Posts Tagged ‘long-term care insurance’

Have You Considered Buying Long-Term Care Insurance?

JUNE 6, 2016 VOLUME 23 NUMBER 21
Spoiler alert: the cost of long-term care can be really high. One of the leading national insurance companies (Genworth USA) conducts an annual survey of the actual costs, breaking them down by state and even by major cities within each state. Genworth’s estimate of the cost of a semi-private nursing home bed in Tucson in 2016: $83,045 per year. (You can look up your own community’s figures on the Genworth website.)

That means a nursing home resident can expect to pay a little more than $225 for each day spent in the nursing home. Would it be much cheaper in an assisted living facility? Yes — about $39,900 per year, or almost $110 per day. That’s still a lot of money, and beyond most families’ ability to pay out of pocket, at least for any extended stay.

Maybe you’re thinking you can save some money by staying at home. Unfortunately, the costs of in-home care are somewhere between those two figures — and that doesn’t cover the costs of home maintenance, utilities, food and other costs incurred when you stay at home. The clear message: if you or someone you love requires long-term care, in Tucson or anywhere else in the United States, the costs will probably be high.

How likely is it that you will spend some time in a long-term care facility? According to the best estimates out there, people turning 50 this year have about a 50% chance of spending some time in long-term care. Actually, women have a significantly higher risk, at about 65%.

At least nursing home stays are usually short. The average length of a nursing home stay (nationwide) is about four months for men, and about seven months for women. That masks the reality, though, that about half of nursing home residents stay more than three years.

Many of our clients are adamant: “I’m not going to a nursing home,” some say. They insist that family will take care of them, or hint darkly that they have other plans in mind. Caring for a family member at home, though, is hard work — and may not be good for the failing family member, whose health care needs may be significant. We often remind family members that they do no favors by caring for a family member while destroying their own health or financial status.

One choice you might consider is long-term care insurance. While sales of such insurance have dropped sharply in recent years, there are about seven million Americans with policies designed to cover the costs of their long-term care. Is such a policy right for you?

You might want to talk with your insurance agent about LTCI (the nearly-ubiquitous name for long-term care insurance). You owe it to yourself to at least look into a policy, and figure out whether you can afford it — and whether you would benefit from having such coverage.

Many of the clients we talk with think they are too young to worry about LTCI. According to the industry, though, the ideal new policy purchaser is in his or her mid-50s. The cost of coverage for a healthy 55-year-old is so much lower that the total cost of insurance will be less when the purchase is made early. For a long time, the average age of new policy purchasers was about 70 — but it has more recently dropped to about 60, as consumers figure out they should be looking at the policies at younger ages.

How much will an LTCI policy cost you? The figures vary widely, based on your age at the time of purchase, where you live, how much of a benefit you purchase, and which company you sign up with. But the American Association for Long-Term Care Insurance (an industry trade group) estimates that the average cost of a new policy for a 55-year-old will be about $2,000/year. That premium figure will buy you about $150/day coverage with a 3% annual automatic inflation adjustment and three years’ worth of coverage. Note that the $150/day benefit will only cover about 2/3 of the total nursing home cost in the Tucson area; that’s not necessarily a bad thing, since you’ll probably have some other income available if you do need to be placed in long-term care.

One piece of good news: there are only a relative handful of companies offering LTCI, so you won’t have to talk with (or research) that many. In fact, there are fewer than one dozen companies writing traditional LTCI policies at a frequency that shows a serious commitment to the product.

You need to remember that, once you buy a policy, premium costs can (and do) go up. Those premium increases, though, are keyed to the entire base of participants — and not to your own health changes, or local cost movement. That has been one of the things that scares consumers off from purchasing LTCI, however.

You might ask your insurance agent about hybrid LTCI/Life Insurance policies. They usually require much bigger premiums but for a short period of time (they might, for instance, require $10,000 payments for each of five or ten years). Once the investment is made, though, you have an LTCI benefit and a life insurance policy, so that your estate will get back your investment (and a small return) even if you do not require long-term care.

The bottom line: don’t just ignore this problem. Look into what you need to do to protect against the high cost of long-term care.

Forgot to Make New Year’s Resolutions? We Can Help

JANUARY 5, 2015 VOLUME 22 NUMBER 1

First we’d like to apologize for not getting this to you last week. We know how hard you were working to prepare some good New Year’s Resolutions. You wanted some that you could actually count on satisfying, that would really be beneficial, and that would make you sound like a mature, responsible adult. We have some; feel free to adopt them now, and assure friends and family that you actually signed them before New Year’s Eve.

Time for “the conversation”

Have you talked about end-of-life treatment issues with your family yet? No? This would be a good time to do that. Any time would be a good time to do that.

We have previously suggested Thanksgiving as a possible day to plan on “the conversation.” That suggestion still holds — but really, any day (holiday or not) would be a good day.

