A single top income could buy housing for every homeless person in the US

Jim and I just saw a disturbing /engrossing/very important film called Inequity for All”. I encourage everyone to see this film! It had a huge effect on me. It takes complex, abstract economic concepts, adds humor and the human element, and makes these concepts very approachable and easy to understand.

From the film’s site:

  • In 1983 the poorest 47% of America had $15,000 per family, 2.5 percent of the nation’s wealth.
  • In 2009 the poorest 47% of America owned ZERO PERCENT of the nation’s wealth (their debt exceeded their assets).
  • At the other extreme, the 400 wealthiest Americans own as much wealth as 80 million families – 62% of America. The reason, once again, is the stock market. Since 1980 the American GDP has approximately doubled. Inflation-adjusted wages have gone down. But the stock market has increased by over ten times, and the richest quintile of Americans owns 93% of it.

How does income inequity pertain to responsible long-term care (LTC) planning?

When I began my long-term care insurance career in 1989, sales of long-term care insurance (LTCi) nationwide were slow. The biggest battle I fought was people’s ignorance, not fear. In those days, people insisted the government would pay for their long-term care, their kids would take care of them, or they would never need long-term care. The media, too, were very ill-informed. Most media coverage disparaged LTCi at every opportunity, and called it a non-essential rip-off. Even the insurance industry considered LTCi to be its illegitimate step-child in those days.

In 2013, the above issues have pretty much been dismissed. Studies today prove the majority of people now admit they might need LTC, and that they are financially unprepared to pay for it.

Interestingly, LTCi sales still languish

In today’s world, the ever-present stress of job insecurity, having to stay in a job you hate, toxic co-workers, working in order to have medical insurance, longer hours, job cutbacks, stagnant wages, higher tuition, overhead, and debts, with no visible way out of such predicaments, is common. Many are understandably scared.

When people live with these types of fears, they often suffer from emotional, irrational inertia and the inability to act affirmatively. We LTCi specialists can show them $50/month premiums they can easily afford. They might have nursed their own mother for years, at considerable physical and economic loss, yet they are paralyzed with fear and do not purchase reasonably priced LTCi. They cannot act.

Inequity for All describes the vicious cycles that result from income inequity. Slow LTCi sales, despite the fact that most now understand LTCi ownership is the only rational solution to big problems many of us will face, is one more dangerous by-product of this nation’s mounting income inequity.

Truthful info on LTCi claim payments

These statistics from Genworth, a leading long-term care insurance (LTCi) carrier, provide insights into the nature and complexion of LTCi claims:

If you missed Genworth’s webinar on their claims history over the past 38 years, here are some interesting facts: 

Youngest claimant: 27 years old

Oldest claimant: 103 years old

Longest claim: 19.6 years

Most expensive claim (still ongoing): $1,300,000

71% of all claimants are females 29% of all claimants are male

51% went on claim due to dementia & cognitive issues

15% of all claims lasted more than 5 years

Average length of claims, if on claim more than 1 year: 3.9 years

71% of claims started with home care 13% of claims started with assisted living facilities 16% of claims started with nursing homes

50% of claims lasted less than 1 year (conversely, 50% lasted more than 1 year)

The reason claims closed: 61% death 28% Recovery 11% exhausted benefits Average age of claimant: 79

Who goes on claim?

38% Single women 28% Married Women 10% Single men 24% Married men

Most expensive claims: Dementia & Parkinson’s

Pseudo Journalism Schlock, Part 1

Beware of newspaper or online columns by “consumer advocates” who are not legitimate journalists.

The following column hit Internet searches set for “long-term care insurance” last week: “Clark Howard: Do your homework before buying long-term care”. What’s not to like about Mr. Howard’s down-home, sincere looking headshot? I’m sure Mr. Howard is a nice guy, but he is not qualified to write about long-term care insurance. Yet, he does.

I’ve already busted Scott Burns, another financial advisor with a newspaper column, who doesn’t need to research his columns in depth before having them published. This is because Mr. Burns, like Mr. Howard, is a financial advisor, not a journalist.

Mr. Howard does not derive much, if any, of his income from his pseudo-journalism. I clicked through to his website. His livelihood appears to come from being some sort of financial advisor. Yet his column gets published online and possibly in the hard-copy Atlanta Journal-Constitution. I’m sure many readers accept what he says without questioning because it looks and seems credible.

I’ve said it before, I’ll say it again. My colleagues and I are exhausted from having to combat the amount of misinformation about long-term care insurance (LTCi) that manages to get published. Mainstream media publishes a lot more misinformation than it does properly researched, accurate information on LTCi.

It is obvious to me and my colleauges that  Mr. Howard is speaking out of his a** on the subject of LTCi.  A lot of what he’s written does not make sense or is not possible. I guess Mr. Howard had a deadline to meet and was in a time crunch. Clearly, minimal research has been done.

