Medicare Advantage copays are high for hospital, nursing care

June 8, 2015   Media contact: David Orenstein   401-863-1862

A new study of the out-of-pocket costs seniors face for a long hospital stay followed by skilled nursing care found that Medicare Advantage plan holders, even if they had incomes just above the poverty level, typically had copays hundreds of dollars greater than the hospital deductible under traditional Medicare. The findings follow federal efforts to limit out-of-pocket costs in Medicare Advantage plans.

PROVIDENCE, R.I. [Brown University] — Millions of seniors with Medicare Advantage plans, including more than a million with low incomes, were on the hook to have large out-of-pocket costs for a 27-day course of hospital and skilled nursing care, according to a new study.

“Policymakers are very concerned about how much Medicare beneficiaries need to spend for essential medical services,” said Dr. Amal Trivedi, associate professor of public health at Brown University and corresponding author of a new study in the June issue of the journal Health Affairs. “It’s one of the goals of insurance — to protect people from large, catastrophic out-of-pocket expenses.”

Copays, or cost-sharing, can limit health care usage if the high out-of-pocket costs they engender discourage consumers from engaging certain services. In the new study the researchers focused on a sequence of services that is medically important, difficult to predict, expensive, and common.

What the data showed is that on average in 2011, seniors in Medicare Advantage plans that had lower premiums were expected to pay $1,785 for a week in the hospital and 20 days in skilled nursing, which are typical stays in the aftermath of catastrophic incidents such as stroke, congestive heart failure, or a hip fracture, Trivedi said. People in plans with higher premiums faced an average copay of $1,446.

Medicare Advantage copays were just as high for members who receive federal subsidies because their incomes are between the poverty level and 150 percent of poverty, added study lead author and Brown doctoral student Laura Keohane.

“For low-income beneficiaries, these copayments for inpatient and skilled nursing care could be more than a month’s worth of income,” Keohane said.

Seniors with traditional Medicare would pay a $1,132 for a week in the hospital and 20 days in skilled nursing, plus additional copayments for physician services while hospitalized.

“The perception out there is that Medicare Advantage offers more generous benefits than traditional Medicare without supplemental coverage but for long inpatient stays and long stays in a skilled nursing facility, that’s generally not the case, we found,” Trivedi said.

For shorter stays in the hospital and in skilled nursing facilities, Medicare Advantage copays were lower than those of traditional Medicare. Because many Medicare Advantage plan copays rise with the length of hospital or skilled nursing stays, the average costs for only three days in the hospital were $544 for low-premium plans and $511 for those with higher premiums.

Despite policy protections

Keohane, Trivedi, and their co-authors considered the issue in the context of federal policy changes starting in 2011. In that year, federal officials restricted some cost-sharing levels and imposed a cap of $6,700 on total out-of-pocket costs and restrictions on copays in Medicare Advantage plans, with the intention of protecting consumers. Some plans already offered members a cost sharing limit at an allowed level, but others did not. Under the new regulations, Medicare Advantage plans that agreed to a lower cap of $3,400 could gain more leeway regarding how they could revamp their cost-sharing. Traditional Medicare has no cap on out-of-pocket expenses.

To conduct their study, the authors looked at the anonymized records of more than 8 million Medicare Advantage enrollees and the pricing structures of their plans, both before and after the federal policy changes. The seniors were enrolled in 1,841 Medicare Advantage plans, including 333 specialized plans.

The researchers’ analysis calculated what average customers were expected to pay for hospital and skilled nursing care based on their plan terms and whether they received subsidies, for instance for Part D drug coverage, because of low income. One set of findings were the Medicare Advantage costs and how they compared to traditional Medicare. But the researchers also examined the specific impact of the 2011 policy changes.

That analysis showed that among Medicare Advantage members in low premium plans that already had an out-of-pocket limit, fewer than a third of members had increased copays for hospital or skilled nursing care after the policy change and more than a third of members had a reduction in copays. But among those members for whom the out-of-pocket caps were new, 55 percent had increased copayments for hospital stays and 46 percent had greater copays for skilled nursing. Fewer than one in six of members in plans with new out-of-pocket limits had lower cost-sharing.

