OHIO LONG TERM CARE INSURANCE PARTNERSHIP

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OHIO LONG TERM CARE INSURANCE PARTNERSHIP

• Presented by Chris Reeg and Katherine Melton
• Webinar October 3, 2008

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What is Long Term Care Who Pays

• Long Term Care is a variety of services that help
  people with health or personal needs and
  activities of daily living over a period of time.
  Long-term care can be provided at home, in the
  community, or in various types of facilities,
  including nursing homes and assisted living
  facilities. Most long-term care is custodial
  care. Medicare doesnt pay for this type of care
  if this is the only kind of care you need.
• How do you pay for Long Term Care
• Private Pay
• Medicaid
• Long-Term Care Insurance

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Basics of Long Term Care Insurance

• LTC insurance pays for care given in a nursing
  home (or other locations) to treat chronic health
  conditions.
• Every policy is different
• Policies can be expensive
• Not guaranteed issued
• Policies are based on age The older you are when
  you buy a policythe more you pay.

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Basics of Long Term Care Insurance

• Should you purchase a LTC insurance Policy?
• Health
• Do you have habits or health issues that could
  result in the need for LTC?
• Does your family history put you at higher risk
  for needing LTC?
• Wealth
• Can you afford the premiums?
• Can you afford extended nursing care?
• Do you wish to leave assets to your family?

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Basics of Long Term Care Insurance

• Core Benefits
• Deductible or Elimination Period- time when the
  policy holder is liable for LTC costs before the
  insurance payments begin.
• For example, a 100 day elimination means you
  will pay for the first 100 days out of your own
  pocket. This could cost you more than 15,000.

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Basics of Long Term Care Insurance

• Core Benefits
• Daily Benefit- most policies define benefits in
  terms of a maximum daily benefit, or amount of
  money that the policy will pay toward each day in
  the nursing facility.
• For example, a 100 daily benefit could pay the
  actual bill up to 100 or pay a flat per diem of
  100. If the actual nursing bill is greater than
  100, you are responsible for the difference.
• Inflation Protection must be offered which will
  increase the daily benefit typically by 5 each
  year

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Basics of Long Term Care Insurance

• Core Benefits
• Benefit Period- is the length of time that the
  policy will pay the daily benefit. The benefit
  period may be as short as one year or as long as
  a lifetime.
• For example, a two year benefit period means
  that the plan will pay the daily benefit for two
  years. If your stay in a nursing home goes
  beyond two years, you are responsible for the
  payment.

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Basics of Long Term Care Insurance

• Bells and Whistles
• Guaranteed Purchase Option
• Waiver of Premium
• Death or Survivor Benefit
• Hospice Care
• Restoration of Benefits
• Ambulance
• Prescription Drugs
• Bed Reservation
• Respite Care
• Medical Equipment

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Basics of Long Term Care Insurance

• Locations of Care
• Nursing Homes
• Adult Day Care
• Home Health Care
• Assisted Living or Residential Care
• Each location of care will have a different
  payment schedule. For example, if your nursing
  home daily benefit is 100, the home health daily
  benefit may only be 50.

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Basics of Long Term Care Insurance
When can I use my policy? Benefits Triggers-
determine when your physical or mental condition
has reached a point that you are entitled to
benefits. Physical Impairment- cannot perform
usually three Activities of Daily Living (ADLs)
bathing, dressing toileting, continence,
transferring, eating. Cognitive (mental)
Impairment- diagnosed as having condition such as
Alzheimers Disease or senile dementia,
deterioration or loss of mental ability requires
verbal cueing and your condition as been verified
by tests that are approved by the insurance
company.
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Basics of Long Term Care Insurance

• Tax Qualified Plans
• Federally tax qualified policies most policies
  are this type
• Benefits are triggered by a licensed health care
  practitioner certifying within the preceding
  twelve months that you are chronically ill
• which means you are expected to be unable to
  perform at least two out of five or six ADLs
  without substantial assistance for at least 90
  days due to a loss of functional capacity
• OR
• you need substantial supervision to protect your
  health and safety due to severe cognitive
  impairment (such as Alzheimers disease).
• A licensed health care practitioner must certify
  one of the above conditions within the preceding
  twelve month period.

