The Benefits of Life Care Funding
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by corestis
11/7/2011
New Legislation Supports Use of Life Policies to Pay for LTC
Cuts to Medicare and Medicaid funding specifically for long term care services coupled with the growing Boomer and senior population of this country are driving the need to fund more and more LTC costs through private pay dollars. Unfortunately, there is a lack of consumer awareness about how LTC funding works and the facts about private market funding options. There is more than $20 trillion of in-force life insurance in the United States (NAIC, 2010) but insurance carriers are resistant to inform policy owners about their legal rights of ownership, and a majority of these uniformed seniors allow their policies to lapse or surrender without ever being aware of other options to use life insurance to pay for long term care services.
Millions more seniors own life insurance then LTCi and for many their policy is an unneeded, undervalued, and illiquid asset. Senior policy owners and their family prefer using the life insurance asset in a productive way to help solve their financial and healthcare challenge instead of lapsing or surrendering it-- and most would prefer to stay off of Medicaid if given the financial option. With mandated access to information and resources, those most in need of financial solutions can make an informed decision about what is the more important priority for them— the value of a death benefit and keeping the policy in force, or the value of a living benefit and converting the policy to its present day value to pay for long term care.
By converting an existing life insurance policy to a long term care Assurance Benefit plan, the owner is spending down the asset towards their cost of care in a Medicaid compliant manner while still preserving a portion of the death benefit. If the insured passes away while spending down via their Assurance Benefit enrollment, any remaining death benefit would pay out to the designated beneficiary without being subject to Medicaid recovery. A life insurance policy is legally recognized as an asset of the policy owner and it counts against them when qualifying for Medicaid. If a policy has anything more than a minimal amount of cash value (usually in the range of $2,000) it must be liquidated and that money spent towards cost of care before the owner will qualify for Medicaid. All Medicaid applications specifically ask if the applicant owns life insurance and full policy details. Failure to disclose and comply is fraud.
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. 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 options available and a plan to take action before its too late. Now is the time to prepare by understanding the funding options that are available to help cover the costs long term care as the responsibility shifts more and more to the individual.
To read the original article as it appeared in its entirety in E-Producers Source, click here
by Chris Orestis
11/2/2011
Long term care funding options with Chris Orestis, Click Here for VIDEO
By Paul Wilson, ProducersWEB
I recently sat down with Chris Orestis, a 15 year veteran of both the insurance and long term care industries. Chris spent several years representing the health and life insurance industry as Vice President and Senior Vice President respectively for the Health Insurance Association of America (HIAA) and the American Council of Life Insurers (ACLI). He is an expert on insurance and long term care issues, and is a frequent speaker, featured columnist and contributing editor to a number of industry publications.
His company, Life Care Funding Group, assists people in need of funds to cover the costs of senior housing and long term care. LCFG specializes in converting the death benefit of an in-force life insurance policy into a long term care benefit to cover the costs of skilled nursing home care, assisted living, home health care and hospice.
In the first part of the interview, Chris talks about the current state of the long term care insurance industry. He also discusses the "wake-up call" facing producers and carriers and details some of the challenges, opportunities and responsibilities resulting from the current economic climate. He goes on to explain his recent involvement in the passage of the National Conference of Insurance Legislator's (NCOIL) Life Insurance Consumer Disclosure Model Law, which ensures policy owners "will be informed that they have a number of options to consider first that could make a significant difference in their lives, and at a time when they need it most.”
In the second part of the video, Chris provides further detail about the NCOIL Model Law and its effects on the industry, and talks about his company's partnerships with assisted living communities and nursing homes to help clients convert their life insurance policies into long term care benefit plans. Finally, he looks into his crystal ball and gives his best guess as to the future of the life insurance industry, LTCI industry and disability insurance.
by corestis
10/25/2011
“The two most important driving forces for the federal budget are the aging of the U.S. population and rapidly rising health-care costs.”
- Federal Reserve Chairman Ben Bernanke
Law makers from both sides of the aisle have come together to create a “Super Committee” comprised of six Democrats and six Republicans, half come from the House of Representatives and half come from the Senate. The members of the Super Committee are tasked with finding at least $1.5 Trillion in budget cuts over 10 years. Reports are that the Committee is struggling to meet its goal because they are facing deadlocks over how to handle a mix of cuts and taxes to bolster two of the biggest budget areas of our country—Medicare and Medicaid.
