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December 2016

Funding Long-Term Care for an Aging Global Population

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Funding Long-Term Care is a Global Issue

Bobbie Preddy’s mother ran out of money years ago. She’s 98 years old and if she lives longer than six more months, Preddy might be out of cash, too.

Preddy’s mother requires round-the-clock care, due to frequent urinary tract infections and related conditions. Together, Preddy and her mother determined the only way she could get the support and care she needed was at an assisted-living facility. But costs for even one of the cheapest facilities in the market are hundreds of dollars more than Preddy’s mother can afford with her pension checks each month.

“I’m going to run out of money and my mother might still be alive,” she says. “And I don’t see anything, anywhere that can help that.”

Preddy’s dilemma is not uncommon. Her mother is one of more than 8 million individuals in the U.S. that require support from long-term care services, according to the Centers for Disease Control and Prevention, the great majority of whom are more than 65 years old. Family Caregiver Alliance, a nonprofit support organization for caregivers, lists at least 10 different options for living arrangements, each with varying degrees of provided care, independence and cost. According to the insurance company Genworth, the average annual cost for a private room in a nursing home in the U.S. is more than $90,000, and a year in an assisted-living facility is more than $40,000 , expenses that are not always covered by public insurance programs.

Globally, the number of older persons is growing faster than any other age group. In 2015, one in eight people was more than 60 years old, according to the United Nations. By 2030, they project an increase to one in six people, or 1.4 billion individuals over the age of 60.pbn-article

When it comes to aging, experts say the greatest challenge our world currently faces — more than pensions or birth rates — is planning for and financing long-term care.

Long-term care is like an “exploding bubble,” says Randall Ellis, a professor at Boston University whose research is focused on health economics. “It’s the largest uninsured risk for the aging population.”

In the U.S., when people face the dilemma that Preddy does with her mother — once houses have been sold, a lifetime of savings has been depleted and health conditions have reached the point that in-home care is not an option — others may rely on Medicaid to cover costs.

In 1965, Medicare and Medicaid became the first public health insurance programs in the U.S. when they were signed into law by President Lyndon Johnson. Medicare was intended for individuals over 65 years old and those with end-stage renal disease, or kidney failure. Medicaid was intended to cover low-income individuals. But as of fiscal year 2014, long-term care services accounted for about a third of Medicaid spending, or $152 billion.

Preddy’s mother is well beyond 65 years old and, with an annual income of about $17,000, would be considered low-income by many. Her pension is far from enough to pay for her long-term care, but it is enough to disqualify her for both public health insurance programs and leave her family scrounging for funds.

“There’s an extreme bias in the allocation of resources away from older people to other groups,” says Peter Lloyd-Sherlock, a professor of social policy and development at the University of East Anglia in the U.K. whose research focuses on the social protection of older people in developing countries. Costs associated with long-term care — financial and otherwise — are inevitable, he says, and the systems created to distribute those costs exemplify the values of that society.

Taking care of an individual at home will always be less expensive than bringing him or her to a nursing home or assisted-living facility, says Terry Hokenstad, a professor of global health at Case Western University. Policies and programs that support informal caregivers like family members, he said, make it easier to keep older adults at home and out of long-term care facilities longer, therefore reducing their overall costs.

In a number of European countries, pension funds are used to compensate unpaid caregivers. Denmark and the Netherlands automatically cover time spent outside the labor force due to caregiving, while Germany and Norway reward caregivers with additional credits to their own pensions.

 “Say an older person has a stroke and goes into the hospital,” Hokenstad says. “The first thing we (Americans) think is to get them to a nursing home. The first thing they think in the Nordics is how they can get back into their own home and what sort of improvements are needed to make it happen.”

But Naoki Ikegami, president of the Japan Society of Healthcare Administration and the Japan Health Economics Association, warns against a reliance on informal care for older adults. A long-term care industry has a public responsibility and legal obligation to provide appropriate care, he said, but it’s difficult to monitor whether family members are actually caring or not.

Instead, restricting the “medicalization” of long-term care — maintaining a separation between health care spending and activities and those related to long-term care — can keep expenses down. “Health care can always be interpreted as a life or death situation,” he says. “In health care, we give doctors a blank check to do whatever the patient needs. But with long-term care, we can rely on a more objective way of measuring need.”

