As reported on the New York Times site, Ted Kennedy’s CLASS Act made its way into the healthcare reform bill. The CLASS Act sets up a government-run long-term care insurance program, a “public option” for long-term care insurance. The program will be available through employers and participation will be voluntary; however, people will be automatically enrolled, meaning if you don’t want to participate you’ll have to take the action of opting out (as opposed to opting in in the first place). After five years participation participants would become eligible to receive benefits. The program is scheduled to take effect in January, so expect a lot of scrambling to work out the precise details between now and then.

It was stated in the New York Times piece that in order for a program such as this to work, it needs a high rate of participation from healthy people, which logically means younger people.

I recognize that participation rates will increase with automatic enrollment, but, and you can call me a cynic, I’m of the thought that many younger, healthier individuals will take the extra step to opt out, leaving the program dependent on general taxpayer funds to be financially sound. Those certain to remain in are those anticipating needing the assistance, people that will draw down funds from the pool.

It is widely documented that younger people are already not saving enough for retirement, let alone long-term care costs (read Rahm Emanuel’s own 2005 piece on the subject). Why would a younger person want to participate in this program if he/she isn’t already on track to have a sound retirement portfolio? Not everyone lives long enough, or becomes disabled enough, to require long-term care assistance. Far more people need retirement savings than long-term care financing. Further, if you have a sound retirement portfolio, those funds have more flexibility and can be used to help cover long-term care costs should the need arise. Long-term care insurance is largely only useful for persons with a certain asset/wealth status, when the insurance can help protect that wealth by covering expensive long-term care costs and preventing the need for someone to “spend down” for Medicaid qualification. A person doesn’t get to that stage unless they’ve built a solid financial portfolio.

I applaud the idea put forth, but I think more political attention should be given to finding creative ways to bring down long-term care costs first and foremost. Let’s focus on bringing down the rate of obesity and diabetes in this country, and supporting healthy habits and lifestyles. These efforts yield far greater cost-to-benefit ratios, reduce long-term care costs through avoidance or delay and increase quality of life.

What do YOU think?

(What is Medicaid? How do I apply?)

Medicaid recipients, their caregivers, and people that think they may need Medicaid to cover long-term care expenses in the near future should be aware of Medicaid’s “look back” period if they plan to transfer assets to loved ones. The easiest way to explain the look back period is to provide an example:

Mary needs long-term, nursing home care that she can’t afford. She applies for Medicaid and when she does, Medicaid “looks back” to see if she transferred any assets (house, real estate, etc.) to someone within the past 5 years (the look back period).

Three years ago Mary signed a plot of land worth $100,000 over to her daughter as a gift. The monthly cost of nursing home care in Mary’s state is $5,000 a month. If Mary had not given the $100,000 property to her daughter, the sale of the land would have covered 20 months of care ($100,000 / $5000 = 20 months).

Medicaid now employs the “ineligibility period.” Because Mary gave the land away, land that could have covered her care for 20 months, she is not eligible for Medicaid until 20 months from the date she applied.

This becomes very problematic for families that don’t learn about the look-back period prior to transferring assets and applying for Medicaid to cover long-term care costs. In the above example, had Mary transferred the land to her daughter more than 5 years ago, the look-back period would not apply, Medicaid would cover her long-term care costs the day she applied (assuming she’s eligible otherwise). This may not feel fair when a family is confronted with the unexpected reality, but long-term care costs are exceptionally expensive, and it is an attempt by the government to limit tax payer funded coverage for people that may be trying to game the system by shielding assets. The above example would have been treated differently if Mary had sold the land to her daughter for its true value.

People that think they may need Medicaid coverage for long-term care needs in the coming years should speak with an elder law attorney about these rules, the specifics of which differ from state to state. The research could begin with a call to your State Medicaid Office, found through the Resources by State page.

The federal Department of Health and Human Services has released the 2010 Medicare and You consumer handbook. This is the official government benefit description manual issued to Medicare members. The handbook contains information on the following:

• What’s new in 2010
• Medicare costs
• Medicare coverage
• Health and prescription drug plans
• Medicare rights
• Health information technology

Download the Medicare and You 2010 Handbook

There will inevitably be changes to Medicare benefits and information as 2010 progresses. For the latest information about changes to Medicare, visit www.medicare.gov or call 1-800-MEDICARE (1-800-633-4227).

Since I last wrote about the big news between AARP and the American Seniors Association (ASA), I have received numerous emails asking me questions mostly focused on 1) how to join the ASA, 2) how they compare to AARP and 3) what benefits and insurance programs they offer.

First: if you want to join, visit their website: www.americanseniors.org

Second: The ASA is an elder advocacy group similar to the AARP, but more politically conservative in nature. They’re actually going out of their way to market themselves as a conservative alternative to the AARP. While the AARP does not actively market itself as a liberal organization, some view them as such. The ASA appears to be embracing the conservative niche, doing things like posting Fox News videos on their website’s front page.

