Cuts in Prescription Drug Plans Coming?
April 26, 2010
Here in New Jersey our new governor, Chris Christie, is making some tough, and unpopular, decisions in an effort to close a huge state budget deficit. While I have written previously about his focus on reducing teachers’ pensions and benefits, a fight that is expected to continue, the latest changes focus on a program that provides prescription drugs to low income seniors and the disabled.
We have a lot of negatives to contend with here in New Jersey. You can start with the highest property tax and automobile insurance rates in the country and an overall high cost of living and go from there. However, the Pharmaceutical Assistance to the Aged and Disabled (PAAD) and the Senior Gold programs that we have here are among the most generous programs of their kind that can be found anywhere in the nation. In fact, fewer than 20 states offer comparable programs.
What makes these programs so good is the income levels needed to qualify. For PAAD in 2010 one must have no more than $24,432 per year in income for an individual and $29,956 for a married couple. Senior Gold income limits go up to $34,432 for an individual and $39,956 for a married couple. There is no asset limit. Participants in PAAD pay $6 per generic prescription drug and $7 per name brand drug. The Senior Gold co-pay is $15 plus 50% of the remaining cost of the prescription or actual drug cost, whichever is less. But that’s what is going to change.
Under Governor Christie’s plan, beginning in January 2011, there would be a $310 per year deductible per person. The co-pay for brand name drugs would also increase from $7 to $15 while the co-pay for generic drugs would drop from $6 to $5. While there are approximately 165,000 people participating in PAAD, it appears that the 40,000 lowest income participants would be exempt from this increase.
Nevertheless, this latest news is just another example of the belt tightening that is going on everywhere and is just another reason why, as our population ages and more Americans reach senior status, it is so important to be proactive in planning for long term care rather than simply waiting for something to happen before addressing the need. You want to get to the front of the line because it is all to easy to get pushed to the back.
Obama’s CLASS Act – Good Idea or Wasted Effort? (Part 2)
April 19, 2010
Last week we reviewed the specifics of the new CLASS Act which is part of the new health care reform bill that passed through Congress and was signed into law by President Obama last month. CLASS attempts to provide coverage for long term care. But, is it going to have an impact on the growing long term care problem in this country? I wouldn’t count on it. I wouldn’t hold out any hope that this program will solve, or even make a dent in, the growing long term care problem. Here’s why.
For one thing, the specifics are very sketchy. The Department of Health and Human Services is supposed to put together regulations that will govern the administration of the program so that CLASS won’t be rolled out for 2 years. Add to that the 5 year pay in requirement before you can put in a claim for benefits, which means we won’t see any impact from this program until 2017. And that’s if you believe that the details will all get worked out on that time schedule (I wouldn’t bet on it).
And how about the benefit amount of $50 to $75 per day, which equates to $1500 to $2250 per month? Anyone who is dealing with a long term care expense knows how little that is when compared to a minimum $4000 assisted living facility charge and a $10,000 nursing home charge per month in our area. For those being cared for at home, $50 won’t cover much more than 2 to 3 hours of in home care a day. That’s without considering that, with inflation, the cost of care will surely be significantly more than it is now. I haven’t heard anything about cost of living increases being included as part of this program.
I also have my doubts about the financial soundness of the program. Will there be enough people paying into the system, for enough time, to cover those collecting lifetime benefits? We’ve seen how the Social Security system is being stretched because of an aging population, not enough workers contributing to the syste, and people collecting benefits much longer than was ever anticipated. Will employees in their 40’s and 50’s commit to a payroll deduction that will reduce their take home by $200 a month, when they are already struggling to pay their bills in recessionary times? Especially if there is no guarantee that the premiums won’t increase on an annual basis? My experience tells me that the average person’s reluctance to address long term care needs – the “it will never happen to me” mentality – won’t change. And 5 years doesn’t seem like a long enough time to collect money into the program before starting the pay outs.
