Copyright 2010 SNL Financial LCAll Rights Reserved SNL Insurance Daily
August 6, 2010 Friday
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Katie Darden

The president of the National Conference of Insurance Legislators added his voice to a chorus of concern over retained-asset accounts for life insurance death benefits.

"NCOIL has grave concerns and awaits with extreme interest the outcome of current probes, including Veteran Administration and New York Attorney General investigations," Kentucky state Rep. Robert Damron said in an Aug. 4 press release.

Damron advocated a "Beneficiaries Bill of Rights" that would "guide" states that have not already adopted models for dealing with retained-asset accounts. The release noted that NCOIL is working on a model disclosure law for its annual meeting that would require insurers to notify policy owners of their rights and options with respect to life insurance policies. The meeting is scheduled for Nov. 17 through Nov. 21.

August 12, 2010
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Chris Orestis discusses Life Insurance Consumer Disclosure legislation before the NCOIL Life Insurance and Financial Services Committee 

(July 9, 2010)— Life Care Funding Group’s president, Chris Orestis testified in Boston on Friday, July 9^th about the important role that Consumer Disclosure Legislation in states such as Maine, Washington, Oregon and Kentucky can have as a model for other states to consider in the coming legislative year.  The legislation enacted in these four states has become an important precedent as it compels life insurance companies to disclose to policy owners at the time they would lapse or surrender a policy that they have other options to consider to receive higher market value for their policy.

Also appearing on the panel was Michael Friedman, Senior Vice President of Government Affairs for Coventry First and Michael Lovendusky, Associate General Counsel for the American Council of Life Insurers (ACLI).  Mr. Friedman spoke in support of the legislative precedent and the need to support state efforts as they consider legislative action to ensure policy owners are informed of all of their financial options.  Mr. Lovendusky speaking on behalf of the life insurance industry emphasized the industry’s staunch opposition to consumer disclosure, stating for the record that the idea is “abhorrent” to the industry.

Mr. Orestis discussed his company’s commitment since its inception in 2007 to working with seniors and their families to provide them with as much information and access to financial resources as possible.  He pointed to the law passed in Maine requiring insurance companies to disclose to policy owners that they have other options instead of lapsing or surrendering a life insurance policy they no longer can afford regardless of its death benefit amount as an example of what should be done around the country.

“We are living in a time when we must be doing all we can to get as much information as possible into the hands of seniors”, testified Chris Orestis.  “When a senior and their family is informed that an asset (life insurance policy) they are about to throw away has unrealized value for them, and it is a potential solution to a health care crisis they are confronting, the consumer wins when they are able to access the most appropriate form of long term care and the state wins when a citizen is able to extend their ability to cover the costs of long term care for as long as possible before accessing Medicaid”, concluded Orestis before the NCOIL committee.   

To obtain the complete transcript of Chris Orestis’ testimony before the Life Insurance and Financial Services Committee of NCOIL, Click Below:  

Remarks NCOIL.doc (30.00 kb)

UPDATE 7/12/10--

The National Conference of Insurance Legislators (NCOIL) plans to begin drafting a new model act requiring insurers to tell consumers of their options, including life settlements, if they plan to get rid of their policies.

Georgia state Sen. Ralph Hudgens said he reported to NCOIL's executive committee on Sunday that he was asking Kentucky Rep. Ron Crimm to craft a life insurance options model bill in the next few weeks by melding similar laws that already have passed in Maine, Washington and Kentucky.

Hudgens, who heads the Life Insurance & Financial Planning Committee of NCOIL, said this model legislation would be separate from the model act on life settlements that was adopted by NCOIL in 2007. Once the draft is complete, it will be sent to interested parties for comment, he said.

Hudgens said he expects the model act will be taken up at NCOIL's November meeting in Austin and adopted.

Now that we have arrived at the long awaited generational stage in our society that “Baby Boomers” are reaching the age of Medicare eligibility, the need to address the question of who is going to pay for a massive increase in long term care spending has become paramount.  Exacerbating the growing crisis is the impact of the economy on the availability of private pay dollars and government spending.  For the last two years we have watched as one of the primary sources of private funds, equity in the homes of seniors has evaporated.  Simultaneously, state and federal budgets feeling the pinch of an eroding tax base and out of control spending on health care have started cutting back on Medicare and Medicaid spending. 