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Basics of Long Term Care Insurance

• Consumer Protections
• Company history of rate increases must be
  disclosed to the consumer.
• Policy must offer (but not require) at time of
  purchase an inflation protection option. If the
  offer is not declined in writing, the inflation
  protection feature is included in the purchased
  policy.
• Policy must offer (but not require) a
  non-forfeiture option. If this option is chosen,
  it must be at least one of these reduced paid up
  insurance, extended term insurance, or a
  shortened benefit period. All policies now
  include a Contingent Benefit Upon Lapse.
• Consumer must be given a Shoppers Guide to LTC
  Insurance written by the National Association of
  Insurance Commissioners (NAIC).
• Consumer must be given an outline of coverage, or
  summary of the policy explaining what it will and
  will not do.

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Basics of Long Term Care Insurance

• Exclusions
• Pre Existing Conditions- anything that you have
  been diagnosed with or treated within the 6
  months prior to purchasing the policy may not be
  covered for the first six months of ownership
• Mental Diseases or Disorders- policies do not
  have to pay for care resulting from mental or
  nervous disorders such as insanity, nervous
  breakdown, etc. Policies must pay for care
  resulting from Alzheimers or senility.
• Alcoholism or Drug Addiction- policies will not
  cover care resulting from either alcoholism or
  drug addiction. Some policies will cover care if
  the result of a prescription medication.
• Other Insurance- policies will not pay any
  expenses that are covered by another insurance or
  Medicare.

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• Overview of Long Term Care Insurance Partnership
  
• Public-private partnership
• States and insurance companies
• Encourages purchase of long term care insurance
  by more of the population
• A key goal is to reduce Medicaid expenditures by
  delaying or eliminating the need for some people
  to rely on Medicaid to pay for their long term
  care services
• Medicaid has very complex eligibility rules that
  look at an applicants income and assets, which
  sometimes require applicants to first reduce
  their assets in order to be eligible.
• Federal and related state laws have created a
  program that allows Medicaid to disregard certain
  assets in the eligibility determination process
  and again at time of estate recovery based on the
  use of these partnership policies.

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• HOW PARTNERSHIP WORKS
• The amount of benefits actually paid for
  qualified long term care services under a
  partnership-qualified private insurance policy
  at the time the person applies for Medicaid is
  the same amount that is disregarded in the asset
  eligibility determination. This is called the
  dollar for dollar model.
• An applicant for Medicaid does not have to
  exhaust their benefits under a private long term
  care partnership policy to apply for Medicaid
  however, the longer they can wait the more assets
  they can protect since the amount protected is
  determined at the time of application for
  Medicaid.
• Since a person must reapply each year for
  Medicaid long-term care services under OAC
  section 5101 1-39, if more is paid to or on
  behalf of an individual under a qualified
  long-term care partnership policy after the
  initial application for eligibility and before
  they pass away, that amount spent under the
  private policy at the time of the last
  reapplication will also be disregarded in both
  the annual eligibility determination and the
  estate recovery process.

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PARTNERSHIP BENEFITS Partnership qualified
policies have stricter requirements to receive
benefits than other long term care policies. But,
having and using these policies also
1) provides tax benefits 2) can assist
beneficiaries to avoid having to become
impoverished before being eligible for Medicaid,
should they ever need to apply for that
program 3) can protect some of the beneficiarys
assets from estate recovery by the Medicaid
program, and retain those assets for their heirs.
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PARTNERSHIP DISCLOSURES /DISCLAIMERS REGARDING
PARTNERSHIPSS RELATIONSHIP TO MEDICAID 1) Purch
ase and use of a private partnership policy does
not guarantee the insured will be eligible for
Medicaid 2) Medicaid eligibility determination
also looks at income in addition to assets, and
they may not necessarily be eligible on that
account 3) The benefit package for Medicaid may
not be identical to the private partnership
qualified insurance policy they were utilizing
before going on Medicaid.
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• Features of a Partnership Qualified Long Term
  Care Policy
• 1) The policy must be issued after the effective
  date of the State Plan Amendment filed with
  HHS-CMS to participate in the partnership
  program. In Ohio, this date is September 10,
  2007, since the related enabling insurance law
  and regulation were effective on that date.
• The policy must be federally tax-qualified.
• The insured must be a resident of the state
  sponsoring the partnership program when their
  coverage first became effective.
• The policy must include certain additional NAIC
  consumer protection provisions from the NAIC
  model long term care act and regulation. These
  are listed in the Deficit Reduction Act of 2005.

