NYS Senator George Maziarz, Chair, Senate Aging Committee
NYS Assemblywoman Barbara Clark, Chair, Assembly Aging Committee
Public Hearing on Age-Related Issues - 3-3-00

Testimony of David L Coffelt - Long Term Care Insurance Consultant

Good Afternoon Senator. I am honored to finally meet you personally with a common area of concern that we have both been through with our Mothers. I am sure that we are more aware of the family issues and financial concerns than most of the average Americans who have not yet had to deal with an aged or ill loved one that may need some form of LTC services. Assemblywoman Clark, I am also glad that you’re here to listen to these issues in order to help us all pave the way on the work that still lies ahead for the benefit of our loved ones and ourselves who may require care someday. Weather we want to accept it or not, we all have to deal with these aging concerns that will affect all of our lives in one fashion or another. The sooner we are able to come to terms with this the better off we will all be.

For the record, my name is David L. Coffelt, a long-term care insurance consultant and a pioneer in NYS on LTC Educational Presentations for the past 14 years. I do know that several of the issues that will be discussed today are financial. I would also like to inform you that I am a Certified Instructor for NYS to teach and train insurance agents for the State's required CE programs. One of the courses I do teach that is really in my heart is on Medicare, Medigap, and LTC Insurance.

Co-Chairmen and Chairwomen on Aging, I hope that what I have to say today does not fall on deaf ears, or no action, as other public hearings had gone that I had the opportunity to address which for the most part stayed as status quo. The previous hearings that I have attended over the years were all related to some of the same issues that we are discussing again today.

Before I go on, I would like to dedicate my outline, our common concerns, my suggestions, everyone's thoughts and hopefully some new opportunity for us all, to my Memory of my Late Mother, Benita Coffelt. Mom was in a Nursing Home here in WNY for 13 years from her age of 57. Mom passed away this past Memorial Day. With Mom's passing I have made a Web Page that some of you have reviewed that I have dedicated to Mom's memory which outlines the need of education on long term care financing.

I know 1st hand that a Mother can raise 7 children, as I had six siblings, however we all know that 7 children and our Spouses cannot take care of Mother. I do not have to go on with the Horror Stories at this point as everyone here in this meeting knows of similar stories so many will be able to at least identify and I do not have to go into the related details. However, I will say that as a former caregiver the emotional, physical and financial tragedy that occurs is too overwhelming for many including myself. When one suddenly becomes a caregiver it does effect that person in all other areas of their life and you cannot, as you are personally aware Senator, put a price on the devastation that occurs.

I am quite sure that the majority of all that will testify today will address the issue of needing more funds, needing more services, needing more something in order to continually serve the Seniors of our communities which will only increase in need over time. I am going to try to take about 20 minutes of notes that I have and cover them in the few minutes that I am allowed.

The problem that is too often overlooked is that as we know within the LTC Industry, when our loved one needs care there is a price to pay. Not only a price but a very costly price that most Americans cannot afford to pay for the type of care that their loved one may need weather this be Home Care, Adult Day Care, Assisted Living, Personal Care or Nursing Home Care.

Today, we as a Group need to ask ourselves these questions? Are Mandate's Increasing? Do more Seniors Need Care? Are more families losing their life savings? Are the Providers of services losing more money? Do Employees who provide care earn a decent wage? Do our Employers lose productivity? Do some Employees quit their jobs to become caregivers? Is funding and money the reason of this meeting? If what I just stated was all a big yes then what is the answer folks? If you cannot figure out how to fix this problem then maybe I can suggest how and I believe I will. I know when I finish this outline I will be hitting a big nail with a powerful hammer and that I know I can help solve some issues.

I cannot stress enough of the need of educational programs on LTC Options to be installed now. Not after the families are affected by a sudden illness and then what happens is too many times families are shocked to find out that their life savings are now at Risk to pay for one's own care under the Medicare, Medicaid Laws.

When we take a look at the traditional ways of paying for care in our society (Which are primarily Private Pay and Medicaid) and then we calculate the number of people that will need care in the future, then what I am looking at in my mind, and I am no Genius, and I am sure many of you see the same problems is that we have a broken system to pay for LTC services that cannot and will not be fixed under our current payment system and regulations and the outcome will only get worse.

The current system and regulations will continually make families go broke. The reason why? Lack of planning, denial, other excuses, children will take care of me, Gov't will take care of me, etc. and so forth. Now the picture looks like due to the fact that most families are currently uninformed, or refuse to believe, or simply do not plan for the need of LTC services ahead of time and then the mandates that are eventually passed on to us as taxpayers when one either currently is, or does become broke will only eat up a larger piece of the County and State Budget that will eventually reduce payments for other programs and services that also must be paid. Where in the world are the future monies going to come from to prevent our children and current systems in place from also going bankrupt?