The study data suggest that imposing an overall cap on out-of-pocket costs may have resulted in many plans increasing copays for hospital and skilled nursing care, but it does not explain why. To finance the expense of adding an out-of-pocket limit, Medicare Advantage plans may have raised copays.

Trivedi and Keohane hypothesize that greater copayments for hospital and skilled nursing care may dissuade people who are more sick (and more expensive to cover) from enrolling in some Medicare Advantage plans or cause those receiving these services to exit their plan. No one can predict a catastrophic need for hospitalization, but a sicker person may be more likely to be deterred from a plan with higher copays for such care.

Ultimately the authors said they hope policymakers will look at whether more needs to be done to protect Medicare Advantage consumers, particularly ones with low incomes, from high out-of-pocket costs for unpredictable catastrophic illnesses such as the ones that result in long hospital and skilled nursing stays.

In addition to Keohane and Trivedi, the paper’s other authors are Regina Grebla and Vincent Mor.

The National Institute on Aging funded the study (grants P01AG027296, R01AG044374).

Blue Cross Blue Sheild of Texas. Group Health, Individual and Medicare Supplement Insurance.
At De Leon Enterprises we've got you covered with the Best. www.deleonenterprisesinc.com

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WHO WE ARE

Blue Cross and Blue Shield of Texas knows health care coverage in Texas — we invented it. We're Texas born and bred, and this is the only place we do business.

We have been around for more than 80 years, and the cross and shield have come to represent the most experienced health care coverage organization in the state and the nation. Our mission is still focused on providing financially sound health care coverage to as many Texans as possible.

As the state's largest health insurer, we serve some of the best-known Texas companies, including American Airlines, Brinker International, Brookshire Grocery, Halliburton, H.E.B. Grocery, JBS, Southern Methodist University (SMU), the Texas A&M System, Texas Instruments, Texas Medical Association and The University of Texas System.

We maintain our state headquarters in Richardson, with regional offices in Houston, Austin, and Lubbock. In addition, we process our members' claims in Texas in our claims and customer service facilities in Abilene, Marshall, Richardson, San Angelo, Waco and Wichita Falls.

We're a statewide customer-owned health insurer in Texas. We believe Texas consumers and employers deserve the best of both worlds — access to affordable, quality health care and top-notch service from a company that focuses solely on customers, not shareholders. Customer value is our cornerstone.

We grew up in local Texas communities, and we've stayed there. However, our significant local presence throughout the state is just one reason why the cross and shield create peace of mind when it comes to choosing health insurance. Here are a few other reasons:

• We have a special relationship with physicians and hospitals dating back to 1929. We remain committed to partnering with physicians and hospitals to provide access to affordable, quality health care, and we are a collaborative partner seeking solutions to joint concerns with employers, physicians, hospitals and governmental bodies.
• Our health maintenance organization (HMO) and preferred provider organization (PPO) networks are large. For example, the HMO Blue Texas network includes more than 451 hospitals and 38,000 providers statewide (Source: Internal PREMIER Reports, July 2009).
• In addition to providing broad access to affordable care, we have a commitment to member empowerment in personal health and wellness.
• We administer the state's Texas Health Insurance Pool, which provides health insurance to eligible Texas residents who, due to medical conditions are unable to obtain coverage from commercial insurers (Source: Texas Health Insurance Pool website).
• Since 1997, our statewide Care Van Program has given more than 712,522 free immunizations/screenings to over 428,890 uninsured Texas children through November 2009. (Source: Internal Care Van Program Activity Report, November 2007).

As a division of Health Care Service Corporation (HCSC), Blue Cross and Blue Shield of Texas is among the financially strongest health insurers in the nation, providing our members with a high level of confidence and security. For detailed financial reports, please visit the HCSC website.

Whatever you needs please visit us and www.deleonenterprisesinc.com or www.seniorshealthllc.com and we'll be happy to answer any questions you might have.

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The truth is Medicare Advantage only works well when you are healthy but when you get sick they leave turn their backs on you and say...good bye! There are no restrictions on these insurance companies when they do it either. 

Thank Brad Wright for sharing this information. It's what we have been telling clients for years.

We all know about Medicare, the federal government health insurance program for Americans who are over the age of 65 and/or disabled. We know that as we have begun to live longer, the Medicare population has ballooned and the costs of the program are, by most estimates, “unsustainable.”