All in all, I don’t expect much from the CLASS program. By the time it has any impact, in the best case scenario, the oldest babyboomers will be into their 70’s and the already overburdened long term care system will need more than what this program can offer.
Obama’s CLASS Act – Good Idea or Wasted Effort (Part 1)
April 12, 2010
Congress’ passage of President Obama’s health care reform last month has generated much controversy and fear, including, in some cases death threats against politicians in Washington who voted for it. I have been asked my thoughts on the long term care provisions contained in the bill, known as the Community Living Assistance Services and Supports or, to add yet another acronym to our vocabulary, CLASS. First, let’s go over the specifics as we know them.
CLASS creates a voluntary government program under which participants will pay a monthly premium, which will then guarantee them a small benefit to cover their long term care needs. However, they must pay into the program for at least 5 years before claiming the benefit. The program is not supposed to be funded with any taxpayer dollars but rather through the premiums collected from healthy participants.
Participants will pay a monthly premium through payroll deduction. The amount has yet to be determined but reports are that it will be in the $180-240 per month range, although it can be increased on an annual basis to insure the program is actuarially sound. The benefits are promised for lifetime, to cover long term care needs. The criteria has yet to be determined as far as what degree of impairment is necessary to qualify for benefits. The dollar amount of benefit has been reported to be anywhere from $50 to $75 a day.
Employers who participate in CLASS will have their employees automatically enrolled, although anyone can opt out of the plan. Self-employed persons and those whose employers choose not to participate will be able to join CLASS through what has been termed a government payment mechanism. Those are the basics as we know them. So, is this program going to be a savior or just another ill-conceived government program? I’ll weigh in on that next week.
Multigenerational Households – A Long Term Care Solution? Maybe
April 5, 2010
An article in last Sunday’s business section of the Star Ledger, New Jersey’s largest daily newspaper, caught my attention. It discussed the rising trend of multigenerational households, highlighted by quotes from a few families in which adult children modified their homes so their parents could move in. Looking at it from my perspective as an elder law attorney and knowing from my own experience how unprepared most people are when it comes to long term care, the article left me with many questions.
According to statistics cited in the article in 2008 one in six households were multigenerational, up from one in eight 30 years ago. For one family interviewed, the reasons were health related and financial. Dad had a stroke and was forced to retire. Social Security and disability payments aren’t enough to pay the costs of maintaining their home so daughter and son-in-law built an addition to their home. Although not entirely clear, it appears that the children are paying for the addition and the parents will sell their home and live rent free with the children, providing childcare for the grandchildren. The article’s author comments that with rising nursing home costs baby boomer children are increasingly providing care for their parents in their own homes.
But, is that realistic in this case? With 2 toddlers, will daughter be able to care for her dad if he needs nursing home level care? Probably not. And is their concern about spending all their money towards a $100,000 plus nursing home bill solved by selling their home? Not at all. Actually, they may have to spend down more by selling their home and living rent free with the kids than if they still owned the home. So does that mean the decision they made is the wrong one?
Absolutely not. But what it tells me is that they have started to think about and address a very real problem but haven’t gone far enough and thought it all the way through. I certainly don’t have all the facts here. But, it might make sense for the parents to buy into the home, either now or later. That depends on how much savings they have, who will need long term care, and when and where it will be administered. The possibility of needing government benefits down the road certainly must be discussed because what choices the family make now could very well impact what is available to them later.
Maybe this was all discussed. But, experience tells me it probably wasn’t. Mom talks in the article about having fewer expenses and being able to go on vacations and enjoy life. And that is important. But, what I see so often is that people don’t really look closely at what long term care means, day to day. It means a downward decline in health and upward trend in expenses. So you can’t just look at where you are now and come up with a solution that solves today’s problem. You have to expect your life, in the next 10 to 20 years, to look very different than it does now and plan for that. That’s what real long term care planning is all about.