Third: Since I first wrote about the ASA, they have partnered with Liberty Mutual insurance group and Mutual of Omaha to offer a insurance benefits through their site. This is undoubtedly an attempt to both appease their increasing member base, but also to generate additional revenue. They are undoubtedly getting lead and/or commission revenue through their partnership with Liberty Mutual.

Buyers should be wary of what they buy regardless of where they buy it, however. American Seniors Association is still relatively new and they don’t have the membership base that AARP does, so if your primary objective in obtaining insurance is to save money, shop widely and wisely. For example, the ASA’s “Medicare Solutions” link on their site is actually a link to Senior Market Sales, Inc., a company that offers insurance products to seniors through third parties.

I did a little digging on the link to “Travel” on the ASA’s site. It appears that they’re just offering a commission based link through www.cltsloyalty.com, a company that partners with others to offer travel and vacation plans. While I see nothing necessarily wrong with this, a disclaimer of some sort might be appropriate. The ASA does not actually state that its their travel program, they’re just implying that it is by listing it on their site and failing to directly state that it’s not their program.

The ASA is still a very new organization that is slowly gaining experience and size. Their website format and design is, in my opinion, still amateur. It is not well organized or designed, and I think that’s indicative of their organization as well.

The ASA’s advocacy efforts appear non-existent, and I see no professional research resources on any work they’re conducting. At this stage, the ASA seems to be offering little more than a way for conservative elders to join an organization that proclaims to represent their interests, but don’t exactly say how. Instead they prominently focus attention on their revenue generating insurance and travel programs.

That being said, I’ve signed up  for their email updates to see how they develop and improve over time. Stay tuned.

Answers to basic Medicare questions can be found in the Centers for Medicare and Medicaid Services (CMS) Medicare and You 2009 Handbook. Each member receives a copy of the handbook when she/he signs up for the program and each year thereafter as benefits change. The handbook is similar to many insurance programs’ publications, but it’s in a more accessible, reader friendly format.

Topics covered include:

• Medicare Basics
• What’s Covered
• Deciding How to Get Medicare (it matters)
• Programs for People with Limited Income and Resources
• Protecting Yourself
• Planning
• Costs
• and more

The 128 page document is available for download in pdf format from ElderGuru:

Download the “Medicare and You” 2009 Handbook

If you want a paperback copy of the Handbook, contact CMS through the link at the top of this post. They will mail a copy for free.

What is Medicaid?

Medicaid is the federal government’s health insurance program for low income seniors, pregnant women, children, people with disabilities, etc. Seniors have been relying on Medicaid since it was established with Medicare in 1965 under the Social Security Act. Medicaid is funded with both stated and federal dollars and it covers hospital and doctor visits, dental care, prescription drugs, nursing home care, in-home support, vision care, Medicare premiums and more.

The Centers for Medicare and Medicaid Services (CMS) manages Medicaid on the federal level, but each state administers its own program. State programs may vary by name.

How do I get Medicaid?

Eligibility rules vary from state to state, but most states follow basic eligibility criteria. Your income and/or assets must be below a certain level depending on your state, circumstances, and the services you’re seeking. Eligibility criteria may include your age, disability, income, resources, U.S. citizenship, etc. Special rules apply for those living in a nursing home and other specific groups.

You must apply for Medicaid through your State office which you can find through the Resources by State page. Coverage may begin retroactively up to 3 months if you would have been eligible at the time; meaning if you had unexpected medical expenses and don’t have Medicaid, but you would have qualified at the time of your illness, Medicaid could cover those costs. Speak with your state’s Medicaid office for specifics.

The results of a Medicare cost saving project that tried to successfully manage older adults with chronic diseases was, if you’re reading this MSNBC article, a failure. I’ll beg to differ with the article’s assessment in a moment, but here is what happened:

• Centers for Medicare and Medicaid Services (CMS) selected 15 test-site programs in 2002 that tried keep sick, aging patients out of hospitals and cut costs
• The sites developed their own programs, enrolling a total of 18,309 fee-for-service Medicare patients
• About half received standard care, and the rest received managed care with a nurse available to advocate, encourage, and educate the patient
• Many patients had more than one chronic disease
• Only two sites cut the number of times patients were hospitalized
• None saved Medicare money

So the goal of the project was not met, but does this mean all was lost? I think not, for what it illustrated is the difficulty in trying to change patient behavior. The project’s failure was not the delivery of effective case management, but the patients’ inability or unwillingness to adopt a healthy lifestyle.

The article states:

“The only way you can really do it is by changing patients’ behavior and by changing physicians’ behavior, and both things are really hard to do,” said study author Randall Brown, a researcher at Mathematica Policy Research Inc., in Princeton, N.J., which was hired to evaluate the programs.

Often, these patients need to stop smoking, or lose weight, exercise more, eat healthier foods — a challenge even for generally healthy people. Those changes are especially tough for sick, older patients who often are set in their ways.

The story cited one success story within the various projects, however. A 74-year old retired man from Pennsylvania followed the case manager’s advice, ate healthy meals and exercised. He lost 60 pounds, his blood pressure and cholesterol improved, and his pre-diabetes evaporated.

The results of this study then begs the question: How does one get another to change his/her lifestyle for him/herself AND for the system supporting everyone?