LTC Bullet: CLASS Redux?

Friday, February 10, 2017


LTC Comment: Washington State legislators propose another LTC fantasy plan. Will they never learn? Details after the ***news.***

*** CLTC AND ILTCI COOPERATION: According to an announcement by CLTC [Certified in Long-Term Care]: “CLTC and ILTCI [Intercompany Long-Term Care Insurance Conference] are working together to help enhance the knowledge and raise awareness of the importance of long term care insurance and the various options available to deal with the risks posed by long term care needs. As part of this effort, ILTCI is offering a Producer scholarship program for CLTC graduates to attend the organization's annual conference March 26-29 in Jacksonville, FL. CLTC graduates are invited to participate in the Producer Scholarship program which reduces the cost of the individual conference registration fee to $295 (from $995).”

Likewise: “This year, Bill Comfort will conduct a CLTC Master Class on Saturday, March 25 (8AM to 6PM) and Sunday, March 26 (8AM to 5PM). The 2-day course will review all the course material and prepare attendees to take the CLTC exam. There is no additional charge for the course material, exam fee or CE filing. Attendees that pass the CLTC exam will receive their CLTC designation upon passing the exam. The course will qualify each attendee for 8-15 hours of state insurance department CE credits (depending upon student's resident state) as well as for CFP/PACE credits (a $25 additional filing fee applies for recording CFP/PACE credits, if desired). Regular full price tuition for the course is $1,165. However, the ILTCI Conference will be subsidizing the course fee for any attendees of the ILTCI Conference, for an additional fee of only $199. Registration for the CLTC course can be completed when registering for the conference.” ***



LTC Comment: Laurie Jinkins and Norm Johnson are state legislators representing Tacoma and Yakima, Washington respectively. They have a plan to fix long-term care financing. Here’s how they described it in a Seattle Times column last Tuesday.

Our legislation would create a long-term care insurance benefit to help seniors and their families pay for long-term services and support while protecting seniors’ retirement savings and assets. Funds from a 0.49 percent assessment deducted from workers’ pay would fund the trust and be disbursed through a program overseen by a public-private commission. Workers would be eligible to draw on the benefits of the trust after they’ve worked three of the past six years, or 10 years total.

Sound familiar? Haven’t we been to this party before and awakened with a bad hangover? When legislators and bureaucrats set out to do what even highly trained actuaries in the private sector have found perplexingly difficult, don’t get your hopes up. Let’s take a closer look at the specifics of their plan. Find the Long-Term Care Trust Act here: HB 1636. We’ll quote from it and comment.

HB 1636 Quote: “The legislature finds that: Long-term care is not covered by medicare or other health insurance plans, and private long-term care insurance plans that do exist are unaffordable for most people; this leaves more than ninety percent of seniors uninsured for long-term care.”

LTC Comment: Hmmm, evidently no one told them about Medicaid, the biggest payer of long-term care in Washington State and everywhere else. Easy access to Medicaid LTC benefits after the insurable event has already occurred crowded out demand for private LTC insurance resulting in the challenges that product faces today.

HB 1636 Quote: “Without access to insurance, seniors must rely on family care and spend down their life savings to poverty levels in order to access long-term care through medicaid.”

LTC Comment: Oh, they know about Medicaid after all. But they don’t know much. In Washington State, median to high-income people can qualify for Medicaid if they have significant medical or LTC expenditures as most people who need long-term care do. Most assets are exempt, such as home equity up to $560,000, plus unlimited personal belongings, home furnishings, prepaid burial plans, one car, one business, IRAs if they’re paying out and on and on. People who still own too much can find a Medicaid planner here and get a Medicaid-compliant annuity, employ the “reverse half a loaf” strategy, or just buy a lot of exempt assets. I wrote about the “Fallacy of Impoverishment” in the Gerontologist 27 years ago and, despite some successful efforts in the meantime to curtail Medicaid planning abuses on the margin, the reality remains that most people can ignore LTC risk, avoid LTCI premiums, wait to see if they ever need extended care and pass the cost to taxpayers while retaining most of their assets for heirs.

