as well, any advice that you'd offer our viewers?
M-W: I think that you-that one of the things that you have to consider, even if you have long-term care insurance and it's covering the financial aspects, it's a significant personal commitment to be a caregiver to someone. And if you are working for a company that allows you to have some leave, so that you can get your home prepared if your parents are moving in with you, or if you're self employed, you need to take a look at your scheduling and how you're going to be able to take care of someone. One of the other things that you mentioned earlier in terms of alternatives, you have to develop networks and you have to know who you can call on when you need help. And too many people don't ask for help and it is a tremendous burden and you've got to have other shoulders to lean on from time to time.
Brown: Thank you so much. I'd like to thank S. Y. Mason-Watson, Vincent Boone and Timothy Willis for sharing their personal stories and expertise about long-term care with us tonight. If you'd like to learn more about long-term care, or about the work of our guests, please visit the Black Issues Forum web site at www.unctv.org/bif. We'd also like to hear your feedback and suggestions, so send us an email, or you can call the BIF line at 919-549-7167. Be sure to join Black Issues Forum each Friday night at 9:30. I'm Natalie Bullock Brown reminding you to be encouraged, no matter what. Good night.
[THEME MUSIC]
Voiceover: This program was made possible by contributions to UNC-TV from viewers like you. Thank you.
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