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What to Do About Long-Term Care Insurance

Trudy Lieberman
Tuesday, April 17th, 2012

Trudy Lieberman, a journalist for more than 40 years, is an adjunct associate professor of public health at Hunter College in New York City. She had a long career at Consumer Reports specializing in insurance, health care, health care financing and long-term care. She is a longtime contributor to the Columbia Journalism Review and blogs for its website, CJR.org, about media coverage of health care, Social Security and retirement. As a William Ziff Fellow at the Center for Advancing Health, she contributes regularly to the Prepared Patient Forum blog…more.

The decision to buy long-term-care insurance and how long to keep it is among the toughest people make as health-care consumers.   The product is difficult to buy—confusing, complicated, and costly.  Many won’t qualify for it because of preexisting health conditions that insurers don’t want to insure.  (Long-term care policies are exempt from the rules of the health reform law, which if upheld by the Supreme Court, will bar carriers from considering applicants’ health.)  And once you have a policy, do you keep it when the premiums continue to climb?

That’s the dilemma thousands of policyholders have faced in the last few months as insurance companies have raised their rates as much as 40 and 50 percent for some policies.  According to the trade group, the American Association for Long-Term Care, average premiums are now six to seventeen percent higher than they were a year ago.

A Consumer Reports study conducted in the late 1990s found that many policies sold then were under priced and projected that companies would need large rate increases as the years went on.  That’s happening now.  But insurers are increasing premiums not just on older policies but on new ones too, and consumers who hold them are trying to keep them despite the large premium hikes, says Bonnie Burns, a long-term care expert with California Health Advocates.  They are following the advice Burns and others have given:  once you have a long-term care policy, you need to hang on to it.

I asked Burns what strategies consumers are using to stay insured.  None are ideal, she explained.  They are reducing the benefits they will eventually get which will leave them with large out-of-pocket expenses if they do go to a nursing home.  Or they are robbing assets that, too, will be gone when they will need them in very old age.

Some people simply stop paying premiums in exchange for a benefit equal to the amount of premiums they have already paid.  In other words, if they’ve paid $40,000 in premiums over the years, the benefit will be $40,000 when they need care.  You can do that only if your state insurance regulations allow it.   Be sure to check with your state’s insurance department to see if it has adopted regulations that permit this protection if this option sounds appealing to you.

What do you do if a sales agent or a financial planner suggests that you buy long-term-care insurance?  Think very carefully about whether you can afford the premium now and in five or ten years.   You’ll have to consider your current resources and what they’ll be down the road.  You’ll also need to consider future expenses. Health care will be a big one and is likely to get bigger.

If you’re under age 65, consider that you will likely have to pay more out-of-pocket for your medical expenses as employers increasingly offer skimpier policies that cover less.  If you’re over 65, you’ll be paying more too.  Congress is considering changes to Medigap policies that will result in seniors paying more out-of-pocket for health care.  A new issue brief from the Kaiser Family Foundation warns that even with Medicare coverage, medical costs are a significant portion of a senior’s budget.

Given higher premiums for long-term care insurance combined with expanding out-of-pocket health care costs, the prospect of many seniors being covered for nursing home care appears slim.  “It looks like seniors with moderate incomes will be less likely to have this coverage and less likely to afford it,” Burns says.  “This is the population most likely to spend down and become eligible for Medicaid.  The promise of long-term-care insurance being the savior of Medicaid is less and less likely.”

That still leaves one huge question on the political table since the Obama Administration junked the CLASS Act, which represented the beginnings of a national program for paying for long-term care under the health reform law:

How will Americans pay for their long-term-care?   

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Prepared Patient: How to Find and Use Health Insurance

HBNS Staff
Thursday, April 5th, 2012

Prepared Patient Publication Logo

Prepared Patient, is created by the Health Behavior News Service (HBNS), part of the Center for Advancing Health. This monthly series helps Americans participate more fully in their health and health care. For more issues of the Prepared Patient series, visit the archives.
Written By: David Pittman, Contributing Writer

Through both her personal and professional life, DeAnn Friedholm knows all too well how difficult it can be navigating the waters of the health insurance market.

As Director of Health Reform for Consumers Union, the folks behind the popular Consumer Reports publications, DeAnn is familiar with the ins and outs of health insurance and health care delivery in the U.S.

Several years ago, she had to shop for her own health insurance. The prospective insurance company discovered she had had a couple of benign tumors more than a decade before and so denied her coverage because of her preexisting condition.

Just like that, Friedholm had no good option for insurance in case she needed to see a doctor.

