ElderLaw Answers Blog

Certainly, the current economic down turn is not going to affect the needs of some seniors for assistance with activities of daily living. But it could affect where that care is provided – at home, in assisted living or in a nursing home. And it could affect who provides the care – a family member or someone who is hired.

Here are a few likely trends:

• Most nursing home care and increasing care at home is covered by Medicaid. This is a joint state-federal health care program for people who are “poor” under its complicated rules. Even before the current recession, it has been growing and straining the ability of states to pay the cost. This has caused them to restrict eligibility for benefits. Such restrictions are likely to tighten further.
• With fewer people working, more will be available to care for family members at home, perhaps delaying or avoiding the move to assisted living or nursing homes.
• With money being more scarce for just about everyone, families will be more reluctant to pay for nursing home, assisted living and home care. This may result in more beds and services being available and a decrease in costs. In fact, according to the 2008 MetLife Market Survey of Nursing Home & Assisted Living Costs, over the past year the cost of semi-private rooms in nursing homes increased just 1.1 percent and the cost of private rooms did not change, in contrast to increases substantially exceeding the inflation rate in most recent years.
• We are likely to see bankruptcies of nursing homes and assisted living facilities if they cannot fill their beds as anticipated and if Medicaid and Medicare reimbursement rates are insufficient to cover their expenses. These will be very disruptive to the residents of these facilities as well as their families.
• With alternative jobs less plentiful, the supply of qualified care providers should grow.
• Planning ahead is ever more important, whether purchasing long-term care insurance, protecting assets to qualify for Medicaid, or simply making one’s wishes known ahead of time.
• Even prior to the onset of the recession, many more alternatives to nursing home care were being developed, including assisted living, new home care models, community partnership, and increased Medicaid coverage of care provided in the community. Anyone providing care for a senior needs to do much more research about the alternatives available.

These changes are not all bad. Fewer Americans working quite as hard as most adults have in recent years should allow more time for us to care for our loved ones and to find the right solutions among the increasing number of care choices available.

Floyd Norris, writing in The New York Times, points out an unusual and previously unremarked phenomenon of our current recession.  While employment has dropped precipitously for younger workers, it has risen for older workers.

The hardest hit group in actual numbers of jobs is those age 35 to 44, who lost more than one million jobs this past September through November as compared to the same months a year ago.  Those aged 45 to 54 lost approximately 150,000 jobs, less than 1 percent, while those aged 55 to 64 gained more than 550,000 jobs and those between ages 65 and 69 gained 190,000 jobs, increasing their employment by about 6 percent.

These numbers can be easily lost in a focus on the unemployment rate which for men age 65 to 69 increased from 3.4 percent in November 2007 to 5.9 percent in November 2008.  The reason the unemployment rate almost doubled while the number of those employed in this age group increased by 6 percent reflects two trends.  First, women in general are doing better than men, and one the increase in jobs includes both sexes while the unemployment rate is only for men. 

Second, more older workers are postponing retirement or seeking to go back to work due to the drop in their retirement savings.  The unemployment figures reflect the relationship between the number of people seeking work and the number employed.  Those not seeking work a year ago, but now seeking work, can account for a large part of the increase in the unemployment rate despite the increase in actual employment.

While these figures are distrubing in terms of what they mean for our younger workers, they are somewhat encouraging for the Baby Boomers and the future of our economy.  They reflect both their bargaining power within the labor force and the ability of the economy to self-correct to some extent.  There have been dire predictions as to what will happen to the economy when Baby Boomers retire and the number of workers supporting the number of retirees is insufficient to maintain Social Security and Medicare.  The result may be that many Baby Boomers will postpone retirement — whether out of necessity or a desire to keep active — thus improving the ratio of workers to retirees and enabling those working to help support those retired.

As reported in The Wall Street Journal, the Pennsylvania Insurance Commission placing 140,000 Conseco long-term care insurance policies into a trust must be of concern to every owner of a long-term care insurance policy.