I will go back and recite some of the outlines that have been previously been recorded by my personal testimony on March 11, 1991 to the Chairperson of The Pepper Commission Report here at the Erie County Chambers. The Chairman then was Mr. Leonard Lenihan, Erie County Legislator Majority Leader, and my testimony was on these same issues 9 years ago.

The Pepper Commission Report studied and reviewed the issues we are currently dealing with today and suggested that there needed to be a change to the Nation's Fundamental approach to financing LTC by utilizing the Private Sector for funding as long as it was fair and equitable to all parties. What Private Sector? The only Private Sector we all know of and have known of forever that will absorb a risk like all other risk are absorbed is the Insurance Industry. So what happened with the suggestion of the Private Sector? No one within the system cared about the educational needs for the Seniors at Risk and never properly funded any educational campaign for the benefit of Seniors and Families. However there seemed to be no problem when the County Mandates for Long Term Care increased by Millions or more funding for services were allocated in one form or another for Millions more. The continuance of this Band-Aid approach of funding for services is catching up with all of us and the bleeding must be slowed down somehow.

Studies that were outlined and addressed under the Pepper Commission Report of 9 years ago was Bill # A-9129, which was to provide education, counseling, and advocacy to Senior Citizens in the areas of Health and Long Term Care Insurance. The purpose of this education reform was to inform Seniors and Families what they are and are not covered for with LTC Services. The point was to make sure people were aware what LTC Insurance is an alternative to LTC funding options. By outlining one's financial consequences they would face if they tried to relied on Medicaid is how LTC Ins might be promoted as a benefit for Seniors and their families. That is all, just let them know there is a choice. By doing so, there would be many that will take advantage of this extra security and peace of mind and eventually spread the associated risk.

The sad truth of the matter is the lack of education provided to the Residents of NYS. The need of education on these matters is crucial not only to the families asset base, but also to the providers of services who cannot continually rely on and absorb the reduced payment structure under Medicaid who is usually the primary payor of services for Institutionalized Care.

I do not understand the Big Secret that many providers have! Secret being - we don't need your services of education on LTC Finance because we might be construed as endorsing you and your product. Well let me ask you something folks? Who do you wish to be paying for the services you provide to families down the line, Medicaid Mandates and cutbacks and regulations, or me and my product, which is a form of Private Pay? Doesn't everybody want and need Private Pay. My God, don't the people in the industry understand that the financial benefit is for them for the services they render? Now by utilizing the Insurance Industry's Strategy, the cost of LTC Services would be spread across the board to several people instead of increased mandates with less people. If we are trying to address the economic cause and affect, I would assume that the spread of cost to the private sector is more affective than the current increased mandates we see today and will see more of tomorrow. It is about time we wake up and realize the true benefit of this type of funding element for our own prosperity and growth.

So now after the Pepper Commission Report was addressed, the recommendations were sat on for 5 years with nothing happening. Then all of a sudden there were more financial concerns that appeared. So what did we do about it? Well we had more hearings and NYS even put together a task force on LTC Financing. In May of 1996 another outline was put together by the NYS Task Force on LTC Financing that was Chaired by Dr. Barbara DeBuono, Commissioner of Health.

What were their recommendations? Let's take a look and see.

Dr. DeBuono headed, chaired and appointed a Task Force on Long Term Care Financing and published a report titled Securing New York's Future. The Report was finalized in June of 1996 and Dr. DeBuono's report from the Task Force's findings and recommendations were sent to Governor Patacki, Senator Buono, and Assemblyman Silver. These recommendations were again more studies, more ideas, and more costs with no or very little follow through. Studies were thorough, Ideas were shared and careful recommendations were outlined by several Professionals in the field of their expertise and many suggestions made were great ideas.

In Particular the following suggestion was a wonderful idea that seems to miss its mark and is costing us all Big Time now.

Section V Page 14 of the Securing New York's Future states the following:

Recommendations of The Task Force.

The State should pursue three complementary financing strategies to increase personal responsibility in paying for long term care services, while preserving Medicaid as a safety net for the poor and those who have fulfilled their obligations by providing the appropriate amount of private funding.

The State should ensure the development of service delivery approaches that appeal to the private sector and allow for Medicaid to participate in an inherently cost effective manner.

The State should facilitate a public education campaign in partnership with consumers, providers, and insurers, to encourage the purchase of long term care insurance and the selection of appropriate services.

If we all believe the same was as the current Candidate's for President also believes that quality, affordable, accessible health insurance for all Americans is a top priority and that the purpose of insurance - that is, to spread the risk as broadly as possible is true. Then we all know that healthcare is a shared responsibility, which in part means that we all pay in for the day when we have to draw upon our insurance, then how is the risk spread with the cost of long term care in our Society?

