The Benefits of Life Care Funding
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by corestis
12/30/2011
2011 was a
benchmark year for the Baby Boom generation.
By the time the clock strikes mid-night and we welcome 2012, almost 4
million Baby Boomers will have turned 65 years of age. During the 365 days of 2011, ten thousand
Americans turned 65 each and every day.
2012 is only the second of a twenty year journey where that pace
continues annually until it ends with almost 80 million Baby Boomers crossing
the threshold of age 65. What other
benchmarks occurred in 2011?
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MetLife
exited the long term care insurance market, and additional departures from the
market are anticipated this year;
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The
CLASS Act was enacted and then killed in the midst of a Medicaid funding crisis
to pay for costs of long term care across the United States;
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Medicaid
spent $427 billion prompting CMS to summarily cut all long term care funding by
Medicare and Medicaid across the board 11.1%;
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We
saw equity in American homes drop to under 50% for the first time in our
nation’s history to just under $10 trillion, and by comparison, in-force life
insurance now stands at almost $30 trillion;
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NCOIL
passed the Life Insurance Consumer
Disclosure Model Law to attack the massive problem of seniors abandoning
life insurance policies because they are unaware of alternative options;
·
State
legislatures started looking at how converting life insurance policies into
long term care benefit plans could save tax payers money by extending the spend
down period before Medicaid eligibility;
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The Florida Legislature introduced a first in the
Nation consumer protection bill (HB 1055) that provides for conversion of a
life insurance policy into a long term care benefit plan as a Medicaid
eligibility requirement, use of accelerated death benefits to pay for nursing
home (SNF) costs, and mandates the NCOIL Life
Insurance Consumer Disclosure Model Law.
What we are
seeing as we enter 2012, is a growing awareness that this $30 trillion pool of
in-force life insurance policies is an asset base of immense proportions and a
source for long term care funding solutions.
But, the policies are in the hands of owners that for the most part have
no understanding of their legal ownership rights and the variety of options
available to use their property while still alive. Seniors in particular have been the most
vulnerable to lack of information, and therefor disproportionately abandon life
insurance policies in their final years.
This lack of information coupled with difficulty affording premium
payments, disappearance of the original insurable interest when the policy was
initiated (the children have grown up and/or lack of spouse), and life
insurance ownership counting against Medicaid eligibility all conspire to push
seniors to needlessly abandon policies.
Consumer protection measures such as the NCOIL Model Law and Florida
legislation, long term care funding options such as policy conversions, and
education efforts spear headed by the assisted living and nursing home industry
will have a major impact in 2012.
This is the
year when policy owners will start to come out of the dark in large
numbers. As they become better informed
about their legal rights of ownership and alternatives to policy abandonment,
they will realize that a life insurance policy they are about to discard can be
put to much better use helping them pay for long term care. And based on the growing demographic tide,
ongoing economic malaise, cuts by the government in Medicare and Medicaid (as
well as elimination of programs like CLASS act), and the very challenging
marketplace for long term care insurance-- the emergence of another private
market funding solution for long term care services comes not a moment too
soon.
If 2011 was
the year of challenges and a search for solutions; 2012 will be the year of
awareness and implementing solutions.
by corestis
12/20/2011
As the Super Committee falters in its effort to reduce federal spending, mandated budget reductions create further pressure on the funding of long-term care
By Chris Orestis
From the December 19,
2011 issue of National Underwriter Life & Health Magazine (Click HERE)
Earlier this year, the so-called Super Committee could not overcome partisan differences over spending cuts and new revenues (taxes) within their mandated deadline and conceded defeat. That unfortunate outcome triggers mandated reductions in the federal budget of $1.3 trillion that will have an immediate impact on Medicare and Medicaid. This will be particularly disruptive for seniors and long term care providers already trying to absorb the 11.1% rate reduction that CMS instituted in October, 2011. After the demise of the CLASS Act, the long term care funding infrastructure of the United States is facing extreme pressure. Lackluster sales, rate increases and carrier casualties in the LTCi market combined with additional entitlement cuts as a result of the Super Committee outcome will conspire to make an already precarious situation worse.
People do not understand and are not prepared to pay the costs of long term care. In years past, seniors could rely either on the government, family, or equity in assets such as a home to offset a lack of savings. In today’s new economic reality, family members are struggling to take care of themselves, the government is making cuts and building barriers to entry for long term care coverage, and the value of assets such as homes have been eviscerated. In fact, today there is currently three times more in-force life insurance in the United States at almost $30 trillion (NAIC) than there is home equity with less than $10 trillion (Zillow Home Equity Index).
