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Hawaii legislature proposes LTC benefits for seniors

January 22, 2016
by Nicole Stempak, Associate Editor
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Hawaii could offer long-term care (LTC) benefits to seniors, the first state in the nation to do so.

Rosayln Baker (D-Maui), chair of the Senate Commerce, Consumer Protection and Health Committee, introduced legislation Thursday for the rapidly growing senior population. Every person who files Hawaii state income tax for 10 years would be eligible for a benefit of $70 a day for up to 365 days.

Those 365 days could be spread out over several years. The $70 benefit could be used to pay family caregivers, in-home aides or defray the cost of safety equipment, such as walkers and ramps. The benefit amount is expected to increase by about 3 percent annually to account for rising care costs.

"Our target was to look at what it would cost to help someone get four hours of home or commuity care," says Lawrence Nitz to The American Prospect. Nitz is a political science professor at the University of Hawaii at Manoa who conducted research on LTC financing for the state. "Seventy dollars means you could plan to go to work, you could take time to meet your child's teacher. It is enough to help people avoid losing their jobs while still balancing care responsibilties."

Benefits would be triggered once someone requires assistance with at least two activities of daily living or suffers from severe cognitive impairment, the same as with private LTC insurance. Benefit funding would come from a 0.5 percent increase in Hawaii’s general excise (GE) tax, a tax on the gross income of most Hawaii businesses. State officials estimate tourists could finance about one-third of the program’s cost. 

The program would begin paying beneficiaries five years after it begins and must remain financially solvent for 75 years.

Hawaii's 65 or older population is growing four times faster than the total population, according to U.S. Census data from 2014. Island culture has a tradition of honoring and caring for their kupunas, Hawaiian for elders.

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The proposal is not really Long Term Care. $70 a day for one year sure helps ... however a few things need to be done. First, the State of Hawaii is one of only a few states that has not authorized the federal/state LTC partnership program. Partnership LTC policies provide dollar-for-dollar asset protect in the event a person spends through all the money in their LTC policy. This needs to be done first. This will help people with savings get a plan in place ... the state knows the chance of that person spending down assets and becoming a Medicaid person is much less. This helps the state's future budget. Then, this proposal needs to be mean's tested. As a benefit for those with little or no assets this will give those people a chance to stay home longer. Also, a means tested program will lower the cost for the taxpayer. This is a common sense approach to address the big concern. The state could also make the deduction of qualified LTC policies easier and available to more people.