What has been used too often is the Medicaid eligibility for many of the wealthier people who in times past has used the legal system to their advantage by using the Trust and Transfers rules and regs to get their care paid for. They have used the system to their benefit and have shifted the associated costs to us as taxpayers. Is this what the safety net of the Medicaid program is? Safety for the wealthy and Indigent? What about the majority of us who are called the Middle Class? I certainly hope this is not the same safety net that is there for the middle class because down the line this safety net will certainly burst. What usually does happen for most of the Middle Class Seniors are that when they need care, they lose their life savings and then rely on the Medicaid Program which is our safety net. It is not fair but that is just the way it is, unless one has a plan in place!

If we all want a LTC Payor System that is patient-driven, not government-run, that leaves care decisions in the hands of physicians and families instead of Medicare and Medicaid Regs, Reimbursements and Cutbacks, and that offers more and better choices to consumers, primarily funds for Home Care, Adult Day Care and Assisted Living and if we all believe every American should have access to quality, affordable health care by giving consumers better information about health care plans, providing more choices such as Long Term Care Funding Options, tax law changes to allow the average person the same tax write off on their Federal Tax Return for the purchase of private LTC Coverage that Companies currently enjoy as a Business Expense write off I would think that the educational format would help more people understand the associated risk and encourage families to manage the associated risk themselves through the Private Sector of the Insurance Industry. It would encourage and promote the benefit of private insurance among millions of American families who do not have long-term care insurance and are particularly vulnerable to the enormous expenses of long-term health care. At the same time it would provide more of the "Private Pay" rate to the provider of services so they are able to pay their Staff and support with a quality wage and still make a profit.

If you recall, NYS Legislation passed and approved the NYS Partnership for LTC in March of 1993. NYS is only one of four states in the Union that has a Partnership for LTC Financing. This Program is now 8 years old and has a paltry total of 24,499 policies on the books through 9/99. That is an average of about 3000 policies a year. There were a total of 42,387 applications received over these past 8 years and only 37,212 were actually processed. Of the 37,212 NYS Partnership Policies processed only 30,951 were approved for coverage. This leaves the balance of 6,261 applicants, or 17% that applied for a Partnership that were denied coverage because of current health status. I am sure this is because when the sudden illness occurs and families are trying to figure out what to do, they now become aware of the Partnership for LTC and decide to apply. Well, as we all know it is now too late to transfer this cost and I am sure that many would have applied for coverage ahead of time if they knew what was available. I know that many of the State's Office of Aging Employees DO NOT even know what the NYS Partnership program is, or if they do, they do not know how it works and they are not promoting the program to inform and benefit the Seniors they currently represent. If the State and County Employees who represent the Elderly are not promoting LTC Financing Options then this is where the problems begin.

I was invited to Albany a couple of years ago to present the NYS Partnership for long term care to all of the State Reps that present the Preretirement Seminars for State Employees throughout New York State. The Director of the NYS Retirement System Educational Programs, Ms. Wanda Willingham and all of the Trainers for the NYS Retirement System also DID NOT KNOW WHAT the NYS Partnership or Long Term Care Insurance was. I had noticed a brochure of the Partnership in the Retirement Office in Albany. I picked up the brochure and at the beginning of my meeting I had asked all of the Trainers if they were aware of what this brochure of the Partnership was. No one had an answer for me. If figures! Obviously they do not know what these funding options are. Why is it that the Trainers who are in contact with State Employees a year or two before one retires are not informing the State Employees of LTC Financing? How can NYS allow the people who are in these positions to inform other people of important retirement issues not know themselves of what is available for LTC retirement protection? By at least informing the Employees at these State Retirement Meetings of the risk and the potential need of LTC Services what they should be aware of with the LTC financing options, I am sure will reduce some of the future mandates of LTC Services. By doing so will help protect some families from financial devastation. This currently is not being done and someone is missing the boat. Why is not the educational format of LTC Financing Options currently being presented at Senior functions and Retirement Programs that the City, County and State oversee? Makes no sense whatsoever!

I do not see any public education campaign installed to any degree that has been recommended by previous studies several times. Do not even think that a State Brochure on the NYS Partnership Program is an educational piece that Seniors can understand. If the State Retirement System Trainers do not understand a brochure on LTC Funding then I am sure that you cannot expect the average Senior Citizen to understand either.

Many times over the years when one does becomes ill I have received that 1st phone call from a family member or family Attorney wanting to buy LTC coverage. Of course I know it is too late yet the family had some hope of trying to protect the assets and this is usually only after they find out that the care must be paid by them as they are not MA Eligible. So now I am suppose to be that lifesaver for someone after the fact. Isn't that usually the case?

