Monday, February 28, 2011

Kiplinger: keep long term care insurance, even as rates go up!

Kiplinger has a comprehensive article dated January 2011 about the recent rate hikes for long term care insurance. The link is here.

The article discusses John Hancock in particular, but all major carriers are likely to behave in a similar fashion.
Kiplinger recommends that seniors who have coverage keep it as long as possible.  The national average for a private room in a nursing home was $229 a day in 2010, or $83535. It’s more in major cities on the coasts.  A private duty aide averages $21 an hour now.  In the future, the labor market, in many states, is likely to become stricter about overtime pay for aides, too; something this blog is still researching.

I know from anecdotal conversations as well as statistics that females are likely to use long term care at end of life longer than males.  In assisted living centers, Alzheimer’s wings are typically about two thirds female.  That’s partly because women still live longer than men. That is complicated, however, by various reports that some kinds of heart disease attacks (those with few warning symptoms) are more likely to be fatal to women than men.

The Kiplinger article sticks to the basics, and explains that there are three ways to pay the bills: self-pay, Medicaid, and long-term care insurance. The “look back period” on Medicaid has gotten longer (since 2006), and states are likely to get tougher as their budgets are crimped. I’m surprised that the article doesn’t mention the filial responsibility laws on the books in about 28 states. 

Sunday, February 27, 2011

"New" health care plan made change age rules for kidney transplants, and weaken ability of elderly to get best treatment; "rationing"?

The new health care law designed by (largely) Democrats under president Obama’s leadership may indeed become more “utilitarian” as to how people get Medicare services (and other government services).  Kidney transplants, usually covered by Medicare for end-stage renal disease at any age, provide an example.

Until, eligibility for transplant receipt has been determined by a waiting list mechanism. But the new rules will favor those who are likely to live the longest after a transplant, and will consider the age difference relative to the donor.

The details are spelled out in an article Feb. 25 in “Medical News Today” (url) here

This has brought on some anger from the Right, and from individuals, (website url) here. There have long been discussions as to whether certain surgeries should not be performed over certain ages, however. My own mother received coronary bypass surgery, a triple bypass, at age 85, in May 1999. She was given a 90% of survival. In fact, she did very well and lived until age 97, passing away in December 2010. She had excellent quality of life until starting some decline in the later part of 2007, after eight good years (about seven years of survival would have been the median).
However, the ability of extended family support could become a factor in determining eligibility for surgeries as advanced ages, and that’s not easy in an age where families have become spread then and diffuse, and there are fewer children in many subpopulations. Gradually, we do live beyond our means. 

Thursday, February 24, 2011

Kiplinger discusses the "cost basis" rules for heirs of persons deceased in 2010; a confusing topic

A few days ago, a friend gave me a copy of a March 2011 Kiplinger Personal Finance article on the choice heirs have if they gain from an estate from someone who passed away in 2010.

It appears that heirs can choose between the 2010 tax exemption, or pay tax but use the 2011 special exemption of the first $5 million.

The hooker seems to come with the fact that in 2010, the “stepped up basis” on real estate sales was eliminated.  If you inherited an old house with a huge appreciation, you could be stuck with all the gain from the original basis, not the basis at time of death (but there was a $1.3 million exception anyway).

Confusing?  Try the Kiplinger article ("The 'Death Tax' Lives", dated Jan. 5, 2011, here.  

Kiplinger also has more coverage on long term care issues, which I’ll revisit soon. 

Tuesday, February 22, 2011

Even liberal media sources recognize that older public pension arrangements and retiree health insurance has become unsustainable

The Washington Post has some balanced coverage Tuesday, Feb. 22, on the “collective bargaining crisis” for public employees (Wisconsin and elsewhere), which amounts largely to a crisis in the unsustainability of defined benefits at high levels for public employee retirees, especially police, fire and teachers.
The editorial (p A12) is here.  

The Post points out that public employees have often retired at 50-55 and had fully paid health care until Medicare kicks in, encouraging overconsumption of medical services, bumping up prices for everyone.  The taxpayer picks up the tab for 100% of public employee retiree health insurance in 14 states.
Richard Cohen has a similar piece on p A13, “Played for pension fools.”   He points out “featherbedding” and notes the retirement of many employees in New York and California at age 50 at 90% of pay. 

Monday, February 21, 2011

Illinois's ponders bond sale to cover underfunded pension; it's an unsustainable example for other states; what happens to the muni bond market?

States may be getting deeper in the hole, as they try to issue bonds to cover costs of underfunded pensions, as is the case with Illinois. More recent stories say that Illinois may seek federal guarantees for its bonds, which might run into further budget cutting wrath from the GOP-controlled House.  The GOP wants to force states to use more conservative accounting methods, which may help governors and conservative state legislators (as in Ohio and Wisconsin, and soon more states) cut back on the collective bargaining power of public employee unions.

A more comprehensive recent story is in Global Pensions, link here.

The readers’ comments are interesting, such as the first one suggesting a “pension replenishment tax.”

At the same time, Assets International reported on Feb. 16 that Illinois had delayed its bond sale, link here

Much of the other media coverage is based on a “Dealbook” story in the New York Times Feb. 18, here

All of this relates to declines in prices in the tax-exempt bond market as investors fear defaults and laws allowing states and local governments to go bankrupt.  This could affect many retirees who hold many of these bonds (or shares in their funds) as “conservative” investments. 