Beware of Mr. Howard, Mr. Burns, and others like him. They are not a journalists. Lack of adequate editorial oversight enables them to give un-researched, false information and have it published, appearing as fact.

In my sequel to this blog, “Pseudo Journalism Schlock, Part II”, I will give the falsehoods in Mr. Howard’s piece and correct them.

Very Useful New Book by Phyllis Shelton

My good friend Phyllis Shelton has written a new book “Protecting your Family with Long-Term Care Insurance.”

Senior Market Advisor Magazine deemed Phyllis to be among the top ten professionals in the long-term care insurance industry nationally. She has been featured and quoted extensively by the mainstream media and is a nationally recognized speaker. I’ve known Phyllis for years consider her reputation beyond reproach. She uses folksy charm and down-home TN humor to convey technical information in an easy-to-understand, thorough manner.

To learn more about Phyllis, visit http://www.ltcconsultants.com/

If you aim to be a superbly well-informed LTCi buyer, or you are a financial advisor who wants your thirst for detailed insight into LTCi products quenched in an entertaining manner, you will surely enjoy Phyllis’s latest book. Here’s the review I gave this book on Amazon.com:

“Phyllis Shelton is regarded as one of the most credible, trustworthy experts in the field of long-term care insurance (LTCi) today. This book lives up to this reputation. Ms. Shelton explains technical aspects of LTCi in an easy-to-understand fashion. The reader will learn how to understand LTCi comprehensively, on a deeper level than is possible from typical LTCi sales materials or media coverage. The info she gives is accurate and timely. This book is “must” reading for any consumer who wishes to make an informed, confident, empowered decision about LTCi. The book is enjoyable. Much of Ms. Shelton’s down to earth, TN humor is evident, and she uses many relevant, first-hand examples.”

Powerful New Tool for Peers

I want to recommend a powerful new book to all readers who are financial advisors.

Margie Barrie is a nationally recognized long-term care insurance (LTCi) expert and a good friend of mine. Senior Market Magazine voted her one of the ten most influential people in the LTCi industry nationally. She is the long-time author of the “LTCi Insider” column in that magazine and a nationally recognized, sought-after speaker.

Margie has just published her second book, “Selling LTCi Today: 46 Ways to Find Clients and Close More Sales.”

Margie has asked many of the most experienced and well-known LTCi professionals in the country to contribute short chapters with their best tips and advice. This array of different perspectives makes her book a lively read.

Any financial professional who is sincere about wanting to cultivate LTCi clients should get this book right away.

You can learn more about Margie Barrie and purchase the book at http://www.margiebarrie.com/.

Honey opines on the state of the long-term care insurance industry

Here’s a link to a recently published article I wrote for the April, 2013 edition of Health Insurance Underwriter Magazine.

The article is about why I am upbeat about the state of the long-term care insurance (LTCi) industry.

Although HIU is a trade magazine, this piece is a good, and brief, read for the public.

Older is not better…It’s Brutal


In “In Hard Economy for All Ages, Older Isn’t Better… It’s Brutal” from the New York Times, February 3, 2013, Catherine Rampell outlines a perfect storm of financial shocks that has eroded the financial security of  Baby Boomers - those nearing retirement but not yet covered by Social Security and Medicare.

A summary of the article explaining the oncoming financial/health/lifespan catastrophe, appears below. There are two big crimes I believe Boomers are guilty of. One is avoidance of saving, replaced by living beyond their means. The second is being champions at denial.

The combination of high unemployment, depressed housing values, and low interest rates has reduced older Boomers’ household incomes by 10% since the recovery began three years ago.  Many of those who lost their jobs during the Great Recession are too old to be seriously considered for another and too young to collect Social Security or begin living off their retirement savings, which in many cases are paltry.  In addition, the unemployed lost the crucial benefit of health insurance and consequently cannot afford routine checkups and preventive maintenance.  New research suggests that they may not live as long as expected because of untreated medical problems and financial stress.

What a depressing state of affairs!!  But, as the infomercials exclaim, “there’s more!”  Nearly 70% of this age group will eventually need some form of long-term care.  And even more disturbing is that only 10% of Americans have planned for this potentially staggering additional financial burden by purchasing reasonably priced long-term care insurance (LTCi).  The remaining 90% are in denial and counting on blind luck that they will be one of the fortunate 30% who need no extra care in their final years.

My advice to these financially stressed Boomers, AND their younger counterparts who have more time to plan responsibly – explore LTCi as soon as possible!  Yes, it will cost you some of your scarce dollars, but take a close look at what you are spending your money on now.  Do you really need cable TV?  What about eating at home more often or drinking home brewed coffee?  Is that expensive vacation trip worth more than the financial assistance that LTCi can provide if you need long-term care?