HB 1636 Quote: “The long-term services and supports trust commission is established. The commission shall include: (a) One member from each of the two largest caucuses of the house of representatives, appointed by the speaker of the house of representatives; (b) One member from each of the two largest caucuses of the senate, appoint [sic] by the president of the senate; (c) The commissioner of the department, or his or her designee; (d) The secretary of the department of social and health services, or his or her designee; (e) Two representatives of long-term services and supports providers, one of which is a representative of a union representing long-term care workers; (f) Two representatives of an organization representing retired persons; and (g) Two representatives of consumers receiving long-term services and supports.”

LTC Comment: Thus, the commission responsible to “establish rules and policies regarding” enrollee eligibility, provider qualifications, benefit payments, assessment standards and procedures, operational standards, annual benefit adjustments, and solvency and financial status reports . . . lacks representation by the one group of experts who actually know how to set up and run a successful long-term care insurance program. To wit, the thousands of long-term care policy experts, actuaries, claims adjudicators, and case managers who make private LTC insurance work all across the country. They succeed somehow in spite of public policies that severely impede their efforts. Shame on any public official who ignores their expertise and their contributions to solving the LTC financing crisis.

HB 1636 Quote: “The department shall deem an individual to be a qualified enrollee under the program if the individual: (a) Is at least eighteen years old; (b) Is a Washington resident; (c) Has paid the long-term services and supports assessment established under section 9 of this act for the equivalent of either: (i) A total of ten years without an interruption of five or more consecutive years; or (ii) Three years within a six-year period.”

LTC Comment: Lucky Washingtonians. This program captures every, hard-working resident of the state and grants them the privilege of contributing even more of their meager and vulnerable incomes to fund yet another long-shot government gamble.

HB 1636 Quote: “A qualified enrollee may become an eligible beneficiary if he or she: (a) Is not eligible for long-term services and supports under medicare; and (b) Has been assessed by a health care provider who is in the registry and has determined that the qualified enrollee requires assistance with at least three activities of daily living.”

LTC Comment: Medicare does not cover long-term care, but Medicaid does. Why the omission? Can someone qualify for this program and Medicaid simultaneously? Three ADLs to qualify? Most private LTC insurance requires only two.

HB 1636 Quote: “An eligible beneficiary may not receive more than three hundred sixty-five services days of benefits over the course of the eligible beneficiary's lifetime.”

LTC Comment: Technically, anything over 90 days qualifies as long-term care, but 365 days is a pretty pathetic benefit period.

HB 1636 Quote: “A qualified enrollee's status in the program shall lapse if he or she ceases to be a resident of Washington for a period of at least five consecutive years without paying the long-term services and supports assessment under section 94 of this act. . . . An individual whose qualified enrollee status has lapsed under subsection (1) of this section may restore his or her qualified enrollee status upon resuming residence in Washington and making payment of the long-term services and supports assessment established under section 9 of this act for the equivalent of either: (a) A total of ten years without an interruption of five or more consecutive years; or (b) Three years within a six-year period.”

LTC Comment: Good luck keeping track of all that. This bill should be renamed the “Washington Bureaucrats Guaranteed Employment Act.”

HB 1636 Quote: “Each employer shall deduct from each employee's salary the equivalent of 0.49 percent of the employee's total compensation. The amounts shall be submitted to the department on a timeline determined by the department. The employer shall accompany the amounts with such information as the department determines is necessary to administer the program.”

LTC Comment: LTCI expert Scott Olsen is reported to have said: "Call this what it really is: a tax on the poor and the working class to get them to pay for care that they currently get for free under Medicaid!" 

HB 1636 Quote: “The department shall deposit all funds received from employers under subsection (1) of this section into the account created in section 10 of this act. . . . The long-term services and supports trust account is created in the state treasury. All receipts from employers under section 9 of this act must be deposited in the account. Moneys in the account may be spent only after appropriation. Expenditures from the account may be used for the administrative activities and payment of benefits associated with the program.”

LTC Comment: Sounds like another “trust fund” in the mode of those for Social Security and Medicare that include nothing but IOUs for moneys the U.S. government has already spent. And what does this mean: “Expenditures from the account may be used for the administrative activities and payment of benefits associated with the program.” What else can they be used for? This looks like a state slush fund modeled after those that rob Social Security and Medicare to enable excess federal deficit spending.

Well, other than that, this sounds like a great plan. Good luck with it, Washington. Thankfully, I’ve already made my escape to Texas.