Expert warns that long-term care is great unfunded liability

Paul Forte, CEO of LTC Partners, is a
recognized expert on long-term care.

An internationally known expert on long-term care is sounding the warning that costs associated with that care -- in particular for aging Baby Boomers -- is “the single greatest unfunded liability most families will face.”

The warning comes from Paul Forte, chief executive officer of LTC Partners, headquartered in New Hampshire.

He knows of what he speaks.

Since 2002, he has headed up LTC Partners, a wholly owned subsidiary of John Hancock Life Insurance Co., which administers two major federal contracts, including the Federal Long Term Care Insurance Program (FLTCIP), the largest long term care insurance program in the country.

According to Forte, LTC Partners currently supports nearly four million customers and handles more than $2 billion in cash flows per year.

The other contract administers BENEFEDS, a secure website that enables federal employees and federal retirees to enroll in the Federal Employees Dental and Vision Insurance Program.

Recently, he was asked to speak in Washington, D.C., to a delegation from the Chinese government about the massive aging population in China.

“… long-term care is the single greatest unfunded liability for most families,” Forte said in his remarks to the Chinese. He advocated using the Federal Long Term Care Insurance Program (FLTCIP) his company administers as a model for use in the private sector.

Baby Boomers are turning 65 at a rate of 10,000 a day, and their long-term care needs will grow and grow and grow, putting an ever larger burden on their own finances, their families’ finances, and the government’s finances to cover the costs of long-term care.

“They are as scary, in their own way, as the cost of cancer,” said Forte. “You can pay a hundred grand for long-term care a year.”

Forte cited a number of questions to ask and factors to think about when considering long-term care:

How long might the care be required? It could be something short-term to recover from surgery that requires a stay in a rehabilitation facility, or it could be something more long term such as a chronic illness or dealing with someone who has Alzheimer’s.

Where is the care going to be provided? “Long-term care can be delivered virtually anywhere,” said Forte, noting skilled-nursing facilities, assisted living facilities, adult daycare, and care provided in the home.

Who is going to provide the care? This might be determined by where the care will be provided. Medical personnel will staff the nursing and assisted living facilities. Home care might include visits from volunteers from a community- or church-based group and in most cases includes a family member, which in itself can provide challenges for a family member who is a caregiver but who also has a full-time job, according to Forte. “You still have to have somebody in the family keeping an eye out and they have to be tethered to the home,” said Forte.

What is the care going to cost and how will it be paid for? The money to pay for the services – be they delivered at a facility or in a home – will come from the individual’s own pocket or savings, from Medicare or Medicaid, from family contributions, from a home equity loan or reverse mortgage payment, annuity payouts, and/or from long-term care insurance.

The need for long-term care insurance grew out of the realization that a federal program, such as Medicaid, didn’t provide enough for unexpected, long duration care costs.

Long-term care insurance is a stand-alone policy that covers care generally not covered by health insurance, Medicare, or Medicaid. Generally, individuals who require long-term care are not chronically ill. Instead, they are unable to perform the basic activities of daily living – called ADLs – that include such tasks as getting dressed, taking a bath, cooking and eating, going to the bathroom, walking or getting in and out of a bed or chair.

Age is not necessarily a determining factor in the need long-term care. Estimates are that about 70 percent of individuals over age 65 will require at least some type of long-term care services during their lifetime, but about 40 percent of those receiving long-term care today are between 18 and 64.

The question of whether to buy insurance to pay for long-term care is a difficult one for most people to answer, said Forte.

“Everybody has a different tolerance for risk,” said Forte.

You might live in reasonably good physical and mental health until your 95 and die in your sleep. Or at age 75, you might have trouble walking and getting in and out of a chair and you really can’t cook for yourself or clean house anymore.

Forte said there’s between a 40 and 50 percent chance that an individual might need some insurance against the cost of long-term care.

The younger you are, the less expensive a long-term care insurance premium will be: A 40-year-old will pay less per month than a 55-year-old.

