GOOD ADVICE OR BAD ADVICE?
I just finished an article in the First Quarter 2003 Agent Sales Journal, GA/TN edition, by Ben Lipson, “Walking Away is No Disgrace”. OK, so I’m a little behind on my reading.
Ben is bashing LTCI trainers in this article, and I have to take issue with several of his comments.
Comment #1: “Prospects don’t have to reminded that unforeseen long term medical care and custodial care expenses can impoverish them.”
A Roper survey released 5/23/03 just said that
Please allow me to reiterate that most Americans have no idea about the difference between skilled care and custodial care, and that point is the central point to any LTCI sales presentation. If people don’t understand that difference, they don’t see the need or appreciate the value of LTC insurance. It’s so important that I include examples of each type of care to drive the point home in both the sales and seminar presentations that I provide.
Otherwise, a Dupont retiree will read that the Dupont retiree health insurance has an unlimited benefit for nursing home care and discard the idea of LTCI insurance. He won’t understand the exclusion for custodial care and he won’t understand that this unlimited benefit is almost meaningless because it’s for skilled care only. He won’t know that Medicare only pays an average of 23 days in a skilled nursing facility instead of the 100 potential days that Medicare can pay (Source: American Health Care Association, 2001), and he won’t understand the reason is because most people don’t meet Medicare’s definition of skilled care for longer than that.
I have a client who received 37 days of benefits from Medicare last year in a skilled nursing facility, and I told the family she was lucky as that was longer than the average Medicare SNF patient. She had had a massive stroke and was undergoing physical and speech therapy when Medicare stopped paying. Why did Medicare benefits stop? Because Medicare said she wasn’t showing progress fast enough. So even if the client understands the definition of skilled care, will he or she know that “progress” is also a requirement? Will the client understand that if he has emphysema and is on oxygen, he won’t qualify for respiratory therapy benefits because an emphysema patient isn’t expected to get better? Do families understand these definitions when they’re trying to get home health care for a loved one without LTC insurance?
I can tell you they do not.
Consumer awareness is somewhat better now than it was when I entered the LTCI field 15 years ago, but it is nowhere near what it needs to be. Otherwise, we wouldn’t have 8 out of every 10 Americans over age 45 with no LTCI protection, based on a new Index of Long Term Care Uninsured released by The Long Term Care Financing Strategy Group, Washington, DC.
Comment #2: Alternatives to long-term care insurance include:
Comment #3: Mr. Lipson asks the agent to communicate just the facts, ma’am:
Mr. Lipson implies in this article that many agents sell to financially nonqualified prospects, and I’m sure some do. The HIAA Buyer/Non-Buyer survey saw a drop from 31% of purchasers with less than $30,000 in assets in 1995 to only 11% in 2000, so I think as an industry, we’re doing a better job with suitability. The 40,000 agents who have been through my training were trained to do just as I did as an agent: pre-qualify the prospect financially on the telephone before making a sales appointment, and tell the prospect immediately if he or she is a candidate for Medicaid. Some people still want private insurance or their children want it for them – in that case, this is America and people do have the choice of buying an insurance policy in order to preserve dignity and be treated like a private-pay patient when they need care. As long as Medicaid is communicated clearly so people understand the choice, I believe the agent has done his or her job ethically. I even recommend handing out state-customized Medicaid eligibility guidelines at seminars and in sales appointments, so there is no confusion about the role Medicaid plays in financing long-term care.
I do agree with Mr. Lipson that it is important to explore all viable options with prospects – an employer plan, the Federal plan, Medicaid eligibility – and to be frank about those options even if it means losing a sale. That earns the respect of other professionals in your community and sets you up for tons of referrals once you have established that reputation.
Phyllis Shelton is President of LTC Consultants, a Nashville-based company specializing in web-based (www.ltcuniversity.com) and live long-term care insurance training and marketing materials that has trained over 40,000 agents and delivered 2,020 employee education meetings for the FLTCIP. Author of Long-Term Care: Your Financial Planning Guide, April 2003. She can be reached through www.ltcconsultants.com.
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