Americans DO worry about Long Term Care Costs and “Oops, I Did It Again ” (Brittany’s lesson on how not to write a will)

Americans Worry About Long-term Care Costs:

Americans have little idea how long-term supports and services are paid for, according to a new poll by Harris Interactive HPOL +0.26% and the medical publishers HealthDay. Yet, they are worried about the cost, believe most people should buy long-term care insurance, and also favor a new government program to pay some or all of the costs of LTC.

This poll shows the public’s confusion with long term care and who actually pays for it. Just as important, despite perceived vast political disagreements on so many things, it is interesting how similar Republicans and Democrats are on their thoughts (and misconceptions) about long term care.

For instance, although Medicaid pays for as much as 60 percent of long-term care costs, only about one in five of those surveyed believe the program is the major payer of these services. One-third think Medicare is the biggest payor, though the program pays for almost no LTC costs. Half think individuals pay the most. In reality, families pay only about one-fifth of the cost of paid services, though of course they do provide the vast bulk of uncompensated care.

When asked who should pay these costs, 29 percent said individuals and their families while 27 percent said the federal government. Interestingly only 9 percent thought state and local governments should pay even though states are already a major payer through their share of Medicaid. Fully one-third said they don’t know who should pay.

Republicans were much more likely to say paying for long-term care should be primarily a family responsibility while more Democrats and independents felt government should play some role. Still, only about half of self-identified Republicans said LTC should be primarily an individual responsibility while nearly one-third were not sure.

Only one-third of Democrats said government should pay most LTC costs while 20 percent said it should be a family responsibility. Another third of Democrats, like Republicans, were not sure who should take on this role.

Two-thirds of all respondents felt “most people” should buy long-term care insurance. Unfortunately, the survey did not ask people if they wanted to buy this insurance themselves. Also, the study did not seem to discuss or identify the costs of long term care insurance options or see how people responded to this question when presented with the cost of long term care insurance.

Regardless of political affiliation, respondents overwhelmingly favored a tax break to subsidize the cost of long-term care insurance. More than 80 percent of Democrats and Republicans supported this idea, possibly unaware that such incentives already exist.

The survey also asked if people were worried about the cost of long-term supports and services. Overall, 68 percent said they were very or somewhat worried. Women more much more likely to be concerned than men by 74 percent to 61 percent. By age, those least likely to be concerned were 18-24 (not surprising) and those 65 and older (very surprising). Those most likely to worry were aged 40-49.

The Harris HRS -0.2% survey, of 2,028 adults, was taken in September of 2013.

Most surprisingly, nearly 70 percent of respondents favored a new government program to pay at least some long-term care costs. Half of Republicans, 80 percent of Democrats, and 68 percent of Independents supported this model.  This is extraordinarily interesting to me since if you listened to the news and the opponents of the Affordable Care Act, most Americans are against being forced to purchase insurance to spread the risk so the cost of care is lower for all.  Isn’t this (albeit imperfectly) what the Affordable Care Act is intended to do.  In Pennsylvania and many other states we are forced to purchase car insurance for the benefit of others.  While personal freedom is one of the best things about this country, if people are truly educated where certain services are best purchased by everyone to keep the costs lower and spread the risk.  That is the most basic concept of insurance.  So maybe, just maybe, if people really understood how the spreading of risk works, maybe there are certain types of insurance that we can agree that everyone must have to lower the costs for all.

Americans recognize that long-term supports and services are a major financial risk, yet they are deeply uncertain about how long-term care is paid for today and what to do about it. And they seem open to some sort of new government program to help, perhaps one that is insurance-based in some way. The only question really is can the private market or the government come up with a plan that spreads the risk

Do It Yourself Wills Revisited: Oops, I Wrote My Own Will and Screwed Up, Again! (Sung by Brittany Spears, Esq.):

Courts resolve ambiguity in conflicts over wills and trusts  by attempting to respect the “intent” of the testator or settlor, even when such intent is poorly expressed in a written document.  But, there are often lines beyond which courts will not go to supply missing words or resolve ambiguity.

In Estate of George Zeevering, decided by an intermediate appellate court in Pennsylvania on September 26, 2013, the court was facing an incomplete do-it-yourself will.  The testator had not consulted with a lawyer.  He attempted to make specific bequests.  One bequest was deemed a “nullity” because the property was already titled in the names of the decedent and a son as joint tenants with right of survivorship.  The father also stated that the “failure of this will to provide any distribution” to three of his daughters was “intentional.”  However, there was no provision made in the will for the residuary estate (what is left over after the specific gifts are paid) which totaled over $200,000.00.

The appellate court upheld the distribution of the residuary to all of the children (including the 3 daughters): “[I]t was proper for the orphans’ court to conclude that where the intent of the testator is not clear from the will, where the will fails to dispose of a decedent’s entire estate, and where the will fails to provide a residuary clause, the residuary estate is to be distributed under intestacy laws.”

In this case the intestacy laws appeared to be contrary to the wishes of the decedent but the failure to put a residuary clause in the will frustrated his intent because, while the Court likely believed he did not want his daughters to get anything, he did not tell where he wanted his other property to go.  Lacking any direction the Court did what it should, it did not try to guess what he wanted to happen to his property.  The judge let the statute that directs property (the intestacy law) disposition when there is no will or the will is silent as to what the testator wants to happen to certain property.  In this case the intestacy law gave the property to his children, which included the daughters he wanted to disinherit.

As stated many times, there are things you may want to try yourself for fun or to save money (baking for instance) and there are things that may be best left to the experts (preparing legal documents and appendectomies).