For the first time in American history there is more debt than equity in America’s homes. For seniors unprepared for long term care this new reality is a big problem. One of the most reliable sources of long term care funding for years has been home equity and then government backstops once assets have been depleted. This mix is now severely disrupted and a search for additional assets to help unprepared seniors pay for long term care is on.
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 payout and the life insurance asset can be spent-down in a Medicaid compliant fashion.
With traditional resources to pay for long term care on the decline, it will take creative private market solutions and the use of non-traditional assets to make up the difference.
To read the entire article published in National Underwriter, click here.
by corestis
12/9/2011
When an
individual applies for Medicaid, the State conducts a "look back" to
find transfers of assets for 60 months prior to the date the individual is
institutionalized or, if later, the date he or she applies for Medicaid. All transfers made by the applicant or the
applicant’s spouse subsequent to January 1, 2010, whether from an individual or
to an individual or from a trust or to a trust, have a five year look-back
period.
These provisions apply when
assets are transferred by individuals in long-term care facilities or receiving
home and community-based waiver services, or by their spouses, or someone else
acting on their behalf. At state option, these provisions can also apply to
various other eligibility groups.
Transferring ownership of a life
insurance policy for less than its fair market value would be a violation of
Medicaid’s asset transfer and look back requirements. A policy can be surrendered for its cash
value to be spent down on care or a policy can be converted for its market
value and the benefit of that conversion can be used to pay for long term care
as a qualified spend down.
Medicaid
rules are very clear that a life insurance policy is an unqualified asset and
counts against Medicaid eligibility.
The
owner of one or more policies has a variety of options to consider:
- A policy with more than a
minimal amount of cash value (usually $1,500 or more depending on the
state) must be liquidated with the proceeds spent down on care.
- A policy with no cash value
does not need to be liquidated but the death benefit will be subject to
Medicaid recovery efforts to return the amount of money spent on care.
- Many states will exempt a
“final expense” policy if the full death benefit value is assigned to a
funeral home.
- Assignment of a life
insurance policy for less than its fair market value is a violation of
asset transfer rules if done within the 60 month look back period.
- A policy owner has the
legal right to convert a life insurance policy into a long term care
benefit plan at its fair market value and extend their spend down period
by covering cost of care while preserving a portion of the death benefit
until exhausted.
by Chris Orestis
12/6/2011
KIRKLAND, WA, November 21, 2011 (SEND2PRESS NEWSWIRE) This month the 3in4
Association added 6 new members to its advisory board, and got new support from
two insurance carriers: John Hancock and Genworth Financial. “We’re
gaining momentum,” says Mark Goldberg, Treasurer of the association that runs
the “3 in 4 Need More” campaign.
The
goal of the campaign is to warn Americans about a looming problem. “The
majority will be affected at some point by long-term care needs of themselves
or a close family member,” says Goldberg. “Yet few are prepared for this.” The
campaign is letting them know so they can avoid a financial and personal
crisis. “Our new board members and the new carrier support will add to our
ability to do this.”
The
new carrier support includes –
·
A study sponsored by Genworth
Financial. Released earlier this
month, the study found that most adults believe that long-term care insurance
should be purchased between the ages of 45-64, yet 82 percent of this age group
have not purchased a policy. The study also found that since the 2008 financial
crisis, only 20 percent of adults have taken any action on their financial
strategy.
·
Marketing support by John Hancock. The company applied the
“3in4” logo to education materials supplied to its network of LTC agents.
The
3in4 Association’s advisory board has been expanded from 14 to 20. The six new
members are –
· Chris Orestis, Co-Founder and President, Life Care
Funding Group
· Joseph Pulitano, President, Advanced Resources
Marketing
· Bill Herring, President, Online Insurance Services,
LLC
· Steve Dozier, President, AIMS Benefit Solutions
· Mark Leighton, Chief Marketing Officer, Connect
America
· Carol Gardner, President of LifeStyle Insurance
Services
To
take advantage of the “3 in 4 Need More” campaign, LTC agencies, brokers,
agents, and advisors may use a number of resources found at http://www.3in4needmore.com.