The purpose of purchasing long-term care insurance is to eliminate concerns about the ability to pay for long-term care costs without totally depleting one’s life’s savings.  Unfortunately, the Conseco story coupled with reports of some companies refusing to honor legitimate claims for coverage and others raising premiums on existing policyholders makes it difficult for anyone to breathe easily.

So, what should anyone considering purchasing long-term care insurance do?  Here are a few rules of thumb:

1. Purchase only policies issued by companies which Standard & Poors and A.M. Best rank as being the most financially secure.
2. Don’t purchase a policy whose premium is much lower than those of polices offered by other companies.  If it’s not in the mainstream, you have to assume that it will have to raise premiums in the future.
3. Only purchase a policy that you can afford to pay indefinitely.  If you have to give it up after five years, you have helped the insurance company, but not yourself.
4. Almost always, purchase a policy that covers home care as well as nursing home care and which includes an inflation rider to cover increases in the cost of care.
5. If you cannot afford to purchase the full coverage you want, cut down on the length of coverage rather than the daily benefit.  For instance, if you would like a benefit of $200 a day for four years, but cannot afford the premium, you are better off purchasing $200 a day for two years rather than $100 a day for four years.
6. Always use a broker who has experience with long-term care insurance so that you can benefit from her knowledge of the policy provisions and the companies selling the policies.

By following these few rules, consumers can feel more assured that their long-term care insurance will be there when they need it.

I am acting as the mediator in a family dispute resulting from the failure of a senior and her family to plan ahead for her potential disability.  Now she is disabled and living with one daughter who with her husband and hired caretakers is caring for her mom.  The dispute is over how much of the mother’s estate should go to the daughter and her husband for the sacrifice they are making.

The mother, who I will call Marilyn, made no plans for her possible need for long-term care.  Her family reports Marilyn to have said that she would never go to a nursing home and if she ever had to, her family should “take me out to the backyard and shoot me.”

Several years ago after her husband died, Marilyn was living alone in the family home and was very lonely.  She and one of her daughters, who I will call Nancy, agreed that Nancy and her husband would purchase a larger house with financial assistance from Marilyn so that they could all live together.  While there was some discussion of how the finances would work and what would happen if Marilyn needed care.  Everyone was counting on everyone else’s good faith.

Nancy and her husband purchased the larger house.  Marilyn moved in and paid about half of what would be her share of the purchase price based on the size of the in-law apartment she occupied.  Then, unfortunately, she became ill and has needed increasing levels of assistance.  Nancy had to give up her parttime job and there is a great strain on the entire family caring for Marilyn.

Nancy’s brother and sister appreciate the sacrifice Nancy has made and continues to make.  They agree that she should be compensated and that Marilyn should cover the cost of her share of the house.  They don’t exactly agree on how much that compensation should.  Nancy finds offensive any suggestion that some of what she does is simply what daughters do for mothers and shouldn’t be fully paid for.

The biggest disagreement is over whether and how much Nancy and her husband should be paid for their cost of moving from a bigger to a smaller house and their costs in maintaining this bigger house after Marilyn passes away since they would never have bought the house if it were not to provide for Marilyn.  Nancy and her husband see large financial costs and risks in living in this bigger, more expensive house.  Nancy’s brother and sister see Marilyn’s money — all of which may disappear in payments to Nancy and her husband and paid caregivers — as helping Nancy and her family have a bigger, nicer house than they could have had on their own.  And these decisions were made among Marilyn, Nancy and Nancy’s husband without the participation of Nancy’s siblings, who have had to accept the current arrangement and make the best of it.

Given the different perspectives, some hurtful comments were made in the negotiations causing hurt feelings that may or may not cause a rupture in the family.  While there are no guarantees, it is more likely that these could have been avoided had Marilyn planned ahead and if the entire family had been involved in the planning.