In my experience, long term care gets the same reaction as death, dying, estate planning and estate taxation. The majority of people I talk to about this would rather have a root canal than even think about the possibility of needing help as they age and, heaven for bid, not “the home!”The Deficit Reduction Act of 2005 allowed the Colorado Legislature, in conjunction with the Division of Insurance and the Department of Revenue, makes this topic easier to talk about. With changes in the regulations, Colorado was able to enter into a partnership with insurance companies to provide this type of coverage.Why and how did this happen? Our population is aging and soon there will be more of us 65 years of age or older than any other age group in the United States. The federal government lays out the rules and money for Medicaid while the states, through their counties, administer Medicaid. The Department of Revenue realized that with the large potential increase in this age group, Colorado could be out of money for its portion of this program. Voters in Colorado routinely decide they do not want any additional taxes to pay for social programs. Knowing this, the Legislature directed the different sectors to come together to provide an answer. With the help of additional outside resources, the Colorado Long Term Care Partnership was conceived. Effective Jan. 1, this new program began in earnest. All insurance agents and brokers that offer long term care had to be retrained and receive an updated endorsement to their insurance license to be able to even talk about long term care and long term care insurance.How does it work? Long term care insurance covers the insured person for expenses during in-home care through skilled nursing care. The policy will determine what is covered and what is excluded. How much is enough is the real question. In-home care could be $75 per visit while skilled nursing can be $7,000 per month or more for just room and board! As a piece of trivia from the National Association of Insurance Commissioners, the most expensive city for long term care is Anchorage, Alaska, at $140,000 per year. How much are you willing to pay out-of-pocket and how much you want covered determines how much coverage you will need to plan for and purchase. As a hypothetical illustration, let’s say you want $250 per day every year for five years. That equates to about $91,250 per year. Over five years, that equals $456,250 – a bucket of money that is available when the first premium is paid. Why is this number important?This is your new starting exemption amount for Medicaid. You no longer have to be needy to receive Medicaid coverage. You or your spouse no longer have to spend down your entire life’s savings, drive a junker, move to your kid’s place or try to hide your assets before needing assistance. When the insurance coverage runs out, you will already have your higher exemption in place.Personally, I still have a difficult time believing the government came up with an idea so innovative. Colorado is only one of six states to adopt this program, which leads to various other potential situations. Will we experience an influx of older Americans to Colorado because the long term care coverage is better than the other 44 states that have not adopted this program? Will the program be portable to North Carolina, Florida or Arizona? These and a list of other questions need to be reviewed and answered through reciprocal agreements by all states.If you purchased a long term care policy several years ago, review the policy to find out if it can be grandfathered into the new program. If you have been waiting to buy when the time is right, there is no time like the present, as the coverage is based on your age and current health.This article is a mere glimpse of a complex topic. Much more detail and information need to be reviewed before purchasing any long term care insurance. A thank you to the NAIC and the Colorado Department of Regulatory Agencies for providing residents of Colorado with a very forward-looking solution to the long term care question.Just think! You got through this quicker and easier than that root canal!About Alex Donnell and Colorado Comprehensive Wealth ManagementAlex Donnell, founder and president of Colorado Comprehensive Wealth Management in Colorado Springs, and independent investment advisor representative for Heartland Financial Consultants has been a part of the financial services industry for over 16 years.Securities offered through Securities America, Inc., Member FINRA/SIPC, L. Alexander Donnell, registered representative. Advisory services offered through Heartland Financial, L. Alexander Donnell, investment advisor representative. Colorado Comprehensive Wealth Management, LLC, Heartland Financial Companies, and Securities America are not affiliated. SAI 56735 5-2009
