The very popular Medicare Advantage coverage that seniors elect as part of Medicare to cover medical and prescription drug coverage became significantly more expensive in 2010 than it was last year.  Reflecting cut backs in government funding, private insurers who offer elective Medicare Advantage coverage decided they would raise rates this year instead of reducing services. 

This is bad news especially for the 8.5 million seniors currently enrolled in these cost saving programs.  The premiums increased by more than double for some seniors that are enrolled, and many fear they can no longer afford to maintain their coverage.  These increases are another blow for President Obama’s goal for healthcare reform this year, because additional Medicare and Medicaid cuts are a major part of how the costs of reform would be paid for.

This is further evidence that pressure on the individual is increasing to shoulder more of the costs of their own healthcare and long term care. "These premium increases fit within a broader trend of increased financial pressure on the insured," said Lindsey Spindle, a vice president of Avalere Health, a data analysis firm that produced the statistical study. "We see very large premium increases and a continued upward creep in how much out-of-pocket expenses beneficiaries are expected to pay, such as copayments."The bottom line of this story is simple-- the need for private funding solutions for health care and long term care costs are going to pushed back on the individual more and more now and into the future. 

To read more about the increase in Medicare Advantage premiums, click here.

There are over 60,000 assisted living and nursing home properties throughout the Untied States.  More than 2,000,000 people reside in these properties, but over the last ten years the differences between assisted living and skilled nursing have become less distinct.  There are a number of contributing factors to consider: pressure on Medicare and Medicaid budgets, private pay services such as Alzheimer’s care, personal tastes of the aging Baby Boomers, and the economics of the facilities themselves.

Assisted Living facilities have increased the level of service and care provided to be more competitive, and Nursing Homes have added private pay services and higher end living arrangements to be more competitive as well.  The Baby Boomers are driving much of this evolution because they are a more affluent cohort than generations past, and their lifestyle expectations are very high.

Additionally, Medicare and Medicaid budgets are being reduced and the thresholds to qualify are being raised higher.  As more seniors enter the senior care stage of their lives, the access to public funds will become scarcer as the options for privately funded housing and care is on the rise.

For people to come even close to meeting their expectations for a high level of senior housing and care it will require a firm grasp of the various options available—and how to pay for it.

To read more about the blurring lines between Assisted Living and Skilled Nursing Home care, click here.

A report tracking Medicaid spending going back over the last seven years showed that Medicaid underfunded payments for services to all patients by $14.17 everyday in 2009.  Projections are that this alarming underfunding trend will get worse in 2010 and 2011.  The economic crisis has robbed state budgets of funds available to support Medicaid funded programs and as a result there was a national deficit of almost $5 billion.   

Medicaid funds at least 2/3 of all spending for nursing home care. Spending shortfalls of this magnitude threaten the ability of nursing homes to offer the highest levels of care for the most vulnerable populations.  Frustratingly for nursing homes and those in their care, state governments were given money in 2009 via the American Recovery and Reinvestment Act to make up this deficit.  But guess what—governments diverted the money away from providing the healthcare it was intended, and instead used the money to shore up their own budget deficits.   

As readers of the Life Care Funding BLOG know, we continue to bring awareness to the unavoidable trend of reducing the amounts of money that are available for Medicare and Medicaid.  And why is that?  Because we are now in the throes of an explosion of Baby Boomers reaching retirement age at the same time that our country’s economy is under siege and entering unfamiliar territory.  Washington, DC and 50 state capitols have no choice but to figure out how to make do with less. 

They have two tools to work with:

1.      Make it harder for people to qualify for Medicare and Medicaid, and--

2.      Reduce what is available for those that do qualify. 

What tools do seniors and their families have to work with? 

1.      Information

2.      Time 

People need to arm themselves with information about how the system works and what kind of funding options (and limitations) they have to work with.  And, people need to stop waiting until the last minute to plan for their inevitable time in long term care.  In one form or another, (home or facility based) as people age and/or become frail they will need someone to help care for them.  That care will cost money and that money has to come from somewhere.  As the government makes it harder and harder to access less funding, people need to prepare to bear much of the financial burden on their own.  To ensure quality of life and dignity when the time for long term care arrives; people must make the effort today to understand what kind of financial options are out there such as the VA Benefit, Life Insurance Settlements, Credit Programs, Reverse Mortgages, Long Term Care Insurance and other sources of private funding.

