Transcript Document

Private Pay Funding Options
for Senior Care
Founded in 2007, Life Care Funding specializes in converting the death benefit of an in-force
life insurance policy into a Long Term Care Benefit plan to cover the costs of Homecare, Assisted
Living, Skilled Nursing Home Care and Hospice.
The Problem
“In the coming decades, many
Americans will not have a way to
pay for long-term care services. As
the population is aging, the need
for
long-term
care is
services
is into an FDIC insured bank account
 Value
of policy
deposited
exploding. However, as the need for
services
increases,
government
 Automatic
payments
are made directly to a provider of long term care
funding will not be able to keep up,
undermining
a critical can
component
 Monthly payments
be adjusted to address changing care needs
of the nation’s health care delivery
system.”
 Funeral benefit equal to lesser of $5,000 or 5% of face value
–The Long Term Care Funding Crisis
Milliman Consulting
 Conversion complies with state life settlement regulations
National Average Costs Senior Care
Nursing Home- $7,000/mo. ($84,000)
Assisted Living- $3,450/mo. ($41,400)
Homecare- $6,384/mo. ($76,608)
*12 hours per day ($19/hr.)
Genworth Cost of Care Survey 2013
Alarming Statistics
• 10,000 Baby Boomers turn 65 every day
• 70%
of them
will need
some form
Value
of policy
is deposited
into of
an FDIC insured bank account
long term care (40% in a nursing home)
 Automatic payments are made directly to a provider of long term care
• 60% of people incorrectly think
cover Assisted
Living orto address changing care needs
Medicare
Monthlywill
payments
can be adjusted
residence in a Nursing Home
 Funeral benefit equal to lesser of $5,000 or 5% of face value
• 92% incorrectly estimate the costs of
Assisted Living and Nursing Home Care
 Conversion complies with state life settlement regulations
• 75% exhaust all savings inside one year
Medicaid Eligibility
•Medical necessity
•Income/Asset levels below poverty line
•Asset transfer rules and violations
•Medicaid qualified spend-down
•5 year look back period
•People don’t want to go on Medicaid
The Liabilities
Alarming Liabilities
•OBRA ’93 / DRA (Mandates to recover $)
•Filial Responsibility Laws (28 states)
•Health Care & Retirement Corporation of
America v. Pittas (Pa. Super. Ct.)
•Larry Grill et al v. Lincoln National Life
Insurance Company (California Central
District Court)
Families and Advisors are being held
liable for poor financial planning and
punitive court cases are mounting
Pennsylvania Man Appeals to Court to Avoid Paying Mom's $93,000
Nursing Home Bill
May 23, 2012
By Susanna Kim
GOOD MORNING AMERICA
As the only remaining family member left in the U.S., John Pittas was left to
foot the $92,943.41 bill after his mother's Medicaid application was not
approved in time. The Health Care & Retirement Corp. of America, which owns
Liberty Nursing & Rehabilitation Center, sued Pittas in May 2008 for the money
and a trial court sided with the nursing home in 2011.
The restaurant owner said he was "in shock" and "devastated" at the ruling
The Politics
Commission on Long Term Care appointed by Congress in 2013 to
study and make recommendations about the rapidly escalating crisis facing
Americans and their ability to pay for long term care.
"We know that 70 percent of people over the age 65 will need some form of
long-term services and support," said Dr. Bruce Chernof, the commission’s
chairman.
“Although government programs provide a significant portion of long-term
care, none offer the full range of services people need”, said Kirsten Colello,
a health and aging policy specialist at the Congressional Research Service.
"The question is whether most Americans can afford to pay for Long Term
Care." According to G. William Hoagland of the Bipartisan Policy Center,
"Medicare and Medicaid have become the major source of long-term care,
and cannot continue at the current pace.”
In 2010, the National Conference of Insurance Legislators
unanimously passed the Life Insurance Consumer Disclosure Model
Law . Conversion of a life insurance policy into a Long Term Care
Benefit Plan is one of the mandated options in the Model Law.
Multiple states have introduced Life Policy Conversion Consumer
Disclosure Laws Granting Medicaid Departments authority to
educate citizens they have right to convert life policies to pay for any
form of care they select. : CA, FL, GA, KY, LA, MA, MD, ME, NJ, NY,
PA, TX, and WA
Private Pay Options has attracted positive attention from the
press and policymakers
“…Life Care Funding puts the money in an FDIC insured account used to send monthly
payments directly to a long term care provider…You can switch from one provider to
another as your needs change; but you can’t use the money for a vacation (or blow it at
a casino).”
10/9/2013
“But a few state law makers who have introduced laws to publicize the [Benefit Plan]
option have pointed out that it beats surrendering a policy to access government
benefits while also giving families more control over how to spend the money.”
8/30/2013
“Texas enacted a law earlier this month that gives state Medicaid officials the authority to
tell people applying for help they can sell long-held life-insurance policies to a third party
to pay for custodial health care of their choice.”