About the 3in4 Association:
The 3 in 4 Need More campaign is dedicated to raising awareness of the
importance of long-term care planning. The campaign utilizes multiple marketing
strategies to increase awareness. The 3 in 4 Need More campaign is a public
service of the 3in4 Association, which operates as a nonprofit 501(C)(6)
corporation. Members of the campaign cross all industries, genders and ages.
The campaign supports an online platform located at www.3in4needmore.com. This
resource supports consumer plan development, and products and services that
should be considered in long-term care planning. The platform also provides
awareness support for long-term care planning specialists.
www.3in4needmore.com
Click HERE to see a
overview of our national tour & $50,000 contest
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
10/5/2011
Alliance will help educate millions of consumers about their legal right to convert a life insurance policy into a long term care benefit plan
Life Care Funding Group announced today the launch of a strategic partnership with Virtual Health, the first subscription-based, Aging-in-Place service provider that leverages cutting edge technology with national health providers to offer seniors "control, independence and dignity" and family care givers "a helping hand". As part of the holistic approach to care, Virtual Health is partnering with Life Care Funding to provide greater access to its service portfolio of home health monitoring tools, in-home meal delivery, transportation and financial solutions.
At a press conference in New York City today, Virtual Health CEO Alex Go explained that their service portfolio closes the loop between the senior, their physician and their family caregiver using a combination of a nationwide triage call centers and easy to use, FDA cleared medical devices that measure blood pressure, weight and glucose levels. With patient consent, this information is available for their loved ones via web access. In addition, Virtual Health will be offering access to the Life Care Assurance Benefit in conjunction with Life Care Funding Group.
Millions of seniors allow life insurance policies to lapse or be surrendered because they do not know they have the legal right to convert those policies to a long term care benefit plan. "Probably the most difficult aspect of long term care is the finances", said Mr. Go, "our mission is to make every aspect of the senior's life easier, and by working with Life Care Funding Group we are opening up a door for seniors across the country to set up a long term care benefit plan with their life insurance policies instead of throwing them away." 153 million Americans own over $10 trillion worth of life insurance-- unfortunately billions of dollars worth of policies owned by seniors are abandoned every year.
Seniors are unaware of their legal options to use a life insurance policy. The majority of senior policy owners moving toward long term care will abandon their policy because they are either unable to afford the premium payments and/or it is an unqualified asset for Medicaid eligibility. "For years seniors have been abandoning life insurance policies because they have not been informed of their options", explained Chris Orestis, CEO of Life Care Funding Group, "and these same policies can be quickly converted into a long term care benefit plan set up to help cover the monthly costs of long term care." "We are looking forward to working with Life Care Funding Group", said Mr. Go, "we believe one of the surest ways we can bring a quality lifestyle to seniors and their families is by helping them address potential financial shortcomings through a long term care benefit plan."
by Chris Orestis
8/18/2011
By Richard Scott
News of a novel benefit program at one of the largest senior care providers in the nation should come across as a big event for those involved in providing care for seniors. The benefit program takes a life insurance policy and converts it into real cost payments for a number of senior living options.
The provider of the benefit program is Brookdale Senior Living, which developed the conversion policy with Lifecare Funding Group. The hope behind the so-called Life Care Assurance Benefit Plan, which is now available at Brookdale’s 550-plus communities, is that it provides an alternative method of paying for care needs at a time when the budgets of many families are stretched thin. The original benefit program debuted in the fall of last year.
“The current economic conditions have compounded the problems some families face when it comes to paying for the costs of senior living or long-term care,” said Ron Aylor, a senior vice president with Brookdale. “Most people do not realize that a life insurance policy is an asset that they are legally entitled to convert into another form of coverage.”
The Assurance Benefit is different from long-term care insurance. According to Life Care Funding Group, there are no wait periods with the new benefit program, nor are there costs to apply or premium payments. The policy owner can convert an “in-force” life insurance policy to enroll in the benefit plan.
The terms of the benefit stipulate that payments are made directly to the care provider or community, that the partial death benefit is preserved, and that the list of qualifying services includes skilled nursing, assisted living, home health and hospice.
“The Life Care Assurance Benefit Plan gives people a quick and simple option to convert a life insurance policy’s death benefit into a life care benefit and immediately apply it,” said Aylor.
Across 34 states, Brookdale operates independent living facilities, assisted living facilities, dementia care communities and continuing care retirement communities.
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.
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