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.”

61 as a number, not an age

Here’s the thing about turning 61: It’s an age that either defines you or you define it.

I’m trying my best to define it, so I consider it a number, not a state of mind.

It doesn’t matter that I’m a year from being able to collect Social Security. It doesn’t matter that I’m a year closer to being eligible for Medicare. It doesn’t matter that I’m inching so much closer to that “senior citizen” euphemism: 61 won’t define me in those terms.

Sure, there are days when I feel every year, every month, every week, every day, every hour, every minute, every second of being 61. My knees remind me. My back reminds me.

And there are reminders from my doctor about the tests and routine procedures normally associated with being a 60-plusser. Oh, and the fact that I CAN’T HEAR YOU very well anymore.

But those are the exceptions of who I am these days, not the rule because I’ve sworn to myself that as I get older, I won’t let the years age me.

I help myself by keeping myself engaged: Engaged in my freelance work, engaged with the people I love, engaged with the world around me.

I feel the need to be on the move - physically, mentally, emotionally.

Sit too long and the corrosives will into your joints, into your synapses. What did Neil Young sing? “It’s better to burn out than fade away...” Rust never sleeps.

Some of the engagement comes from the fact that I’m on the move between two homes - one in South Bend, Indiana, where my wife Jane works for the University of Notre Dame, and one in Durham, N.H., where I work as a freelancer for a couple of online and print news and information outlets.

I can work from pretty much anywhere because of my fully equipped “office in a bag”. I can set up anywhere and be immediately productive.

I’m given to looking more deeply into 61 than I did 60. Any age that ends in a 0 - 10, 20, 30, 40, 50, 60, 70, 80, 90, 100 - is a big deal because it’s an easily identifiable mile marker on the interstate of life.

61 is the beginning of the outlier years. Hardly anyone notices, and you just go about your business.

That’s why I’m making more of an effort to remain engaged in this life I live. Those outlier years will begin to pile up. You live it, or it lives you.

My homeward bound life as a hobo

This hobo's primary mode
of transportation.

Since January, I’ve become a bit of a hobo.

I’m slightly better dressed than your average hobo, and I do have steady income, but I’ve been riding the rails - and buses and planes and cars - at least twice a month to travel hither and yon.

The image of hobos -- as the homeless vagabonds of the 1930s who hopped boxcars to get from place to place -- isn’t well regarded. But hobos, as itinerant workers, are different from tramps, who work when they are forced to, and bums, who don’t work at all,and there is a romantic, literary notion to the hobo life, a la Jack Kerouac and his “The Vanishing American Hobo.”

The etymology of hobo is worth exploring because it provides some context for Baby Boomers like myself who get the urge for going.

One etymologist suggests hobo may be derived from hoe-boy, meaning farmhand. Another suggests - and this is the one I like - that hobo is derivative of homeward bound.

Now, my Mom always said that “home is where the heart is”, so the hobo in a sense is just someone following his or her heart home, wherever home may be.

My heart leads me in a variety of directions these days. With my wife having taken a job at the University of Notre Dame and with my continued itinerant work and family in New England, my heart has been dividing its time between here and there.

I don’t hop a freight car and ride for free from rail yard to rail yard. I amass air miles and credit card points to and from  Portsmouth, N.H., Boston, Chicago, and South Bend, Ind.

My heart is with Jane in South Bend. My heart is also with the people I love, admire and respect in New England. I need them all - in the bars where we share our stories, on the golf course where we play against ourselves and each other, and in the offices where I reconnect with my professional life.

The itinerant work I do as a working retired Baby Boomer allows me to pack up my bindle, stow it in the overhead compartment, and move back and forth.

I’m not alone. There are others who do essentially the same thing, who are less rooted to fixed address.

Jane and I a few years ago rented a motor home for a weekend to get a sense of what living life on four wheels would be like.

We stayed at a campground and parked next to owners of a land yacht. Ours was a Class C motor home. Theirs was a Class A motor home that, honestly, was more nicely furnished than our house.

And the couple in their 60s had no fixed address. They moved about as hobos in their condo-on-wheels, visiting friends and family as their hearts moved them, or they visited various parts of the country as their wanderlust moved them. They called it “the life”.

There’s a bit of a hobo in all of us as we get older. Our empty nests make us less rooted. It’s why we Boomers do bucket lists. It’s that need to wander, to discover, to reconnect with someone or some place.

Wrote Kerouac: “The hobo has two watches you can't buy in Tiffany's, on one wrist the sun, on the other wrist the moon, both bands are made of sky.”