To read more about Medicaid budget deficits, click here. 

State of Maine Announces proposal to cut 10% out of nursing home Medicaid spending in 2010:

Governor Baldacci released his proposed FY 2010-2011 State budget Friday afternoon. As in previous years, the Departments of Health and Human Services and Education are being asked to bear the brunt of significant cuts including 10% rate cuts to some MaineCare providers including nursing homes and residential care facilities. Preliminary analysis shows that the cut to nursing homes is in the area of $26 million. It is harder to separate the hit to res care, but we estimate it to be in the area of $10 million or a little over $9.00 per resident day. The newest figures (Nov. 2009) from AHCA indicate that Maine currently underfunds its nursing homes by $25.5 million per year. This translates to an average loss of $16.20 per resident per day. So, it seems reasonable to estimate that the proposed cuts will double those shortfalls.

Demand to help seniors with the costs of senior housing and long term care continues to rise across the country.  In response,  Life Care Funding Group has begun adding “Network Partners” at the local level around the U.S. to support senior living facilities and work directly with families.

Starting in the Midwest with Jo Letwaitis, Founder and CEO of the The Senior Site, Inc., senior care experts are being endorsed to represent Life Care Funding Group and make Funding Solutions available to help more people.

In the coming weeks, more Network Partners will be announced in other regions of the country.  To learn more about how to access the Network Partner program, contact Life Care Funding Group at info@lifecarefunding.com.

To read the Network Partner announcement, click here.

Two recent reports add more evidence to the alarming trend of financial pressure being pushed back onto seniors and their families as they reach the age that the costs of long term care play a central role in their lives.  In addition to Medicaid cuts in the states and cuts to Medicare being proposed as part of healthcare reform, more money will continue coming out of seniors’ pockets. 

The annual MetLife Mature Markets Institute study tracking the costs of long term care in assisted living, nursing homes and home healthcare was recently released showing significant increases in costs over the last year: 

-         Nursing Home costs rose 3.3%

-         Assisted Living costs rose 3.3%

-         Home Healthcare costs rose 5%

-         Adult Day care costs rose 4.7% 

The increasing costs of long term care can be attributed to the most basic economic principal there is: supply and demand.  The economic crisis has slowed the construction and expansion of facility based care.  Also, more people requiring long term care are having a difficult time selling their homes.  As the population of seniors demanding long term care services of every type increases, the supply of options and dollars is decreasing—driving up the costs. 

In another alarming report, the costs of Medicare premiums will rise 15% next year. This will push the monthly Medicare premium above $100 for the first time in history.  The final outcome of this increase, or measures to offset the increase, is being debated in Congress as part of healthcare reform.  Regardless of the outcome, this will now become a yearly struggle as the population going onto Medicare is exploding-- and just when the country is least prepared financially to accommodate the demand. 

Supply and demand will become a recurring theme over the years as the growing population of seniors needing to pay for long term care confronts the harsh reality of both a shrinking supply of dollars and ability to deliver housing and care. 

To read more about the MetLife Mature Markets study, click here. 

To read more about the increase in Medicare premiums, click here.

Another sign of things to come for seniors in the 21^st Century: for the first time since the darkest days of the economic crisis of the 1970’s, seniors will not see a cost of living increase in their Social Security checks.  Combine this new development with proposed cuts to Medicare and Medicaid and the trend for seniors is becoming clearer every day. 

The realities of a global economic recession intersecting with explosive growth in the senior populations will create increasing pressures for the United States.  More people needing help (money), with less resources to go around (money), equals hard choices about how to help those who need it most (money).  Increasing emphasis on the individual to shoulder more of the costs of their senior years will grow quickly.  Moves to cut COLA’s, raise the minimum age for Medicare and cut Medicaid funding in the states will become more common occurrences. 