You say you don’t need to broach this unpleasant topic, because your family knows what you want? You’re wrong. They don’t, unless you tell them. They might guess, but they will be guessing. Their guesses will probably be more conservative than your actual wishes unless you give them permission — by telling them what you want.

In fact, you can go further than giving them permission. You can (and should) give them instructions. Tell them what you want, and put it in writing. Sign a living will, a health care power of attorney, or both (“both” is the best approach here).

It’s actually not even enough to sign the advance directives — you still have to have “the conversation.” Why? Because you’re not only telling the person you designated as your agent, you’re also telling the rest of the family. You are telling them what you want, that you’ve really thought about it, and that you really did mean to name your agent as agent. You’re heading off family disputes and possible disharmony. Did we mention that if your family doesn’t know for sure what you want, the result is likely to be more aggressive treatment than what you’d probably choose?

Here’s a radical thought: during the conversation you might also want to listen. You might be surprised to find out that some of your family members have strong feelings themselves. They might be persuasive, or at least give you more to think about.

One anecdote from our cases: some years ago, we dealt with the family of a woman who had signed advance directives. She had named her Arizona daughter as agent. She had expressly instructed that she be kept at home, even if her doctors thought she should be hospitalized or institutionalized. She made it explicitly clear that her entire savings should be exhausted, if necessary, in keeping her at home.

When she lost her capacity to discuss her preferences or reason with visitors, a long-estranged daughter arrived from out of town. She insisted that the local daughter must have persuaded Mom to sign the documents, hoping to be able to stay in Mom’s house as long as possible. She claimed that Mom would never have signed the documents if she had been in her right mind at the time.

The result? A non-family member was appointed as guardian temporarily, while an investigation was undertaken. The guardian, worried about possible liability, moved Mom to the nursing home — where she died a few weeks later, before the final court hearing.

Though Mom signed all the documents she should have, and made her wishes clear, the result was exactly what she did not want. What could she have done differently? If she had talked with (or at least written to) her estranged daughter, would the outcome have been different? Possibly — it seems like the most likely possibility. The lesson? Have the conversation, and include even those family members who will not be in charge of the decisions.

Update your estate plan

This would be a good time to pull out your old will and trust, review them, and schedule an appointment with your attorney. Has the law changed since you signed your will? Perhaps. But more importantly, has your life situation changed? Do your children (now in their 30s, or 40s) really need to have a guardian named, as they did when you signed your will twenty-five years ago? Have you moved, or changed your assets significantly? Are you the rare parent who correctly predicted each of your children’s future capabilities, needs and proclivities?

Once again, “my family knows what I would want” just won’t cut it. Believe us — we see lots of families in litigation over things that might seem trivial. Don’t think it will happen with your family, since everyone gets along so well? We hope that’s correct, but it has not been our experience.

Since you signed your will and trust, have you put one child on as joint owner of your bank account (to take care of things if “something happens”)? Have any of your children gotten divorced, or married, or had children? Do you still want the child who lived close to you fifteen years ago to be your executor and trustee, even though you’ve moved across the country to be near a different child? Have you signed an Arizona beneficiary deed after hearing a presentation, or listening to a friend? All of those things affect, and need to be taken care of in, your estate plan.

Another anecdote from our cases: last year we dealt with the estate of a fellow who moved to Arizona from another state. He had a trust and a will there, and he put his new Tucson home in the trust’s name. Apparently, though, he decided that his trust was now invalid, since he had moved from the other state to Arizona. So he made no changes.

Meanwhile, he got married. One of his children (named in his trust as a beneficiary) had become estranged. He tore up his will (it was invalid anyway, he thought). The result? His new wife ended up with his entire estate, as he apparently intended — but only after payment of several thousands of dollars of court costs and legal fees, and an opportunity for his estranged child to object (she didn’t, thankfully). Meanwhile, if he had talked with a lawyer before he died, he could have spent perhaps 1/10 of what it ultimately cost to take care of his estate.

Insurance update

Do you have enough (or too much) life insurance? How about long-term care insurance? Shouldn’t you talk with someone about your insurance status, and see what needs to be changed?

Long-term care expenses, particularly, have changed a lot in the last few years. Long-term care insurance is a maturing market, which means that older policies need to be revisited — and people who have not gotten around to looking into the policies should set aside some time to do so. Soon.

We don’t give insurance advice directly (except to advise people that they need to get more information). We recommend you talk with a trusted agent, and make sure they have your entire insurance picture. Right after you make that appointment to update your estate plan.

Need more ideas?

Not all of your New Year’s resolutions need to be about legal issues. Two years ago we gave you some other ideas, and we offer them up for your consideration again this time. You’re welcome.

Long-Term Care Insurance: A 2013 Update

MARCH 16, 2013 VOLUME 20 NUMBER 11
A colleague recently asked if we knew why long-term care insurance premiums might be climbing significantly in the next month or so. We didn’t, but it got us thinking about how the industry has changed over the past few years. Is it still a good idea to purchase insurance to cover possible costs of institutional or home care in the future? If so, who should be considering such policies, and what should they expect to pay?

