Monday, October 29, 2007

AARP and Genworth offer long term care insurance: does it compute?

Today, I received a piece of mail from the Genworth Life Insurance Company in Richmond, VA offering long term care insurance to AARP members in the 50-79 age bracket. The mailing did not specify premiums, but included a business reply mail form, which I sent in out of research curiosity. The form letter notes that the average cost today of a year in a nursing home is over $69000 and is not covered by Medicare, and that Medicaid pays it only when one has depleted assets – a topic (along with filial responsibility laws) that I have been developing on this blog.

I looked up a premium calculator (here) and found that at my age, a maximum lifetime benefit of $109500 and daily benefit of $100 would cost about $80 a month at my age (64). So a year’s benefit would cost about $160 a month and the payout would last only about two years. I sent away the reply envelope to El Paso, TX and I suspect that the AARP rates are better. But it’s obvious that long term care insurance isn’t very affordable if started late in life.

This begs another public policy question. States are experimenting with mandatory personal health insurance; Hillary Clinton wants to experiment with that at a national level. Suppose there were mandatory long term care insurance? The mandatory aspect to stop at a certain age (since it so quickly becomes unaffordable from an actuarial point of view). It’s even possible that a particular state could, in combination with filial responsibility laws, could make it mandatory only for the childless or at higher ages for the childless. How do you like ‘dem apples? Scary. But imagine where this debate can go. At least into the land of Jonathan Swift novels.

It's also notable that today, The Washington Times has an article on p A1, "AARP magazine targets 'new 50': Boomers spur 'youth' move", by Andrea Billups.

Update: There is a follow-up on Jan. 16, 2008
on this blog.

Tuesday, October 09, 2007

USA Today / AARP reports on baby boomers starting social security next year

Today, Tuesday, Oct. 9, 2007, USA Today has a major front page story by Richard Wolf, “Social Security hits first wave of boomers: Drain on the system picks up in January, when millions born in 1946 start taking benefits,” here:

That’s because in people born in 1946 turn 62 next year, and the way many corporate retirements are set up (with social security offsets), retirees often feel pressured to start social security as soon as possible, when actuarial formulas have them collecting 75% of what they could collect if they waited until full retirement age. Waiting until age 70 can mean a collection of 32% additional monthly benefit over the full benefit, so the difference between an age 62 and age 70 benefit is a 176% increase at 70. The demographics could become less favorable for early retirement as people live longer. Early retirees also have to be careful about the tricky rules of earnings limits (and as to what counts toward them, written about in this blog before) until they reach full retirement age. Those rules harken back to the FDR days when social security was regarded ideologically more as a welfare program than as a retirement system that one pays into over life and then collects from.

The article has a subheading, “a retiree for every couple,” as we head for the day when every retiree is supported by only two workers. According to the article, Medicare will get into fiscal trouble sooner than Social Security itself.

Update: Oct. 10, 2007: The AARP Bulletin for Oct. 2007 has an excellent sidebar by Stan Hinden on p 23, "Your Money: The Question Everyone Asks: When Should I Take My Social Security Benefits?" Hinden points out that the arguments for postponement are becoming more critical than anyone expected a few years ago. Here is the link.

Barbara Basler has an important story on understaffing for customer service at the Social Security Administration, "The Line Starts Here," p 30, here. She recommends calling the 800 number later in the day or later in the month. My wait at the Arlington VA office in March 2006 was about an hour.

Tuesday, October 02, 2007

Filial Responsibility Laws -- New Jersey, North Carolina

In July (7 and 12), on this blog, I went through the filial responsibility laws of a number of states and gave the references. Remember that the change in 2005 to Pennsylvania law to move filial responsibility from the “welfare code” to the “family code” was seen as politically and socially provocative, although it’s not clear that it has been enforced since then.

Today, I looked up New Jersey (which, ironically, has made significant gains in equality for same-sex couples, like Massachusetts), and North Carolina.

New Jersey is here:
(or plug in "101" at the end of the URL) on a legal website called HelpLineLaw.

The text is as follows:

"44:4-100. Ascertaining and obtaining or compelling assistance of relatives Upon application for the relief of a poor person the county welfare board shall ascertain if possible the relatives chargeable by law for his support and proceed to obtain their assistance or compel them to render such assistance as is provided by law.

"44:4-101. Relatives chargeable a. The father and mother of a person under 18 years of age who applies for and is eligible to receive public assistance, and the children, and husband or wife, severally and respectively, of a person who applies for and is eligible to receive public assistance, shall, if of sufficient ability, at his or their charge and expense, relieve and maintain the poor person or child in such manner as shall be ordered, after due notice and opportunity to be heard, by any county director of welfare, or by any court of competent jurisdiction upon its own initiative or the information of any person. b. The provisions of this section shall apply to the minor children of a mother whose husband shall fail properly to support and maintain such minor children when by reason thereof they are likely to become a public charge. c. The provisions of this section shall not apply to any person 55 years of age or over except with regard to his or her spouse, or his or her natural or adopted child under the age of 18 years. Amended by L.1968, c. 446, s. 2, eff. Feb. 19, 1969; L.1975, c. 1, s. 2, eff. Jan. 14, 1975; L.1979, c. 401, s. 2, eff. Feb. 8, 1980."

It’s interesting that in New Jersey the filial responsibility process would start when a parent applies for welfare, and would not apply to adult children over 55 (I haven’t seen that exception yet with other states).

The North Carolina reference is as follows. (PDF file)

Here is the text. It is fairly typical for these laws, providing some criminal penalties and being structured as a “poor law.”

"14-326.1. Parents; failure to support.
If any person being of full age, and having sufficient income after reasonably providing for his or her own immediate family shall, without reasonable cause, neglect to maintain and support his or her parent or parents, if such parent or parents be sick or not able to work and have not sufficient means or ability to maintain or support themselves, such person shall be deemed guilty of a Class 2 misdemeanor; upon conviction of a second or subsequent offense such person shall be guilty of a Class 1 misdemeanor. If there be more than one person bound under the provisions of the next preceding paragraph to support the same parent or parents, they shall share equitably in the discharge of such duty. (1955, c. 1099; 1969, c. 1045, s. 3; 1993, c. 539, s. 227; 1994, Ex.Sess., c. 24, s. 14(c).)"

Original reference giving statute numbers for all states on "Everyday Simplicity" blog: here.

Update: Oct. 14, 2007

I have not seen any specific state laws on how filial responsibility is to be divided among adult children in a family. This would seem to be at the discretion of officials. I have not seen any statutes that specify a greater liability for adult children without their own children, for example (the "family slave" problem). At least one state (NJ) limits liability at age 55, and another (Va) limits it to 60 months.

It is not clear how filial responsibility laws work when the adult children live out of state. The "lookback period" laws depend on federal statutes and would apply, but the "poor laws" that don't necessarily involve prior "giveaways" might be harder to enforce out of state. There is still a "full faith and credit" issue that works with other laws like this (for example, "alienation of affection" judgments, that can only come from some states, can be enforced out of state -- see the Dr. Phil show on Oct. 19, 2007).