The oldest man in the United States died this past weekend at the age of 112 years and 204 days.  George Francis was residing at a nursing home in Sacramento, CA at the time and he is survived by 18 grandchildren, 33 great-grandchildren and 16 great-great grandchildren.  He lived through three centuries as he was born in 1896.  Mr. Francis was not the oldest person in the world, nor was he the oldest person in the United States.  Those distinctions belong to a 115 year old woman living in Portugal and a 114 year old woman living in Los Angeles.   

As we come to another New Year, it is always interesting to read about Centenarians and consider the thought of living that long.  But it is also important to consider the demographic and financial realities of the fact that people are living longer than ever before and life expectancies will continue to rise. In fact, average life expectancy from age 65 increased from 77.7 to 84 years for males and 79.7 to 87 years for females in the 60 year period from 1940-2000.  Life expectancy going forward into 2040 should add another 3 years on average for both males and females. The age group of 85+ is the fastest growing segment, and they are experiencing the highest gains in life expectancy on a percentage basis.  Further, the population of Centenarians (age 100+) more than doubled from 37,306 in 1990 to 88,289 in 2004. 

Important to note with all of the life expectancy gains is that the population of 65+ living in a nursing home accounts for 1,557,800 or 4.5% of the total cohort population.  Most people that move into an assisted living or nursing home are a surviving spouse, and to that end, the number of seniors surviving a deceased spouse triples when moving from the age segment 65-74 to 85+. 

With people living longer than ever it is absolutely critical to be planning for the costs of senior housing and long term care.  The reality is that a family could be covering those expenses for many years into the future with no way of knowing for exactly how long.   

To read about the life of George Francis and other Centenarians, click here. 

Post Script (1/3/09): on January 2nd the world's oldest person, Maria de Jesus of Portugal, died.  Gertrude Baines, age 114 and currently living in a nursing home in California, is now the oldest living person in the world.  To read about these Centenarians, click here.

As states all across this country prepare budgets for 2009, one thing is clear: revenues are down, but the need to spend is never down.  Every state is facing a fiscal crisis unlike anything in the past.  California, Nevada, New York, Rhode Island, South Carolina and Utah are all looking at freezing or even reducing the numbers of people on Medicaid in their states.  Some states will start making it even more difficult to qualify and then remain Medicaid eligible.  Requirements to reapply twice a year and lowering of income/asset ceilings will remove thousands of people from Medicaid programs across the country.  These actions are being pushed into motion as a direct response to the budget crisis in every state.  

There is less money to pay for Medicaid and more people trying to get on the program.  Medicaid is the single biggest payor of long term care expenses and hundreds of thousands of seniors rely on the program to pay for the costs of living in a nursing home.  What will happen when states are looking for ways to save billions of dollars?  They will push more responsibility back on the individual.  This shift has been taking place now for some time, but the impact of the economic crisis and the reality of the surge of Baby Boomers entering their senior years looking for Medicaid to cover their long term care needs is going to accelerate this issue.

People need to educate themselves about what Medicaid and Medicare will, and will not cover.  And in light of the this situation; what are other private funding options to consider?  It would be very unwise in today’s environment to ignore all of the signs pointing towards what the future of senior housing and long term care will look like, and not know the answer to that question.

To read more about the growing Medicaid crisis, click here (1) and click here (2).

A report released on December 15^th shows that $2 trillion in the value of American home owners evaporated in 2008.  A report released by the National Association of Home Builders in June of this year showed $500 billion lost in home values at that time.  But now, 11.7 million home owners are carrying mortgages considered “underwater” because they owe more on their homes than they are worth.  The combination of negative equity and a continuing surge of foreclosures flooding the market have caused the loss of home values in the U.S. to accelerate by a factor of 3X in the last six months.

Home values have been declining for eight consecutive quarters and with projections of foreclosures and continuing declines in equity “with no end in sight”; there is no projection yet for when the market will begin to turn around.  The problem is that the real estate market is already flooded with undervalued and foreclosed homes and there are many more to come in the months ahead.  Compounding this problem is the ongoing struggles on Wall Street and increasing numbers of unemployed.

Seniors and their families that are counting on the sale of their home and/or their savings invested for the future are being hit particularly hard by this culmination of negative factors.  When money from the sale of a home or income from investments can not be counted on; seniors and their families must educate themselves about financial alternatives to pay for senior housing and care.

Massive Wall Street losses since its highs less than two years ago have cut many retirement accounts in half, reports University of Illinois Law Professor Richard L. Kaplan.  The average costs of staying in an assisted living or skilled nursing property can be quite high; and with the losses on Wall Street combined with historic lows in the real estate market, the ability of seniors to afford care by means other than meeting poverty levels to qualify for Medicaid is quickly becoming impossible for many.  Events from this year impacting owners of long term care insurance polices have made that option less reliable and added fuel to the flames of concern shared by seniors everywhere. 

People want to continue their high quality of life even after it becomes necessary to leave their homes-- and to do so it will be necessary to understand every possible funding option available and be in a position to act when the time comes. 

Click here to read more on the UPI report.

A large number of long term care insurance policies sold by Conseco Insurance company a number of years ago needed to be moved to a state managed risk pool last month to ensure they would remain solvent.  The Pennsylvania Insurance Department took over 150,000 policies-- taking an action described as a “shocker”.  These were older policies that had been under priced when sold years ago and had been a drag on the insurance company’s revenues ever since. 

According to the Insurance Commissioner of Pennsylvania, policy owners impacted by this move should expect to choose between higher rates or reduced benefits.  With 8 million long term care insurance polices having been sold in the United States, it is important that every policy owner double check with their insurance company about the solvency of their policy.  Conseco receives one of the lowest ratings among the major long term care insurance companies (B+ by A.M. Best) and higher rated companies such as MetLife, John Hancock and Genworth were not involved in this situation.  None the less, all consumers should take the time to make sure they understand the condition of any company before they buy a policy or if they currently own a policy.

This is also an important reminder why seniors and their families need to do all they can to inform themselves of the various funding options available to help pay for the costs of senior housing and long term care.  With the impact of this economic crisis being felt on every front, knowledge and access to financial tools will be the key to making it through the coming months and years.

Click here to read more about the long term care insurance situation in U.S. News and World Report.

In response to the economic slump, growth of the Baby Boom population and pressure on state budgets, the federal government will allow states to begin charging premiums and increasing co-pays for those on Medicaid.  This is another warning sign to seniors and their families that they need to be preparing to take on more and more of the financial burden to cover the costs of senior housing and long term care.  As the growing population of Baby Boomers and seniors hits in concert with a shrinking economy, the pressure on the federal budget to support entitlement programs such as Social Security and Medicare and on state budgets to fund Medicaid programs is creating more pressure to push back on citizens to carry more of the load.

Medicaid pays the vast majority of costs associated with the almost 1.5 million people receiving housing and long term care in skilled nursing facilities.  Medicaid is now moving in the direction of operating more like health insurance and by charging premiums will deflect a portion of the costs back on the individual.  And by charging higher co-pays, they hope to motivate people to be more cost conscious when spending Medicaid dollars.  Each state runs its own Medicaid program and will have discretion to set premium and co-pay amounts as they wish.

It is important that people understand these early warning signs of what is to come.  Federal and state budgets can only accommodate so much, and when dollars are shrinking while populations are growing it becomes pretty simple math to see that something has to give.  If history is our guide, then it will be the individual who ends up giving the most.  Now is the time to be preparing by understanding the funding options that are available to help cover these costs as they become more and more the responsibility of the individual.  

Click here to read the New York Times article about the Medicaid situation.