First, the cost figures. The American Association for Long-Term Care Insurance, an industry trade group, conducts a survey of prices every year. The AALTCI’s 2013 figures were released, as it happens, this month. The short version: long-term care insurance costs have risen significantly in the past year. They calculate, for instance, that a 55-year old buying a typical policy might expect to pay $2,065 per year in premiums; the same policy last year would have cost $1,720. That’s about a 20% increase in cost, during a year where the general cost of living increased at something more like 2%.

Of course, your mileage may vary. If you are older or younger, married rather than single, or purchase a “richer” policy or one with less coverage, you might see a greater or lesser increase. But there’s no doubt that the cost of long-term care insurance has increased in the past year, continuing a trend of the past several years. Jane Bryant Quinn, a leading columnist for AARP Magazine, last year reported that premiums were up as much as 50% over the preceding five-year period.

More significant, perhaps, is the problem of a contracting market. Both buyers and insurance companies are leaving the long-term care insurance marketplace (though the number of new policies has rebounded somewhat since the economic downturn of five years ago).

So what’s happening to the marketplace? Historically low interest rates have the perverse effect of increasing insurance costs (since insurance companies are investing your premium dollars in order to generate income to pay future claims, costs of administration and profits). Life expectancies continue to increase, and uncertainty about the length of a policy-holder’s life makes actuaries a little twitchy — and conservative. Medical advances introduce the possibility of cures for some of the diseases that cut life expectancies short — and create the paradoxical possibility of extended nursing home stays. And, surprisingly, existing policyholders are not dropping their policies at the rate predicted years ago — meaning that more claims are being made on older policies than insurance companies anticipated. While most insurance products experience a “lapse” rate of about 5%, the figure for long-term care insurance is more like 1%. In short, the long-term care insurance industry is in trouble.

That might mean that long-term care insurance is more expensive, or harder to locate, but it doesn’t necessarily mean that consumers should avoid the product. The cost of long-term care can easily exceed $100,000 per year in a nursing home or in home care (in fact, home care is often more expensive than institutional placement).

It is, of course, impossible to predict which potential buyers will need long-term care insurance. But there are some generalizations about the purchasers of LTCI policies that might give some guidance — if only on the theory that the marketplace is wiser than individual buyers. Here are some observations about typical buyers and policies, drawn from the American Association for Long-Term Care Insurance reports and financial writers over the past few years:

  • The average age of new LTCI policy purchasers is dropping. Twenty years ago it was almost 70. Today it is below 60 (it was 59 in 2010-2011, according to America’s Health Insurance Plans, an insurance industry trade group).
  • Not too surprisingly, wealthier people buy more policies. The AHIP study reports that more than half of policies are purchased by people with incomes over $75,000 per year; more than three-quarters of all policies are owned by people with liquid assets of more than $100,000.
  • There is a correlation between education levels and policy purchases. Nearly three-quarters of long-term care insurance buyers are college-educated. For comparison purposes: about a quarter of all those over age 50 have college degrees.
  • Women and men buy long-term care insurance policies at rates almost exactly equal to their respective shares of the over-50 population. Married people buy policies at a slightly higher rate than their representation in the age group, and divorced, separated and widowed seniors are much less likely to purchase policies.
  • One of the significant drivers of cost of a particular LTCI policy: inflation protection. About three-quarters of policies sold in  recent years include a provision for automatic increases in coverage — most of those provide for about a 3%/year increase, down from the 5%/year that was more common twenty years ago.
  • In 1990 nearly two-thirds of LTCI policies covered nursing home or institutional care only. Today almost all policies (95%) cover both nursing home and home care. But more than half of the more modern policies will still be exhausted if the buyer spends four years in a nursing home.

Does all this mean that you don’t have to worry about long-term care costs unless you are age 59, college-educated and earning an income of $75,000 or more? Of course not. In fact, it may be more important that you shop for insurance if you are younger and more solidly middle-class (as judged by your income and assets). You might have more to lose, and a harder time paying for nursing care you might end up needing. We urge you to talk with an insurance salesperson about long-term care coverage.

What Is “Elder Law”?

OCTOBER 15, 2012 VOLUME 19 NUMBER 38
At Fleming & Curti, PLC, we practice “elder law.” But what does that mean? Are all our attorneys elderly? (No) Are they all senior members of a religious group? (No) Are all our clients above a certain age? (No) Then what is the significance of the term “elder law”?

Sometimes we rebel against the term. When asked what kind of law we practice, we might say something like: “We limit our practice to guardianship, conservatorship, estate planning, probate, long-term care planning, trust administration and special needs planning.” The problem with that formulation is obvious: it seems oxymoronic to “limit” your practice to seven items — and to be complete we probably should thrown in two or three others.

