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

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

In a recent commentary for CNN Politics, Bob Greene wrote a very compelling piece about the economic injustice currently being done to our nation’s senior citizens.  In it he observes that the mantra being repeated in the media to keep everyone from jumping off a cliff is to “wait out the storm”.  We are reminded of the conventional wisdom that economic busts and booms are cyclical, but that in the long term the stock market will steadily increase in value and after a few years people will recover their losses. 

But as readers of this blog know, we have been reminding people that our seniors don’t have that time to wait.  Many are in situations where they need the money from their investments or the sale of their home right now to pay for things such as senior housing and care.  If that money has evaporated ($11 trillion of wealth in America has disappeared in the last year alone!) what will people do if it is no longer safe or possible for them to live without assistance?  The people who built this country, fought its wars, and made our prosperity possible are now the ones left holding the bag. 

Mr. Greene is absolutely correct when he says it is unfair to force this generation to sacrifice again-- just when they should be able to enjoy a peaceful retirement in safe and nurturing surroundings.  Fortunately, there are options that our nation’s seniors and their family can turn too for financial security.  There are Funding Solutions that can be accessed to help ease the hardships of this economic calamity.  We have been writing about this situation and the potential solutions for a long time.  Kiplinger’s Retirement Report (March, 2009) issued an excellent resource analyzing this crisis situation and in it, they discuss Funding Solutions from companies such as Life Care Funding Group (see page 4).

 To read the commentary by Bob Greene, “We owe oldest Americans an apology”, click here.

The economic downturn has forced seniors that once could rely on selling a home and investment income to pay for the costs of senior housing and care to look for new sources of funding.  One funding tool that is rapidly gaining attention is selling an existing life insurance policy in the Life Settlement market.  A Life Insurance Settlement is the sale of an existing life insurance policy, while the policy holder is still alive, in a straightforward process that takes 30-90 days.  The seller of the policy will receive a lump sum payment for their policy and will no longer be responsible for paying the monthly premiums. 

A life insurance policy is an asset that the owner can sell just like they would with any other form of personal property such as a home or stocks.  And just like selling a home, there are no restrictions or limitations on how much can be raised or what the owner can do with their money.  For people looking to raise money to cover the costs of senior housing and care this makes the Life Insurance Settlement an ideal funding option. According to a recent Wall Street Journal story about the growth of the Life Settlement market, there was over $13 billion in Life Settlement transactions done for seniors last year.  

To read more from the Wall Street Journal about the growth of the Life Settlement market, click here.

In reaction to the deepening economic crisis, “senior living” companies that provide independent living, assisted living, continuing care retirement communities and skilled nursing care have begun actively offering “Funding Solutions” programs to seniors and their families.  Deep losses in the value of homes and investment portfolios, as well as the decline of long term care insurance companies, have had a very painful impact on people preparing to enter the stage of life where living at home alone is no longer a viable option.  Making this move is difficult both emotionally and financially—and the difficulty has been made much greater over the last year.

Leading companies such as Emeritus Senior Living, 5 Star Quality Care, EPOCH Senior Living, Belmont, Good Neighbor Care, and Legend Senior Living among many others (click here for a complete list of participating companies) have begun introducing comprehensive “Funding Solution” programs to give seniors and their families more choices and resources for financial assistance.  What was once an area largely left up to the individual to figure out on their own, has now become a critical area for support and action by senior living companies.  The range of financial services include: life insurance settlements, bridge loans, VA benefits, real estate programs, and other innovative ways to help people bridge possible financial gaps preventing them from accessing the housing and care that they most need.

Industry trade groups such as the American Health Care Association (AHCA), the Assisted Living Federation of America (ALFA), and the American Senior Housing Association (ASHA) have all been bringing attention to the importance of “Funding Solutions” for the consumer through various forums to communicate with and educate the senior living companies that are their members.  The media has also been discussing this phenomenon over the last year in periodicals such as the Wall Street Journal, the New York Times, Eldercare News, Senior Care Investor and countless other local media outlets.

With the economy continuing its downward climb for possibly years to come, it is important to see the kind of action being taken by the industry charged with caring for our nation’s elderly to put information and financial tools into the hands of the people that need it most.