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5 )The biggest change from other long term care
policies partnership coverage must contain
specific inflation protection at certain ages at
time of purchase a) If the person at time of
purchase has not yet attained the age of 61, the
policy must contain annual inflation protection
of at least 3 compounded annually per year,
or a rate, compounded annually, that is equal to
the annual consumer price index. b) If the
person at time of purchase is at least 61 but
less than 76, the policy must contain annual
inflation protection of at least 3 simple, or a
rate equal to the annual consumer price
index. c) If the person at time of purchase is
at least 76, the policy may but does not have to
provide some level of inflation protection.
Remember that these are federally tax qualified
policies as well, and an offer of inflation
protection must be made and rejected in writing
to avoid this protective feature being included
in the policy for those 76 and older. (See OAC
section 3901-4-01(M))

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Ohio Partnership has Certain Procedural
Requirements - Insurance Exchanges of old long
term care policies - Under Ohios new partnership
rule, Ohio Administrative Code section 3901-4-02,
effective September 10, 2007 1) Insurers
choosing to participate in the partnership
program must make a written offer on a one-time
basis, to all their existing policyholders and
certificate-holders that were issued long term
care coverage on or after August 12, 2002. 2)
These persons have the option to exchange their
existing coverage for coverage that is intended
to qualify as part of Ohios long term care
insurance partnership program. 3) Appendix A
to the new partnership rule, OAC section
3901-4-02, is the notification form to be used in
making the offer of exchange, or something
substantially similar in content.
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4) The offer to exchange must be made within 1 8
0 days of the date the insurer begins to
advertise, market, offer, sell, or issue policies
that qualify under the Ohio partnership program.
5) The insurer can make the exchange by issuing
a new policy or amending an existing policy with
an endorsement or rider.
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Ohio requirements for exchanges (OAC section
3901-4-02) 1) An offer of exchange must be made
on a nondiscriminatory basis without regard to
the age or health of the insured. 2) An offer
must remain open for at least 90 days from the
date of mailing by the insurer. 3) The insurer
must provide the insured a copy of the Appendix
A notification form or a form that is
substantially similar in content. 4) An offer to
exchange may be deferred for any insured who is
currently eligible for benefits under an existing
policy or who is subject to an elimination period
on a claim, but when that eligibility or
elimination period is up the offer must be
made. 5) However, an offer does not have to be
made to an insured who would have to purchase
additional benefits to qualify under the
partnership program, and who is not eligible for
new benefits under the insurers new business,
long term care, underwriting guidelines.
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• The offer of exchange is not a guarantee of
  issue. The partnership rule has requirements for
  underwriting and rating which vary by whether the
  new policy has an actuarial value of benefits
  equal to or less than the actuarial value of
  benefits of the existing policy or whether they
  exceed that of the existing policy. See OAC
  Section 3901-4-02(E)(4) and (E)(5).
• The new policy offered in an exchange must be on
  a form that is currently offered for sale by the
  insurer in the general market.
• 8) The effective date of the partnership plan
  policy shall be the same as the new policy
  remember the requirement that the policy be
  issued after the effective date of the State Plan
  Amendment.
• 9 ) In the event of an exchange, the insured
  shall not lose any rights, benefits or built-up
  value that has accrued under the original policy
  with respect to the benefits provided under the
  original policy, including, but not limited to,
  rights established because of the lapse of time
  related to pre-existing condition exclusions,
  elimination periods, or incontestability clauses.