The Super Committee must present their recommendations to Congress by November 23 to face an up or down vote before Christmas. The question for Christmas this year is which groups will be visited by St. Nick and which will meet the Grinch. Some very tough decisions need to be made and no area is protected. Adding to the pressure of the situation is the fact that if Congress rejects the recommendations of the Super Committee then automatic cuts of $1.2 Trillion as well as possible tax increases will be enacted across the entire federal budget sparing no one.
Families already under enormous economic pressure will find it even more difficult to pay for long term care services for loves ones. Government dollars will pay for less and it will become more difficult to qualify. It has become more important than at any time in our nation’s history to prepare for the costs of long term care and make use of programs such as long term care insurance, life insurance policy conversions to long term care benefit plans, and other financial vehicles to ensure sufficient private pay dollars are available when the time comes.
As a nation, we have truly arrived at the point where we can no longer kick the can down the road. We have all been enjoying a fantastic dinner party for years but the check is now on the table and everyone has to get out their wallets to help pay. The question for seniors and families faced with long term care expenses—have you prepared for this day (are you even paying attention!?) and do you understand all of your available options to help cover the costs?
To read the entire article published on ProducersWEB, click here.
For some fast facts and sources on Medicaid, click the link below:
KFF quick reference MCaid stats 2009-2011.doc (187.00 kb)
by Chris Orestis
10/12/2011
National Underwriter
By Allison Bell
Skilled nursing facilities will depend on private-pay patients more than before now that a regulation cutting Medicare skilled nursing care funding has taken effect.
The Alliance for Quality Nursing Home Care (AQNHC), Washington, a coalition of groups that represent nursing homes and rehabilitation centers, has been mounting a media campaign to try to draw attention to the impact the cuts have had on member facilities.
The Centers for Medicare & Medicaid Services (CMS), an arm of the U.S. Department of Health and Human Services (HHS), imposed about $4 billion in cuts on skilled nursing facility payments – or about 11 percent of total anticipated “Reimbursement Utilization Group Protocols” spending – for the fiscal year that started Oct. 1.
CMS said they cuts are necessary because skilled nursing facilities responded to payment changes that were supposed to reduce spending on care in the facilities by submitting more bills for high-cost care and driving up total claims costs.
Although Medicare does not pay for true long-term care, it does cover the cost of much of the skilled nursing care patients receive between the time they leave the hospital for care for acute conditions, such as strokes or heart attacks, and the time when they return home.
The CMS cuts will have no direct effect on the long-term care nursing homes provide, but many nursing homes that provide long-term care also provide transitional skilled nursing care, to help patients, increase overall revenue, and bring in transitional patients who, in some cases, turn out to be sicker than expected and end up needing long-term care.
Meanwhile, the congressional Joint Select Committee on Deficit Reduction – the 12-member “Super Committee” -- is racing to come up with $1.2 trillion in deficit reduction proposals by Thanksgiving, and that committee could call for further cuts both in Medicare skilled nursing care reimbursement spending and Medicaid long-term care spending, according to Contemporary Healthcare Capital L.L.C., Shrewsbury, N.J., a company that specializes in health care facility finance.
The groups in AQNHC estimate their members have been employing about 1.7 million people in the United States and generating about $200 billion in total U.S. economic activity.
Avalere Health L.L.C., Washington, a health policy firm, has estimated the reimbursement change that took effect Oct. 1 led to a $484 million reduction in Medicare spending in California, the hardest-hit state, and a $448 million reduction in Florida, the second-hardest-hit state, according to AQNHC.
Meanwhile, states are cutting their spending on facility care, AQNHC said.
In Florida, for example, the state has cut state nursing home Medicaid reimbursements 6.5 percent, AQNHC said.
AQNHC said the funding cuts are already starting to lead to nursing home staff layoffs.
Additional cuts “would hurt Florida seniors, and undermine facilities’ ability to admit, treat and return to home a rapidly increasing number of patients requiring intensive post-acute rehabilitation and care for multiple chronic illnesses,” AQNHC President Alan Rosenbloom said in a statement.
AQNHC is making the case against further cuts in a wave of press releases distributed through PR Newswire.
Douglas Korey, a managing director at Contemporary Healthcare Capital, is arguing that, although the cuts are significant, investors and others may be exaggerating the extent of the damage done.