A report released on December 15^th shows that $2 trillion in the value of American home owners evaporated in 2008.  A report released by the National Association of Home Builders in June of this year showed $500 billion lost in home values at that time.  But now, 11.7 million home owners are carrying mortgages considered “underwater” because they owe more on their homes than they are worth.  The combination of negative equity and a continuing surge of foreclosures flooding the market have caused the loss of home values in the U.S. to accelerate by a factor of 3X in the last six months.

Home values have been declining for eight consecutive quarters and with projections of foreclosures and continuing declines in equity “with no end in sight”; there is no projection yet for when the market will begin to turn around.  The problem is that the real estate market is already flooded with undervalued and foreclosed homes and there are many more to come in the months ahead.  Compounding this problem is the ongoing struggles on Wall Street and increasing numbers of unemployed.

Seniors and their families that are counting on the sale of their home and/or their savings invested for the future are being hit particularly hard by this culmination of negative factors.  When money from the sale of a home or income from investments can not be counted on; seniors and their families must educate themselves about financial alternatives to pay for senior housing and care.

Massive Wall Street losses since its highs less than two years ago have cut many retirement accounts in half, reports University of Illinois Law Professor Richard L. Kaplan.  The average costs of staying in an assisted living or skilled nursing property can be quite high; and with the losses on Wall Street combined with historic lows in the real estate market, the ability of seniors to afford care by means other than meeting poverty levels to qualify for Medicaid is quickly becoming impossible for many.  Events from this year impacting owners of long term care insurance polices have made that option less reliable and added fuel to the flames of concern shared by seniors everywhere. 

People want to continue their high quality of life even after it becomes necessary to leave their homes-- and to do so it will be necessary to understand every possible funding option available and be in a position to act when the time comes. 

Click here to read more on the UPI report.

In the last month two reports came out that should be of concern to seniors and their families.  Just this past week the Federal Reserve released their economic projections through 2009 anticipating Gross Domestic Product (GDP) for the U.S. may contract by as much as a full percentage point.  We are watching what the Secretary of the Treasury recently described as a “once in a Century” tumult in the U.S. economy.  The impact on unemployment could be alarming with the unemployment rate of 4.5% last year jumping to 7.6% next year which would be the highest levels in two decades.

In October, the annual MetLife Mature Markets study was released and it highlighted the continuing increase in the costs of senior housing and care.  The national average cost of staying in a semi-private room in a nursing home grew from $189 per day / $68,985 annually in 2007 to $191 per day / $69,715 annually in 2008. The national average cost of living in an assisted living facility grew from $2,969 per month / $35,628 annually in 2007 to $3,031 per month / $36,372 annually in 2008. 

When you combine the impact of an economy in a true crisis that will take at least a couple of years to sort out, and the cost impact of living in a nursing home or assisted living community; it starts to become obvious why families must do all they can to inform themselves of all their financial options.  Our best advice to the people we speak with-- don’t wait until you are in a crisis to start planning for the future.  Start now!

Click here to read more details about the MetLife Mature Markets Study 2008.

The impact of this economy on seniors and their families has been particularly difficult.  Housing values are down significantly and the time it takes to sell a home is now measured in months instead of weeks. Income from retirement accounts and investments have been reduced in many cases by half or more due to the volatile stock market.  For those now facing decisions about retirement and possible moves into senior housing, assisted living and long term care the impact of the economic crisis has been rapid and unforgiving.  Further compounding the problem is the fact that experts agree we are still in the early stages of this situation and not only unsure of how this crisis will continue to unfold, but how many years it will take for things to return to "normal". 

As we talk to seniors and their families all around the country every day they are sharing their frustration and fears with us.  They had worked and planned for years to enjoy a reasonably comfortable and secure retirement; and when the time came to move into an assisted living community or long term care nursing center they were counting on the value of their assets to be there to cover those expenses.  When the value of your primary assets such as a home or an investment portfolio is cut in half-- it does not leave you with many attractive options.  That is why during these troubled times it is critical that people take the time to understand how their personal finances have been impacted and how that projects out for the future.  Too many people wait until it is too late to learn about all of their options and what they can do with the assets available to them to try and secure their financial future. 

The article attached is a sobering look at what it happening to people as they reach their retirement years in the midst of this economic crisis.