And anyone who’s thinking about long-term care insurance has to be prepared that the premium is likely to go up, said Forte.

The policy that you bought at $2,500 a month when you were 50 could easily double by the time you’re 80 or 90. The fact that the rates rise the older you get can be a disincentive for people to buy the insurance.

“This is not perfect,” said Forte in explaining why premiums go up. “The problem with every insurer is that you’re trying to figure out the real cost of what claims will be 10, 20, 30 years into the future.”

In recent article he wrote for Contingencies, the magazine for the American Academy of Actuaries, Forte examined the need for long-term care insurance as “the best choice for uninsured millions looking to protect their retirement against the risk of needing long-term care services sometime before the end of their lives.”

He thinks the government long-term care program is a good one for all Americans.

“Since raising taxes to pay for a Medicare-like LTC insurance program is not seen as practical,” he said, “the FLTCIP offers the best value and may be replicated for all Americans. It has been our long-held belief that the public and private sectors should work together to address the LTC financing problem and to identify authentic solutions.”

Mind games with my son

They say (the ubiquitous ‘they’) that playing games that engage the brain is good for us Baby Boomers.

Question: Does getting my ass kicked by my son David while we play chess count?

As we get older, they say, our brains need mental exercise in the same way our bodies need physical exercise.

We need to keep our brains loose and gooey so those synapses can engage each other; we don’t want plaque build up that they say is responsible for Alzheimer’s.

Puzzles -- word puzzles like crosswords or number puzzles like Sudoku -- are recommended. I suspect chess would fall into that category too.

Chess is a mind game, made especially more challenging in this instance because I’m playing from my home in New Hampshire while my son is playing from his apartment in Brooklyn.

As a Christmas gift, David and my daughter Elizabeth gave me a beautiful chess board with pieces made as reproductions of the Isle of Lewis chessmen, the oldest chessmen in existence, probably dating back to the 12th century.

He has a board at home, I have my board at home, and we communicate our moves by texting each other on our cell phones (good thing I have an unlimited texting plan with Verizon, huh?).

We’re using the algebraic method to communicate our moves. The chessboard is set up as an alpha-numeric grid,. So, if I’m white and I want to make a first move with my knight, I might text David a message that says ‘NC3’. (Knight, by the way, uses the designation ‘N’ because the ‘K’ is taken by the king … it’s good to be the king.)

Two problems: I’m lousy at math, and I’m not very good at chess. So I have to think extra hard not only on my moves but remembering the layout of the grid.

David and I started playing chess together when he was a kid, each of us learning as we went along. David, it turns out, learned much more quickly than me.

I don’t think I’ve ever taken a game from him. Ever.

And our remote games, so far, have been no different.

He’s patient. He sees the bigger picture. He anticipates a couple of moves ahead. Hell, he anticipates a couple of games ahead.

I’m impulsive. I tend to attack with too much force and not enough thought.

And yet I play on, for the sake of my brain, but mostly because it’s fun to engage with my son.

But isn’t that the definition of insanity, as least according to Albert Einstein? Doing the same thing over and over again and expecting different results?

I keep playing David over and over again expecting I’ll win. Apparently I’m crazy to think I will. But I’ll take crazy over Alzheimer’s.

My weekly education from "This American Life"

Every week, for an hour, I go to class.

It's a part of my Baby Boomer continuing education.

It is said that as we age we need to keep those synapses working, give that cognitive tissue a workout.

We need to keep our minds healthy just as importantly as we need to keep our bodies healthy. Good body health may keep me away from diabetes and heart disease. Good brain health may help keep me away from Alzheimer's. At least that's my story and I'm sticking to it.

To accomplish both, in a true kill two birds with one stone manner, I exercise both my body and my brain by taking a four-mile power walk while listening to a podcast of "This American Life" on National Public Radio.

I look forward to the walk and the way it raises my heart rate, and I look forward to what I'm going to learn from "This American Life" host Ira Glass and his merry band of contributors.