In 2000, Japan developed a universal insurance program for long-term care in response to public outcry against growing problems of neglect. Funded by tax revenues and higher premiums for those over 40 years old, out-of-pocket costs for long-term care services are limited to a 10 percent co-payment. A revision this year raised that rate to 20 percent for those with above average income.

Ultimately, national and global debates on long-term care come down to whether the responsibility to look after our growing elderly population should be a public or private one. Like Japan and Denmark, most developed countries have favored strong, publicly funded social safety nets.

For Josh Wiener, former director of the Aging, Disability, and Long-Term Care program for the non-profit research organization RTI International, creating a successful system is a matter of finding the political will to make long-term care a policy priority.

“Long-term care is higher on the political agenda mostly everywhere else than it is in the U.S.,” he said. “Germany established a long-term care insurance program at a time when they were dealing with the unification of the East and the West. They recognized a need and they went ahead and did it.”

The same happened in Japan, where policy makers saw they had an aging population and agreed to address it . But the U.S., he said, tends to avoid the conversation.

For a while, private insurance plans that allow individuals to protect a greater share of their assets dominated the long-term care coverage discussion in the U.S. But the number of providers for these private plans has decreased dramatically in recent years.

A voluntary public insurance program almost made its way into President Barack Obama’s health care reform plans in 2011. But the Community Living Assistance Services and Supports program, or CLASS Act, was quashed for fear of adverse selection, or attracting a disproportionate number of high-cost users, that would drive up premiums and because it couldn’t prove to be debt-free for at least 75 years as the law requires.

Bobbie Preddy and her mother share a caring and trusting relationship; they’re “simpatico,” she says. Preddy doesn’t hope for her mother to die, but she does hope that supporting her mother doesn’t have to cut too much into her own retirement savings.

Deidre McPhillips is a data reporter at U.S. News. You can find her on Twitter or email her at

The original story can be found HERE.


Special Needs Trust Fairness Act Passes

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Special Needs Fairness Act

Yesterday, the Senate passed the Special Needs Trust Fairness Act. After the President’s signature, individuals with disabilities, who have capacity, can create their own (D)(4)(A) special needs trusts. This ends the false presumption in American law that all individuals with disabilities lack the mental capacity to handle their own affairs. No longer will individuals in need of a special needs trust, but without parents or grandparents, face undue legal difficulties.




Bonnie Kraham: Planning ahead eliminates element of surprise

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The older you are, the longer you’re going to live. According to the Social Security Administration, men who reach age 65 can expect to live until age 84 and women who reach age 65 can expect to live until almost age 87. People are living longer and many Americans are living twenty years or more beyond their retirement age. The increased longevity forces many people to change the way they view their later years.According to the U.S. Department of Health and Human Services, nearly seventy

Source: Bonnie Kraham: Planning ahead eliminates element of surprise

MJL Blog Footnote

RI Has Higher Demand For Elder Services

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Demand for elder services growing in Rhode Island


HEALTH CHECK: RIC nursing student Jaclyn Baribault measures Nazareth Cabral’s blood pressure at the Leon Mathieu Senior Center in Pawtucket. PBN PHOTO/ MICHAEL SALERNO

By Emily Gowdey-Backus |


Mary Lou Moran works with the aging population of Rhode Island day in and day out, and understands how the needs of the elderly are changing.

Director of the Leon Mathieu Senior Center in Pawtucket, Moran has observed that as the baby boomer generation ages, they demand more state services, such as transportation, accessible information and social opportunities. She doesn’t think the infrastructure is in place to meet those growing demands.

According to the first-ever Rhode Island 2016 Healthy Aging Data Report, the state has the highest proportion of residents aged 85-plus in the nation. Rhode Island is the second state in the nation to be the subject of the in-depth report on the aging population, after Massachusetts.

Funded by Tufts Health Plan Foundation and conducted by the University of Massachusetts Boston, the report analyzed 120 healthy-aging indicators, such as hypertension and arthritis, breaking down the results by the state’s 39 cities and towns.

Compared to New England, the report found aging Rhode Islanders had the highest rates, regionally, of being diagnosed with hypertension (79 percent), high cholesterol (78 percent), ischemic heart disease (46 percent) and diabetes (36 percent).