No one practicing “elder law” likes the term. It is not descriptive of our clients: a significant number of the cases we handle involve children — often even toddlers — and many of our clients are middle-aged children of aging parents. It is not easy for clients to relate to: when asked what constitutes an elder or senior citizen, most of our clients immediately think of someone just a few years older than themselves.

All elder law attorneys think from time to time about better descriptions they might use. The problem with that effort, though, is that no one has come up with a better label, or even one that comes closer to describing what we do.

What do we (elder law attorneys) do? For that matter, what do we (Fleming & Curti, PLC) do? Here’s a sampling:

Guardianship and Conservatorship. In Arizona, a guardian is a court-appointed person who makes medical and placement decisions for an incapacitated adult or a minor child whose parents are not available to handle those duties. A conservator fills a similar role, but handles money; a conservator can be appointed for an adult who is unable to manage his or her finances because of a disability, or for a child. Note that there is no requirement of a finding that the child can not handle money, or that the child’s parents can not do so; a child is legally incapacitated no matter how capable he or she might be, and the child’s parents do not have any automatic right to make financial decisions for him or her (as they do for medical and placement decisions). So that means guardianship and conservatorship may be necessary for the very young, and for adults who are incapacitated — whether by dementia or by other illness or condition.

Getting a guardian and/or conservator appointed is only part of the battle. Once appointed, a guardian or conservator is answerable to the courts, and must file annual reports and accounts. It is an intensive exposure to the legal system, and very difficult to navigate without the help of counsel. Like us.

Estate Planning. We write wills, trusts, powers of attorney and other estate planning documents. Most of our clients in this area are older than, say, their mid-50s — but not because that’s who needs estate planning. Younger people (including the parents of minor children, anyone who drives a vehicle, anyone who has ever seen a doctor) also need to complete estate planning. They just tend not to until they reach an age where they see the value. As one of our clients wisely said: “the two kinds of people you hate to deal with are doctors and lawyers — and when you get older you spend a lot of time with both.”

Older people may have more complicated estate plans. They may have larger tax concerns (because they have had time to acquire more assets). They may have others (children with disabilities, spouses with failing abilities, long-time friends they have helped over the years) who rely on them and need their consideration. They also may feel somewhat more mortal. And so they tend to be the ones who get to the lawyer’s office — and hence the estate planning business seems to be (but should not be) an issue for elders.

Long-term Care Planning. Nursing home costs will likely bankrupt most families if someone has to spend more than a few months in a care facility. Planning for how to deal with that should start early, and include (among other things) long-term care insurance. But most people don’t plan for possible institutionalization. Instead, they bravely insist that “I am never going into the nursing home.” Many of them turn out to be wrong, but most of those won’t know how wrong they were until they are, well, elderly. Most (but certainly not all) of the residents of nursing homes and assisted living facilities are elderly. So the practice of preparing people for that eventuality, and of helping spouses and children get ready to place a loved one in such a facility, has come to be thought of as “elder” law.

Trust Administration. While creating and funding a living trust may avoid the probate process, that is not the same as saying that your (successor) trustee will not need any contact with lawyers or accountants. In fact, your trustee will probably need both. But even your trustee will probably be elderly by the time you die. Odds are that you will be, too. So this tends to look like a legal problem involving the elderly, though plenty of trustees are younger and a lot of people sign trusts when they are younger, too.

Probate. Some people don’t plan for probate avoidance, either because they didn’t get around to it or because they consciously engaged in a cost/benefit analysis and decided it wasn’t worth the expense (to them, at the time). Whatever. Probate administration, like trust administration, is an area of practice that often — but not always — involves people who are elderly.

Special Needs Trusts and Planning. This one has the most tenuous link to the elderly. The beneficiaries of most special needs trusts are young — often infants or toddlers. Even the parents of special needs trust beneficiaries may be young — perhaps even in their 20s. So how does this become an “elder law” issue? It’s simple: the government programs and rules that are involved in special needs trust planning, establishment and administration are the same programs and rules involved in long-term care for the elderly. But saying “I’m an elder and special needs lawyer” just doesn’t trip lightly off the tongue, and it begins to sound like we are trying to describe our own circumstances, not those of the people we strive to help.

So that’s what we do as “elder law” attorneys. Is that all we do? No, we also have a few other areas we might work in — like guardianship of minors, advance directive preparation and interpretation, or recovering from abuse, neglect or exploitation. But that’s the bulk of our work.

Feel free to come up with a better, shorter, more user-friendly term. We’ve been working on it for years, but we are confident that there is a good answer out there. Somewhere.

Home Care Suggestions From A National Elder Law Expert

JUNE 17, 2002 VOLUME 9, NUMBER 51

North Hollywood, California, elder law attorney Stuart Zimring knows what his clients want. “In my Elder Law practice,” he writes, “I have found that when I ask my clients (or their families) what they want more than anything, the answer is frequently ‘I want to stay at home. I don’t want to have to go to a nursing home or other kind of facility.’” Elder Law Issues asked Zimring, a nationally recognized authority on placement concerns, to provide some guidance for our subscribers and readers. Here is what Zimring wrote:

“Our senior population is fiercely independent and self-reliant. They (and we, their children, the baby boomers who will be ‘them’ in not too many years) value independence, the ability to go and do what we want when we want.

