Long Term Care Insurance Will Soon Cost Women More




The cartoon is a link to "The Growing Need for Long-Term
 Care Insurance- Part 1" authored by Desiree Baughman,
 writer for InsuranceQuotes.org (link removed upon request)

The long-term care insurance (LTCI) market will soon change dramatically as companies start charging higher premiums for women.  Life insurance has long employed gender-based pricing, by gemder, but LTCI insurance companies have avoided the practice. For the first time this year, starting with policies from Genworth Financial Inc, the nation's largest seller, the industry will move to gender-based pricing.

The industry's goal is to reflect actuarial realities.  Women live longer and plan more for their futures by buying LTCI policies. Genworth says two-thirds of its LTCI claim payouts go to female customers, and overall, women account for 57 percent of all policy sales in 2011, according to data from LIMRA, the insurance research and consulting group.

Genworth will introduce gender-specific policy pricing by this spring, if the plan passes regulatory hurdles. That will boost the cost of new policies for women by 20 to 40 percent, depending on the applicant's age and benefit package, according to the American Association for Long-Term Care Insurance (AALTCI).

According to Reuters, Genworth spokesman stresses that the pricing will be applied only for women applying on their own - 10 percent of its policy applicants. The company will continue to offer lower rates to married couples who purchase joint coverage, and the changes won't affect current policyholders.  Gender-based pricing will likely be adopted by other carriers - both for individuals and married couples.

Gender-based pricing is seen as a necessary step for companies struggling in the current low interest rate economy to earn enough on their fixed income portfolios to fund benefits. 

Premiums have generally beeen on the rise regardless,  For new customers, policies in 2012 cost anywhere from 6 to 17 percent more than in 2011, according to AALTCI, and they are 30 to 50 percent higher than five years ago. Competition also reduced as a long list of major insurance companies have stopped writing new individual policies, including Prudential Financial Inc, Metlife Inc., and Allianz Finance Corp.

Gender pricing is just the latest sign that our approach to long-term care isn't working. The private market is limping along as a small niche business - overall penetration remains less than 5 percent of the total possible market, according to LIMRA.

If you have been thinking about LTCI,  buy it now.  Better, consider a life insurance policy or annuity that will provide a leveraged death benefit during your life specifically for long term care.  These "linked-benefit" policies are an attractive alternative to traditional long term care insurance.

IRS Reminder: 2010 Roth Conversions May Require Income Reporting on 2012 Return

The Internal Revenue Service reminds taxpayers who converted amounts to a Roth IRA or designated Roth account in 2010 that in most cases they must report half of the resulting taxable income on their 2012 returns.

Normally, Roth conversions are taxable in the year the conversion occurs. For example, the taxable amount from a 2012 conversion must be included in full on a 2012 return. But under a special rule that applied only to 2010 conversions, taxpayers generally include half the taxable amount in their income for 2011 and half for 2012, unless they chose to include all of it in income on their 2010 return.

Roth conversions in 2010 from traditional IRAs are shown on 2012 Form 1040, Line 15b, or Form 1040A, Line 11b. Conversions from workplace retirement plans, including in-plan rollovers to designated Roth accounts, are reported on Form 1040, Line 16b, or Form 1040A, Line 12b.

Taxpayers who also received Roth distributions in either 2010 or 2011 may be able to report a smaller taxable amount for 2012. For details, see the discussion under 2012 Reporting of 2010 Roth Rollovers and Conversions on IRS.gov. In addition, worksheets and examples can be found in Publication 590 for Roth IRA conversions and Publication 575 for conversions to designated Roth accounts.

Taxpayers who made Roth conversions in 2012 or are planning to do so in 2013 or later years must file Form 8606 to report the conversion.

As in 2010 and 2011, income limits no longer apply to Roth IRA conversions.

Credit Card Debt Will Follow the Younger Generation to the Grave

Younger Americans not only take on relatively more credit card debt than their elders, but they are also paying it off at a slower rate, according to a first-of-its-kind study conducted by Ohio State’s Center for Human Resource Research.

The findings suggest that younger generations may continue to add credit card debt into their 70s, and die still owing money on their credit cards.

“If what we found continues to hold true, we may have more elderly people with substantial financial problems in the future,” said Lucia Dunn, co-author of the study and professor of economics at Ohio State University. Our projections are that the typical credit card holder among younger Americans who keeps a balance will die still in debt to credit card companies.”

The results suggest that a person born between 1980 and 1984 has credit card debt substantially higher than debt held by the previous two generations: on average $5,689 higher than his or her “parents” (people born 1950-1954) and $8,156 higher than his or her “grandparents” (people born 1920 to 1924).  In addition, the results suggest younger people are paying off their debt more slowly, too.  The study estimates that the children’s payoff rate is 24 percentage points lower than their parents’ and about 77 percentage points lower than their grandparents’ rate. 