Even after the cuts, overall spending on skilled facility care will be about 3 percent than it was before CMS made the payment system changes that ended up triggering the new changes.
There are still opportunities in the market for nimble, midsize facility operators that run from 5 to 25 facilities, Korey said in an analysis of the changes.
Originally published by National Underwriter Life and Health
by corestis
8/12/2011
Medicaid was signed into law in 1965 by President Lyndon Johnson as a safety net to provide health care to the indigent and disabled. Over the years it has also become the major payer of long-term care services for the elderly in the United States: More than 10 million Americans now require long-term care annually and Medicaid funds at least two-thirds of all spending for nursing home care today. In 2009, $240 billion was spent on long-term care services, and Medicaid accounted for 43 percent of total expenditures. By comparison, just $45.6 billion, or 19 percent, of long-term care services was paid “out-of-pocket” by consumers.
The current Republican proposal would cut $750 billion over ten years by transforming Medicaid into a block grant program that would provide $11,000 per year for each enrollee. And now a crushing blow for both long term care providers and seniors– on August 1, 2011 CMS enacted an unprecedented across the board reduction in LTC reimbursements from Medicare and Medicaid of 11.1% for 2012.
Providers of long-term care services such as nursing homes, assisted living communities and home health agencies, as well as state governments, are realizing that there is tremendous value for the consumer in converting life insurance policies to help pay for the costs of long-term care. By converting a life insurance policy instead of abandoning it, the policy owner’s care can be covered by the monthly long-term care benefit payouts and the life insurance asset can be spent-down in a Medicaid-compliant fashion — while preserving a portion of the death benefit during the extended time period.
To read the entire article published by Providers ESource.com, click here.
by Chris Orestis
7/26/2011
CHICAGO, July 21, 2011 /PRNewswire/ -- Two out of three (67 percent) of America's middle-income Boomers expect that their retirement experience will be drastically different from that of their parents, according to a recent study released by the Bankers Life and Casualty Company Center for a Secure Retirement(SM) (CSR).
The study, Middle-Income Boomers, Financial Security and the New Retirement, which focused on 500 middle-income Americans between ages 47 and 65 with income between $25,000 and $75,000, found that the pensions and guaranteed income are what the majority (60 percent) of middle-income Baby Boomers envy most about the retirement of previous generations.
The ideas of being taken care of by family members, slowing down and moving to a retirement community, (activities commonly associated with the retirement of previous generations) are being replaced by keeping up with technology (77 percent), working (78 percent) and staying physically fit (81 percent).
The CSR's study reveals, nearly one in three (31 percent) Boomers anticipate having to financially support at least one adult person during retirement and 15 percent expect that person will be an adult child or children, rather than an elderly parent (only 9 percent).
There are several factors contributing to this change in retirement outlook. According to the study, retirement risk has been shifted from employers and the government to individuals with the demise of corporate pension plans in favor of 401(k) plans, discontinuation of many employer-paid retiree health benefits and the future of Social Security and Medicare.
Today, just over half (56 percent) of middle-income Boomers work for an employer that offers a retirement savings plan. This is less than the national average for all workers (72 percent). And of those who contribute to a retirement plan at work, one in four (24 percent) do not receive a match from their employer.
The report also cites one in seven have no pension or retirement accounts at all and 55 percent of middle-income Boomers have saved less than $100,000.
"The retirement of the Baby Boom generation will not only test the limits of government programs such as Medicare and Social Security, but also help shape the definition of retirement itself," said Scott Perry , president of Bankers Life and Casualty Company, a national life and health insurer. "Boomers may have to take more personal responsibility for their retirement financial security than was the case of their parents' generation and plan for the risks that may jeopardize this security, like long-term care, inflation and outliving their money."
For a copy of the complete report, click here.
by Chris Orestis
7/19/2011
The White House and Republican leaders from Congress are currently engaged in a contentious negotiation over a balanced budget and how to rein in the massive debt our nation has incurred. The ability of Medicare and Medicaid to meet the demands for long-term care is being greatly challenged and reforms are inevitable. But one area that is receiving more emphasis is private-pay options to cover the costs of long-term care.