Recent studies and press releases and news articles continually point out the huge financial losses that occur to both families and companies. To Highlight recent studies as of two months ago shows that a family caregiver will lose $19,500 of annual income and a total of $660,000 of life time benefits in wages, retirement contributions and social security over their lifetime. US Companies will lose productivity between $11-29 Billion annually due to employees becoming caregivers, which reduces productivity and overhead. All of these are losses that are never recaptured in any way.

Where did the "Pepper Commission Report" and the "Securing NY's Future Report" with no Education lead us? To Where we are today, asking for more funds for more services? With the additional increased mandates that is added to this equation does in fact demonstrate the suggestions of the Pepper Commission Report on LTC funding alternatives to be true and accurate way back in 1991. However the Bills and Recommendations that were introduced under the Late Claude Pepper and Dr. DeBuono's Task Force were not enacted upon and now the system is paying the price by increased costs, lower reimbursements for facilities, more families becoming impoverished and everyone looking for more funding. Is this simple because there has not been enough education on LTC Financing so that families could at least have a choice of where to receive their care and the burden is now too big for the system to continually handle financially?

Because of the non action of education and advocacy for LTC Funding Options that was suggested and not implemented, and the current financial concerns for the providers of services does show there is currently not enough of the private sector's funds in place to help offset the providers of services current and future costs.

The need of education on choices, benefits and associated cost are again the key component. How our system pays for services and who's finances are at risk and what one can do to protect themselves from financial devastation and still maintain their independence is what needs to be explained. It really is that simple. Of course if there were tax incentives approved and explained would also encourage and promote the sale of LTC Ins in order to spread the risk.

How do we do this?

I would strongly suggest a few things. I also would love to be part of, or be funded for, the immediate Implementation and Study of an educational campaign to honestly educate Seniors, Families, Employers, Employees and others of their LTC funding options.

We do this a couple of different ways.

I would strongly suggest a few things. I also would love to be part of, or be funded for, the immediate Implementation and Study of an educational campaign to honestly educate Seniors, Families, Employers, Employees and others of their LTC funding options.

We do this a couple of different ways.

1. Make it mandatory for every person who applies for their Social Security Benefits to also sit through a short meeting on LTC Financing Options for their understanding. At least a person can make a choice weather to participate of not. Give them the knowledge they need ahead of time, not the heartache and devastating news after the fact.

2. Allow me the opportunity to educate all of the Directors of the NYSOFA and Senior Services and every County and City Senior Director of what LTC Choices their Employees and Senior Members need to be aware of in order to have them help promote the need of education in their communities.

3. I would suggest that you inform every State Leader on the Aging and Finance Committee the purpose of my outline and let them put this educational program on their agenda. Hopefully this would allow me, or someone with my knowledge and dedication to present this subject material to their Constituents in order to promote the suggestions of the Late Claude Pepper. Maybe by at least trying the recommendations that were outlined in 1991 and as recent as 1996 under the State's Task Force on LTC will help transfer some of the future cost to the private sector in order to ensure there is still some form of alternative funding for all.

4. Have every EAP that represent Companies and Unions attend a workshop on LTC Funding Options. Let them see and explain to them the emotional issues that their employees are trying to deal with such as the guilt, frustration, sadness, fear, elder abuse, neglect, chemical dependency and alcohol use. Let the EAP's understand the emotional side and the fears that employees have to deal with when a loved one needs care. The EAP's would be able to better inform their Employees and members of the alternative funding options so their members would not have to go through all of this alone which is what usually happens.

By structuring what I have outlined would have many immediate and long-term benefits. I know that by providing education on LTC Financing to organizations I would be able to help preserve our Safety Net for our indigent. At the same time the educational process would allow Middle Class families an informed choice in order to afford quality long-term care services where and when they are needed which is primarily home care. This would allow many to transfer of LTC Financial risk to the private sector. Additionally, we would be able to assure the private pay status that the provider of services are looking for in order to be paid a rate that would be consistent for them to attract and maintain a quality workforce who are taking care of us and our loved ones and still make a profit.

I look forward to answering any and all questions and I hope that my suggestions do not fall on deaf ears again. I am looking forward to personally being able to help promote the benefit of LTC Financing to the audiences that you would like this educational information on LTC addressed to.

In Closing I thank the Chairman and the other Speakers for hearing and listening to my comments and suggestions. I look forward to working with the Senate and Assembly and providers of service by helping to educate our Seniors, Families and Employers on this growing need of LTC Financing which will help alleviate several problems and concerns for many.

God Bless.

David L. Coffelt, 4 Lucks Lane, Warren, PA 16365
Phone 814-723-9663 Fax: 814-723-0175
Toll Free VM 800-861-0402 Ext 2920
Email: dpoo1@penn.com or dpool1@aol.com
Home Page: http://www.geocities.com/WallStreet/Floor/2821