Mcmahon and Associates LTD

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Who’s responsible for your health, wealth and well being? Long-Term Care doesn't have to be a complicated and unpleasant subject. In fact, taking responsibility for your own health and welfare can help you avoid years of poverty or substandard care. Everyone must have a Long-Term Care plan in place that will fit her lifestyle and budget and McMahon and Associates Ltd. can help you choose a solution to fit you and your specific needs.

On Sunday, October 17, "This Week with Christiane Amanpour" featured Maria Shriver, First Lady of California, and Ann O’Leary, from the Berkley Center for Health, Economic and Family Security, to discuss "The Shriver Report: A Woman’s Nation takes on Alzheimer’s."

It is refreshing to know that the national spotlight is finally focusing on this critical issue, but O'Leary underestimates the cost of care and mistakenly creates the impression that there is no insurance to fund caregiving for Alzheimer’s patients, saying "we estimate families are spending $56,000 a year - they are paying out-of-pocket - we don’t have any insurance for this.” O’Leary does not clarify whether this figure is for one year of care at home, in an assisted living facility or in a nursing home.

In Michigan, the annual cost is estimated to be $24,700 for part time home care: five hours per day, five days per week; $32,832 for care in an assisted living facility and $80,665 for nursing home care. These numbers come from the 2009 MetLife Mature Market Institute “Long-Term Care Costs Market Survey.” To be fair, O’Leary does mention that some relief is possible under the Health-Care Reform bill, but I'd like to offer some additional clarification.

There are several different ways to pay for caregiving to Alzheimer’s patients, or anyone needing care for chronic illness or disability, including The CLASS Act, which will go in to effect in 2014, the Public-Private Partnership for Long-Term Care, and private Long-Term Care Insurance.

The CLASS Act is part of Health Care Reform that could provide Long-Term Care, but many argue that the benefits are structured poorly. This insurance-like plan will be available through employers and will have a low daily benefit, inadequate growth for inflation and an unlimited benefit period. People who know Medicaid are aware that if a person can't pay the difference between the benefit and the cost of care, that person quickly spends personal resources and soon goes on Medicaid.

A better plan would be to have a higher daily or monthly benefit with a 5% compound inflation and a shorter benefit period. That way the insurance has a chance to pay for at least the first two or three years of care. That would be enough to keep most of the 80 million baby boomers off of Medicaid for long-term care, thereby freeing public dollars to pay for the research that O'Leary and Shriver referred to.

Almost all of the states have implemented the Public-Private Partnership for Long-Term Care, which ensures that the private sector pays first and Medicaid pays last for extended health care. Some of the benefits are paid to families in cash; families can use the funds for in-home care or as they see fit. If the insurance is insufficient, then Medicaid would pay unlimited benefits, allowing that person to protect assets up to the value of their privately owned long-term care insurance policy.

Most Americans don’t know about the Partnership for Long-Term Care legislation of 2006 because Michigan, like many states, does not have the funds to educate the public about the plan. The Partnership for Long-Term Care is a proven strategy and four states have piloted this concept since the early 1990s. Partnership directors will tell you that out of the more than 325,000 policyholders, fewer than 500 have accessed Medicaid after first using their Partnership insurance plan. A partnership plan is being established in Michigan, but the condition of the economy has prevented it from moving forward.

We especially need the Partnership for Long-Term Care because there is no way that public dollars alone can pay the $20 trillion required for Alzheimer’s treatments over the next 40 years. In addition, 16 million younger adults will be added to the Medicaid rolls beginning January 1, 2014 via the Health Care Reform Bill.

The third way to pay for caregiving is personally-owned Long-Term Care Insurance, which is available through private insurance companies. Private Long-Term Care Insurance policies are very comprehensive, less expensive and have better benefits than the CLASS Act will provide. In addition, since January 1, 2010, Americans enjoy a new tax incentive that allows gains from a non-qualified annuity to be distributed tax free to pay for qualified Long-Term Care Insurance policies.

For example, if a woman with Alzheimer’s has a cash-benefit Long-Term Care Insurance policy that pays $5,100 per month with a 5% compound increase of the monthly benefit, and if she has paid $18,090 in premiums since 1993, it will take only three-and-a-half months to recoup the premiums when she receives care. Her premium would be waived as long as she is receiving care and her monthly benefit would continue to increase, even while she received the care.

Madams Shriver, O’Leary and Amanpour are correct when they say that women make up half of the U.S. workforce and are at great risk of losing careers and personal lifestyle choices when faced with the caregiving tsunami that is coming our way. They are also spot on, noting that our nation's productivity is headed for a serious decline as our population ages and more resources are spent on those requiring long-term care.

However, solutions are available for those willing to take responsibility for their own health and well being. Private Long-Term Care Insurance can help to avoid years of poverty or substandard care and remove some of the uncertainty associated with government provided services.

Dorothy McMahon, founder of McMahon and Associates Ltd., will address all of your questions and concerns regarding Long-Term Care and Long-Term Care Insurance. Reach her at (248) 844-9787 or ltcinsusa@aol.com.