The Baby Boom generation is still in the early stages of moving into their retirement years and the amount of money required to support these programs is already overwhelming. As economic and demographic trends over the coming years continues to challenge the governments ability to keep pace, seniors and their families must do all they can to prepare themselves financially for the costs of retirement and the even greater costs of long term healthcare. 

To read more about the COLA freeze for Social Security, click here.

This past Friday we received a call from a woman who had just learned about the Life Care Funding option from the assisted living center where her husband had recently moved.  Her husband is 79 with advancing Alzheimer’s and they moved him into a care facility two months ago.  Covering the costs have been a stretch for her and her adult children and the facility told her that if they have a life insurance policy they could get money for it now through a life insurance settlement by contacting Life Care Funding Group. 

The good news is that they have been carrying a $100,000 life insurance policy for the last 25 years.  The bad news was that because of the financial strains they are under, she stopped paying the premiums two months ago and the policy was going to lapse (cancel) that next Monday.  She had called the insurance company and asked them what her options are and they told her she had two: pay the back premiums to keep the policy in-force (active), or let it lapse on Monday.   

They never told her she had a third option, sell the policy in the open market through a life settlement and receive as much as 40% of the death benefit right now in a lump sum payment.  After receiving premium payments for 25 years, the best option for the insurance company would be for the family to let the policy go now that her husband has Alzheimer’s and is facing a shortened life expectancy.  In that case, they keep every penny paid to them in premiums and never have to pay anything to the family! 

But fortunately for this family, we spoke to them before the policy lapsed and the insurance company received the premium payment in time to keep the policy in-force (the insurance company was hoping they would not see that check arrive in an overnight packet).  We are now working with the family to take their policy out to the life settlement market to receive multiple bids for the policy.  Based on their husband’s health, the potential for them to receive anywhere from $20,000-$40,000 is very real.  That amount of money will get back the premium payments made over the years, and will make all the difference in the world to their ability to provide the best possible housing and care for their loved one. 

Too few people know about the life settlement option. We hear from families every day who have let a policy lapse, or are about too, and they lose out on their opportunity to receive money that could help their loved ones during a time of crisis.  As the country debates health care reform and contemplates the imminent long term care funding crisis, the life insurance industry must stop suppressing the legal rights of policy owners.  Two states have passed laws (ME and WA) requiring life insurance companies to inform citizens of their legal right to a life settlement.  Let’s hope the other 48 states start listening and do the same.

To read more about the legal rights of a life insurance policy owner, click below:

Legal Rights of Policy Owners.doc (31.00 kb)

66% of residents in an assisted living facility in 2009 reported being the primary source of payment for the costs of housing and care.  The impact of the economic recession has hit seniors and their families hard with an almost 60% drop in the number of families able to contribute to a loved ones care.  The trend of more seniors being solely responsible for the costs of housing and care will only be made worse as the combination of a slow economic recovery and additional cuts to programs such as Medicare and Medicaid are being contemplated as part of President Obama’s health reform plans. 

Over the coming years these economic and political realities will be exacerbated by the baby boomers reaching retirement age and then their “senior living” years (shifting to use of home healthcare, assisted living and skilled nursing home care).  Cuts to programs such as Medicare and Medicaid may be shortsighted. During a recent interview with healthcare policy expert Gail Wilensky on PBS’ News Hour (Aug. 10), her insight into the impact of these cuts was very specific: 

GAIL WILENSKY: The notion that you can cut $500 billion to $600 billion dollars out of the Medicare and Medicaid program and think that you don't risk affecting access for groups of seniors is simply incorrect. That is a whole different story. What most of the ways to get money quickly, which is what you want if you want to use that money to expand insurance coverage for people don't have it, are sure ways that Congress will score as being a real saving, and that means whacking reimbursement. They're going to lower reimbursements for a nursing home. They're going to lower reimbursements...

JUDY WOODRUFF: For nursing homes?

GAIL WILENSKY: ... for nursing homes, for home care. They're going to reduce the amount hospitals who have high re-admissions for certain illnesses have. Now, do you want to go after some of these in reforming the delivery system? You do in careful and slow ways, but just whacking reimbursement, which is the only way to get quick savings upfront, is a whole different matter.

