My grandfather and his three brothers all served in World War II.  My other grandfather served in World War II and Korea.  My uncle served in Viet Nam.  All of them saw active, combat duty and all returned safely except my uncle who made the ultimate sacrifice for his country. 

On today’s Veteran’s Day it is important to take a moment and honor the sacrifices that so many have made, and continue to make today, for this country.   Many of those who have served as young men and women are now seniors.  They gave much to this country and in comparison asked for little in return.  Today, they again are facing great challenges in the form of an unstable economy and a long term healthcare system that can be too expensive for some to access. 

Fortunately for our veterans, there is a financial program offered by the Veteran’s Administration that will help pay for the costs of long term healthcare.  The Veteran’s Aide and Attendance Benefit provides financial support for veterans who served in active combat duty on foreign soil. 

The program work like this: 

VA Aid & Attendance Criteria

· Veteran would have had to serve at least 90 days of active duty with at least one day served during an active time of war.

· Veteran or a surviving spouse (or married couple) would have to have less than $80,000 in assets (excluding a primary residence and a vehicle).

· Veteran or a surviving spouse must spend the financial assistance on out-of-pocket medical expenses.

· Veteran or surviving spouse would need assistance with their activities of daily living.  

2009 monthly Aid & Attendance rates

• Surviving Spouse $1,056

• Healthy Veteran with Sick Spouse $1,291

• Single Veteran $1,644

• Sick Veteran with Spouse $1,949

If the family of a veteran is struggling today with the costs of senior housing and long term care, then accessing this benefit should be considered.  To learn more about how to apply, please send an email to info@lifecarefunding.com or call 888-670-7773 x 1.

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.

As of 2009, the difference between what is owed to recipients of Social Security and Medicare and the amount available to meet the obligations now and into the future is now 7 times larger than the U.S. economy.  Medicare’s unfunded liability is currently 5 times greater than that of the Social Security gap.  If taxes were to be raised to meet the unfunded liabilities within a generation (by the year 2054) 1 out of every 3 payroll tax dollars would be consumed (in effect doubling the current level of payroll taxes being paid). As Baby Boomers age half of all tax dollars will be spent on Social Security and Medicare within 20 years. 

According to the Congressional Budget Office (CBO), if the government were to continue spending at current levels and attempt to achieve a balanced budget a marginal tax rate of 25% would need to be increased to 66% and the highest marginal tax rate of 35% would rise to 92%!!  In fact, healthcare spending accounts for about 1/6 of the U.S. economy ($2.5 trillion / 17.5% of U.S. GDP).  According to Meredith Rosenthal, a Harvard University professor of health economics and policy, "Health care is the economy," and fixing it would free up money for other priorities, such as education and industrial innovation. 

As the population of seniors explodes over the next twenty years and the pressure on government programs and the healthcare system become gargantuan, people will need to be prepared to find alternative ways to take care of themselves.  Alternative forms of funding will become critical as the burden to pay for care will be pushed back on the individual. 

To read more about the Social Security and Medicare crisis, click here. 

To read more about the impact of healthcare spending on the U.S. economy, click here.

The Senior Living industry’s growth is driven by a couple of key factors that can trump the impact of a sagging economy: need and numbers. People don’t move into an assisted living community or a skilled nursing home because they want to—they do it because they need to.  When the health and safety of a loved one is in jeopardy by living alone, families must take action.  Adding to this need driven dynamic is the sheer number of seniors and now Baby Boomers beginning to reach the age where senior living is becoming a factor in the remaining years of their lives. 

Recent reports from leading providers of senior living and long term care such as Emeritus Senior Living, 5 Star Senior Living, Capital Senior Living, Horizon Bay, Belmont Villages, and numerous others bolster this trend.  This industry has shown minor growth or declines in occupancy and revenues across the country this year, but in comparison to many other industries such as automobiles, travel, real estate and financial services, the senior living industry appears to be almost recession proof.   

For families considering the best options for a loved one this is good news.  They can rest assured that there are numerous communities to chose from that are in great fiscal shape.  In addition, many of these same communities are offering “Funding Solutions” programs to help seniors pay for the costs of housing and care so they are not forced to wait for the sale of a home or the recovery of their investments. 

To learn more about these Funding Solutions from Kiplinger.com, click here

A recently released study shows that the costs of care in a nursing home are growing at twice the rate of inflation.  It should be no surprise to anyone currently looking at making the move into assisted living or long term care that it is an expensive proposition.  Complicating matters for families is the impact of the economy on the value of assets such as a home or investments in stocks and mutual funds. The report lists the least (and most) expensive states for nursing home care: 

Least expensive (in order):

1. Iowa
2. South Dakota
3. Kansas
4. Nebraska
5. North Dakota
6. Oklahoma
7. Missouri
8. Arkansas
9. Wyoming
10.Louisiana 

Most expensive (in order):

1. New York
2.  Hawaii
3. Oregon
4. California
5. New Jersey 

There are a variety of options for people to raise the money they will need to cover these costs; it is important that family’s do all they can to understand the financial implications of assisted living and nursing home care.   

To read more about the costs of nursing care, click here.