“But reality can impose boundaries on this independence. Whether it is physical limitations such as arthritis that make it difficult to grasp or manipulate cooking utensils, mental limitations such as short term memory lapses that cause us to forget that we were putting up a pot of tea, the reality of the aging process makes it desirable, if not imperative, for many of us to obtain assistance at home if we are going to continue to age in place.

“But where can we find this assistance? How do we make sure the persons we choose are honest and capable? What are our obligations to them as employers? How do we pay for these services?

What Kind of Help Do You Need?

“The threshold question before looking for assistance is to determine exactly what kind of assistance is required. It may ‘only’ be housekeeping once or twice a week. Or meal preparation once a day. Or transportation. Or companionship. Seniors with more serious needs may need assistance with some (but not all) of the ‘activities of daily living’ such as bathing, dressing, toileting, eating, medicating and/or ambulating. Obviously, someone who requires assistance with most of these ‘ADLs’ requires a significantly higher level of care than someone who just needs help keeping the house clean.

“The point here is that the senior (and her family) may not be in a position to objectively assess what services are necessary. Thus, the first step may be to retain the services of an experienced Geriatric Care Manager to do an assessment and recommendation of what is required. Various local aging organizations provide these services. They can be located through the state agency responsible for aging issues [in Arizona, the Department of Economic Security’s Aging and Adult Administration, at www.de.state.az.us/links/aaa/]. Also, the National Geriatric Care Managers Association website (www.caremanager.org) can be used to locate professionals in the area.

“Once the level of assistance has been ascertained, the next step is to locate the right person. Simply put, there are two ways to do this: Work through an agency, or employ the person yourself. There are pros and cons to both approaches.

“Again, to put it simply, there are two kinds of agencies that can be utilized. The first, an ‘employment’ agency, will generally pre-screen candidates, acting as an initial filter for you. Some are better than others. With respect to services to the senior population, some social service agencies perform services like this (in the Los Angeles area, Jewish Family Service of Los Angeles has its A+ Total Care division which screens prospective aides, gives them some training on an ongoing basis, and then matches its people to meet the senior’s criteria). Domestic agencies may do minimal training and screening, but basically they are simply going to refer a number of potential candidates to the senior, leaving the hiring decision to the senior or her family. These agencies charge a fee for their service, usually calculated as a percentage of the salary of the employee.

“The other kind of agency actually furnishes the aide. He or she is an employee of the agency. The hiring process is similar, in that a number of candidates will be sent out for interviews and the senior allowed to choose the one she wants. However, in this scenario the aide remains an employee of the agency rather than of the senior.

How to Find Assistance

“Another source is ‘word of mouth.’ It is trite but often true that everyone ‘knows someone.’ It pays to talk to friends in the community, church or synagogue members, senior center participants and other social groups. Unfortunately, as we move through this continuum called ‘aging’ our needs change. Someone’s father may now be in a nursing home and the aide who assisted him at home for several years may now be looking for work. These kinds of referrals (whether they are of individuals or agencies) are often the best.

“Speaking of referrals: always, always, always get references and do not hesitate to talk to all of them!

“One of the most frequently asked questions is ‘should I hire the aide myself or pay the agency?’ The simple answer in my opinion is that if it is economically feasible, let the agency be the employer. It is more expensive (some-times a little, sometimes a lot) but there are a number of advantages. The biggest advantage: if the aide doesn’t show up for work, it is the agency’s responsibility, not yours, to see that someone is there. Taxes, worker’s compensation insurance, all the minutiae of being an employer are someone else’s problem. But one generally pays for this luxury.

“Unfortunately, there is very little government assistance in most states for non-skilled or custodial care. Medicare will provide some home health assistance in certain circumstances on an intermittent, non-recurring basis, but not full time. Medicaid assistance [managed in Arizona by ALTCS—the Arizona Long Term Care System] may be available for services related to ‘activities of daily living,’ or ADLs, but again on a limited basis. However, this kind of assistance, usually referred to as Home and Community Based Services (HCBS) or In Home Supportive Services (IHSS), is usually limited to low income families such as those receiving SSI and, unfortunately, may provide only minimal financial assistance at best. The Department of Veterans Affairs provides a range of home health benefits for eligible veterans, especially those who are combat veterans and who are disabled (whether or not the disability is service related).

“Older long term care insurance policies (the first generation of ‘nursing home’ policies) generally did not provide any residential care benefits. However, today’s policies frequently include various kinds of in-home benefits such as respite care, homemaker services, adult day care coverage and the like. Benefits are usually tied to the number of ADLs that are adversely impacted.

