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.

A report tracking Medicaid spending going back over the last seven years showed that Medicaid underfunded payments for services to all patients by $14.17 everyday in 2009.  Projections are that this alarming underfunding trend will get worse in 2010 and 2011.  The economic crisis has robbed state budgets of funds available to support Medicaid funded programs and as a result there was a national deficit of almost $5 billion.   

Medicaid funds at least 2/3 of all spending for nursing home care. Spending shortfalls of this magnitude threaten the ability of nursing homes to offer the highest levels of care for the most vulnerable populations.  Frustratingly for nursing homes and those in their care, state governments were given money in 2009 via the American Recovery and Reinvestment Act to make up this deficit.  But guess what—governments diverted the money away from providing the healthcare it was intended, and instead used the money to shore up their own budget deficits.   

As readers of the Life Care Funding BLOG know, we continue to bring awareness to the unavoidable trend of reducing the amounts of money that are available for Medicare and Medicaid.  And why is that?  Because we are now in the throes of an explosion of Baby Boomers reaching retirement age at the same time that our country’s economy is under siege and entering unfamiliar territory.  Washington, DC and 50 state capitols have no choice but to figure out how to make do with less. 

They have two tools to work with:

1.      Make it harder for people to qualify for Medicare and Medicaid, and--

2.      Reduce what is available for those that do qualify. 

What tools do seniors and their families have to work with? 

1.      Information

2.      Time 

People need to arm themselves with information about how the system works and what kind of funding options (and limitations) they have to work with.  And, people need to stop waiting until the last minute to plan for their inevitable time in long term care.  In one form or another, (home or facility based) as people age and/or become frail they will need someone to help care for them.  That care will cost money and that money has to come from somewhere.  As the government makes it harder and harder to access less funding, people need to prepare to bear much of the financial burden on their own.  To ensure quality of life and dignity when the time for long term care arrives; people must make the effort today to understand what kind of financial options are out there such as the VA Benefit, Life Insurance Settlements, Credit Programs, Reverse Mortgages, Long Term Care Insurance and other sources of private funding.

To read more about Medicaid budget deficits, click here. 

State of Maine Announces proposal to cut 10% out of nursing home Medicaid spending in 2010:

Governor Baldacci released his proposed FY 2010-2011 State budget Friday afternoon. As in previous years, the Departments of Health and Human Services and Education are being asked to bear the brunt of significant cuts including 10% rate cuts to some MaineCare providers including nursing homes and residential care facilities. Preliminary analysis shows that the cut to nursing homes is in the area of $26 million. It is harder to separate the hit to res care, but we estimate it to be in the area of $10 million or a little over $9.00 per resident day. The newest figures (Nov. 2009) from AHCA indicate that Maine currently underfunds its nursing homes by $25.5 million per year. This translates to an average loss of $16.20 per resident per day. So, it seems reasonable to estimate that the proposed cuts will double those shortfalls.

Demand to help seniors with the costs of senior housing and long term care continues to rise across the country.  In response,  Life Care Funding Group has begun adding “Network Partners” at the local level around the U.S. to support senior living facilities and work directly with families.

Starting in the Midwest with Jo Letwaitis, Founder and CEO of the The Senior Site, Inc., senior care experts are being endorsed to represent Life Care Funding Group and make Funding Solutions available to help more people.

In the coming weeks, more Network Partners will be announced in other regions of the country.  To learn more about how to access the Network Partner program, contact Life Care Funding Group at info@lifecarefunding.com.

To read the Network Partner announcement, click here.

In a report released this past Saturday, the government agency that administers Medicare and Medicaid detailed the possible impact of cuts proposed in healthcare reform passed by the House of Representatives.  The study states that the proposed $500 billion in cuts would be so severe that hospitals and nursing homes would be forced to stop accepting Medicare as payment. 

The report says that seniors would suffer form additional reductions in benefits and services to pay for the $500 billion in reduced spending. The White House answered back against the report’s findings by saying the reductions would come in the form of reduced wasted spending on fraud and abuse in the system and from administrative savings through such efficiencies as expanded use of electronic medical records.  Democrats also contend that these cuts would extend the life of Medicare a number of years before becoming insolvent. 

As is often the case, both sides are focusing on the aspects of this study that bolster their position in the debate.  But regardless of who is right, one truth is clear—seniors need to be preparing themselves for less and less financial support coming from the government.  The burden to cover the costs of senior housing and long term care will continue to be pushed back on seniors and their families and people should do all they can to prepare for the inevitable. 

To read more about the various points of view on the CMS study, click here.

The U.S. Senate begins debating healthcare reform legislation today.  Critical to the proceedings will be Medicare cuts and its impact on seniors across the country.  Click here to read more about how the votes are lining up.

Senate Democrats were able to hold a filibuster proof 60 vote majority to introduce the Senate verison of heathcare reform legislation for debate and a final vote.  Action on this legislation will begin after the Thanksgiving recess.  Click here to read more about how today's proceedings unfolded.

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)