California website offers help on long term care coverage

January 31, 2012

By Herbert A. Sample

As California’s population continues to age, state officials are urging residents to do something human beings frequently find agonizing: Plan for that time in their twilight years when they may need assistance getting out of bed, visiting the bathroom and dressing themselves.

That’s the impetus behind the five-month-old website www.RUReadyCA.org, which is managed by the California Partnership for Long-Term Care, a joint venture of the state Department of Health Care Services and a trio of insurance companies that sell long-term care policies in the state.

The department had long published a website on long-term care coverage for insurance agents and consumers. But the newer site is aimed just at consumers in hopes that many more will realize — even in a time of tight household budgets — that they should spend money now to handle medical expenses that may not arise for 10, 20 or more years, if ever.

“It’s been a challenge to really get the word out and make sure that (Californians) understand all of the complexities of long-term care,” said Brenda Bufford, the partnership’s chief.

Long-term care insurance helps defray the cost of in-home support services and nursing home care, which are not generally covered by regular medical policies and only in limited ways by Medicare. Medicaid (or Medi-Cal, as it’s known in California) typically covers nursing home bills, but usually requires beneficiaries to first exhaust most of their financial assets.

Still, long-term care frequently remains off the radar screen of most adults because of its cost, in many cases above $100 a month, and because it’s unlikely to be needed in the near future.

Enter RUReadyCA.org. The result of focus groups and other consumer research, and accompanied by pictures of smiling or pensive 50-somethings, the website describes long-term care insurance, what services it generally covers, how much it costs, and where it can be purchased. It offers videos of Californians discussing various aspects of long-term care. And it includes calculators that estimate insurance premiums and how much money a consumer would need to stash away, in lieu of buying insurance, to help cover long-term care expenses in the distant future. (The answer: A lot.)

“We never want to think about the possibility that we’ll one day need help with getting dressed, eating or bathing,” the site declares. “But when daily activities become difficult and you or a loved one need long-term care because of a chronic physical condition such as arthritis or Parkinson’s disease, or a degenerative mental disease such as Alzheimer’s, who will pay for this care?”

In somewhat obscure fashion, the site also describes consumer-friendly features of long-term care policies that only companies enrolled in the California partnership can offer.

For example, partnership policies must allow for a 5 percent increase in benefits, compounded annually, to compensate for what officials expect will be 5 percent annual growth in long-term care costs. (Over the last three decades, such expenses have risen between 5 and 6 percent a year, Bufford said.)

Thus, a partnership policy that would pay out $260 a day when first purchased in 2012 will provide $690 a day in benefits 20 years later, according to the state. A non-partnership policy without inflation protection might continue to pay $260 a day after two decades.

Partnership policies also require a third party unaffiliated with the insurance carrier to assess policyholders seeking benefits, as well as their plan of care. The insurer is required to follow the evaluation’s conclusions, though it can seek a second opinion from another independent party.

“Asset protection” is an exclusive feature of partnership policies: Each dollar the policy pays out in lifetime benefits entitles the policyholder to hold onto a dollar of his or her assets when later seeking Medi-Cal coverage. In other words, if a partnership policy caps lifetime benefits at $200,000, and a policyholder exhausts that coverage and then applies for coverage through Medi-Cal, $200,000 in assets are shielded from Medi-Cal’s standard eligibility requirement that almost all assets be liquidated first.

“That’s kind of what distinguishes the partnership policies from other policies,” said Brian Millsap, vice president of product management for long-term care with Bankers Life and Casualty, a unit of CNO Financial Group. “It makes sense to have the policy available for (customers) that gives them…that Medicaid asset protection on the back end rather than only offering ones that don’t have that feature.”

Partnership companies must win approval for rate hikes – which are capped at 40 percent — from both the state Department of Insurance and the partnership office. If approved, the increase must be spread equally over three years. On the other hand, partnership policies tend to be more expensive than non-partnership versions, Bufford said.

Only three firms — Bankers Life, Genworth Financial, and New York Life Insurance – and CalPERS currently offer partnership policies in California. John Hancock expects to “soon” restart selling policies in California, a spokeswoman said.

More than a dozen other insurers offer stand-alone, non-partnership policies in the state, according to Dave Althausen of the insurance department. Currently, close to 660,000 long-term care policies are in force in California, he added.

That number should be much higher, say long-term care advocates. They point to sobering facts: Life expectancy is growing, and the number of California residents age 85 and older — those who are most likely to need extended care at home or in nursing homes — is likely to more than double by the year 2030, when the bulk of baby boomers will reach advanced age, according to the California Health Foundation.

And the cost of long-term care is unlikely to recede. According to the partnership website, the average daily private pay rate for nursing facility care in Los Angeles County currently is $206. In San Diego, it’s $240; San Francisco, $272; Sacramento, $232; and in Fresno, $213.

Long-term care advocates said the website should help jump-start conversations among more Californians about planning for their future care needs. Sean Coffey, a policy specialist at the National Center on Caregiving in San Francisco, said the site’s tips on buying long-term care insurance were helpful, though it lacked definitions of such bureaucratese as “average daily benefit.”

He also pointed out an irony: The website states that the majority of long-term care is provided by relatives, and provides a link to 11 Caregiver Resource Centers, which assist those who provide care to family members. However, as Coffey noted, Gov. Jerry Brown’s proposed 2012-13 budget would eliminate funding for the caregiver centers and make big cuts in the In-Home Supportive Services program, which would impact 254,000 recipients whose household tasks are frequently handled by family members.

Herbert A. Sample is a freelance writer based in Los Angeles. He can be reached at hasample@mac.com.

This article was updated to correct the first name of Brenda Bufford.

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