We also know that Medicare, despite being a government program, is beloved by America’s seniors. If it was an unpopular program, Congress would have cut it long ago, saved billions of dollars, and we wouldn’t be talking about debt ceilings. But, the fact is that the Medicare program is extremely popular, making any proposed changes to it–even changes deemed necessary to preserve the program–a political liability. That is why both Republicans and Democrats have blamed each other for wanting to cut the program. They know that if they can pass the blame effectively, it would be the kiss of death for their opponent.

But, while we know all of this, what far fewer of us know about is a special offshoot of the federal Medicare program–a privately administered model known as Medicare Advantage. In 1997, the passage of the Balanced Budget Act created what were known as Medicare+Choice plans. By 2003, when the Medicare Prescription Drug, Improvement, and Modernization Act was passed, Medicare+Choice was re-branded as Medicare Advantage. These Medicare Advantage plans work differently than traditional fee-for-service Medicare. Let me explain.

Under traditional Medicare, at the time they become eligible, individuals receive hospital coverage (Part A), which they have paid into during their working life (or that of their spouse), and they may pay a relatively low monthly premium to receive physician coverage (Part B). While these beneficiaries have to pay certain deductibles and co-insurance, the Medicare program generally covers all necessary health care services.

By contrast, Medicare Advantage works on a more capitated model. That is, the federal government pays private insurers who offer a Medicare Advantage plan a fixed dollar amount per member per month. Beneficiaries still have to pay their monthly Part B premium to Medicare, but they typically do not pay additional premiums, and they usually pay a co-payment at the time of a health care visit, rather than a deductible and coinsurance. To top it all off, Medicare Advantage plans have to provide coverage that is as good as traditional Medicare, but they can also offer additional benefits, and most plans do offer things like vision and hearing benefits, and even gym memberships.

On the surface, these Medicare Advantage plans certainly seem advantageous. After all, who doesn’t prefer lower out-of-pocket costs and more benefits? This likely explains the growth in Medicare Advantage enrollment from 5.4 million beneficiaries in 2005 to 11.1 million in 2010. But there’s a catch. You read it, but maybe you glossed over it. Let me draw your attention to it again: “the federal government pays private insurers who offer a Medicare Advantage plan a fixed dollar amount per member per month.”

If you’re running a business and trying to make a profit, and your model is based on receiving a fixed monthly payment for the individual, paying a significant portion of the costs of their care, and pocketing the difference, what are your incentives? If you answered, “To pay as little for their care as possible,” you’re on the right track. But they can’t do this by denying benefits to those of their enrollees who use the most care. What they can do, is work diligently to target only healthy people to enroll in their Medicare Advantage plan. The strategy is simple: By selecting healthy individuals who will use less health care, they keep their costs down and generate larger profit margins. Meanwhile, traditional Medicare gets left caring for the sickest subset of the elderly and disabled population.

Recent research, which Jordan Raul of Kaiser Health News summarizes nicely, confirms that this is precisely what is happening. The bottom line is this: Medicare Advantage works to your advantage when you are healthy, but if you happen to get sick, the private insurance market will turn its back on you, and traditional Medicare will be there to greet you with open arms–provided we can keep it solvent. So, the next time you hear Politicians say they want to privatize Medicare, it might sound like an attractive option right now, but think long and hard about what it would mean if you actually got sick and needed insurance on which you could depend. If your turning 65 or would like to learn more about your options. If you're in the Houston area or surrounding counties and are turning 65 or would like more information please contact us. www.seniorshealthllc.com 

When it comes to Long Term Care “Should You Buy Inflation Protection Insurance?”

Should you buy inflation protection for long-term care insurance? Absolutely. In fact, if you don’t think you can afford that extra coverage, you should probably rethink whether you should buy the insurance at all.

The issue of inflation protection was just one of the subjects that I, along with financial adviser Michael Kitces and insurance industry spokesman Jesse Slome, discussed on a Wall Street Journal webcast on Monday. The Journal’s Anne Tergesen wrote a nice article this week that also touched on the inflation issue.