We are at a crisis point in our nation’s history.  The cost of long term care continues to rise every year, and seniors (and their families) confronting the realities of what it costs to provide home based care, assisted living, or long term nursing home care are looking for solutions.

For those families with a long term care insurance policy, a portion of these costs may be covered if they meet the necessary eligibility requirements.  And for those families with the last name Gates or Winfrey, they can just cut a check.  But what about the vast and often overlooked middle market?  Where do they find the resources to cover all or a portion of these costs?

For the ANSWER-- Click Here to read the complete article by Chris Orestis published by Insurance News Net Magazine

National Underwriter (published June 14, 2010)

by Chris Orestis, President Life Care Funding Group

The question was: My client would like to use a life settlement to help pay the assisted living expenses for her mother, who is alert but frail and needs the care the community provides. The mother is the owner and insured of a $250,000 UL in-force policy, but the daughter (my client) has power of attorney for her mother’s financial affairs. Is a life settlement the best option in this situation and how do you recommend I proceed?

The answer is: Monetizing life insurance policies to help cover the costs of long term care in its various forms has grown much more common in the last couple of years.

Providers of assisted living, skilled nursing home care and home healthcare have come to realize the financial opportunity for policy owners in need of their services but lacking in funds. States are now waking up to see that the use of a life insurance policy to access money is a better route for seniors than letting a policy lapse or be surrendered. Maine, Oregon and Washington are three examples of states that have passed laws requiring insurers to notify policy holders of their legal right to a life settlement at the point that a policy would lapse or be surrendered. As time marches on, more states are considering and will enter this law onto their books. 

Simultaneously, more seniors and their families are becoming aware that a life insurance policy can be cashed in through a variety of mechanisms to raise money to help cover the very expensive costs of long term care.

In this particular example, the family’s representative will need to be aware of a few factors. First, when going down the path of monetizing a life insurance policy, it is critical that the family members are in agreement and are active participants in the process. Working with the daughter as POA will help move the process along and not burden the mother. Unfortunately, a policy of this size will not find many interested life settlement companies as most have minimum face size requirements in the range of $500,000-$1,000,000. Also, the companies that specialize in underwriting for life expectancy evaluations do not have the ability yet to accurately account for the sudden dynamic of “Life Expectancy Compression” that occurs in a long term care scenario.

You will need to look for a company that specializes in working with the long term care space and understands how to underwrite this specific population. Also, keep in mind that a life settlement is one possible option, but it is not the only option to monetize a life insurance policy to raise money for long term care.

www.aplaceformom.com to feature Life Care Funding Group’s Funding Solutions for Senior Living 

Life Care Funding Group and A Place for Mom announced the addition of Funding Solutions for Senior Living to the “Financial Assistance” section of the #1 website in the world for Senior Living resources and referrals.  Life Care Funding Group is the leading provider of funding solutions to the senior living industry and works with over 2,500 providers around the U.S.  A Place for Mom is the leading online resource in the senior living industry for families looking for information and access to providers of senior housing and long term care. 

A Place for Mom’s “Financial Assistance” program provides information to families about their funding options to help pay for the costs of senior housing and long term care.  Life Care Funding Group has been selected as the preferred provider of Life Settlement funding and will provide information and assist families to access the maximum amount of liquidity they can derive from an existing life insurance policy. 

“Many families we help are struggling to afford the costs of Senior Living,” said Brian Trisler, co-founder and Senior Vice President of A Place for Mom, “and our goal through the Financial Assistance program on our website is to provide them with information and access to the leading provider of the most appropriate financial tools to meet their needs.” 

Since the onset of the deepest recession to hit the U.S. in almost a century, seniors and their families have been struggling to afford the costs of senior housing and long term care.  Families have been looking for alternative funding tools to help them in a time of crisis and the senior living industry has responded by making resources such as converting a life insurance policy into a long term care benefit to pay for these costs readily available.  Adding Life Care Funding Group’s Funding Solutions for Senior Living program to A Place for Mom’s website is another move towards making these financial tools readily available to the people who need them most. 

