Help for Long Term Care
(5/1/07)- A federal law that was passed last year is intended to help alleviate the costly expense of long-term care, whether it be in a nursing home, assisted living facility of for care at home. The law is intended to moderate the cost that arises when an individual's long-term care policy's coverage is used up.
Under the law, if you buy a policy and then use up the benefits, you may have additional coverage so that not all of your lifetime savings will have to be spent down before Medicaid picks up any coverage. The program is called the Partnership for Long-Term Care, a public-private long-term care insurance program now being used in five states-California, Connecticut, Idaho, Indiana and New York.
All states have leeway to start the program, and there are presently 25 additional states working on starting such a program.
Under the program you must buy a long-term care policy that has been approved by your state. If those insurance benefits run out, you can apply for Medicaid help to cover any additional costs up to the amount of the insurance originally purchased.
Here's an example of how the program works. Let's say you bought a $100,000 long-term care policy. If you use up the total amount of coverage, which in our example is $100,000, you could keep $100,000 in personal assets and still qualify for Medicaid coverage up to $100,000.
To find out if your state plans to offer the partnership program, go to the American Health Care Association's Web site at www.ahca.org or call the organization at 1-202-842 4444.
(9/29/02)- Governor Gray Davis (Dem.) signed a bill in California that established a paid family leave for a worker to care for a new child or an ailing relative. Similar legislation is now pending in 27 states. Under the California law a worker will be paid up to 6 weeks for the leave he/she must take to care for a family member.
The bill requires that the worker use up to two weeks vacation time for family emergencies first. and also caps the benefit at $728 a week. The benefit is paid solely out of employee contributions. This type of bill is one of the highest priorities of the A.F.L.-C.I.O., but was opposed by business interests, which felt that it would drive many businesses out of the state, especially in these difficult economic times.
The Congressional Budget Office has projected that the nursing home population will increase by over 50% between 1990 and 2010 and double by 2030. The cost for a " private pay" average annual stay in a nursing home has gone up from about $37,000 in 1993 to above $62,000 in 2001.
Medicaid finances the care, at least in part, of over 60% of nursing home residents. In the last 10 years Medicare and Medicaid outlays for long term care of older people has increased by 225% for nursing homes and by over 600% for home care. These are staggering percentage increase numbers, and it makes us realize help is needed to deal with this burden. There is much talk these days on how to save Medicare from becoming insolvent.
There are two areas that stand out like "sore
thumbs" in regards to effectuating meaningful savings and at
the same time to deal with this problem. We would like to discuss
these two areas in this article, and at the same time point out
to you where Congress and the President may be doing something to
bring about some tax relief to help alleviate the problem.
In addition to the emotional stress of caring for an elderly
relative at home there is a tremendous financial cost involved as
well. Just ask anybody who is dealing with such a situation and
they can be quite specific about the costs. Yes it is true that
Medicare or Medicaid, etc may pay for some of the costs, but they
do not fully bear all the costs.
As expensive as it may be to raise a child, it may be just as costly for the child to care for the parent in the parent's later years. In spite of this fact, there is no personal income tax exemption to help mitigate the costs borne for caring for an elderly relative.
Rep.Bill Archer (Rep-Tex) chairman of the House Ways and Means Committee announced he would support legislation to give an exemption to taxpayers in such a situation. This would add another inducement for people receiving the tax break to help justify their caring for the relative especially when cost might be an important consideration. The then President Bill Clinton indicated at that time that he supports such a provision being added to the tax code. We also believe that such a provision is sorely needed. Under the Republican plan the exemption would be for $2,750 this year, and change annually adjusted for inflation.
A few states such as New York do allow a tax deduction for the cost of long term care insurance policies. See our article on Preserving Assets and Long Term Care. The logic behind allowing the deduction is the fact that the government actually saves a lot of money when the insurance carrier rather than the government has to pay the cost associated with residing in a nursing home.
The income lost to the government by allowing a deduction may cost income on the short run, but ultimately it saves a lot of money that may be spent on the long haul. Former President Clinton proposed a $1,000 tax credit for long term care, but it would be phased out for married couples with adjusted gross incomes above $110,000 and $75,000 for singles.
Under the proposals in the Republican plan there would be no income limits whatsoever. We support the idea of the deduction and will accept whatever income limits are or aren't accepted by Congress so long as the legislation gets passed.
FOR AN INFORMATIVE AND PERSONAL ARTICLE ON PRACTICAL
SUGGESTIONS WHEN SELECTING A NURSING HOME SEE OUR ARTICLE "How to Select a Nursing
Home"
By Allan Rubin
updated May 1, 2007
http://www.therubins.com
To e-mail: hrubin12@nyc.rr.com or rubin@brainlink.com