Tag Archives: assisted living

How End of Life Is the Real Healthcare Crisis

To contend with ever-escalating healthcare costs, Americans will need to come to grips with the cost of end-of-life care. Right now, it’s my reality. I am seeing, first hand, rampant and seemingly uncontrollable costs of sustaining life in a system that lacks any semblance of common sense.

My mother is 90 years old and, other than some spending on five healthy sons, has expended very limited healthcare dollars in her lifetime. That is, until now. Suffering mild dementia, she is a resident in a very pleasant assisted-living facility on Long Island. The facility takes good care of her creature comforts, but, medically, she appears to be a case study in why we are all facing a cost crisis. Two of my brothers are medical professionals, and we have a concerned, knowledgeable, family that oversees her care, but we are not with her all the time to manage treatment, and that’s where things break down.

At the first sign of an issue, the facility phones an ambulance and ships her off to the nearest emergency room — three times in the past few months. The first was because of the flu. She weathered the illness but, because of scarcity of resources, was bedridden for a week. As a result, she needed more than a month of inpatient rehabilitation to restore her ambulatory skills. I am guessing that this episode cost in excess of $50,000. The doctor believes that the next two episodes – which occurred in the past 10 days – relate to an allergic reaction, and he has been trying to rule out possible culprits. He took her off Prilosec, and soon thereafter she complained of chest pains, which turned out to be indigestion. So the hospital sent her home. She burned through about $3,000 in costs to figure that one out. Then, after some tinkering with her medication, her blood pressure spiked to 200/113. This has resulted in another in-patient stay. We are planning to keep her moving to avoid another costly rehabilitation; so, for this one, Medicare and her supplemental insurance will probably spend less than $20,000.

The medical expenses she has experienced could have easily been reduced. The problem is that our Medicare system pays for services rendered and not for care management. Care management would have resulted in a much better outcome for my mother, for our family and for U.S. taxpayers.

I am convinced that the Affordable Care Act is not the answer to solve the healthcare crisis, which can only be fixed if we change the way we deliver care at the end of life. And those who lobby for Medicare for all can consider my mother’s experiences. That’s certainly not the answer.

What Features Of Long-Term Care Policies Should I Focus On?

Where May Care Occur?
The best policies pay for care in a nursing home, assisted living facility, or at home. Benefits are typically expressed in daily amounts, with a lifetime maximum. Some policies pay half as much per day for at-home care as for nursing home care. Others pay the same amount, or have a “pool of benefits” that can be used as needed.

Under What Conditions Will The Policy Begin Paying Benefits?
The policy should state the various conditions that must be met.

  • The inability to perform two or three specific “activities of daily living” without help. These include bathing, dressing, eating, toileting and “transferring” or being able to move from place to place or between a bed and a chair.
  • Cognitive impairment. Most policies cover stroke and Alzheimer’s and Parkinson’s disease, but other forms of mental incapacity may be excluded.
  • Medical necessity, or certification by a doctor that long-term care is necessary.

What Events Must Occur Before The Policy Begins Paying Benefits?

  • Some older policies require a hospital stay of at least three days before benefits can be paid. This requirement is very restrictive — you should avoid it.
  • Most policies have a “waiting period” or “elimination” period. This is a period that begins when you first need long-term care and lasts as long as the policy provides. During the waiting period, the policy will not pay benefits. If you recover before the waiting period ends, the policy doesn’t pay for expenses you incur during the waiting period. The policy pays only for expenses that occur after the waiting period is over, if you continue to need care. In general, the longer the waiting period, the lower the premium for the long-term care policy.

How Long Will Benefits Last?
A benefit period may range from two years to lifetime. You can keep premiums down by electing coverage for three to four years — longer than the average nursing home stay — instead of lifetime.

Indemnity vs. Reimbursement
Most long-term care policies pay on a reimbursement (or expense-incurred) basis, up to the policy limits. In other words, if you have a $150 per day benefit but spend only $130 per day for a home long-term care provider, the policy will pay only $130. The “extra” $20 each day will, in some policies, go into a “pool” of unused funds that can be used to extend the length of time for which the policy will pay benefits. Other policies pay on an indemnity basis. Using the same example as above, an indemnity policy would pay $150 per day as long as the insured needs and receives long-term care services, regardless of the actual outlay.

Inflation Protection
Inflation protection is an important feature, especially if you are under 65, when you buy benefits that you may not use for 20 years or more. A good inflation provision compounds benefits at 5 percent a year. Without inflation protection, even 3 percent annual inflation will, over 24 years, reduce the purchasing power of a $150 daily benefit to the equivalent of $75.

Six Other Important Policy Provisions

  1. 1=7 Elimination period. Under some policies, if the insured has qualifying long-term care expenses on one day during a seven-day period, he or she will be credited with having satisfied seven days toward the elimination period. This type of provision reflects the way home care is often delivered — some days by professionals and some days by family members.
  2. Guaranteed renewable policies must be renewed by the insurance company, although premiums can go up if they are increased for an entire class of policyholders.
  3. Waiver of premium, so that no further premiums are due once you start to receive benefits.
  4. Third-party notification, so that a relative, friend or professional adviser will be notified if you forget to pay a premium.
  5. Nonforfeiture benefits keep a lesser amount of insurance in force if you let the policy lapse. This provision is required by some states.
  6. Restoration of benefits, which ensures that maximum benefits are put back in place if you receive benefits for a time, then recover and go for a specified period (typically six months) without receiving benefits.