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10) Existing regulatory requirements for
marketing long term care apply to exchanges
including, but not limited to, the requirements
relating to replacements and suitability.
Replacement requires certain notifications and
suitability requires the insurer and agent make
a reasonable effort to find out if the policy is
appropriate for the person, including whether
they can afford the premium over time. Excessive
insurance is not to be sold and agents must give
prospective applicants a copy of the long term
care Shoppers Guide and written notice of the
address and phone number of the Ohio Senior
Health Insurance Information Program. 11) For
those insureds with long-term care policies
issued before August 12, 2002, any insurer may
offer any insured an option to exchange an
existing policy for a policy that qualifies as a
state long-term care partnership plan. (It is
not mandatory)
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• Ohio Filing Requirements for Partnership
  Qualified Policies
• Any policy intended to qualify as a partnership
  plan must be filed with the Superintendent of
  Insurance for approval as a partnership qualified
  policy prior to use.
• This filing must include the partnership program
  certification form attached as Appendix B to
  the rule OAC section 3901-4-02, signed by an
  officer of the company.
• This form certifies the policy includes the NAIC
  consumer protections and the inflation protection
  feature required by the Deficit Reduction Act of
  2005.
• This includes seeking certification of previously
  approved non-partnership policies that qualify as
  partnership policies, and riders to be used with
  previously approved policies to bring them into
  partnership qualified status. About 18 companies
  have certified partnership forms currently.

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• Partnership program requires specific disclosure
  to applicants
• Insurers or their agents are required to provide
  to applicants a long term care partnership policy
  disclosure form. This is Appendix C to the
  rule, OAC section 3901-4-02 or a form
  substantially similar.
• The disclosure form is given at time of
  solicitation with the outline of coverage for a
  policy intended to qualify under the Ohio long
  term care insurance partnership, or for a group
  policy with the enrollment forms, and for a life
  policy or rider with the policy summary.
• Appendix C or a form substantially similar in
  content must also be given no later than the time
  of policy delivery. This is the insurers
  responsibility. Among other things, this notice
  reminds the policyholder that changes to the
  policy as purchased can change its partnership
  qualified status.

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Ohio Department of Insurance 50 West Town Street,
Third Floor Columbus, Ohio 43215 Consumer
Hotline [phone] Fraud Hotline (800)
686-1527 OSHIIP Hotline (800)
686-1578 www.ohioinsurance.gov www.ltc4me.ohio.g
ov www.longtermcare.gov
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Questions ?
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Introducing
Ohios Partnership for Long-Term Care Insurance
Start planning today by getting your partnership
policy for tomorrow!
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Overview

• Risk of needing long-term care and estimated
  costs
• The Ohio Partnership for Long-Term Care Insurance
  What is it? How can it help?
• Selecting a Partnership policy the benefit of
  Medicaid Asset Protection
• How Partnership policies work
• How to get one

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Risk of Needing Long-Term Care (LTC)

• Most of us find out the hard way when we or
  someone we love needs it
• About 60 percent of people age 65 and over will
  need some form of LTC
• Nearly 40 percent of people getting LTC are
  between ages 18-64

• Medicare does not cover most LTC costs
• Medicaid only pays LTC for those with limited
  income and assets. Most qualify after LTC has
  wiped out almost all of their financial resources

Source Own Your Future Long-Term Care Planning
Kit
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LTC isnt just care in a nursing home
People are living longer and want to stay at home
as long as possible. LTC can be provided in all
of the following

• At home
• Adult day care
• Assisted living

• Nursing home
• Hospice facility
• Other settings

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Cost of LTC in Ohio

• Average annual cost
• 67,058 for a private room in a nursing home
• 60,251 for a semi-private room in a nursing home
• 29,738 for care in an assisted living facility
  (private, one bedroom)
• 51,714 for a licensed, Medicare-certified home
  health aide (50 hours per week)
• 44,122 for homemaker services (50 hours per
  week)
• Assumed average stay in a nursing home is 2.5
  years.
• Average length of time for care in the home is
  4.3 years

Source 2007 Cost of Care Survey, Genworth
Financial, March 2007
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Who pays for LTC?

