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Cities' Interest in The United States Conference of Mayors Long-Term Care Program Sparks Questions

July 31, 2000


Here are some answers:

The United States Conference of Mayors launched a long-term care program for cities this year. It is designed to meet the concerns of municipal employees and their families. The following are answers to some of the most frequently asked questions about the program:

What is long-term care?

Long-term care is the kind of assistance that is often needed when someone becomes unable to perform normal daily tasks, such as eating and bathing, because of a debilitating illness, an accident, or the infirmities of age.

Doesn't Medicare cover long-term care?

Many people believe Medicare and Medicare Supplements will fully cover long-term custodial care. In fact, Medicare pays full benefits for only the first twenty days in a Medicare-approved facility and nothing after one hundred days.

Since the passage of the Health Insurance Portability and Accountability Act (HIPA) in August 1996, the American public has become increasingly aware of the need for long-term care protection. "Soaring out-of-pocket medical costs among older Americans is one reason the savings rate has fallen so low in the 1990s," says Stephen Roach, chief economist at Morgan Stanley Dean Witter. "The trend shows no signs of slowing down."

Surveys show that the primary sources for paying for long-term care expenses are:

  • Individual and family assets and income;

  • Medicaid - an individual must "spend down" personal assets to meet eligibility requirements for Medicaid. Statistics show the average long-term care nursing home resident reaches this point after eleven months of care.

Individuals who have reached the age of forty-five, have over $35,000 income, and possess at least $100,000 in assets should consider long-term care benefits an important part of their financial planning.

What are some of the distinct advantages of the Conference's Long-Term Care Program?

The Conference's Long-Term Care Program is dedicated to providing the best long-term care coverage at a reasonable price. Designed to offer municipal employees an option to protect their assets and resources from potential financial drain, the Conference's program offers a number of distinct advantages:

  • Group rates for city employees;
  • Voluntary enrollment with no minimum participation requirements;

  • Worldwide coverage; and

  • Flexibility in benefits design.

Which company provides the long-term care insurance benefits for the Conference's program?

MedAmerica Insurance Company, dedicated exclusively to long-term care, is the insurance carrier. The company has received an "excellent" rating from A.M., best based on its financial strength and solid ability to meet the obligations of policyholders.

Municipal Employees Long-Term Care Administrators (MELTCA) is the insurance program's administrator. Both MELTCA and MedAmerica have demonstrated a strong commitment to the long-term care business.

What are other attractive features of the Conference's Long-Term Care Program?

The Conference's program offers a variety of benefits amounts, elimination periods and maximum benefits periods. The elimination period, like a deductible, is the time during which you pay out of pocket expenses before your benefits kick in. And, the maximum benefit period is the length of coverage. For example, if you choose a benefit period of three years, you'll receive coverage for a minimum of three years. Should you not use your entire "pool" of money during the three-year period, you may find you have coverage for longer than three years.

Other attractive provisions include:

  • A benefit "bank" design that allows flexible spending of the benefit dollars.

  • An inflation protection option.

  • Broad benefits options that allow care in a variety of settings.

  • A spousal discount benefit.

  • A variety of payment options.

  • Easy benefits access when you need it.

How affordable is this long-term care coverage?

The United States Conference of Mayors is committed to providing a quality program at a reasonable price. The Conference's Long-Term Care Program has been designed with group rates for cities across the nation.

Various factors determine the cost. The younger and healthier you are when you buy a policy, the more affordable long-term care insurance is. The average cost of a basic long-term care insurance policy at age 50 is about $400 a year, and the same policy at age 65 is less than $1,000.

Group rates are generally lower than rates for individual plans. Strategies for covering long-term care benefits plans include the option of the employee to apply for coverage and pay all costs. Some cities have funds already set aside which they may use to supplement a portion of their employees' premium payments.

What about tax benefits for Long-Term Care?

Organizations such as the American Association of Retired Persons (AARP) have joined with key legislators and the nation's health insurers to urge Congress to give tax relief to families with long-term care needs and people who purchase long-term care insurance. The newly introduced legislation would give seriously disabled people or their caregivers a $3,000 tax credit. In addition, purchasers of long-term care insurance could deduct their premiums. The amount of the deduction would be based on a percentage of the premium paid.

Currently, an individual can claim a portion of his/her qualified long-term care insurance premiums, as well as long-term care expenses for which they have not been reimbursed. For example, a person may receive deductions for medical expenses if the total exceeds 7.5 percent of adjusted gross income and one has itemized deductions.

Long-term care insurance benefits received by the claimant from a tax-qualified long-term care insurance policy aren't federally taxable, subject to IRS limitations. Some states, such as New York and North Carolina, also offer tax breaks for long-term care insurance. Check with a professional tax consultant to verify all possible tax benefits.

When is the next regional meeting presenting the Conference's Long-Term Care Program?

The regional meeting will be held on August 17, 2000 in Provo, Utah.

For more information about The United States Conference of Mayors Long-Term Care Program and its regional presentations, please call Lilla Hammond at 1-888-828-8763. Email: lhammond@usmayors.org Website: usmayors.org/longtermcare.

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