The economic downturn has forced seniors that once could rely on selling a home and investment income to pay for the costs of senior housing and care to look for new sources of funding.  One funding tool that is rapidly gaining attention is selling an existing life insurance policy in the Life Settlement market.  A Life Insurance Settlement is the sale of an existing life insurance policy, while the policy holder is still alive, in a straightforward process that takes 30-90 days.  The seller of the policy will receive a lump sum payment for their policy and will no longer be responsible for paying the monthly premiums. 

A life insurance policy is an asset that the owner can sell just like they would with any other form of personal property such as a home or stocks.  And just like selling a home, there are no restrictions or limitations on how much can be raised or what the owner can do with their money.  For people looking to raise money to cover the costs of senior housing and care this makes the Life Insurance Settlement an ideal funding option. According to a recent Wall Street Journal story about the growth of the Life Settlement market, there was over $13 billion in Life Settlement transactions done for seniors last year.  

To read more from the Wall Street Journal about the growth of the Life Settlement market, click here.

Members of the U.S. Senate have been working overtime through the weekend to get the Stimulus package, voted on in the House of Representatives, back in line with the level President Obama had requested.  The $920 billion level that the House passed, was $100 billion more than where the President and the Senate want it to be.   

Key in the bill is how much should be spent on Medicaid, and how to divide that money across all of the states.  Medicaid, which is the primary source of health care coverage for the poor, children and the elderly in the U.S., is typically one of the top three budget items in every state.  The stimulus package calls for almost $90 billion in federal funds to be sent to the states to spend on their Medicaid programs. 

Medicaid is the primary payor for residents of nursing homes, and the debate about how much to spend centers around if this money is being spent to support a social program or to help stimulate the economy.  On the one hand it is a social program: Medicaid is by definition the payor of last resort for the indigent and the elderly and has become the default funding mechanism for the vast majority of seniors in nursing homes across this country.  On the other hand it is critical to the economy: Medicaid is such an integral funding mechanism that the nursing home industry could not exist without it.  

If Medicaid funds are cut, that means seniors can not access the care they need and nursing facilities will face the prospect of shutting down or laying people off. In today’s world, Medicaid has become one of the most important budget items in both the federal and every state budget.  But, these tough choices will confront us again and again—families need to realize that fact and not just assume it will be there for them when they need it.

To read recent correspondance from United States Senator Olympia Snowe on the stimulus bill and the treatment of Medicaid, click the link below the picture.

To read up to the minute developments on the stimulus bill and any impact on entitlement programs for seniors, click the links below as they are added.

U.S. Senator Snowe correspondance.pdf (531.45 kb)

UPDATE February 10, 2009:

Senate passes $838 billion stimulus bill 

Both houses provide $87 billion in additional funds for the Medicaid program, which provides health care to the low income. But the House and Senate differ on the formula to be used in distributing the money, a dispute that pits states against one another rather than Republicans against Democrats.

UPDATE February 11, 2009:

Negotiators reach deal on stimulus bill

The new version includes help for victims of the recession in the form of unemployment benefits, food stamps, health coverage and more, as well as billions for states that face the prospect of making deep cuts in their own programs.

UPDATE February 16, 2009:

$787 Billion Stimulus Package Signed by President Obama

President Obama signed his $787 billion recovery package into law on Monday with a statement that it would “set our economy on a firmer foundation.”

The president said he would not pretend “that today marks the end of our economic problems.”

“Nor does it constitute all of what we have to do to turn our economy around,” Mr. Obama said at the signing ceremony in the Denver Museum of Nature and Science. “But today does mark the beginning of the end, the beginning of what we need to do to create jobs for Americans."