There is a reasonable debate about how much additional coverage you should buy, but there is no doubt that nearly everyone should buy some. Here are just some reasons why:

Typically, buyers of long-term care insurance are in their 50s or early 60s. But you probably won’t need substantial help with daily living until you are in your 80s. That means the cost of long-term services and supports—whether you receive care at home, in a nursing home, or in some other setting--will rise year after year for thirty years before you ever collect benefits.

As a result, what looks like a pretty good benefit today will be worth far less when you eventually make a claim.

How much less? Say you buy a three year policy that promises to pay $150-a-day (a bit more generous than a typical policy). Today, according to the latest survey of long-term care costs by ltc insurer Genworth, a private room in a nursing home averages $240-a-day, or nearly $88,000-a-year. Your $150-a-day policy would cover 58 percent of the cost and you’ll pick up the additional $90 out of savings or retirement income.

that might be manageable. But if inflation averages 3 percent a year (the long-term average for the overall economy), in 30 years the purchasing power of that $150 will shrink to less than $62. Or to put it another way, that $240 daily cost of a nursing home bed would increase to $582. However you prefer to think about it, your insurance would cover only about one-quarter of your daily costs instead of nearly 60 percent.

It is true that inflation will also increase the size of your nest egg (in nominal dollars), but will you have the resources to pick up the difference?

Of course, there is no way to predict increases in long-term care costs over the next 30 years. The Genworth study and others like it provide some useful information but also can be misleading.

Here's one problem: Genworth reports that the median cost for that private nursing home room increased by an annual average of 4.19 percent over the past five years. But that was a period when we were slowly climbing out of the worst recession since the 1920s and many measures of inflation, including labor costs, remained stagnant. Thus, I’d be very careful about using the last five years to predict the next 30.

The study also found that the cost of home health aides rose very slowly over the past five years, only about 1.32 percent. But again, be warned. As more people age at home, the demand for home care workers is likely to explode and as a result costs could go up a lot faster in the future.

Buying inflation protection isn’t cheap. It can easily increase your premiums by 50 to 100 percent. But if you don’t think you can afford it, you might want to reconsider whether you should buy at all.

Unfortunately, you’ll be faced with a mind-numbing set of choices. A policy may offer 3, 4, or 5 percent annual inflation protection, or an increase tied to the Consumer Price Index. You also may have to choose between compound or simple inflation coverage. The differences may seem small but over 30 years they’ll add up.

Finally, you may be offered an alternative called a future purchase or guaranteed purchase option (to further complicate matters the industry often just uses the initials FPO). Unlike automatic inflation protection, this option won't automatically increase your benefit but instead it will allow you to buy more coverage at regular intervals as you age. But remember, as you boost benefits you’ll pay higher premiums. While this option may mask the true cost of insurance by reducing the initial price, you could end up paying more over time than if you bought inflation protection up-front.

So what should you do? Like so much in the world of long-term care insurance, much depends on your tolerance for risk and your overall financial situation. But I’d get a minimum of 3 percent compound inflation coverage and even more if you can afford it.

Medicare Recipients The Clock Is Ticking & Plan F Is Going Away?

March 23,2020  

Plan F will no longer be sold starting in 2020

Yes, it is – but not for a while yet, so don’t panic. Medigap Plan F has been one of the most popular supplement plans on the market for decades. Millions of people will be affected, so Congress has given us plenty of time to prepare for this – until 2020, in fact.

We’ve got the scoop so you’ll know what to expect in 2020, when these changes come about.

Why Are They Changing Plan F?

The changes coming are a result of the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015. You may have heard it referred to as the “doc fix” law.

The Doc Fix was necessary Congress passed this legislation last year to ensure that doctors would  be paid adequately for providing Medicare services. We all want our doctors to be paid fairly for seeing Medicare patients, but some earlier laws actually budgeted for doctors to have rate decreases over the years.

Doctors, of course, don’t like this, and many threatened to leave the Medicare program if the cuts continued. Every year, Congress has been voting at the last minute to stall the cuts, but kicking the can down the road doesn’t work forever.

The new law ensures doctors will be adequately paid for Medicare services

They needed a solution to fix the payments for physicians so that they would not bail out of the Medicare program.As you can imagine, that costs money, around $200 billion over the next 10 years. Congress had to come up with that money somewhere. They decided to reform our existing Medigap policies, among other measures.