Ignore Film’s Message at Your Peril

Here is information and the trailer for a film we saw last night here in Houston, called Amour. It is an award winning film that has received rave critical reviews.

Unfortunately, many of you who watch the trailer will be so uncomfortable with the subject matter that you will probably not want to see the film. Even more unfortunate (and frustrating to me), after seeing the film most viewers will still be unwilling to connect the film’s message to their own need for immediate LTC planning.

George, the husband and primary caregiver to Anne in the film, was in denial about the extent of Anne’s need for care for way too long. He refused to acknowledge how bad off she was, and that there was an urgent need for additional care. It’s very likely that one reason he chose to deny the extent of Anne’s need was financial.

Finally, additional caregivers are hired. But they appear to be there for only a few hours a day. Anne’s profound need for care was meticulously portrayed, and it soon became clear that she actually needed full-time care. Any professional in the care giving industry would have quickly recognized this. Again, why was more care not brought in? I believe it was due to George’s psychological denial of the severity of Anne’s condition, as well as the exorbitant cost.

Inevitably, George’s mental and physical health also declines from the stress of being Anne’s primary caregiver and having too little respite.

Of course, if Anne and George owned long-term care insurance, their LTCi policies would’ve been pumping loads of money to defray Anne’s care giving expenses. And perhaps the ultimate, inevitable tragedy would have been averted.

Back to the beginning. How do I know that people still cannot connect the dots between the tragic outcome of Amour and the need for immediate long-term care planning? I had conversations with three ladies in the ladies room afterwards, and when I mentioned that George and Anne would have benefited greatly from owning long-term care insurance, these ladies could not connect the dots. They admitted they did not own long-term care insurance, but dismissed my overtures to discuss why long-term care insurance ownership would have altered the film’s tragic outcome. People dwell in denial.

If you read my prior blog, featuring Steve Moses, you will gain a better understanding of my grave concern about how unprepared Americans are for their possible need of long-term care.


The State of the Long-Term Care Insurance Industry

Thanks to my friend and colleague, Stephen Moses, president of the Center for Long-Term Care Reform, for allowing me to republish this address on the future of long-term care financing and long-term care insurance in the United States. The following is an edited transcript of a speech he delivered on January 12, 2013.

Don’t miss the irony in Steve’s speech.  The good news for LTC insurance is actually very bad news for the U.S. economy.  The only way to reconcile this seeming conflict is to resolve the LTC financing crisis in the right way. 


“The Good News and Bad News About Long-Term Care”
Stephen A. Moses

I have good news and bad news.

I’ll spend one minute on the bad news and the rest of my time on the good news.

The bad news is that all the reasons consumers have been in denial about the risk and cost of long-term care still apply and they are getting worse.

  • Government programs still pay for most expensive long-term care in the USA.
  • Government LTC benefits are much easier to get than most people realize. 
  • And the Federal Reserve still forces interest rates to near zero which compels carriers to raise premiums to compensate, making LTCI harder to sell.

OK.  So much for the bad news.

Here’s why LTC insurance carriers, distributors and producers are in the catbird seat primed to do well doing good for your clients and for your country.

First of all, everything that makes LTC insurance necessary remains true and is becoming more so.  For example:

  • 8,000 Americans turn 65 every day and that will continue for the next 18 years.
  • 70 % of people 65+ will need some LTC and 20% will need 5 years or more
  • LTC is very expensive:  As of 2012, over $80,000 per year for a nursing home; over $42,000 for assisted living; and over $60,000 for a home health aide on a daily 8-hour shift

But we’ve known all that since the inception of LTC insurance in the 1970s.  Nothing new there.

So what is new?  Why will the LTC insurance market explode within your career horizons and probably during the current four-year presidential term?

In a nutshell, all the obstacles to a strong LTC insurance market are about to come crashing down.

Let me walk you through them one by one.

  • The demographic bombshell of aging boomers is only now beginning to explode with the first of the 77-million-strong generation becoming fully eligible for Social Security last year and for Medicare the year before.
  • Government programs funding LTC are like Wylie Coyote in the Road Runner cartoon.  They’ve gone over the fiscal cliff still wearing a silly grin, but they’re about to fall like an anvil.  Why?
  • Basic federal government debt is $16.5 trillion, over $52,000 for every man, woman and child in the country.  Our debt to Gross Domestic Product ratio is 100 percent.  We borrow 42 cents of every dollar the federal government spends.  Can you believe that?  We go $1 trillion deeper in debt every year.  That can’t continue for long.
  • Medicaid, which crowds out 2/3 to 90% of the LTC insurance market according to Brown and Finkelstein, has a terrible reputation for poor care and is bankrupting the states.  Easy access to Medicaid and its big loopholes will end.
  • Social Security pays for about 13% of LTC through Medicaid spend-through, but Social Security has a $21 trillion unfunded liability.  It can’t continue funding LTC.
  • Medicare pays generously for nursing home and home care which enables LTC providers to survive with most of their patients funded at less than cost by Medicaid.  But Medicare has a $39 trillion unfunded liability, so it can’t continue either.
  • All three – Medicaid, Social Security and Medicare – will be means-tested.  That means they’ll be welfare programs, not social insurance, and most middle class and affluent Americans will get less, if anything, from them.
  • Home equity will become a major source of funding for income security, health care and long-term care in retirement.  That’s good for the reverse mortgage business in the short run and for LTC insurance in the long run as more people realize they need coverage to protect their home equity.
  • 65 million Americans are unpaid caregivers, 7 of 10 of whom care for someone over 50 years of age.  Those numbers will skyrocket as boomers age.