Earlier this year, the two largest assisted-living companies in the United States made separate announcements that they would begin offering families the option to convert existing life insurance policies to long-term care plans by working with Life Care Funding Group. Emeritus Senior Living and Brookdale Senior Living, both publicly traded on the NYSE, are using what is termed an “Assurance Benefit” so families can exchange a life insurance policy in order to be enrolled in a long-term care benefit plan that will pay a monthly amount directly to any of their facilities over a pre-determined benefit period. Life Care Funding Group has been working with the long-term care industry since 2007 and currently offers the Assurance Benefit to approximately 4,000 senior care properties across the country.
“Recently we heard from a family with a $95,000 life insurance policy entering its grace period. Their mother was in the process of making the move into long-term care and they could not afford the monthly expenses, said Chris Orestis, CEO of Life Care Funding Group. "They called their insurance company to ask what they could do with their policy and they were told their only option was to pay the premium or let it lapse. Then they contacted Life Care Funding and we converted the policy into a long-term care benefit plan that is now covering the costs of care and will keep her off of Medicaid for at least two years.”
To read the entire article on Producers ESource, click here.
by Chris Orestis
6/25/2011
A survey conducted by AgingCare.com found that although adult children are often responsible for paying for their elderly parent's care, the large majority of caregivers are vastly unprepared. The survey found:
- 63% of caregivers have no plan as to how they will pay for their parent's care over the next five years.
- 62% say the cost of caring for a parent has impacted their ability to plan for their own financial future.
"With an estimated 34 million Americans providing care for older family members, the survey's results indicate a financial crisis in the making," says Joe Buckheit, Publisher of AgingCare.com, a website and online forum for family caregivers.
- 34% spend $300 or more per month out of their own pocket for care giving expenses.
- 54% have sacrificed spending money on themselves to pay for care of their parents.
Making matters worse, caring for aging parents often impacts adult children at their workplace as well. The survey found:
- 43% have had to take time off work due to care giving responsibilities.
- 48% say they are earning less money at work as a result of care giving.
- 25% have been fired or had to quit their job as a result of care giving.
- 53% of care givers provide care 40 or more hours per week.
- 37% provide care more than 80 hours per week.
- 21% say they never get a break from care giving.
- 36% get a break of 5 hours or less a week.
The survey indicates that today's care givers face a triple financial threat: unplanned-for caregiving expenses, less money for their own needs and reduced time in the workplace.
To read the entire article on AgingCare.com, click here.
by corestis
3/30/2011
Treatment of Life Insurance as an unqualified asset for Medicaid eligibility
Over 10 million Americans now require long term care annually. Medicaid is the primary payor of long term care services in the United States. The national average cost of a nursing home is $72,000 per year, for assisted living it is $38,000, and for home healthcare services it is $21 per hour. Most people will drain all personal savings and assets paying for long term care in their first year of usage.
In 2009, Medicaid spent $240 billion on long term care services accounting for 43% of total expenditures. By comparison, $45.6 billion or19% of long term care services was paid “out of pocket” by the consumer. States spent on average 16% of their annual budgets on Medicaid making it the second biggest budget item behind only education. Medicaid and state budgets have been impacted particularly hard by shrinking tax dollars and growing Medicaid enrollment brought on by the economic crisis and an aging population.
States have begun looking for alternative ways to stimulate private dollars to help pay for the costs of long term care and reduce the pressure on Medicaid budgets. One example has been the unanimous passage by the National Conference of Insurance Legislators (NCOIL) of the Life Insurance Consumer Disclosure Model Law requiring that life insurance companies inform policy owners they have a number of options to consider instead of abandoning an in-force policy. Among the options in the law is the right to convert a life insurance policy into a long term care benefit plan.
An Assurance Benefit will convert any form of life insurance to pay directly for the costs of long term care in a nursing home, assisted living and home healthcare.
Click here to read the enitre White Paper published on ProducersWEB.com
by corestis
2/7/2011
What NCOIL’s Life Insurance Consumer Disclosure Model Act Means
Too often when seniors and their families contact their life insurer about their old policies, they are given only three options: surrender the policy for its cash value (if it has any), pay the premium or let it lapse.
Most people who receive a lapse notice have a policy with no cash value because it has already been drained by the carrier to make premium payments. That typically leaves a final option of paying the premium or walking away. The number of seniors allowing this to happen to a policy after paying premiums, sometimes for decades, is scandalously high. State law makers around the country have noticed this situation and are now taking action to make sure policy owners are informed of their options before they abandon a life insurance policy.
Click to read article in entirety
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