All Medicare Beneficiaries Must Be Subject to a Deductible

Currently Medicare Parts A & B both have deductibles. Deductibles are the amount of money that you pay out of pocket before your benefits begin.

Medigap plans can still cover the Part A Hospital deductible, but as of 2020, the plans can no longer cover the Part B deductible for new enrollees.  Currently this deductible is $183 per year in 2017. Since Plan F covers that deductible, it is going to be phased out for new enrollees.

The goal of this measure, in the view of Congress, is to make Medicare beneficiaries put a little more “skin in the game.”

You see, people with Plan F have what we call “first dollar” coverage. Right from the first day, Medicare covers 80% and their Medigap Plan F covers the deductibles and the other 20%. So at the time of service, people currently on Plan F pay no copay for their Medicare-related doctor visits. No deductible either.  Lawmakers fear that this lack of cost-sharing results in people running to the doctor for minor issues that may not really require medical care.

These changes mean that all Medicare beneficiaries will have least $183 in deductible spending out of your own pocket each year. In light of this, they hope you might think twice before seeing a doctor and perhaps causing the Medicare Trust Fund some unnecessary spending.

Basically…. they want you to think about whether you really need to see a doctor for every little sniffle.

Will this really work to reduce Medicare’s overall annual expenditures? We’ll see. Opponents have argued that people may end up waiting to seek medical care for serious issues. This would ultimately cost the Medicare program more money down the road. The end result is something we’ll all be discovering together after 2020.

The 2020 Changes

Medigap Reform begins in 2020

So is Plan F going away? Yes, BUT only for new people starting in 2020. Here’s how it will go:

• If you are are on Plan F already when 2020 rolls around, you won’t be kicked off your coverage. In fact, you will continue to be able to purchase Plan F policies from other carriers after 2020 as well. (Again, the MACRA act only prohibits the sale of Medigap Plans C & F to newly eligibleMedicare beneficiaries.

• If you are eligible for Medicare before 2020 but have delayed it because you are still working and have employer insurance, don’t worry. When you leave that insurance and switch to Medicare, you will still have the right to enroll in Medigap Plans C or F.

• People eligible for Medicare AFTER 2020 will not have this same right, but they will have a similar right to enroll in Medigap Plans D or G going forward.

Other popular Medigap plans like Plan G and Plan N will continue to be available for everyone in their current format. A New High-Deductible Plan G will be created and made available for both newly eligible and previously eligible applicants.

What does this mean for you?

Here’s our advice:

1. Make the best coverage decision for yourself right now. If Plan F feels best to you, go for it. You’ll be grandfathered if you choose to keep that plan past 2020. If you would rather choose Plan G or Plan N that isn’t slated to be discontinued down the road, then that’s fine too. In fact, Plan G offers some great potential savings and gets great reviews.
2.  Watch our posts for future updates. Legislation about Medicare changes often and 2020 is still quite a long way away. We never know what other changes they may pile on between now and then. We’ll keep you posted though, so be sure to check in here at our website or l for future updates as we roll them out.
3. Visit us at www.deleonenterprisesinc.com to learn about these plans and other life insurance plans available in Houston and Surrounding areas. We’ll help you see just how much you would save. - Raymond De Leon

If it could happen to Superman, it can happen to you..."Prepare for the "Unthinkable."

GenerationXers this was advice only given to Boomers in the past but it's time for you also to "Prepare for the unthinkable."

If it can happen to Superman, it can happen to you. More than 12 million Americans need long-term care, and almost 5 million of those are working-age adults. Here's how to prepare for the worst.

I’ll bet you're not considering the prospect that you might need nursing home or skilled home health care. But the unthinkable can happen. Just ask Superman -- actor Christopher Reeve. Reeve was paralyzed in a 1995 horse-riding accident, joined millions of Americans who require nursing care at home or who now reside in nursing facilities. NOTE: Christopher Reeve died Oct. 10, 2004. 10 years after his accident.

You insure your home against fire and your car against an accident -- and never complain if that money is wasted. Why not insure against one of the most expensive realities of life -- long-term care? As our lives lengthen and new treatments are developed, you -- or your parents -- are more likely to require some type of senior care.