“We work with families everyday that own a life insurance policy and they have no idea it can be used to pay for the costs of senior housing and long term care,” Chris Orestis, president of Life Care Funding Group explained during the Assisted Living Federation of America annual conference, “and instead of letting the policy lapse or surrendering it because they can no longer afford the premiums, Life Care Funding Group can covert it into a long term care benefit.”  

Both organizations have linked websites and Facebook pages, and are reaching out to their respective client bases to generate more awareness about these Financial Assistance options. 

SENATE AND HOUSE SEND LD 1523 TO GOVERNOR FOR SIGNATURE 

(April 1, 2010)— Life Care Funding Group applauded the actions taken this week by the Maine state Senate and House of Representatives as well as the office of the Superintendant of Insurance to protect Maine’s life settlement disclosure law for everyone regardless of the size of their life insurance policy.  Maine passed a law last year requiring the insurance industry to inform every life insurance policy owner in the state of Maine of their legal right to a life settlement as an alternative to surrendering or allowing a policy to lapse. 

In response to this precedent setting law, an effort to exclude information about the legal right to a life settlement from anyone owning a life insurance with a death benefit under $100,000 was introduced into the legislature this year. This attempt to exclude the consumer disclosure requirement was stricken via amendment offered by Senator Margaret Craven and then passed by both the Senate and the House.  It will now go to Governor Baldacci giving him the opportunity to reaffirm his commitment to consumer protection and full disclosure for the second time in less than a year. 

“We are particularly grateful to Senator Craven, the leadership of the House and Senate, Superintendant Mila Kofman, and the Governor for their commitment to inform all policy owners in the state of Maine about their legal right to a life settlement regardless of the size of their policy,” said Chris Orestis, president of Life Care Funding Group. For many seniors confronted with financial challenges in the face of escalating costs of long term care and overall costs of living, the money potentially derived from a life settlement is a far better option than abandoning a policy after years of faithfully making premium payments. 

Unfortunately, too few people know that they have the legal right to a life settlement.  In the state of Maine that will not be the case because the law of the land has been upheld and every consumer will receive full disclosure of their legal rights as a policy owner by their insurance company. 

Chris Orestis went on to comment about other states looking at this law as a national precedent, “Maine’s actions to uphold consumer rights for life insurance policy owners has become a model for the nation. We are glad to see other states now taking this legislation under consideration to ensure that their citizens enjoy the same legal protections and access to information that policy holders in the state of Maine enjoy.” 

Life Care Funding Group is the nation’s leading provider of “Funding Solutions for Senior Living” to the senior care industry.  Life Care Funding Group (www.lifecarefunding.com) can be reached at 888-670-7773 or info@lifecarefunding.com.

" The federal budget is on an unsustainable path, primarily because of the rising cost of health care and the aging of the U.S. population."-- Congressional Budget Office March, 2010

When you visit the CBO's website that is the very first message to greet you in a very PROMINENT headline on their homepage!  The chart below this dire warning is a graphical depiction of how sharply spending on Medicare and Medicaid escalates above spending on Social Security and on every other Federal expenditure combined will continue to rise for years to come.

The impact of the healthcare reform package signed into law by the President still has many unknowns.  Like anything else it has its positives and negatives, supporters and detractors, but one thing is certain-- we could not as a nation continue down this path to certain calamity. 

FACTS:

- Aging Baby Boomers (the "Silver Tsunami") will spark an explosion of demand on healthcare and long term care services/spending

- The U.S. and world economy continues to confront challenges and a changing dynamic that will limit the ability of the U.S. government at the state and federal level to give everyone everything they need/want 

- Pressure on the individual to be able to maintain a reasonable standard of living in retirement and senior care is going to increase as government dollars/programs become more difficult to access

The sweeping changes in the newly enacted health reform legislation came amidst much debate and political battle-- but when you consider the demographic and economic realities over the next 10-20 years, what we have just witnessed is just the warm up.  When serious reform efforts turn to Social Security, Medicare and Medicaid we will see a battle that will make us look back on the last two years of economic and political upheaval as the "good old days".

I was recently interviewed about what our company has been doing to help seniors and their families with the costs of long term care. We also discussed the current state of the Life Settlement market and thoughts about its future.

 To read the interview in its entirety, click here.

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.