On my most recent walk with Ira in my ears, I learned about parasites, not a subject I would normally approach in the normal cadence of what I do day to day. I learned about the hookworm parasite as a possible cure for allergy sufferers, and it was fascinating.

I'm not making this up.

They did a terrific job -- better than anyone in the media, in fact -- explaining the housing crisis and how it helped bring down Wall Street. For once, I understood stood something about the economy. It was so good that a new group -- Planet Money -- has emerged as a National Public Radio contributor to explain economic-related news in a way that Joe Average like me can understand.

"This American Life" airs on noon each Saturday on my local NPR station. I am not allowed to hear it live. If I'm in the car listening to public radio at the time in comes on the station has to change. That's true in my car and it's true if I'm riding with my wife Jane in her car.

Because I download the episode as a podcast then transfer it to my iPod for my weekly walk with Ira.

The broadcasts are no more than an hour, which fits in to my pace of walking my four miles in under an hour.

I often laugh out loud -- particularly when a contribution from David Sedaris is involved.

And I always learn something new.

This graying brain appreciates it.

It's all in your mind

I believe wholeheartedly in exercise -- both for the body and for the mind.

There's already a booming industry for the exercising the body -- we as a society spend $16 billion a year on health club memberships, not to mention what we spend on all the attendant gear and stuff that goes along with having a physically active lifestyle.

Now there's a growing industry for mental fitness. According to a recent article in the New York Times, products like computer software to spur brain activity are being gobbled up by Baby Boomers who are concerned about losing their mental acuity as they lose their hair, teeth, eyesight and hearing. The so-called neurosoftware market was worth $225 million in 2007, according to the Times article, and is expected to grow as Boomers advance in age. The Times estimate it could be a $2 billion industry by 2015.

Boomers, who have always thought of themselves as forever young, are realizing that their bodies and possibly their minds will break down over time. And they will not go gently into the night. Still believing we are as invincible at 60 or 70 as we were at 20 or 30, we will kick and scream and whine and try just about any means possible to hold off or delay the inevitability of aging.

You can understand why. Most of us at around 50 start to joke about our senior moments -- like forgetting where the car keys are, or forgetting a telephone number that we've dialed a bazillion times before. But our worry is that the senior moments might portend something more serious -- senior hours, days or years of dementia or Alzheimer's.

You know the moments.

The Times article offered a few of anecdotes: A 47-year-old woman misplaced her cellphone, only to find it in her refrigerator freezer when she went to make dinner. Or the 51-year-old woman who drove to work in her car but took the bus home after work after forgetting that she'd driven in. Or the 61-year-old man in the FedEx store who, while filling out the forms, could not remember his home address.

We might chuckle at these anecdotes, but most of us have "moments" of our own. One time coming back from skiing by myself, I went north onto a highway when I should have been traveling south. I was well on my way to Canada before realizing I'd made a wrong turn.

We worry that what's funny now might not be so funny later.

The Times has this telling quote from Nancy Ceridwyn, director of educational initiatives at the American Society on Aging: "It's probably one of the most frightening aspects of the changes we undergo as we age. Our memories are who we are. And if we lose our memories we lose that groundedness of who we are."

So Boomers are running with evidence that suggests brain exercises will help maintain mental fitness, or, as the Times article points out, help keep "the plasticity of the brain."

Nintendo has something called Brain Age 2 of math and memory exercises (originally devised for a youngster). There is "cognitive behavioral training" software. Beyond that, some Boomers are going to their doctors to ask for medical tests to determine if they already have the early stages or are at risk for Alzheimer's.

I'll stick with my crossword puzzles, thank you very much. For the record, my favorite is the Friday puzzle in the Wall Street Journal. But I'll take on all comers. I like the challenge; I like working the puzzles as much as my morning workouts at the YMCA.

Crosswords have served my mother well over the years. She may not want me revealing her exact age, but she's into her 80s and still chugging along quite nicely as she tackles her daily puzzles. We should all be so fortunate.