Friedholm went without health insurance for a year before landing a job at a large company that provided it. In the meantime, she paid the full doctor’s bill herself and prayed nothing catastrophic would happen.

“We have all kinds of examples of that, where people were denied coverage and couldn’t find anybody to cover them because of something in the past that no longer is a current issue for them,” Friedholm said.

Whether you have a preexisting condition or not, are new to shopping for insurance or trying to figure out what coverage you do have, there are resources to help with this often complicated but important purchase.

Don’t know an HMO from a PPO? 
Here are some of the most common terms you will encounter when selecting and using health insurance:

Premium-the amount you and/or your employer pays for health insurance. It can be paid monthly, quarterly or yearly.

Deductible- the amount of money that must be paid out-of-pocket for a health care service before an insurer will start to pay

Co-payment- a fixed amount you pay when receiving a health service, such as a doctor visit or to receive prescription drugs

Co-insurance- the percentage an insured person pays for a service after a deductible is met. Your insurance pays the rest.

Network- the hospitals, physicians and other health care providers your insurance has contracted with to provide health care services.

HMO (health maintenance organizations)- managed care plans that have a closed network of providers you can visit. Most HMOs require you to have a primary care physician who will refer you to a specialist if needed.

PPO (preferred provider organization) –­ managed care plans that allow you to visit any doctor from a preferred network of hospitals and physicians. Under PPOs, you can visit a doctor out-of-network, but you will be charged more.

Out-of-network—health care providers not contracted to provide services to customers on a particular health plan

Out-patient-a person who visits a hospital or clinic for medical services but does not require an overnight stay

Inpatient-a person who is admitted to a hospital for at least one night for ongoing care

Mental Health Care-the diagnosis and treatment of mental illnesses, such as depression

First Things First

If you are seeking health insurance, the first thing you should do is figure out what coverage you are eligible for, recommends Cheryl Fish-Parcham, deputy director of health policy at Families USA.

Find out if you can gain coverage through your employer or if you can be placed on your spouse’s or parent’s plan. About 55 percent of Americans have an employer-sponsored plan while another 10 percent buy it on their own, according to the U.S. Department of Health and Human Services (HHS).

Figure out if your income, age or other factor, such as a disability, makes you eligible for a state or federal health plan. For example, the federal Medicaid program is designated for those with low incomes and children while Medicare covers people over 65 and certain people under 65 with a disability.

Next, consumers should look at how much they will be paying; both for premiums-money paid on a regular basis for health insurance-and through deductibles and co-insurance, which are the amounts insurance companies require you to pay before they cover a portion or the rest. Because everyone has different health needs based on age and health condition, it’s difficult to say overall how much a good plan should cost. “You want to get an idea of what’s available to you in the market,” Fish-Parcham said.

Cost of insurance typically varies from state to state and from region to region as the population by age, race, and sex, the numbers of uninsured and providers, local health care costs, insurance companies and taxes vary.

Additional questions you should ask yourself include: Are prescription drugs covered? Are mental health services included or limited? What is the difference between coverage for out-patient care, like from a doctor’s office, and hospital care or visits to an emergency room?

A common pitfall is choosing the plan that has the lowest deductible without looking at what’s covered under the plan. “That’s a big mistake,” Fish-Parcham said.

Mari Edlin of California is a freelance writer who has shopped for and purchased health insurance on her own for 24 years. She advises that people evaluate their lifestyles and medical histories to figure out what they need in terms of routine doctor’s visits and possible specialty care.

As a 59-year-old who expects to have health problems, she admits to paying high monthly premiums in exchange for lower-cost office visits. For example, recent back surgery, which included a hospital stay, only cost her $100.

“I guess I feel a little content paying a slightly high premium knowing everything else I pay is very small,” Edlin said.

Changes Coming

If navigating the health insurance sea is still a little rocky, there may be some help coming later this year. Starting in September 2012, insurance companies will be required to issue a summary of your insurance benefits in plain, easy-to-understand language. Using uniform standards developed by HHS, the goal is to help customers understand their health insurance coverage and how to use it.

The new benefits summaries will not only tell you what you are paying for and what’s covered but also provide a dictionary for common terms such as “deductible” and “co-payment.”

High-deductible plans

If monthly premiums seem to take a big chunk of your paycheck, Tommy Taylor, managing consultant with the health insurance broker Willis, in Texas, suggests considering a high-deductible plan. Deductibles are the money insurance plans require you to pay first before their coverage kicks in. When employer-sponsored health insurance started to become popular in the 50’s and 60’s, deductibles of $50 or $100 were common.  Now, high-deductible plans often have $1,000 to $5,000 deductibles.