There is no doubt that our nation’s healthcare system needs reform, but before cutting real dollars to provide care to our nation’s most vulnerable population, areas to concentrate on first are administrative waste, unnecessary medical testing, frivolous law suits, and excessive drug and medical equipment costs.  Regardless of the outcome of this latest attempt to reform healthcare, seniors and their families must prepare themselves to shoulder more and more of the burden of the costs for senior housing and care.  Private funding sources are going to continue to become the rule and not the exception as time moves along. 

If you want to add your voice to the healthcare reform debate, click here to learn how on the American Health Care Association (AHCA) website.

NYT: Seniors living in retirement communities react to the President's health reform proposal

The federal government plans to cut $16 billion of funding out of Medicare for nursing home care over the next ten years.  In addition, the U.S. House of Representatives will vote on cutting $45 billion out of Medicare funding as part of their proposed health care “reform” legislation.  The combined impact of these cuts with the shrinking dollars in every state to fund Medicaid budgets is the greatest threat to quality of care for our nation’s seniors in history. 

Seniors rely on Medicare to fund short term rehabilitation services provided by nursing homes, and many rely on Medicaid to fund long term residency in a nursing home.  The amount of money these programs pay barley cover the true costs of housing and care, and nursing homes are forced to operate on dangerously thin margins.  Further cuts to their budgets will have an immediate and negative impact on the quality of care that it is possible to provide.  Nursing homes and long term care services are often large employers in local communities, and these cuts will also have a negative economic impact for towns across the United States. 

Studies have shown that many people are unaware of the differences between Medicare and Medicaid and how long term care in a nursing home or assisted living environment is paid for.  As government budgets continue to be stretched thin by shrinking tax dollars and a growing senior population, the burden to pay for the costs of housing and care for seniors will continue to be pushed back on the individual.  The unfortunate truth is that as more and more baby boomers age and require long term care, their will be fewer dollars available to pay for these rising costs.  Every family should take the time to understand how the system works, and put their own plan in place for how they will pay for themselves, or for loved ones when the time comes.

To read more about budget cuts, click here.

UPDATE: Medicare cuts could cost 1,960 jobs in Florida

The Governor of the state of Maine signed into law a bill requiring life insurance companies to inform citizens of the state their legal right to engage in a life settlement instead of allowing a policy to lapse or be surrendered.  Maine and Washington State are now the first two states to pass this important consumer protection law.  Many more states, including Kentucky and Indiana, are currently considering the laws adoption.   

The consumer protection law also prohibits insurance companies from engaging in anti-consumer activities.  It will now be illegal for insurance companies to stand in the way of people who would be better off to sell their insurance policy through a life settlement, instead of surrendering it back to the insurance company for much less money or allowing it to lapse.  As much as 90% of life insurance policies issued are allowed to lapse every year, and to date, life insurance companies do not inform people of life settlements as an alternative option.  This law will begin changing that intentional oversight around the country.  

"These new consumer disclosures and consumer protections represent a substantial step forward in ensuring that seniors who are faced with the lapse or surrender of unaffordable or unwanted life insurance policies can sell their policies and are not prevented from doing so by the acts of big insurance companies," said Doug Head, Life Insurance Settlement Association (LISA) Executive Director. "These measures respond to the documented evidence of carriers trying to block life settlements through threats to insurance agents and providing misleading information to seniors."  

With seniors and baby boomers facing economic challenges and shrinking government dollars to help pay for the costs of senior housing and long term care, the need for alternative financial options is at an all time high.  Options such as life insurance settlements, which can pay out as much as 500% more than the cash surrender value of a policy, have been suppressed by the life insurance industry because it cuts into their profits.  But now, instead of allowing a life insurance policy that has re-sale value to just terminate, seniors can tap into that value through a life settlement.  With this law passing, the citizens of Maine and Washington will now be informed of the life settlement option as a legal right to raise the most money possible through their valuable asset-- and soon many more states around the country will benefit from this important consumer law.

To read more about the life settlement consumer protection law, click here.