“When looking into the availability of governmental or insurance benefits, the senior and/or her family should never assume that benefits are not available. It is always better to ask, apply for benefits and then, if denied, ask ‘why?’ Where appropriate, an elder law attorney should be consulted. It may well be that when pushed, the local agency or insurance carrier may reconsider its initial denial.

“The specter of losing one’s independence is frightening and depressing. Effectively utilizing aides and assistance can facilitate our aging in place, maintaining our independence and dignity. The costs involved (including the cost of competent legal advice) are usually a small price to pay.”

Mr. Zimring’s advice and suggestions are entirely relevant to securing and monitoring home care outside his own Los Angeles, California, area. Elder Law Issues thanks Mr. Zimring for sharing his expertise with our readers in Arizona, California and around the country.

False Application Info Leads To Rescission Of LTC Insurance

JANUARY  8, 2001 VOLUME 8, NUMBER 28

Norma Steinback was interested in purchasing long term care insurance for her husband Jack. When she saw a solicitation from Bankers Life and Casualty Company she returned the postcard indicating an interest. Shortly thereafter Bankers Life agent James Van Noten visited the Steinbacks at their Montana home.

During Mr. Van Noten’s visit Mrs. Steinback did most of the talking. She told the insurance agent that her husband suffered from a variety of health problems. She listed them for Mr. Van Noten: diabetes, a heart condition, “hardening of the arteries,” and vision restrictions related to the diabetes.

One of the questions Mr. Van Noten asked was whether Mr. Steinback had “seen a doctor professionally or had medical treatment or advice for Parkinson’s Disease, memory loss, Alzheimer’s Disease, or any other organic brain disorder.” The Steinbacks answered “no” to that question, and Mr. Van Noten filled in the corresponding box on the application form. Bankers Life ultimately issued a long-term care policy for Mr. Steinback.

Eighteen months later Mr. Steinback was admitted to a nursing home in Billings. The insurance company investigated the resultant claim and denied coverage.

The insurance company’s investigation revealed that Mr. Steinback had seen his doctor three months before the insurance application, and had been treated for “moderate to severe organic brain deficit.” One possible diagnosis listed by the physician during two months of treatment had been Alzheimer’s Disease.

Because the application contained false information Bankers Life refused coverage and refunded the premiums. Mrs. Steinback filed a lawsuit charging that the insurance company had acted improperly and seeking coverage for her husband’s nursing home stay (Mr. Steinback died five months after his admission to the nursing home).

In her complaint Mrs. Steinback acknowledged that her husband had received medical treatment for organic brain disorder. In fact, she argued, the insurance agent must have been able to tell her husband was suffering from problems even during their short interview in the Steinback home. At the time, she insisted, Mr. Steinback was “so visibly confused that he didn’t even understand what was going on, or why.”

If Mrs. Steinback could show that the insurance agent had actual knowledge of her husband’s mental limitations her claim would be successful, since the insurance company would be deemed to have issued the policy despite what it knew. In this case, however, the evidence was far from clear that Mr. Van Noten actually saw a confused and disoriented applicant, and so Bankers Life was permitted to rescind the policy. Steinback v. Bankers Life, December 12, 2000.

Insurance Saleswoman Unduly Influences Wisconsin Man

AUGUST 23, 1999 VOLUME 7, NUMBER 8

Vanessa Henningfeld first met 71-year-old George Milas when she visited his Wisconsin home to sell him a long-term care insurance policy. The two of them quickly became friends.

Mr. Milas had a number of problems to deal with. He had a heavy Lithuanian accent that made it hard for people to understand him. He was also beginning to experience problems with his memory, and he needed help managing his finances. His second wife was divorcing him, and he had legal proceedings to deal with.

Ms. Henningfeld, 35, promptly began assisting Mr. Milas to deal with all of those problems. About four months after they first met, she called his lawyer, made an appointment and accompanied Mr. Milas to the lawyer’s office to make a new will and power of attorney. The will, executed in 1988, disinherited his two adult children (who had been named in his earlier will) and left everything to Ms. Henningfeld. He also signed a power of attorney giving her control over all his finances.

Over the next year, Ms. Henningfeld took charge of Mr. Milas’ affairs. She managed his divorce proceedings, attended all meetings with his lawyer, tried to keep the lawyers on both sides out of the settlement discussions and generally interfered with the court process. She even filed a complaint against Mr. Milas’ lawyer with the Board of Attorneys’ Professional Responsibility.

A year after he made the will leaving his estate to Ms. Henningfeld, Mr. Milas visited his lawyer’s office without her present. He took the 1988 will, drew a line through it and wrote at the bottom that he revoked it. Ms. Henningfeld remained in his life, however.

Five years later, Mr. Milas suffered a stroke. Shortly after that, he signed another will leaving his entire estate to Ms. Henningfeld. He died three years after signing the new will.