Insurance companies offer lower monthly premiums with these higher deductible plans because the policy holder is willing to pay more of their health costs up front. In some cases, such plans might cover routine office visits and prescription drugs with lower co-pays.  Knowing your health condition and how frequently and likely it is that you will need to see a doctor or receive health care services, will influence the package of health coverage, premium and co-payments that work best for your or your family’s situation.

Taylor drafted an example of a plan for someone living in Austin, Texas. Coverage with a $500 deductible would cost a sample individual $603 a month and a family $2,015. That same person could drop their premiums to $330 per person per month with a $3,500 deductible.

“That’s what a majority of our employers provide,” Taylor said. And added that he believes, “What you should be able to do is buy the plan you are comfortable with.”

Need help finding and understanding health insurance?
Here are some helpful websites:

Resources from the U.S. Department of Health & Human Services

Resources from Consumers Union

Families USA

Resources, Asking for Help

Fortunately, there are several avenues to guide you along the way if you are lost or need help. And it’s never wrong to ask someone if you are confused or need guidance, DeAnn Friedholm said.

Healthcare.gov is the federal government’s website that provides information on finding and using every kind of insurance, including a guide to selecting insurance. Cheryl Fish-Parcham also noted it has a useful tool to compare small group and individual policies by state.

The Consumers Union, like many other patient advocate groups, has created guides to health insurance designed to help people understand and use their health insurance coverage.

Independent agents can also help. “Be sure that they are licensed in your state before you use them,” Fish-Parcham said. State insurance departments are a good place to check for complaints or compliance charges against plans and agents.

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The Supreme Court’s Health Care Decision and Your Pocketbook

Trudy Lieberman
Thursday, April 5th, 2012

Trudy Lieberman, a journalist for more than 40 years, is an adjunct associate professor of public health at Hunter College in New York City. She had a long career at Consumer Reports specializing in insurance, health care, health care financing and long-term care. She is a longtime contributor to the Columbia Journalism Review and blogs for its website, CJR.org, about media coverage of health care, Social Security and retirement. As a William Ziff Fellow at the Center for Advancing Health, she contributes regularly to the Prepared Patient Forum blog…more.

Last week’s drama at the Supreme Court and most of the media coverage that followed omitted crucial information:  how a decision either upholding or junking the Affordable Care Act (ACA) will affect ordinary Americans.  Because the health reform law is not well understood by most people, it’s worth recapping what might happen.

Insurance Coverage Mandate

Most of the 160 million Americans who have health insurance from their employers won’t be affected directly by the Supreme Court’s ruling either way.  Most will continue to get job-based coverage.

A mandate for everyone to have health insurance is at the center of the Supreme Court case. If the individual mandate is upheld, every state will implement “exchanges” where people without health coverage will be able to shop for insurance.  However, those with employer-sponsored coverage will not be eligible to purchase insurance from the exchange unless their share of the premium for their employer insurance is greater than 9.5 percent of their gross income.   If employer coverage is skimpy or too expensive, they—and their family members—are stuck.

If the Supreme Court upholds the mandate, then people who do not have coverage either from government programs or from their employers will have to buy it.  Those with incomes less than about $92,000 (about $45,000 for individuals) will receive subsidies that will help cover the cost of a policy.  Those with lower incomes will receive more help.  If the mandate is struck down, people without coverage are in the same fix they are now.  They will still be at the mercy of the individual insurance market where premiums are very high, and insurers often reject those with preexisting conditions.

Whether young adults will still be able to obtain coverage under their parent’s insurance until they turn 26 will depend on whether the court strikes down the entire law or just the mandate.   The requirement to cover young adults is already in effect, giving coverage to some 2.5 million young adults.  If that provision goes, then this group will be in the same position they were in before the law was passed.  Some carriers might allow them to stay on their parents’ insurance; others might not.  In that case, they, too, will have to shop in the individual market.

More on Those Exchanges

If the mandate stays, states will set up shopping exchanges where insurance companies would sell their policies in a kind of insurance bazaar.  Policies will have to meet minimum standards, but states will have a lot of discretion about what the basic plan will cover.  Consumers will be able to choose from among four types of policies:  bronze policies will be the cheapest and will cover only 60 percent of a policyholder’s medical costs; the silver policy will cover 70 percent; a gold policy 80 percent; and the most expensive platinum policy will cover 90 percent and offer Cadillac coverage for a price, of course.    If the mandate goes, some states may operate their own exchanges similar to what Massachusetts does.  Those who will have to buy health insurance in the individual market and even those with employer coverage will find policies that will cover varying amounts of their medical expenses.  They won’t be called bronze, silver, gold, and platinum, but they will be similar.