So what does this mean for you?

We’re about to enter a brave new world of long-term care.  Keep doing what you’re doing and before long prospects will be knocking on your door instead of vice versa.

The public’s been asleep about LTC risk and cost because a government safety net has softened the financial consequences of going without LTC insurance since 1965.

As I’ve explained, that’s ending.

Already you see key changes indicating the public is finally getting the message.  The age of purchase for LTC insurance has fallen by a decade from late ‘60s to late ‘50s.

You see and hear many more media stories about the risk and cost of long-term care. 

Businesses worry more and more about absenteeism and “presenteeism” due to employees caring for elderly parents or worrying about them instead of working.  That means you’ll sell many more group and multi-life policies.

Attorneys, financial planners and accountants are getting more questions from their clients about LTC.  Just last week an estate planner called me to find out who could help him protect his clients.  I referred him to a major distributor.

People are getting scared.  They hear the news about the federal debt and deficit and unfunded entitlements.  They’re caring for elderly loved ones in huge and rapidly growing numbers.  The public programs they’ve relied on no longer instill confidence.

These trends develop slowly over time.  They grow and grow like blowing up a balloon.  Then they pop and all of a sudden everything is different.  That’s what’s going to happen.

You are in the enviable position of being in the right place at the right time.  Some of you have been pioneers in long-term care insurance.  We know you by the arrows in your backs.

But your time has come now. 

Watch for this scenario to play out.

  • Assuming current government policies stay the same, the American economy will continue to lag.
  • Domestic and international financial pressures will force interest rates up in spite of the Federal Reserve.
  • Federal debt service will skyrocket putting more financial pressure than ever on government programs that fund LTC such as Medicaid, Social Security and Medicare.
  • Policy makers will have no choice but to cut back on benefits, eligibility, and provider reimbursements.
  • The quality of publicly financed LTC will continue to decline.
  • It is true already and will be more true in the future that access to quality long-term care at the most appropriate level is assured only to those who can pay privately.

You are the heroes who will show the next generation how to avoid the pitfalls of publicly financed long-term care. 

One of the things I love most about speaking with my many friends who have been selling long-term care insurance for two decades or more, is to hear their stories about clients who have gone on claim.

Those clients are so appreciative that they elevate the producers who sold them their policies to the status of demigods.  How enormously proud that must make them . . . you . . .  feel.

And that’s what the future holds for you if you stay on course.  You are the last line of defense between the people you meet and the dismal future that awaits them if you allow their denial about LTC risk to prevail.

So my advice to you is “Go forth with confidence and pride.  Know that long-term care insurance is good and people need it.  Everyone you protect is one less person to drag down the social safety net for the truly needy.”

Thank you.

Stephen A. Moses is president of the Center for Long-Term Care Reform (www.centerltc.com).  Contact him at 206-283-7036 or smoses@centerltc.com.


Continued Medicaid payment shortfalls are very scary

Here’s a link to the December 2012 Report on Shortfalls in Medicaid funding. This is an annual report commissioned by the American Health Care Association (AHCA) and performed by Eljay, LLC. 

 Not surprisingly, the report (page 6) states that:

Between 2010 and 2012, the…. projected (Medicaid) shortfall climbed to $22.34 from $18.54 in 2010, a 20.5 percent increase in the shortfall amount.”

“We estimate that in 2012, state Medicaid programs, on average, reimbursed nursing center providers only 88.9 percent of their projected allowable costs incurred on behalf of Medicaid patients. This means that for every dollar of allowable cost incurred for a Medicaid patient in 2012, Medicaid programs reimbursed, on average, approximately 89 cents. This represents the lowest percentage since the inception of this study in 1999.

 This is very scary stuff!

 Obviously, the government is less and less capable of providing long-term care.

I hope that those of you who do not already own reasonably priced long-term care insurance (LTCi) will take heed and plan responsibly for your long-term care. LTCi is the reasonable—and sure—way to ensure you will have all the options you’ll prefer if long-term care is needed.