Ms. Henningfeld filed the last will for probate with the Wisconsin courts. It was found to be invalid because of Mr. Milas’ susceptibility to undue influence and Ms. Henningeld’s actions taking advantage of that susceptibility. Ms. Henningfeld then offered the 1988 will for probate, arguing that Mr. Milas was not unduly influenced when it was executed, and that his revocation of that will was invalid.

The court refused to admit the earlier will, as well, but Ms. Henningfeld appealed. The Court of Appeals heard Ms. Henningfeld’s appeal and ordered the trial judge to reconsider; at the second trial, the 1988 will was upheld and Ms. Henningfeld once again was to receive Mr. Milas’ property. This time his daughters appealed.

On the second trip to the Court of Appeals, the result was reversed again. The Court ruled that there was at least slight evidence of Mr. Milas’ susceptibility to undue influence; since there was clear and convincing evidence of Ms. Henningfeld’s disposition and opportunity to unduly influence Mr. Milas, and since she obtained her desired result, his susceptibility to undue influence could be inferred from the slight evidence presented. Estate of Milas, August 19, 1999.

Although Wisconsin law imposes a four-part test for undue influence, Arizona’s approach is to list seven elements which might suggest the existence of undue influence. Both states require evidence of undue influence to be shown clearly and convincingly; because such influence is usually exerted in secret, both recognize that the evidence will often be shown by inference, rather than direct evidence.

Three Common Myths About Paying For Nursing Home Care

JANUARY 25, 1999 VOLUME 6, NUMBER 30

The possibility of nursing home placement terrifies many seniors and their families. The specter of loss of control and dignity is part of the problem, but financial concerns may also be overwhelming. It does not help that accurate information is so difficult to obtain. Myths about nursing home costs, long term care insurance and government benefits persist, making the situation more frightening and difficult.

Remembering that Arizona law may differ from that of other states (and, of course, from the systems in other countries), a few of the more common myths about nursing home costs include:

Myth: Long term care insurance is too expensive, and is only for the elderly anyway.

For many people, long term care insurance is the best choice for protecting against the exhaustion of assets required to qualify for government assistance with nursing home care. Although premiums can be expensive, the cost for younger applicants is dramatically lower. The average long term care insurance purchaser is in his or her late 60s or early 70s, but financial advisers recommend that insurance be considered by those twenty years younger.

Myth: Medicare will take care of my medical care if I should need to go to a nursing home.

Medicare is an extensive federal government program providing medical care to the elderly and disabled. Most American citizens and resident aliens over age 65 qualify for its excellent coverage. But Medicare’s nursing home benefit is almost entirely illusory.

Many Medicare beneficiaries believe that the program covers 100 days of nursing home care. But only the first 20 days are fully covered; the next 80 days require the patient to pay the first $96 of care each day. The program also limits its coverage to care which leads to improvement. In other words, once it is clear that the patient will not be likely to return home, Medicare coverage will end.

Medicare supplemental insurance policies and Medicare HMOs may help some nursing home residents. But neither kind of plan increases the length of coverage–most simply provide for the payment of the $96 per day charged to the beneficiary.

Myth: If either my spouse or I enter the nursing home, we will lose our home.

Neither the nursing home nor the government has any ability to “take” the home of a nursing home resident. If no long term care insurance is in place, and the patient does not qualify for Medicaid, the nursing home will expect to be paid each month. That does not mean, however, that the nursing home can “take” away the home–in fact, one’s homestead is exempt from the claims of unsecured creditors including the nursing home.

Once assets (and income) are diminished, the patient may qualify for Medicaid. If the patient’s spouse is still living in the home, Medicaid is not permitted to count the home as an available asset, and may not seek to recover the cost of care it provides by forcing sale of the home (or any other asset, for that matter). If the patient is not married, Medicaid may not force the sale of the home until after the death of the recipient, and even then only in some circumstances.

New Studies Show Children As Caregivers For Aging Parents

APRIL 7, 1997 VOLUME 4, NUMBER 40

Two recent studies demonstrate that children of the frail elderly spend more time and money on care of their parents than is widely supposed. Despite the popular image of “baby-boomer” children as self-involved and neglectful of their elders’ needs, the research indicates that the amount of effort invested in elder care has actually increased over the past decade.

In 1987, according to one of the studies (sponsored by the American Association of Retired Persons, the National Alliance for Caregiving and others), seven million families were involved in providing long-term care for parents or other relatives. That number has more than tripled, to 22.4 million.

Fully half of employed caregivers have missed work time to care for their elders in recent years, reflecting an increase from just over two-fifths a decade ago. Another surprise: almost half of long-distance caregivers are male, despite the stereotype of daughters providing all the care for aging parents. The average age of long-distance caregivers: 46–which places the average caregiver solidly in the baby boom generation.

Long-distance caregivers make up a distinct portion of the children providing care for elderly relatives. 70% of those out-of-town care providers are employed, and they provide assistance with everything from bill-paying to hiring and managing on-site caretakers.