With a little planning, you can buy long-term care insurance -- either for yourself, or as an annual gift for your now-healthy parents. And you can encourage your company to provide this coverage as an employee benefit. Otherwise you may become one of the 7 million Americans who, according to the National Council on the Aging, now provide or manage care for a friend or relative aged 55 or older and not living with them.

Long-term care insurance is a product that catches the attention of seniors, but the ideal time to buy it is actually when you're in your early 50s and in good health. At that point, premium costs are lower, and you’re less likely to have a pre-existing condition that disqualifies you. But a society that values a youthful appearance seems unwilling to recognize these expensive facts of life.

The costs of long-term care are staggering today and should soar higher in the coming years when baby boomers retire. Even the GenXers won’t escape the impact. Your parents will either spend your inheritance on nursing home care, or you may find yourself taking care of your elderly parents out of your own retirement funds.

In fact, the U. S. General Accounting Office says that nearly 40% of people age 65 now will spend some time in a nursing home. The federal Health Care Financing Administration projects that spending on nursing home care will rise from about $94.1 billion now to $125 billion a year by the end of 2005 and $330 billion by 2030.

The average annual cost of a private nursing home is now about $55,000, or $150 per day -- with many facilities in large cities costing more than $65,000 a year. Those costs can add up quickly, and Medicare does NOT cover them -- except for a few days in a skilled nursing facility after a hospital stay.

And no Medicare supplement policy covers custodial nursing care. Yes, state Medicaid programs cover nursing care for the indigent -- but that means almost all assets and income must be spent down before the state will pick up the tab.

Medicaid spend-down planning has received attention as a way to deal with the nursing-care costs. Financial advisers counsel seniors to transfer assets to younger family members -- a process that must be completed at least three years before asking Medicaid to pay nursing home costs. But these state nursing home programs for the impoverished do not cover home-health-care costs. And aside from the moral implications of such a strategy, do you really want you or your parents to depend on a government-funded nursing facility?

Long-term care insurance can solve the problem in most cases. The latest generation of policies pays for "home care" at a senior daycare facility, as well as care in a skilled or custodial nursing facility. A portion of premiums may be tax-deductible, depending on your age and income. But not all policies are alike, the business is growing (There were just 4.1 million policy holders in 1998.) and coverages are constantly evolving, so study both the product and the pricing.

Nuts and bolts
If you’re thinking about buying long-term care insurance, here’s what you should know before you buy.

The cost of a long-term care policy depends primarily on three basic factors: your current age, your current state of health, and the location of your residence. Unless you move, you can’t control any of these. But you can control such questions as the amount and length of coverage, the elimination period (deductible), and whether you’ve chosen an inflation rider.

Buying early pays. A healthy 50-year-old could purchase more than adequate coverage for $1,365 a year. For a 73-year-old, the same policy might cost $6,300 a year. This four-year coverage would include a 90-day deductible or elimination period, $200 per day in coverage (for home health care or nursing home care), and a simple inflation rider -- all on a policy from a top-rated company.

Good health now pays off later. Once you’ve locked in an annual premium, it can’t be raised if your health changes. But insurance companies can ask state regulators to raise premiums for an entire age group, depending on claims experience. Unfortunately, many companies have raised premiums in recent years, once they realized they’d underpriced their policies. (See below, on choosing a reputable insurer.)

While some insurers require a medical examination, most just ask for a medical reference. However, any false claims could result in future denial of coverage.

Where you live affects costs. That’s because nursing costs typically are higher in major metropolitan areas than in smaller communities.

Length of coverage: The average stay in a nursing facility is 2.5 years, so some people opt to limit coverage length to cut costs. But if you're purchasing a policy in your mid-50s, you’ll find that lifetime coverage is not much more expensive.

Elimination period: This is like a deductible and works like one. You agree to pay for the first 60 days or 90 days of needed care; then the policy kicks in. Having a 90-day deductible can cut premium costs substantially.

Inflation rider: Even a 3% inflation rate can cut the value of your dollar in half in 25 years. Plus, assume health-care costs will rise more than the general inflation rate as boomers age. So it may pay to buy an inflation rider. All tax-qualified policies today (see below) must offer this coverage as an option.

