Could you be forced to buy Long-Term
Care Insurance in Florida soon? Is there any precedent for this? Is Medicaid slowly going broke with little money to fund Long-Term Care?
America’s Entitement programs are out of control in this author’s opinion.
Federal spending for Social Security, Medicare and Medicaid are enormous drags
on our fiscal health. The programs have promised a lot more than they can
deliver, as each legislative decision seems to liberalize the benefits even more.
The 2023 Social Security Trustees Report shows the program being able to
pay just 77% of scheduled benefits starting in 2033, one year earlier than the
last report. Medicare will run short in its funding also in just 4-5 years.
There
are many myths out there regarding LTC; what it covers, and what Medicare does not
cover. Virtually no long term care services are covered by Medicare. Nursing and Custodial care is provided after hospital stays covered by Medicare Insurance for a limited time, but not on-going care in your home or a non-hospital facility.
Who Qualifies for Medicaid?
Basically, if you can’t afford to take care of yourself health-wise, and have
little money to hire others to do so, you become a ward of the State and could qualify for Medicaid, the jointly funded program between the states and Federal Government. Once certified, you will normally go to a ‘facility’ that can feed
you, house you, and medicate you. Medicaid will use your Social Security benefits
to pay your costs, and then use the program funds to pay the difference. Long Term Care
insurance planning helps you pay for those expenses – partially or fully – so
you don’t use all your estate assets, and/or go bankrupt and be forced to go on
Medicaid after that.
Long Term Care is an EVENT,
not a PLACE. Not being able to dress, bathe, eat, walk, transfer
or use the bathroom usually qualifies you for LTC benefits (2 or more of the above activities minimum). Cognitive
diseases such as Alzheimers, Dementia, or Parkinson’s also would give you the
green light to qualify. LTC insurance enables you to stay in your home while receiving skilled care -or even family care - also.
Many of the State budgets are in much better shape than the U.S. Federal budget.
To get a ‘data-rush’ on all this, head over to https://USDebtClock.org Use the link at the
upper left to find your state’s data.
WASHINGTON’S LONG TERM CARE PROGRAM
The Washington State plan, enacted in 2021, set forth a maximum $36,500 lifetime LTC benefit, with other stipulations on age and residency. Their thinking; $100/day benefit for one year. A $100,000 wage earner without a LTC plan in force pays $580/year in taxes to support those collecting LTC. A small dollar amount, but a smallish benefit. Eight million people reside in Washington State.
Last year, California started the ball rolling and established the Long Term Care Insurance Task Force to formulate a worker-funded LTC plan of their own. Here is an excerpt from their Department of Insurance:
They want to learn and improve on the Washington State plan for their 40 million citizenry. Insurance insiders tell me the California plan may have up to a 1% payroll tax, with a 2024 launch date. Washington State’s rate was set up at 0.58% of taxable payroll. Pensions, capital gains and other income is not included, just earned income.
Florida is run pretty well under our
current legislature. Debt to GDP is about 11%, about the same as Washington
State. But Florida is still running a deficit of about $77 Billion a year –
last report. Florida's Medicaid budget is $28 Billion, and going into the red this next fiscal year.
Are you starting to see the
possibility of some type of Florida LTC plan getting traction?
Tax More or Spend Less
A State managed Long Term Care
insurance plan would also give the states much more control over their money since
the Federal Government – I assume – would have little say in how to allocate
the money to those in need. They could then also share the costs of the current Medicaid program with the Feds, as they now do.
The Florida legislature would have to determine the rules, the potential future claims,
and the funding necessary to make it viable and fair for both taxpayers and beneficiaries.
Perhaps Florida brings back the state “intangibles tax”, or some other tax to
fund the program. It won't likely have juicy benefits that a private insurer would offer for more money, but it's a start to help those chronically ill get some assistance and have many taxpayers as stakeholders in this important and costly event most of us will someday use.
With the aging of America from the
Baby Boomer’s retiring at about 10,000 folks a day, this Medicaid mess in
unlikely to get better anytime soon. I look for more states to take LTC matters
into their own hands as the Federal Medicaid Program may not be able to stay
alive much longer funding millions of residents for years in assisted-living and nursing
home facilities. See the current status of state's legislation at the end.
The Hazards of Waiting
The sooner you get LTC coverage, the cheaper it is, like most types of insurance. Plus, you never know when you will need it; age 55, 60, 82?
The Washington State LTC plan, when
announced in 2021 resulted in tens of thousands of applications to life insurance
companies that write LTC policies, that they had to stop accepting new business for
6-7 months!
For a quick comparison quote, I ran a $3,000 a month benefit for a healthy 55
year old male, with a $108,000 pool of money lasting 3 years. The cost is
$221/month.
The Death Benefit to his heirs if no LTC used; $72,000, with a 3%
compound inflation on the initial $3,000 benefit built in. Refund of premium can be added at no cost if you wish to cancel the policy.
A
50 year-old woman would pay $181/month. Surf over to this link for an interactive LTC quote for your area of the country: https://tinyurl.com/5n7xktn3
Do you have life insurance that
no longer suits its initial goal? Exchange it for an LTC policy.
I believe in this type of coverage for you or your loved ones. I’ve owned my
hybrid policy for 2.5 years now, and see the cash value growing each month and can rest
assured with every medical report / check-up that should I need my LTC money,
it will be there for me each month.
Forward this to those who may benefit from this retirement planning advice, please.
For a more accurate quote for yourself, contact me.
I'll circle back when I hear more news on the California and potential Florida LTC plans.
~Barry
(954) 560-3622
UPDATE from my 9/14/23 Post: Here is list of states that are in the process of LTC discussion or legislation: Discussion: AK, NC, IL, ME, MA, MI, NH, OR, VT. Progressing legislation: CA, MN, NY. In-force now: WA
I am licensed to provide LTC insurance to my clients using stand-alone and hybrid LTC insurance solutions. I have been full-time active and licensed in the retirement planning field since 1993.