The second recent study, commissioned by the National Council on Aging, shows similar results. The NCOA focused its study on caregivers who live at least an hour from their elders. While that study showed that only 15% of caregivers have taken unpaid leave from their jobs to deal with elder care responsibilities, it suggests that out-of-town caretakers provide more than just their time to support aging elders. In fact, the NCOA caretakers had spent an average of $196 per month of their own money to provide or oversee care, and spent 35 hours per month on making the arrangements and visits necessary to keep their elders safe and provided for.

The NCOA study (funded by the Pew Charitable Trusts) also revealed another important detail about long-distance elder care: the length of time such arrangements continue. According to the study, the average long-distance caretaker had been involved in helping out for just over five years.

Both studies demonstrate the reality of caregiving at a time when public policy debates focus on the spiraling costs of long-term care. According to the conventional wisdom, children (and especially baby boomers) are interested primarily in receiving their depression-era parents’ estates as quickly as possible. That is the view that invests policy determinations, from Congress’ recent attempt to make criminals out of parents who give away property before institutionalization to Medicaid’s refusal to provide any substantial home care alternative to nursing home placement.

Even as the American population ages inexorably, the public debate shifts away from reasoned solutions of the growing funding problem associated with long-term care and toward demonizing of the segment of society most likely to require assistance. The long-term care insurance industry, eager to develop a market in this growth field (a tiny fraction of long-term care costs is currently paid by insurance, with the majority of funding coming from the federal Medicaid program), has led the charge with a two-fold attack: accusing children of the frail elderly of greed while trying to frighten the elderly themselves with visions of bankrupt government programs and allegedly substandard care. Unfortunately for those who make the first claim, the AARP and NCOA studies clearly demonstrate that the elderly receive tremendous assistance from their children, even across long distances.

Long Term Care Insurance: Who Needs It? Which Policy?

JANUARY 27, 1997 VOLUME 4, NUMBER 30

With nursing home costs approaching $40,000 per year for most residents, the government’s Medicaid program has for decades been the “safety net” for families with long-term care needs. In recent years, escalating Medicaid costs and increases in the portion of national nursing home bill paid by the program have resulted in Congressional efforts to reduce Medicaid eligibility and coverage. Prudent elders should be considering other ways to ensure that nursing home stays can be paid for if needed.

A relative handful of individuals have long-term care available from religious or service group affiliations. Another small portion of the population can rely on government programs other than Medicaid, but for most elders the only alternatives are to accumulate substantial personal wealth (a common goal, though sometimes difficult to realize) or purchase long-term care insurance (LTCI).

A recent review of LTCI purchasing strategies by Elder Law Forum (a newsletter published by Legal Counsel for the Elderly, Inc., and sponsored by AARP) points out some of the considerations for typical buyers. The review makes several points for the “typical” LTCI buyer:

  • About half of 65-year-old women and a third of the men will spend some time in a nursing home.
  • Most nursing home stays will be short, with the median length of institutionalization being slightly less than one year.
  • LTCI premiums currently average about $1,000 per year for 60-year-olds, and rise to $1,500 for 65-year-olds and $2,000 for 70-year-olds.

If you (or a relative or client) are concerned about long-term care costs, some pertinent questions to consider include:

  • When should you buy? The average age of new policyholders is currently 67. Many employers now offer group plans, and a few younger people may buy policies. But for most people, waiting until age 60 to make the purchase is probably reasonable.
  • Should both a husband and wife buy policies? In many cases, one spouse or the other may be uninsurable due to illness or age. The “well” spouse should particularly consider LTCI, since she (most commonly) is likely to survive the “ill” spouse, and therefore have no spouse to care for her. Of course, this is another way of saying that the well spouse is likely to spend some considerable time providing care for the ill, uninsurable spouse, as well.
  • Does family history matter? If a potential LTCI buyer has a family history of strokes, high blood pressure, dementia, Parkinson’s or other conditions likely to require long-term care, insurance is more strongly indicated. Such persons should make the initial purchase at younger ages, since the onset of disability will usually make them uninsurable.
  • Does net worth make a difference? Couples with a net worth of less than $100,000 (not counting the family home), and individuals worth less than $50,000, may not need to consider LTCI, since (current) Medicaid rules will permit them to receive government assistance within a year or two of nursing home admission. Prospective LTCI buyers with large estates may not need the insurance, particularly if their estates generate $40,000 in annual income over and above their (or their spouse’s) other living expenses. In other words, LTCI is primarily of interest to the middle-class elderly.
  • How important are individual policy provisions? Very. Some policies provide excellent coverage for home health care, while others do not; a policy without home care provisions might unnecessarily force the owner into an institution.

A checklist for comparison shoppers can help frame some of the issues. For a helpful checklist, contact FLEMING & CURTI at the fax, e-mail or street address below.
330 N. Granada Avenue, Tucson, Arizona 85701
520-622-0400 / FAX: 520-203-0240

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