6/27/2013
The Solution
Private Pay Funding
• VA Aide and Attendance
• Reverse Mortgage
• Loans
• Life Settlements
• LTCi
• Long Term Care Benefit Plan
Veteran’s Aide & Attendance
A monthly benefit for low income veterans (and their spouses) age 65
or older who served at least one day during a wartime period. The
VA benefit is a tax-free supplemental income pension benefit
intended to assist the costs of skilled nursing care for a disabled
veteran. A single veteran can receive upwards of $1,700/mo. and
with a spouse upwards of $2,000/mo.
The Veteran’s Administration has proposed a significant rule change
that would include a three year look back period (similar to Medicaid
look back rules) for all applicants that is expected to be in effect
before the end of 2015.
Reverse Mortgage
A reverse mortgage is a loan that enables senior homeowners, age
62 and older, to convert part of their home equity (primary residence
only) into tax-free income without having to sell their home, give up
title to it, or make monthly mortgage payments.
You don’t need to repay the loan as long as you or another borrower
continues to live in the house and keep the taxes paid and insurance
in force. The loan only becomes due when the last borrower (s)
permanently leaves the home at which time the reverse mortgage
principal, interest charges, closing costs and service fees are
typically paid back from the sale of the house.
Senior Living Loans
Loans that can be secured specifically to pay for long term care
services for a maximum term of three years. These loans are
unsecured by collateral and instead are guaranteed by family
members (one or more). Interest rates are similar to a credit card.
Long Term Care Insurance
Long-term care insurance is designed to cover a wide range of longterm care services such as homecare, assisted living, nursing
homes, or hospice. Generally, the younger and healthier you are
when you buy long-term care insurance, the lower your premiums will
be. Waiting too long can decrease the likelihood of being accepted
and increase the cost of coverage.
Life Settlements
A life or viatical settlement is the sale of an existing life insurance
policy to a third party for more than its cash surrender value, but less
than its net death benefit
Most states regulate life and viatical settlement transactions, and
many of the specific regulations in place are intended to protect
individuals that are selling their insurance policies. For example, in
most states, the seller of an insurance policy through a life settlement
can cancel the transaction by returning the purchase price within
fifteen days of receipt. More than forty states have regulations in
place regarding the sale of life insurance policies to third parties.
Single Premium Income Annuity (SPIA)
An immediate annuity is a contract with an insurance company under
which the consumer pays a certain amount of money to the company
and the company sends the consumer a monthly check for the rest of
his or her life.
In most states the purchase of an annuity is not considered to be a
transfer for purposes of eligibility for Medicaid, but is instead the
purchase of an investment. It transforms otherwise countable assets
into a non-countable income stream as long as the income is in the
name of the community spouse. Under the DRA, the state must be
named the remainder beneficiary up to the amount of Medicaid paid
on the annuitant's behalf.
Long Term Care Benefit Plan
A Long Term Care Benefit Plan is the conversion of an in-force life
insurance policy into an irrevocable, FDIC-insured Benefit Account.
An unneeded life insurance policy is sold for a percentage of the
death benefit (the range can be between 20-60 percent) and the
funds are immediately available to pay for Senior Care.
Once enrolled in the benefit plan, tax-advantaged monthly payments
are made directly from the account to cover any form of senior care:
home care, assisted living, nursing home, memory care, and hospice.
Private Pay allows for choice and dignity
Home
Health
Care
Private Duty
Home Health
Care
Assisted
Living
Skilled
Nursing and
Hospice
Memory or
Behavioral
Care
Accepted by all Long Term Care
Providers in the U.S.
Conclusion
Problem• Families confronting Long Term Care are
unprepared, uninformed and are looking for
comprehensive advice and access to options
• Seniors want to remain financially
independent and in control of care decisions
• Seniors don’t want to be a burden on their
family or become a ward of the state
Solution• Numerous options to remain private pay are
available
• Advisors and care providers need to be
familiar with these options so families are able
to make well informed decisions
Who Benefits and How?
• Consumer: Use assets they already own that will provide private
pay dollars to their preferred form of senior housing and care
while preserving financial independence, choice and dignity.
• Provider: Long term care service provider receives private pay
funding for services (1/3 higher than CMS rate) over a guaranteed
timeframe without disruption from cutbacks in Medicare/Medicaid
reimbursements.
• Medicaid and Tax Payers: Private pay delays entry onto Medicaid
generating considerable savings to stressed Medicaid budgets
and tax payers.
Life Care Funding
Phone: 888-670-7773
[email protected]
www.lifecarefunding.com
Chris Orestis, CEO of Life Care Funding, a former Washington, DC lobbyist, is an 18year veteran of both the insurance and long-term care industries. A nationally known
senior care advocate; he is the author of the Amazon best-seller book “Help on the
Way”, a legislative expert, featured speaker, columnist and contributor to a number of
insurance and long term care industry publications. Chris is a frequent guest about
senior issues on national radio programs and has also been featured in the Wall Street
Journal, New York Times, USA Today, Woman’s World Magazine, Fox Business News,
Kiplinger's, and PBS.
His blog on senior living issues can be found at
www.lifecarefunding.com.
He can be reached at 888-670-7773 x 6623
[email protected].