Picture: Countryside near my father's one-room school in Iowa, around 1912. 

Tuesday, February 15, 2011

States grapple with retiree health care costs; at least one town requires employees to have colonoscopy at age 50

One of the biggest challenges to balancing state budgets is the soaring cost of retiree health insurance for municipal and state employees, according to a front page story in the New York Times Feb. 14, “States aim ax at health cost of retirement”, link here

New Jersey and California had the biggest unfunded liabilities with regard to retiree health insurance, according to the Pew Center on the States. Pew has a link for Pension and Retiree Health Care Reform in the States here

Demographics are driving much of the problem, as states begin to require more copays, sharing of premiums, and longer periods of employment for eligibility.  

Greenhouse also reports that at least one city in Wisconsin requires all employees to have a colonoscopy at age 50, to reduce future cancer treatment costs. I’ve never heard of an “invasive” diagnostic test being required before. 

Wednesday, February 09, 2011

Some retirees could consider "single premium" long term care insurance

Financial planners have been telling me that a retired person can buy a “single premium” long term care that would typically pay about three times the deposited amount by the person should the person subsequently  meet the criteria for needing care (difficulties with at least two activities of daily life). So a $50000 deposit could enable one to qualify for about $15000 in benefits (less than two years in a nursing home in many cities).

There might be strict health entrance requirements and intrusive monitoring and medical exams.  For example, the Lincoln Financial Group "MoneyGuard" product does ask a lot of prior health problem questions (especially heart disease) and could up to $394000 for long term care over six years for a $100000 premium, with a small residual death benefit. Specifics are available only by quote and can depend on individual circumstances considerably.  Generally these products are available through investment departments at major banks (Wells Fargo, SunTrust, etc.) 

It’s possible to imagine future legal pressures on the childless to purchase these policies if able, especially as states wake up to filial responsibility laws. 

Tuesday, February 08, 2011

A note on eldercare by those without their own parented families

I wrote a post yesterday on my main (“BillBoushka”) blog relating the shift in our moral values away from obvious individualism, but I thought I’d add a more specific comment here as to eldercare.

During the past couple of years of my mother’s life (as documented on the main blog under the “memorial” label) I felt that I was coming under a lot of “social” pressure to make her care the only focus of my life.  I found it very objectionable for anyone to be able to try to “monopolize” me.

Yet, I also realized here how much adult “lifestyle” matters.  To wit, if I “had” a wife and children of my own, aging parents would fit into the “domain” for which I was responsible. But that’s not how my life went. I’m well aware of the challenges in more “traditional” families faced by the so-called “sandwich generation”.  But I could not offer a social infrastructure to give her more sense of value than what she could generate within herself, which declined as she declined.  It was painful to watch.

It’s connected to sexual orientation to the extent that in my generation, a “gay identity” meant also “single” because “marriage” was off the table and relationships tended to be serially monogamous at best.  Relationships satisfied the self and the partners (even with respect to the “Polarity Theory”); they did not directly serve the needs of sustaining a larger society or other generations. 

Our society has, as part of its democratic values, taken on the responsibility for extending life as long as possible, often at great cost. And many procedures, such as open heart surgery or coronary bypass, can be given at later ages than before, with reasonable results (sometimes ten or more additional years of survival, well into the 90s, and reasonable independence for some years), were not possible for earlier generations. Periods of senior disability at end of life are longer than they were for our parents when they tended our grandparents.

I must add something else here of a personal nature. I don't liked to be asked to function as a "role model" for kids in situations resembling those that were humiliating when I was a boy. (But I guess that really belongs on the main blog.) 

Saturday, February 05, 2011

China may require adult children to visit aging parents; filial piety under review

China is considering a law to force adult children to visit their aging parents, according to a New York Times story Jan. 30 by Sharon LaFraniere, link here.  The story was reprinted in the Charlotte Observer and also got comments in the Huffington Post here.  

There was a strongly worded LTE today in the New York Times about filial piety from a NYC resident wit roots in China.

But China’s one child policy is undermining filial responsibility, as only children find themselves unable to provide for their parents and work in the cities.

Ted Koppel had covered China’s Confucian notions of filial piety in is Discovery Channel series “The Peoples Republic of Capitalism” back in 2008 (review on TV Blog, July 9, 2008).
The stories deserve comparison to policy in the United States, where 28 states have filial responsibility laws but almost never enforce them. But crimped state budgets could cause a change. 

Tuesday, February 01, 2011

Some retail-ordered companies specifically want to hire retired and senior workers

On Monday, January 31, Tory Johnson (“Women for Hire”) gave some advice on ABC “Good Morning America” to the effect that many employers are finding that they need older workers (“retired”) because of their “wisdom” and the likelihood that they can remain focused on the job. She particularly mentioned CVS and Home Depot (which has worked with AARP to hire seniors). One employee at Home Depot was 90 and had been there since age 71, and was a great stabilizing influence on younger employees.  There is an old press release (2004) about the AARP and Home Depot partnership here

Furthermore, retirees often have their Medical benefits already set up with Medicare and supplementals (which provides an economic, business argument for single-payor).