• An individuals family
• Long-term care insurance
• Medicaid
• Local Sources

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Financial planners generally recommend LTC
insurance if someone

• owns total financial assets of at least 75,000
  that they want to protect (not including home or
  car)
• has annual retirement income of at least 25,000
  to 35,000 for an individual or 35,000 to
  50,000 for a couple
• is able to pay premiums without financial
  difficulty
• if one of their major financial goals is to leave
  an inheritance to children, grandchildren, or
  other heirs.

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Selecting an Ohio Partnership Policy

• The unique benefit of asset protection.

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What is the Ohio Partnership for Long-Term Care
Insurance?

• Collaboration between the State and private
  insurance companies
• Insurance companies agree to sell long-term care
  insurance policies, also known as partnership
  policies with enhanced consumer protections
• Creates a win-win for the State and Ohio
  citizens
• Encourages Ohioans to plan for their long-term
  care needs and retain more of their assets
• State saves money by reducing reliance on the
  state Medicaid program which finances most of
  Ohios long-term care costs

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Where did it all begin?

• Pilot began in 1992 in four states (CA, CT, IN,
  NY) as Robert Wood Johnson Foundation Grants.
• Partnerships pilots resulted in increases in the
  sale of long-term care insurance to moderate
  income consumers most likely to deplete resources
  and rely on Medicaid for long-term care
• Ohio Revised Code (ORC) 5111.18 required ODJFS to
  establish a long-term care partnership program
  (LTCPP) by September 1, 2007.

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Ohios Project Team

• Ohio Department of Job and Family Services
• Ohio Department of Insurance
• Ohio Department of Aging
• Ohio AARP
• Genworth Financial
• Association of Philanthropic Homes, Housing and
  Services for the Aging
• Ohio Association of Health Underwriters
• Ohio Health Care Association
• Ohio Department of Job and Family Services
  Directors Association

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Features of Ohios Partnership policies

• Enhanced inflation protection
• For ages 60 or younger
• includes a compound inflation benefit (3
  compound or consumer price index)
• For ages 61 75
• includes some form of an inflation benefit (3
  simple or consumer price index)
• For ages 76 and older
• no purchase of an inflation benefit is necessary

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Medicaid Asset Protection

• Allows buyers of partnership policies who need
  help paying LTC costs to potentially qualify for
  Medicaid without depleting all of their assets
• Standard Medicaid Asset Limit
• 1500 for individuals 2250 for couples
• Total Medicaid Assets Limit for a holder of a
  partnership policy is based upon the amount of
  benefits paid by the partnership policy.

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Why would someone need Medicaid if they buy LTC
insurance?

• Someone may have expenses that exceed their LTC
  coverage Medicaid can help pay the difference if
  they meet certain eligibility criteria
• (e.g., income, age, Ohio residency, citizenship)
• If someone buys a partnership policy and the
  policy pays for any portion of their LTC needs,
  they may still be able to qualify for Medicaid
  even if their assets exceed the limit

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What assets does Medicaid count?
Countable Exempt

• Cash
• Savings
• Checking
• Stocks
• Bonds
• Mutual funds
• Real property

• Home (If applicant or spouse is living there)
• Car (Or a portion of the value)
• Personal or household items
• Irrevocable pre-need funeral contracts

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How does the partnership work?
Step 3 If there are costs that exceed what the
policy covers, or the policy is exhausted,
individual can apply for Medicaid to help pay for
LTC.
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How the partnership work? (continued)
Step 5 Caseworker determines countable assets
based on the Medicaid asset limit combined with
the total benefits paid by the policy
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Heres an example
Joe Smith has received care at home for almost
two years and now must move into a nursing home.
To date, Joes partnership policy has paid
100,000 for his care. His authorized
representative applies for Medicaid on his behalf
to help pay future costs.

