Protecting Senior Assets

By Senator Michael A. O'Pake (D-Berks)
Senate Democratic Whip

          Harrisburg, June 25, 2007 -- As the state completed action on a new no-tax-increase state budget, several important accompanying pieces of legislation were also enacted.  Among them was a long-overdue consumer incentive that's aimed at both encouraging Pennsylvanians to purchase long-term care insurance and, at the same time, saving taxpayer costs.
          Modeled after legislation I've championed for years, the state's new Long Term Care Partnership Act (SB 548, Act 40/2007) seeks to give seniors and others the ability to protect their personal assets if and when they must rely on public assistance for their care while also helping to bring exploding medical assistance costs under control.
          In the debate over public welfare, rarely is it mentioned that the vast majority of this expense is to care for our frail elderly and the disabled.
          Fully 65 percent of the federal and state expense for medical assistance in Pennsylvania is to take care of seniors and people with disabilities.
          Over the past five years alone, the taxpayer cost for long-term living -- with most of the expense for the care of our older citizens in nursing homes -- has increased by over $1 billion to a total of $3.7 billion.  The average cost for an individual's care in a nursing home is more than $55,000 annually.
          While we must never retreat from our responsibility to make certain that the most vulnerable in our society receive the adequate services and care they need and deserve, the new Long Term Care Partnership law will help us to control this expense for taxpayers while also providing a benefit to our seniors.
          The legislation will enable a plan whereby consumers of all ages will be able to protect their assets on a dollar-for-dollar basis through the purchase of long-term care insurance.  For example, a person's purchase of $100,000 in long-term care insurance coverage will now enable that individual to keep $100,000 in assets and receive medical assistance for long-term care services if and when their insurance coverage runs out.  Currently, persons must spend down their assets before qualifying for medical assistance.
          To facilitate this new initiative, the law requires the Department of Public Welfare to file an amendment to our state Medicaid Plan with the federal government within a month.  The legislation also contains strong consumer protections, including a requirement that all long-term care policies in Pennsylvania offer comprehensive coverage to permit reimbursement for not just nursing home or assisted living care but home and community-based care, the ability to exchange recently purchased long-term care insurance policies with partnership policies, and an increase in the guarantee fund to protect consumers against loss if an insurance company becomes insolvent.
          This legislation makes both common sense and dollar sense.  It makes it possible for seniors, the baby boom generation nearing retirement, and families of all ages to protect their personal assets and belongings for themselves and their loved ones while also helping to bring taxpayer costs for long-term care services under control.
          Legislation like this is long-past due.  I'm glad it's finally crossed the finish line.

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