Rising Health Care Costs

The big pocketbook issue for consumers will be whether there will be a slow down in the increase of health care costs.  Those ever-rising prices are responsible for a large chunk of the premiums everyone pays, and they also make it tough to cover those high deductibles and coinsurance the newer models of skimpy coverage require.

The Affordable Care Act contains a number of measures designed to provide better care that will ultimately result in lower prices, or so the designers of these provisions have hoped.  These include so-called medical homes and accountable care organizations (ACOs), which are supposed to better manage patients’ conditions.

The law also calls for rewarding hospitals with larger Medicare reimbursements if they give better care.   Some of these efforts will continue regardless of a Supreme Court decision to overturn the ACA. But it is unclear whether the ACA provisions can lower costs or improve care.  A study published last week in the New England Journal of Medicine  found that paying hospitals to improve their quality of care did not appear to help patients live longer.  The health reform law calls for bonus payments to hospitals that show improvement.

No one knows yet what the Supreme Court will decide, but either way its decision will affect everyone’s pocketbook.

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Medicare Games: When Is a Stay in the Hospital Really a Stay?

Trudy Lieberman
Wednesday, March 21st, 2012

Trudy Lieberman, a journalist for more than 40 years, is an adjunct associate professor of public health at Hunter College in New York City. She had a long career at Consumer Reports specializing in insurance, health care, health care financing and long-term care. She is a longtime contributor to the Columbia Journalism Review and blogs for its website, CJR.org, about media coverage of health care, Social Security and retirement. As a William Ziff Fellow at the Center for Advancing Health, she contributes regularly to the Prepared Patient Forum blog…more.

It may seem like a no-brainer. If you or a family member is on Medicare, you would assume that if they are in the hospital their care would be covered under Medicare’s Part A hospital benefit. Right? Well, not always. The definition of a stay is tricky and depending on how a stay is defined, families can be left with unexpected bills totaling thousands of dollars.

Here’s the problem: It’s not uncommon for a hospital to admit patients for what’s called “observational status.” That means hospital personnel watch the patient while doctors decide if he or she can go home or if they are sick enough to be admitted as a bona fide inpatient.

Medicare considers “observational status” to be an outpatient service, which is paid for under Medicare Part B and not Part A, the hospital benefit. With Part B coverage, there is 20 percent coinsurance, or 20 percent of the bill, a patient must pay plus a deductible. Medigap policies usually cover this amount, but with Medicare Advantage plans, the insurers’ rules determine what’s paid. And 20 percent of a bill for several days in the hospital adds up to big dollars quickly.

Observational stays are not supposed to last more than 48 hours, but the Medicare Payment Advisory Commission (MedPac), which advises Congress, has found that there are an increasing number of observations lasting longer than that. The number of observational stays is growing, too, making it more and more likely that you or a family member will experience one.

Why are hospitals doing this? Toby Edelman, a senior attorney at the Center for Medicare Advocacy in Washington, explained, “It’s one way to keep Medicare fraud investigators off their backs. If they classify someone as an inpatient who should simply be held for observation, they could get in trouble with Medicare’s fraud police looking for overpayments to providers.” So, Edelman says, they try to stay beneath the radar and take the advice of hospital consultants to play it safe.

The health reform law gives hospitals even greater incentive to keep patients under observation. Soon Medicare will start penalizing hospitals financially if patients are readmitted. Readmissions are expensive for Medicare, and curbing them is a way to reduce their costs. Edelman says that if a patient is admitted for observation and later must return to the hospital, it is not counted as a readmission. But if a person is admitted as an inpatient at first and later must be readmitted as an inpatient, the hospital can be penalized.

Like so many things in health care, trying to solve one problem simply creates another. This observational versus inpatient status sure creates some big headaches for Medicare beneficiaries. If you or your family finds yourselves in this pickle, you may need to appeal Medicare’s decision to classify your family member’s hospital bills as outpatient care. Here are some steps that will help you:

If the patient is still in the hospital, try to get the status changed to inpatient.

Seek your doctor’s help in persuading the hospital to change a patient’s status.

Obtain hospital records, which will be necessary to show why someone should have been an inpatient.

Check the Medicare Summary Notice that summarizes the patient’s stay, and then follow the appeal steps the notice outlines.

There’s a lot of paperwork involved, but the Center for Medicare Advocacy’s website can help with the task of appealing a decision. “It’s crazy the way we do it,” says Edelman. “It doesn’t make sense from the patient’s perspective. You’re in a bed, you get hospital food, you have tests done, and yet it’s not a hospital stay. It’s not the way to get good health care.”

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