But the study also did uncover some good news: Increasing the minimum monthly payment spurs borrowers to not only meet the minimum, but to pay off substantially more, possibly eliminating their debt years earlier.

The study underscores the challenges younger folks are facing that cause and encourage debt.  In addition to the economic woes under which we all labor, are cultural changes that encourage spending.  Stuart Vyse, professor of psychology at Connecticut College, describes them in his book "Going Broke: Why Americans Can't Hold On to Their Money."  Professor Vyse argues that the mountain of debt burying so many of us is the inevitable byproduct of America's turbo-charged economy and, in particular, of social and technological trends that undermine self-control, including the rise in availability and use of the credit card, increase in state lotteries and casino gambling, and expansion of new shopping opportunities provided by toll-free numbers, home shopping networks, big-box stores, and the Internet which create twenty-four hour instantaneous marketplaces.  Professor Vyse reveals how vast changes in American society over the last 30 years have greatly complicated our relationship with money. 

These trends and harsh realities should inform our financial, estate, and business succession planning. 

California Doctor Shortage Frustrates Affordable Care Act

According to the Los Angeles Times, as California moves to expand healthcare coverage to millions of Californians under the Affordable Care Act, it faces a major obstacle: There simply aren't enough doctors to treat a crush of newly insured patients.

The obstacle, while acute in California, is not unusual.  There exist regional doctor shortages throughout the United States (see map), and these are likely to worsen.  The Association of American Medical Colleges estimates that there will be a shortage of 63,000 doctors by 2015 and 130,600 by 2025. The tidal wave of newly insured patients has to be served somehow and US Medical Schools and Residency Programs cannot supply anywhere near these numbers of new physicians in such a short time frame.

Some lawmakers want to fill the gap by redefining who can provide healthcare.  They are working on proposals that would allow physician assistants to treat more patients and nurse practitioners to set up independent practices. Pharmacists and optometrists could act as primary care providers, diagnosing and managing some chronic illnesses, such as diabetes and high-blood pressure.

For the complete article, click here.

Consumers Benefit from Feds Effort To Reduce Antipsychotic Drug Use in Nursing Homes

Nursing homes around the country are under pressure from the Federal government to reduce their use of antipsychotic medications in treating patients with dementia, including patients suffering from Alzheimer's Disease. This powerful class of prescription drug is meant for mental illnesses such as schizophrenia.  But they are being used on people with dementia and Alzheimer's Disease at startling rates.  

In the United States, 25.2% of all nursing facility residents receive antipsychotic medications, according to data from the Online Survey Certification and Reporting Database (OSCAR) (member login required) from the Centers for Medicare and Medicaid Services (CMS).  .  More than half of nursing home residents may suffer dementia, and while many of these residents experience BPSD (behavioral and psychological symptoms associated with dementia), the preferred therapies for management of these symptoms are non-pharmacologic, including environmental modifications. If an underlying cause or reason for the behaviors can be identified, a non-pharmacologic approach that addresses this underlying cause can be effective and safe.

Some believe that antipsychotic medications are being used unethically to control behavior, in effect, handcuffing patients to wheelchairs so that they won't be a nuisance.  In addition to the ethical questions of simply sedating patients, the drugs have sometimes serious side effects, and can pose a serious health risk.  Some believe that use of such medications can actually increase a senior's risk of injury or death.  

According to The National Consumer Voice for Quality Long Term Care, the misuse of antipsychotic medications in nursing homes can harm long-term care residents in many ways. When used inappropriately among nursing home residents, antipsychotic medications can:

• Place Nursing Home Residents at Increased Risk of Injury, Harm and Death: Antipsychotic drugs, when prescribed for elderly persons with dementia, can have serious medical complications, including loss of independence, over-sedation, confusion, increased respiratory infections, falls, and strokes. In fact, one study found residents taking antipsychotics had more than triple the likelihood of having a stroke compared to residents not taking these medications. Even worse, antipsychotics can be deadly; in 2005, the Food and Drug Administration (FDA) issued “Black Box” warnings for antipsychotics stating that  individuals diagnosed with dementia are at an increased risk of death from their use and that physicians prescribing antipsychotic medications to elderly patients with dementia should discuss the risk of increased mortality with their patients, patients’ families and caregivers. The FDA has also stated that these medications are not approved for the treatment of dementia-related psychosis, nor is there any medication approved for such a condition. 