• Without a partnership policy
• Total Assets 100,000
• Total paid out-of-pocket for LTC 98,500 apply
  for Medicaid
• Standard Medicaid Asset Limit 1,500
  (individual)
• Total Exempted Assets once eligible for Medicaid
  1,500

• With a partnership policy
• Total Assets 100,000
• Total out-of-pocket costs cost of premiums
• Partnership policy paid benefits 100,000
• Medicaid Asset Limit for Joe increases to
  101,500
• Total Exempted Assets once eligible for Medicaid
  101,500

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Heres an example
Jane D. has received care in a nursing home for
over a year. To date, her 150,000 partnership
policy has only paid 100,000 for her care.
Through her authorized representative, Jane
applies for Medicaid. She can be eligible for
Medicaid, but her QLTCP insurer must pay for
medical care to the maximum extent of their
liability before Medicaid funds may be used to
pay for covered services.

• Without a partnership policy
• Total Assets 90,000
• Total paid out-of-pocket for LTC 88,500 apply
  for Medicaid
• Standard Medicaid Asset Limit 1,500
  (individual)
• Total Exempted Assets once eligible for Medicaid
  1,500

• With a partnership policy
• Total Assets 90,000
• Total out-of-pocket costs cost of premiums
• Partnership policy paid benefits 100,000
• Medicaid Asset Limit for Jane increases to
  91,500
• Total Exempted Assets once eligible for Medicaid
  91,500

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More about Medicaid Asset Protection

• Mutual exchange with other states allowing buyers
  to claim Medicaid Asset Protection even if the
  policy was purchased outside of Ohio. For other
  participating states, visit http//www.longtermca
  re.gov/LTC/Main_Site/index.aspx
• Ability to access Medicaid even when the
  partnership policy is not completely exhausted
• Amount of resources disregarded at Medicaid
  eligibility determination will also be
  disregarded during estate recovery
• More information about Medicaid eligibility can
  be found at www.jfs.ohio.gov/ohp

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How Much Do Partnership Policies Cost?

• That depends
• Costs and premiums vary by insurance company
• Important to shop around
• The younger a person is are when they purchase an
  LTC policy, the lower their annual premium will be

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How does someone know if a Partnership Policy is
right for them?

• Can they afford to pay for LTC out-of-pocket?
• Do they have assets they want to protect?
• What health care settings does the policy cover?
• Do they want to protect their familys standard
  of living?
• Can they afford the policy premiums?

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How can someone purchase a Partnership Policy?

• Find an insurance company who is licensed to sell
  partnership policies
• Visit www.ltc4me.ohio.gov for a list of insurance
  companies offering this product
• Visit the National Clearinghouse for Long-Term
  Care http//www.longtermcare.gov
• Talk to current health insurance agent
• Phone directory check long-term or health
  insurance
• Local area agency on aging can also help

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Special thanks to CHCS

• Ohio received a 50,000 technical assistance
  grant from the Centers for Health Care
  Strategies.
• CHCS grant opportunity expands long-term care
  partnerships beyond the four original states
• Technical assistance from George Mason University
  Center for Health Policy Research and Ethics and
  the U.S. Department of Health and Human Services
• Grant project period is July 1, 2007 through June
  30, 2009
• Ohio using grant dollars to cover expenses
  related to consumer outreach and education

The Center for Health Care Strategies, in
Hamilton, NJ, provided funding for Ohios
partnership project. This grant was made possible
through a separate grant to CHCS by the Robert
Wood Johnson Foundation.
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Review

• Long-term care planning is more important now
  more than ever
• State has approved the sale of a new type of
  long-term care insurance includes Medicaid Asset
  Protection
• Visit www.ltc4me.ohio.gov for more details

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Helpful Information

• Ohio Partnership for Long-Term Care Insurance
  www.ltc4me.ohio.gov
• Own Your Future Planning Kit
• www.longtermcare.gov
• Ohio Senior Health Insurance Information Program
  (OSHIIP)1-800-686-1578
• www.ohioinsurance.gov
• Ohio Department of Insurance Consumer Hotline
• 1-800-686-1526