Other issues
Benefit payments and triggers: A qualified physician must certify to the insurance company that you need the benefits -- and those benefits will be paid only to qualified caregivers. A daughter who simply does your shopping and prepares meals wouldn't qualify as a caregiver, but she might if she’s a trained professional.

Most policies require the inability to perform at least two activities of daily living to trigger the benefits. The activities include being able to dress yourself, bathe yourself, move from a bed to a chair, use toilet facilities or eat unassisted. Policies will also pay out if you can’t pass certain mental function tests. (Look for a policy that specifically includes coverage for mental or cognitive impairment.) Most policies no longer require a hospitalization before benefits start, but check the wording anyway.

Insurance companies may pay benefits using one of two methods:

Expense-incurred benefits: These are paid either to you or to your provider up to the limits in your policy.

A daily benefit or indemnity: This will be paid directly to you. But be sure your policy offers a pool of benefits on a daily or weekly basis allowing you to pay for covered services as needed, as well as nursing home care.

Tax-deductibility: You may be able to deduct part of your annual premium as part of a medical deduction. But remember, you can only deduct medical expenses that exceed 7.5% of adjusted gross income. The size of a deduction depends on age. People over age 61 can deduct $2,510 (assuming they meet the 7.5% threshold). Almost all policies sold before Jan. 1, 1997 were grandfathered and are considered qualified. Benefits paid by a qualified policy aren't generally considered taxable income -- even if your employer paid the premiums.

Options
Waiver of Premium: This provision lets you stop paying the annual premiums once you’ve moved into a nursing home and the insurance company has started to pay benefits. It may not apply if you are receiving home health care.

Premium Refund: Some policies will repay your estate any premiums you paid, minus benefits used. Usually, there’s an age limit, typically 65 or 70.

Non-forfeiture benefits: If you drop your coverage, perhaps because you can’t afford the premiums, you can receive some benefits for the money you've already paid in. But this feature can boost the policy cost substantially.

Find a strong company
Make sure you’ve purchased from a company with a strong financial base, and a 10-year history with this insurance, so it will price policies properly and be there when you need it. A number of companies jumped into long-term care insurance without adequate data on which to base prices.

Companies such as Fortis and Travelers have either sold their long-term care businesses to others or reduced sales. The same for John Hancock, UnumProvident, and GE Financial who were once big players in this business. Companies that raised prices substantially for existing policyholders include Banker LIfe and Casualty once owned by (Conseco) and Penn Treaty who just got out of the business completely. So di Allianz Life. 

That's why you only want to work with an Independent Insurance Broker. Captive agent that work with only one company will always have their companys' interest first. It's it 100% your reposibility to understand to the contract. (Buyer Be Ware). An independent Insurance Agent works for you the client and not the Big Insurance Companies.

Independent insurance expert Martin Weiss has created a ratings service for long-term care companies at his Web site, Weiss Ratings. Weiss suggests that experienced companies have more claims-paying data on which to accurately price policies. He also warns that if you ask an agent whether a recommended company has ever raised premiums, the agent will probably say no. That’s because companies change the identification number of a policy, in effect creating a new policy, when they ask for a rate increase! Ask whether an increase in premiums has taken place on this type of policy instead of on this specific policy.

An alternative coverage
Edited: February 7th, 2017. 

There are now (new) policies in the market today from top notch carriers that offer Return of Premium Riders (ROP). Some offer 100% and some 80% return of prepiums. In most cases you’ll have the option to chose which one you want. 

The ROPs are only available as "Riders" and cost extra but compared to the Long Term Care insurance products of the past I personally think it's worth it and that this is going to be a great product for our Aging Texans.

The need for long-term care can occur at any time of life. Of the 12 million Americans who need long-term care, nearly 5 million are working age adults. If something happened to you -- or your parents -- how would you cover the cost? Don’t say you’d just leave it to the government. Instead, take a minute to stop by a nearby nursing home. You would certainly bring some cheer to the patients there. And you’ll gain new respect for those who provide care. And, I hope, you’ll be inspired to do some planning now, before the need arises. After all, that’s what insurance is all about.

There is much to learn about long Term Care and the Four Financial Realities that could affect your life and retirement. Here at De Leon Enterprises & Seniors Health and Life PLLC we are here to help.

Visit our website at www.deleonenterprisesinc.com.

Thank you.

Raymond De Leon