Illinois Permits Guardian Authority to Petition for Termination of a Ward's Marriage

The Illinois Supreme Court overturned the 26-year-old opinion In re Marriage of Drews, 503 N.E.2d 339 (1986), ruling that a guardian has the legal authority to petition for dissolution of a ward's marriage, and may take appropriate legal action to accomplish that end. Karbin v. Karbin, 2012 IL 12815 (Ill. 2012). 

In 1986, the Supreme Court had held that a guardian did not have standing to initiate a dissolution of marriage action on behalf of a ward. The court found that the Probate Act, which allows a guardian of the estate to appear and represent a ward in legal proceedings, was limited to matters directly involving the ward’s estate and that there was no comparable language which governs rights and responsibilities over the ward’s person. In making this decision, the court said that it was following a strong majority rule across the country. In re Marriage of Drews, 503 N.E.2d 339, 340 (1986).

The decision was short and concise. Justice Seymour Simon dissented, arguing that the court’s holding was too restrictive. “If the initiation of a legal proceeding though personal can be shown to be beneficial to the maintenance and welfare of the ward, the court ought to allow it.” In re Marriage of Drews, 503 N.E.2d 339 342 (1986).

Karbin v. Karbin involved a contentious divorce case that, while initiated by the competent husband, was being pursued by the incompetent wife’s guardian after the husband voluntarily dismissed his petition. The husband moved to dismiss the counterpetition filed by the guardian, citing Drews. The trial court dismissed the case and the Appellate Court affirmed. As its first order of business, the court justified its decision to overturn Drews, finding that the court had shifted away from Drews. Karbin v. Karbin, 2012 IL 12815 at 6 (Ill. 2012).

In fact, the limitation on the guardian’s authority ordered in Drews was abandoned only three years later in Estate of Longeway, when the Supreme Court held that a guardian has implied authority to act in the ward’s best interests regarding the use of life-sustaining measures. Estate of Longeway, 549 N.E.2d 292 (1989). Later that year, the Supreme Court reaffirmed that expansion of authority by holding that a guardian may decide to remove life support. Estate of Greenspan, 558 N.E.2d 1194 (1980).

After justifying its decision to overturn Drews, the Karbin Court pointed out that the divorce in Drews had been filed prior to the adoption of no-fault grounds in Illinois. At that time, divorce involved one guilty party and one injured party and it was the sole choice of the injured party to severe the marriage. This was considered a uniquely personal decision to which no one else was privy. Once the concept of injury was removed from divorce, the decision to end a marriage would be no more personal than the decision to end life support, have an abortion or undergo involuntary sterilization. In fact, the court noted, divorce was not as final or permanent as those decisions were. Karbin v. Karbin, 2012 IL 12815 at 11 (Ill. 2012).

There was simply no reason why a guardian should not be allowed to make the personal decision to file for divorce using the substituted judgment standard permitted by the Probate Act. “As is apparent, the traditional rule espoused in Drews is no longer consistent with current Illinois policy on divorce as reflected in the Illinois Marriage and Dissolution of Marriage Act.” Karbin v. Karbin, 2012 IL 12815 at 11 (Ill. 2012).

Finally, this court found that continued application of the holding in Drews could put an incompetent spouse at the mercy of an ill-intentioned competent spouse. “Because under the Probate Act the guardian must always act in the best interests of the ward, when a guardian decides that those best interests require that the marriage be dissolved, the guardian must have the power to take appropriate legal action to accomplish that end.” Karbin v. Karbin, 2012 IL 12815 at 12 (Ill. 2012).

The Court summed up its discussion succinctly: “[t]his ensures that the most vulnerable members of our society are afforded fundamental fairness, equal protection of the laws and equal access to the courts. Therefore, In re Marriage of Drews is hereby overruled.” Karbin v. Karbin, 2012 IL 12815 at 14 (Ill. 2012).

Upon remand, the court directed the Circuit Court to hold a hearing in order to determine if divorce is in the ward’s best interests, clarifying that the guardian always acts as the hand of the court and subject to the court’s direction. In order to prevent a guardian from pursing a divorce for his or her own purposes, the guardian must satisfy a clear and convincing burden of proof that the divorce is in the ward’s best interests. This higher burden is in accordance with the standard applied to other highly personal issues. Karbin v. Karbin, 2012 IL 12815 at 15 (Ill. 2012).

While most probate and domestic relations practitioners agree that the decision to overturn Drews was long overdue, on the grounds that a guardian who has standing to petition the court to withdraw life support from a ward, should likewise have authority to dissolve a marriage, both decisions being personal to the ward, others are more apprehensive because a guardian can remove an advocate spouse when the spouse is properly recalcitrant or vocally objects to decisions of an abusive guardian.  

Those supporting a guardian's authority rely upon the Probate Court to decide whether pursuing a divorce is clearly and convincingly in the ward’s best interests.