Wake up now to the realities of long-term care insurance

I don't want you to go broke. And I want to teach you how to avoid it now and through your eventual retirement.

We have to think about getting old and dying and, worst of all, we have to think about insurance.

Christopher J. Allen, DVM, JD

Since the topic tends to make eyes glaze over, we are going to do it in two parts. This month, I will briefly and painlessly explain the reasons long-term care insurance needs to be researched and purchased by every veterinarian. In a future article, I'll offer suggestions to help you in the hunt for affordable long-term coverage.

Groundhog Day again?

I try to lead a simple life. I get up, work like a fiend all day, squeeze in events and affairs related to children and spouses, then go to sleep. The next day — well, it's the exact same routine. So is the next. Sound familiar? There is not a lot of time available for thoughts of end-of-life issues for many of us. If you do think about them, they relate to enduring the vicarious suffering and administrative complications of a parent or other relative afflicted with an age-related illness.

What slips by us are time, youth and our ability to adequately protect ourselves with enough insurance for our golden years. When retirement and old-age arrive, many of us wonder how intelligent people such as ourselves could have let something so inevitable creep up on us without giving it more advance attention.

Don't wait

I think I have figured out why we tend to ignore the details of aging and the financial and management nightmares it can bring with it. Let me explain:

Doctor Busy is leaving his 40s and entering his 50s. He has more on his plate than he had ever thought possible. He exercises, feels great and expects to continue to work for a long time. He'll put together a nest egg and eventually retire.

But what if he gets sick?

He figures that if he is debilitated, he has disability insurance. If he gets sick, he has health insurance. When he gets old and sick, Medicare will cover him. If Medicare doesn't take care of everything, he will transfer his assets to the spouse, children or some kind of trust. After that, Medicaid will cover his nursing-home stay (not that strong, vital guys like him actually ever go into a home...).

Reality check

While this plan might have been a pretty good strategy in, say, 1967, currently it stinks. Decades ago, when lots of companies offered generous defined-benefit pensions and GM was the top seller of cars in America, a middle-class person (including doctors) could possibly afford to have relied on "somebody in government" to take care of him in old age. This was especially true if he hired a smart lawyer right after getting diagnosed with some terrible long-term illness.

Medicare off steroids

As we all believe, Medicare is the government safety net for old people. It takes money out of our paychecks for decades and in exchange takes care of all our health needs when we retire. Wrong.

The truth is, nobody ever put Social Security's money into a lock box. And, guess what? Medicare's money didn't go in there, either. Consequently, there are now very strict and very complicated legal limitations on what nursing care and home health care is available from Medicare.

Contrary to popular belief, Medicare was never intended to provide for the medical needs of most people or to be the insurer of last resort for the nation's aged. It was developed to care for the few truly sick people who needed hospitalization in their old age. Medicare's founders never expected people to live so long. They never expected that wives and daughters would not be available to stay home and care for aged relatives until they passed. This is not sexism; it is a fact.

It is foolhardy to expect that Medicare can or will pay for anything meaningful for the average old veterinarian.

Medicaid version 3.0

Most people don't even know the name of the government agency upon whom they are mindlessly relying to be taken care of when all else fails. The name of that agency is Medicaid, and it is us.

Every time I open the tax bill for my house, there I am, Medicaid, being funded before I even get a chance not to take advantage of it (me). (Whatever is left from my property taxes goes for roads and schools and stuff.)

Medicaid is the government entitlement program funded under a federal and state mandate that finances the health needs of the indigent.

Rule of thumb: If you are contributing to Medicaid, you probably don't qualify to use it.

In the olden days, Medicaid paid for poor people, old and young. Most people never needed it because they weren't living to 90 or 100.

For the middle class who did live long, they could get to use Medicaid if they made themselves poor.

Middle-class people used to make themselves Medicaid-qualified simply by hiring a lawyer to set up a trust to hold their property. Then, once legally destitute, they applied and received Medicaid coverage for admission to a nursing home.

Sometimes they simply gave away their property to children or a spouse ("Deed the house away, Dad, so the nursing home won't get it. ...")

This strategy worked decently until Congress got smarter.

Medicaid has gone through several transitions, instituting new qualification criteria known as "look-back" provisions.

These regulations scour a Medicaid applicant's finances to see just what transfers and other shenanigans the old person went through for the years immediately before the date of application.

Even newer laws provide for more extended look-back periods. Also, Medicare is entitled to sue a spouse or the estate of a recipient for reimbursement for nursing-home care.

Money has pretty much run out of places to hide.

Remember, no one's looking out for you. There are no more smoke and mirrors. In the blinding sun of the 21st century, we are now officially responsible for our own old age.

Even the super-tricky, high-power estate and trust attorneys agree: Forget looking to Uncle Sam as your insurer of last resort. You absolutely, positively need to get long-term care insurance. So shop and shop smart. It can be more reasonable than you think. What is not reasonable is to wait until you are uninsurable to begin the search.

Next time, I will outline the available policies, their contingencies, cost, waiting periods, inflation riders and all the other fun stuff. My goal is to give you the tools to speak the language with your insurance carrier so you do not make a mistake or get taken advantage of with coverage. Only you are really looking out for you.

Dr. Allen is president of the Associates in Veterinary Law P.C., which provides legal and consulting services exclusively to veterinarians. He may be contacted at (607) 754-1510 or info@veterinarylaw.com