Data in this report, said Moran, will be a top resource when creating a more aging-friendly environment for Rhode Islanders.

Of the state’s progress in reinforcing infrastructure needed to improve daily life for the elderly, she said: “Nationwide, we’re probably not ready, so I don’t think Rhode Island is any different.”

But she says the new report, which includes input from Gov. Gina M. Raimondo, House Speaker Nicholas A. Mattiello and Executive Office of Health and Human Services Secretary Elizabeth Roberts, unites the state on a pressing issue, an important first step for Moran.

“I don’t think it’s doable if we stay in separate silos, we need to work together to make Rhode Island age-friendly,” she said.

Elizabeth Dugan, an associate professor of gerontology at UMass Boston and the report’s lead researcher, found that today 20 percent (217,000 people) of the state’s population is aged 60-plus. That number will increase nearly 75 percent, to 264,238, by 2040.

Is the state ready to care for more than 260,000 elderly people? No, Dugan said.

“For the ill or infirm, we don’t have adequate services or supports in place, nor the types of care settings,” she said, noting the additional lack of opportunity for those with more mobility to remain at their homes, in familiar environments.

“We need to re-engineer society to become more age-friendly, and it’s not an easy task,” she said.

Dugan described the aging Rhode Island is experiencing as a “unique demographic transition.” Soon there will be more people aged 65-plus than 5-year-olds, she said.

“It’s natural that there’s a lag between what we need and what’s here. I don’t see it as the sky is falling, I see it as we’re in the middle of adapting to this aging reality,” she said.

Dugan met with 25-30 state residents, including senior-center directors, retired people and the Rhode Island Foundation to better understand aging Rhode Islanders’ needs.

What she took away was a positive outlook for the state.

“The number of champions in place to get things done and make changes is a breath of fresh air. I’m really impressed,” said Dugan.

Charles Fogarty, director of the R.I. Division of Elderly Affairs, acknowledged there is work to be done, but said the state was aware of the eventuality spelled out by the report.

“This is a chance for us to build on the successes we’ve had but make sure we are ready for the coming challenges. The system had its foundation in the 1970s and the world has changed since then,” he said.

Fogarty has implemented four-year plans, produced in accordance with the Older American Act, focusing on the services provided to the elderly by the state. The most recent plan was approved in September 2015 and is effective until Sept. 30, 2019.

It found that the state’s 65-plus population accounted for 27 percent, or $484 million, of the fiscal 2013 Medicaid spending, which is 30 percent of the state budget.

Facing a growing population and increased demand for already short resources, Fogarty said such reports cannot be ignored and should serve as “the impetus to help us transform our system.”

The original article published by the Providence Business News can be found HERE.

Need to discuss how this news about elder services impacts you or a loved one? Need to plan out what the cost for elder services are and how you can plan for them? Contact our office for a free consultation.

Matt Leonard

House Passes Health Package with SNT Fairness Act

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Passage by the House clears way for new ways of creating Special Needs Trusts

On November 30, 2016, the House passed H.R. 34 – 21st Century Cures Act, a major health care package that included the Special Needs Trust (SNT) Fairness Act (Sec. 5007). The health package covers a wide array of issues, including new disease research funding, mental health reform, and combating opioid abuse.

The SNT Fairness Act would allow individuals with disabilities, who have capacity, to set up their own d-4-a special needs trust. Passage of the SNT Fairness Act has been National Academy of Elder Law Attorney’s top public policy priority for this congressional session.

In September, the House passed an amended version of the SNT Fairness Act that contained several additional non-controversial provisions related to Medicaid. A year prior, the Senate unanimously passed the original version of the SNT Fairness Act.

Now, the Senate must take up the health package for the provisions to become law.

Special Needs Trusts are trusts designed to hold assets for the benefit of a disabled individual while allowing that individual to receive and benefit from available government services. There were 2 types of SNT’s: 1. Created with the assets of the disabled individual (so called (D)(4)(a) Trust); and 2. Created with assets other than those of the disabled individual.

The current law limited who could create a SNT with assets of the disabled individual. This new law removes the restrictions as to who can create a SNT for a disabled individual.

Want to learn more about Special Needs Trusts? Contact our office for a no-cost consultation.